The New Age of Private Equity | Global Conference 2025

Deal Activity & Regional Divergence

• GIC deployed $11 billion across US, Europe, and Asia through April, a meaningful increase year-over-year despite sourcing difficulties.
• 80% of recent deals were carve-outs or take-privates, indicating a reliance on non-sponsor-driven opportunities.
• US deal activity experienced a significant pause in Q1 due to policy uncertainty, whereas European and Asian markets saw acceleration during the same period.
• The private credit market sustained leveraged buyouts (LBOs) during the pause, with 10 syndicated loan deals priced for LBOs in the last 10 days alone.
• M&A volume for the first four months is up 16% compared to 2024, though panelists predict the final year-end figure will be lower due to a lack of announced deals.

Market Cycle & Valuation Dynamics

• Panelists characterize the current environment as a "dislocation" between buyers and sellers rather than a collapse, contrasting it with the dot-com bust or GFC.
• High vintages from 2021–2022 created an overhang, forcing many assets to grow into previously inflated valuations rather than exiting immediately.
• Dry powder in the US relative to assets in ground is at a record low ratio of 40 cents on the dollar, creating potential opportunities for capital deployment.
• The industry is moving away from "boom-bust" cycles toward a desire for linear capital deployment and distribution, though pro-cyclicality remains a structural challenge.
• Median private equity returns have flattened in recent vintages, while top-quartile returns continue to be strong, signaling increased dispersion in manager performance.

Exit Strategies & Distributions

• The "distribution drought" is cyclical; monetization grew at a 5% CAGR from 2019–2024, matching deployment growth.
• Private Equity firms are increasingly utilizing continuation funds as a tool to manage illiquid assets, offering LPs a choice to cash out or roll over with reset fee structures.
• IPO activity is currently limited but viewed as a critical exit tool; firms are prioritizing buyers who can provide immediate liquidity over waiting for public market windows.
• Some firms, like EQT, have executed multi-billion dollar private IPOs to provide liquidity while retaining long-term investment horizons in AI-enhanced businesses.

Asset Class Diversification & Vertical Integration

• Bain Capital and General Atlantic argue that diversified platforms (integrating credit, public equity, and private equity) offer superior sourcing synergies and cross-vertical deal opportunities.
• EQT and GIC favor singular focus on specific asset classes to maintain investment discipline and avoid internal conflicts of interest.
• The industry sees private credit as a vital tool for corporate growth, with GIC noting its value in providing dynamic funding options outside traditional bank lending.
• Private credit is viewed as a diversifier rather than a replacement for private equity, offering risk-adjusted returns independent of the traditional equity cycle.

Artificial Intelligence Integration

• EQT employs "Mother Brain," an in-house AI team of 50+ experts, to assist with deal sourcing, investment committee analysis, and portfolio reviews.
• Bain Capital focuses AI applications on value creation, citing examples of 1,000 to 1,500 basis points margin improvement through automation in insurance and logistics.
• Panelists agree AI cannot yet replicate the nuanced judgment required for final investment decisions, though it significantly enhances data synthesis and productivity in mid-office functions.
• The sector views AI as both a defensive necessity to mitigate disruption risks and an offensive lever to enhance revenue and cost structures in portfolio companies.
• GIC plans to run experiments on every one of its 250+ portfolio companies to accelerate learning on AI application speed compared to competitors.

Talent, Compensation & Regulation

• Potential removal of preferential tax treatment for carried interest is viewed by panelists as detrimental to talent retention and long-term career development in the sector.
• While tax changes might alter compensation structures, firms expect to utilize alternative instruments like share-based compensation to maintain alignment.
• The "apprenticeship model" remains central; firms continue to hire analysts and do not foresee a reduction in junior talent pipelines despite AI automation of grunt work.
• LPs retain voting rights every three to four years on fund performance, a timeframe panelists suggest allows for more informed decision-making than the 18-month fundraising cycles of the past.
• GIC maintains a long-term commitment to the US market, increasing exposure from 35% to 40% of its portfolio despite current political volatility.

Economic Outlook & Risk Factors

• Panelists express caution regarding tariffs and IP-specific trade barriers, noting a dramatic drop in West Coast port forward bookings.
• Despite macroeconomic recession fears (65% of interviewed CEOs expect one), 80% of portfolio CEOs report confidence in their business health due to sector insulation (tech, healthcare, services).
• The industry remains optimistic that the current low activity level represents a buying opportunity given the misalignment in valuations and the abundance of dry powder.
• Deregulation of the financial sector is viewed positively by some as it may expand private credit's role, though GIC remains neutral on specific regulatory outcomes.