As LPs and GPs reconvene at IPEM Paris in September, we see signs of shifting market dynamics. Continued innovation across the Private Equity industry and broader economic and market developments drive some of these shifts, as we explore in this year’s allocation and fundraising expectations for 2025.
We see a market that may have relaxed somewhat since our previous study, with greater liquidity, more exits, and more completed deals apparent than in the previous 12 months. But what trends have emerged deeper below this macro view?
Strategically, the dominant investment focus remains directed at Private Equity, albeit marginally muted versus last year’s report. This translates to signs of diversification within Private Debt and Real Assets and, within these asset classes, more notable moves towards Special Situations and Fund of Funds verticals. Within Private Equity, too, Turnaround and Restructuring has seen an uptick in investment intention from LPs, perhaps in line with the well-documented financing headwinds and approaching wave of debt maturities on the horizon.
Our data indicates that a higher percentage of GPs are fundraising at this moment. A third of fundraising GPs have already indicated a first close in the previous calendar year – close to double that of last year’s data – suggesting that fundraising is taking longer. With more funds also coming to market soon, levels of competitiveness could increase the difficulty in hitting fundraising targets.
Re-ups are back in favour in Private Equity and Private Debt, after the highlighted quest for all-new GP activity 12 months prior in our last report. This LP focus on existing relationships drives further competition still, exacerbated by the crowded market we see in specific areas of LP focus. In particular, we see increased targeting of the smaller markets, where our data suggests an oversupply from GPs despite this increased LP demand in these areas.
As with any market movement amongst LPs, the GP winners that emerge will be those that can proactively respond to sharpen their strategies and clearly articulate the differentiating criteria that align with their prospective LP partners.
“Our second annual IPEM Allocation and Fundraising Report, created in partnership with AlixPartners, really shows how competitive and nuanced the market has become.
We’re seeing a continued shift beyond traditional Private Equity, with more attention now on Private Debt and Real Assets. Interestingly, there’s also a rising interest among LPs in areas like Fund of Funds, Special Situations, and Natural Resources. Secondaries are still a strong point, especially given the ongoing challenges in M&A and public exits. This suggests that demand for Secondaries will likely stay strong through 2025. We’re also noticing that the Secondary market is branching out into new territories, such as Venture Capital, Growth Equity, Private Credit, and Infrastructure.
Re-ups are back in favourtoo, with LPs showing a clear preference for sticking with tried-and-true GP relationships. Yet with the market being so crowded, areas like the small and mid-markets are becoming increasingly competitive. It’s no surprise that fundraising is taking longer, with about a third of fundraising GPs reporting a first close in the last calendar year –almost double what we saw in 2023. As more funds come into play, hitting those fundraising targets is only going to get tougher.
At IPEM, we’re committed to fostering the growth of Private Capital by helping the industry connect in meaningful, informed ways. We’re excited to dive into these trends and opportunities with all of you and welcome you to Paris!”
“The market appears slightly more fluid than this time last year, with more exits and deals in the pipeline, but conditions remain challenging. Exiting from investments has only marginally eased, liquidity remains constrained, and competition among GPs for capital remains tight. LPs are investing smaller amounts, allocating to primaries, and focusing more on Re-ups than this time last year.
Within Private Equity, there is a noticeable demand from LPs for Turnaround and Restructuring investment, and increased interest in Private Debt, particularly Special Situations and Fund of Funds, likely driven by looming debt maturities and financing challenges.
Our findings indicate strong alignment between GPs and LPs in specific sectors and technology focus areas, with Technology and Software emerging as a top consideration for more than half of LPs in 2025, followed by Healthcare.
Lastly, if the Value Creation approach, ESG and Sector Expertise remain key arguments for GPs to offer the expected performance and returns to LPs, the proper execution and capabilities to deliver them become even more critical priorities.
These are all areas where AlixPartners specialises in helping its clients define, execute or restore value creation trajectories across sectors and in highly complex environments.”
AlixPartners is a results-driven global consulting firm that specializes in helping businesses respond quickly and decisively to their most critical challenges—from urgent performance improvement to complex restructuring, from risk mitigation to accelerated transformation. These are the moments when everything is on the line —a sudden shift in the market, an unexpected performance decline, a time sensitive deal, a fork-in-the-road decision. We stand shoulder to shoulder with our clients until the job is done, and only measure our success in terms of the results we deliver. We partner with you to make the right decisions and take the right actions. And we are right by your side.
When it really matters.
Discover a summary of Wednesday at IPEM Paris 2024 with the Photo Gallery (relive our events: Comms & Marketing Lunch, Wrap Party), the TV Studio Interviews, and the Video Highlights!