Industry Trends
Private market evergreen funds: A new era for venture and growth equity
The private equity landscape is evolving, with increased access to private companies driving innovation in AI, cybersecurity, automation, and blockchain. Historically limited to institutions, this access is expanding through vehicles like evergreen funds and a robust secondaries market, representing about 20% of the private equity ecosystem. Companies are staying private longer, with the median time from first funding to IPO increasing from 5.5 years in 2016 to 7.5 years in 2024. This shift means companies experience more growth while private, offering investors new opportunities. Fundraising from institutional investors has slowed, creating opportunities for flexible capital pools due to more attractive valuations and increased secondary market activity. Evergreen funds, open-ended mutual funds offering individual investors access to private markets, are gaining popularity. These funds have lower investment minimums, simpler tax reporting, higher diversification, and more liquidity control.
As of year-end 2024, wealth-focused evergreen funds totalled US$ 427 billion, projected to exceed US$1 trillion by the decade's end. Despite their historical focus on real estate and private credit, evergreen funds are increasingly providing access to a broader private investment universe, particularly in VC and growth equity spaces. This trend is expected to bolster the case for accessing VC and growth equity through evergreen funds, creating compelling opportunities for asset owners. The convergence of these trends, alongside the aftermath of the 2022 market reset, presents a broad opportunity set in VC and growth equity across direct company investments and secondaries at attractive valuations.
Source: Wellington Management
From deals to diversification: Private equity’s strategic shift
Industries are reorganizing around essential human needs, such as food, healthcare, mobility, construction, and energy. The construction of data centers exemplifies the need for collaboration among various sectors to support AI infrastructure. This reorganization presents significant opportunities for the private capital industry, which is expected to grow at a CAGR of 8-10% through 2030, reaching $25-28 trillion in assets under management from $16 trillion today. Private capital, including private equity, private credit, sovereign wealth funds, and infrastructure investments, is well-positioned to drive industry transformations with its long-term orientation and flexible capital structures.
Regulatory scrutiny, macroeconomic volatility, interest rate uncertainty, and geopolitical risks add complexity to the market. Thematic investing around human needs offers scale, defensibility, and relevance, crucial in a market facing exit delays and rising expectations from limited partners. Investors should adopt a cross-industry approach, focusing on future trends and evolving portfolios to capitalize on them. Scenario-based forecasting and domain stress testing are essential for calibrating capital deployment and risk mitigation.
Large investment managers are blending private equity, credit, and infrastructure capital to invest across the capital stack. Cross-functional thematic teams or 'domain squads' combining industry, tech, and capital expertise are recommended. AI should be treated as a portfolio-level capability, with successful use cases validated through rapid pilots. This approach aligns private capital with investor needs, delivering returns, resilience, and relevance.
Three growth scenarios are outlined: base case (gradual recovery from 2026), high case (optimistic growth with favourable conditions), and low case (challenging environment with persistent risks). Capital deployment must evolve to stay ahead in a shifting market, maximizing returns and creating long-term value.
Source: PwC
Private equity deals in Europe rise as firms refocus on core operations
Private equity investors are increasingly attracted to Europe due to a rise in dealmaking driven by several factors, according to Michael Bruun, global co-head of Private Equity at Goldman Sachs Asset Management. European companies are shedding non-core businesses, consolidating assets, scaling up for AI capabilities, and expanding globally. The drop in the cost of capital in Europe is also making private equity investments more rewarding. The region's economic growth, stability, and lower valuations compared to the US market make it an attractive investment destination. Key sectors experiencing high dealmaking activity include financial services, technology, business services, and healthcare. The financial services sector is seeing growth opportunities in wealth services and insurance, while the healthcare sector is driven by rising costs and demand for innovation.
The conditions for dealmaking are favourable due to a surplus of unsold assets and corporates disposing of non-core assets. Additionally, there is a significant amount of capital being raised and deployed. Falling interest rates have improved the equity-return environment, making new deals more attractive and providing companies with more room to invest in growth. The fragmentation in European industries offers opportunities for private equity players to create platforms and consolidate markets.
The drive to add AI capabilities is also a catalyst for dealmaking, as companies seek to future-proof themselves and improve efficiency and customer experience. Private equity helps European companies expand globally by leveraging networks to introduce them to new markets, customers, and potential hires. Secondary transactions and deals involving companies listed on public exchanges are also gaining momentum. The strength of the euro relative to the US dollar is another factor attracting global investors to Europe's private equity market, offering diversification away from the US dollar-dominated market.
Source: Goldman Sachs
Family offices set to increase stakes in public and private equity
Family office allocations have remained relatively steady despite changing investment risks. According to a survey, 61% of family offices identified geopolitical conflict as their top investment risk, followed by political instability (39%) and economic recession (38%). Tony Pasquariello, global head of hedge fund coverage for Global Banking & Markets, attributes this to an active newsfeed. Other concerns like inflation and high market valuations ranked lower. Family offices allocated 42% of their funds to alternative asset classes such as hedge funds and private equity, slightly down from 44% in 2023. Sara Naison-Tarajano, global head of Private Wealth Management Capital Markets and Apex, notes that family offices are committed to their asset allocation despite a different market environment compared to two years ago. In the Americas, 35% of respondents are not focused on hedging for tail risk, viewing market dislocations as buying opportunities. Family offices' patient capital is well-suited for investing in innovation trends, with 58% expecting to be overweight in technology in the next 12 months, driven largely by AI. Meena Flynn, co-head of Global Private Wealth Management, explains that family offices are gaining exposure to AI through public equities and private markets, including infrastructure investments. While most family offices are not investing in cryptocurrency, attitudes are changing, with 33% of respondents in the 2025 survey investing in crypto, up from 26% in 2023 and 16% in 2021.
Source: Goldman Sachs
Quarter Review
October 2025: Private markets
The number of public companies has halved over the past three decades, driven by rising regulatory costs, abundant private capital, and M&A activity. Passive investing has overtaken active management, weakened price discovery and made it harder to generate excess returns, or "alpha," in public markets. Market returns are now concentrated in a few technology giants, the "Magnificent Seven," which account for over 30% of the S&P 500’s market capitalization and most of its earnings growth.
The decline in public companies and the dominance of passive strategies have fundamentally altered investment strategies. Investors now face the challenge of finding durable opportunities and adapting portfolios accordingly. Private markets, including private equity, venture capital, and private credit, offer access to companies earlier in their growth cycle, less efficient markets where skilled managers can add value, and lower correlation to public markets during volatility. Innovations like tokenization and secondary trading are making private equity more liquid and appealing.
Sentinel advocates for a balanced approach, leveraging both public and private markets while adhering to risk budgets. Despite the concentration risk in public markets, alternatives remain compelling. Sentinel focuses on rigorous manager selection, careful liquidity management, and bespoke portfolio design to ensure long-term success for their clients.
The investment landscape is transitioning, with AI-driven mega caps dominating returns. Long-term research suggests that hyper-concentration is not sustainable. Diversification remains a fundamental principle of modern portfolio theory, proving its virtue through the costs of concentration. In an uncertain world, broad diversification and thoughtful exposure to private markets are seen as reliable paths to enduring wealth. Sentinel looks forward to discussing these themes further and continuing their partnership with clients.
Source: Sequoia Financial Group
Private markets investment outlook: Q4 2025
Amid ongoing macroeconomic and geopolitical volatility, private markets are becoming increasingly attractive due to their cyclical decoupling and diverse risk sources, which enhance portfolio resilience. Select private market strategies, particularly in infrastructure and real estate, offer insulation from macroeconomic risks and are supported by tangible assets. Structural tailwinds like the global energy transition and technological revolution are reshaping industries and capital flows, creating favourable entry valuations and yield potential. A bottom-up allocation approach, focusing on high selectivity and transformative value-add, is crucial for capturing attractive opportunities and driving long-term performance. Maintaining a steady investment pace, prudent risk management, and a focus on long-term value creation are essential in this uncertain environment.
Private equity is in a recalibration phase, with fundraising, deal activity, and exits below pre-2022 levels, creating pricing dislocations and reduced competition. The segment offers attractive inflation linkage and stable income, with supportive policy frameworks in Europe and Asia driving investment in wind and solar projects. The most compelling opportunities are in small- and mid-sized buyouts, continuation investments, and selective early-stage ventures, focusing on local champions, transformative growth, and multi-polar innovation.
Private credit remains resilient, supported by solid corporate and consumer balance sheets. Real estate debt is showing signs of stabilisation, with conservative underwriting and improved collateral coverage. Infrastructure debt offers yield stability and downside protection, driven by the global decarbonisation agenda. The recalibration of return expectations has created attractive entry points for long-term investors, with core strategies well-positioned for performance recovery.
Source: Schroders
ESG Trends
Sustainable capital in flux: Thriving amid market volatility
In a volatile policy and macroeconomic environment, investors should seek opportunities that combine conviction and a margin of safety at the intersection of four key areas: accelerating “in-the-money” growth themes, companies with robust value propositions, critical links in value chains, and capital supply-demand imbalances. Attractive opportunities exist in asset classes where sustainability themes are structurally advantaged, such as private credit, value-add infrastructure, middle-market private equity, and continuation vehicles.
Lesson 1 emphasizes pragmatism and complexity over idealism, acknowledging the dynamic and non-linear nature of the energy transition influenced by economic, geopolitical, and technological factors. Lesson 2 highlights the enduring fundamentals of the long-term secular trend of energy transition, driven by falling costs, rapid deployment, and geopolitical imperatives. Lesson 3 underscores the importance of the macro environment as a fundamental driver of capital allocation and investment performance, especially considering recent policy shifts, higher interest rates, and inflation. Lesson 4 advises looking beyond headlines to identify substantial opportunities within the broader climate transition theme, such as circular economy business models.
The way forward involves focusing on accelerating “in-the-money” themes, finding companies with robust value propositions, and taking advantage of capital imbalances. Investors should target companies with technological or scale advantages in less commoditized segments to achieve better financial outcomes. Significant capital pools in core and core-plus segments of real assets and infrastructure compress returns, highlighting the need for expertise in sustainable private debt. Attractive opportunity sets for sustainable themes include private credit, middle-market private equity, and continuation vehicles, which offer strong relative value, asset stability, and attractive entry valuation points.
The sustainable investing landscape is shifting from idealism to a focus on substance, resilience, and economic fundamentals. By identifying accelerating themes, critical value chain links, and capital imbalances, investors can find conviction and margin of safety across asset classes.
Source: Goldman Sachs Asset Management
Artificial Intelligence Scope/Trends
AI diligence: Unveiling potential pitfalls and prospects
Artificial intelligence (AI) has become a significant factor in due diligence for private equity and corporate M&A buyers, who are increasingly evaluating its impact on target companies. AI diligence can reveal both risks and opportunities, influencing decisions to either walk away from deals or leverage AI for new efficiencies, growth, and business models. For example, Bain's diligence on an AI-native healthcare company led to concerns about the technology's vulnerability to competition, while diligence on a specialty workflow software company highlighted AI's potential to enhance customer loyalty and defensible data moats.
AI's impact on a business can be categorized into revolution, transformation, and augmentation. Revolution targets, such as translation services, face fundamental risks to their business models and must reinvent themselves to survive. Transformation targets need substantial changes to their business models and must quickly embrace AI to avoid falling behind. Augmentation targets, which comprise about half of all companies, can achieve measurable value through AI without major disruptions, capturing cost savings, efficiency gains, and new revenue streams.
Effective due diligence involves answering five key questions: whether AI will disrupt the business model, affect market volumes and pricing, change the basis of competition, improve product offerings, and generate cost savings. Additionally, assessing the AI readiness of the management team and the broader enterprise is crucial. This includes evaluating the company's AI strategy, tech and data infrastructure, use cases, talent, and operating model. Mastering AI diligence allows investors to make informed decisions on when to invest and when to walk away.
Source: Bain & Company
Private equity’s AI imperative: Turning algorithms into alpha
Chris Brown, President at VASS Intelygenz, emphasizes the importance of AI and deep tech innovation in driving tangible ROI across industries. The private equity landscape is evolving, with debt becoming pricier, exits slower, and limited partners scrutinizing every basis point. AI is increasingly prioritized for deal sourcing and portfolio execution, as highlighted in McKinsey’s 2025 Global Private Markets Report. Investment committees demand proven ROI rather than mere proof of concept. Successful AI implementation starts with a clear value hypothesis, focusing on specific business problems and payback windows. Early wins in narrow, data-rich use cases are crucial to build credibility and generate proprietary data. AI applications in private equity include deal sourcing, diligence processes, and portfolio management, delivering measurable improvements. Leading firms like KKR, Vista, and Blackstone are already seeing material performance gains from AI. However, scattered data across various platforms and privacy concerns pose significant challenges. The first step is consolidating essential data into a secure environment, ensuring strong data quality standards and trial runs to confirm ROI metrics.
McKinsey suggests that allocating 1-1.5% of existing IT budgets can create the necessary infrastructure for robust AI. The future of private equity lies in agentic workflows that execute, with early adopters gaining a competitive edge through proprietary data and self-improving models. Firms that commit to board-level sponsorship, scalable budgets, and pilot tactical use cases will set the pace for the industry’s next decade.
Source: Forbes
Expert Opinion
Navigating private equity's new reality: The middle market advantage
The executive summary discusses the challenges and opportunities in the private equity market, particularly in the middle market, amidst global political and economic uncertainty. Middle-market companies, defined as those with less than $3 billion in total enterprise value, are highlighted for their potential to create value and find liquidity despite market volatility. The One Big Beautiful Bill Act (OBBBA) and tariff impacts are expected to drive growth for certain U.S. businesses, while Europe and some APAC regions are becoming more attractive as global economies decouple. Inflation remains high, influenced by immigration policies, tariffs, and currency pressures. The recent U.S. government shutdown has hindered access to crucial economic data, affecting monetary and fiscal policy decisions. The OBBBA offers new fiscal incentives to boost domestic jobs and economic interests, benefiting sectors like private infrastructure and healthcare. Middle-market companies are seen as more resilient to global trade policy issues due to their localized revenue and customer demand profiles. The OBBBA also prioritizes domestic infrastructure and energy independence, creating opportunities for grid-servicing companies. Despite some rollback of tax incentives for renewable energy, new incentives for fuel centers, nuclear facilities, and utilities are introduced. European and APAC middle-market services companies are less affected by international supply chain risks and can adapt to evolving trade environments. The global trade reshuffling has opened investment opportunities in Japan, Korea, Australia, and Southeast Asia. Middle-market companies in essential services like infrastructure and healthcare have historically generated attractive returns, offering solid downside protection for investors.
Source: Hamilton Lane
