Navigating the future of private businesses: steering development through institutionalization
In the ever-evolving world of private capital, managers are prioritizing liquidity, strategy expansion, and global operational scale. This strategic approach is a response to the changing landscape, as Limited Partners (LPs) increasingly favor evergreen and semi-liquid vehicles that balance accessibility with performance.
The first half of 2025 saw Global Private Equity (PE) funds raising $223bn, marking the weakest showing since 2018. Despite this, exit activity in PE is recovering, with GPs capitalizing on improved M&A sentiment and an emerging IPO window. This recovery is reflected in the stable deal value, which rose over 20% in 2024 and has remained consistent in 2025.
The goal for integrated infrastructure varies by strategy. For instance, a global real estate platform has different operational needs than a multi-asset credit manager. However, firms are extending across asset classes and geographies, requiring sharper treasury oversight and portfolio insight.
To adapt to current changes, companies are focusing on IT modernization, including legacy system updates, cloud transformation, and the integration of industrial artificial intelligence (AI) into core business processes. This modernization aims to meet expectations by modernizing and securing IT infrastructures, embracing cloud solutions for flexibility and scalability, and embedding AI to automate, predict, and optimize operations for increased productivity and new service models.
NAV financing has become a key tool for sponsors navigating delayed exits, and the AUM in private capital has surpassed $2.5trn globally, with some estimates nearing $3trn. Regulatory divergence is another challenge, with new regimes in various regions creating a patchwork of compliance standards.
Direct lending remains dominant, with volume growth tracking 13-15%. To sustain growth, cross-border firms are emphasizing alignment around core jurisdictions, flexible infrastructure, and proactive regulatory tracking. Lift-Outs are becoming common, where managers externalize internal functions like fund accounting and middle office to access better technology.
Strategic Service Partnerships are being adopted, shifting from fragmented legacy providers to a consolidated partner model. Private capital firms are moving towards scalable, integrated platforms to meet the expectations of the future.
Venture Capital (VC) fundraising in Q1 2025 saw just $10b, putting the year on track to be the weakest for VC fundraising in a decade. Despite this, real assets, such as data infrastructure, logistics, and housing, continue to attract capital, underpinned by long-term trends like urbanisation and e-commerce.
The bar for private capital firms is rising, with a focus on operational resilience, transparency, and governance. The credit ecosystem is also becoming more collaborative, with GPs co-investing alongside each other. As these trends continue to evolve, private capital firms are positioning themselves for a future of growth and innovation.
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