Private Equity:
2025 Year in Review

Private equity highlights from 2025

• Private equity dealmakers endured a volatile year, as tariff changes put the brakes on an encouraging start to 2025.
• With hopes that 2025 would herald an M&A revival put on ice, pressure on GPs to clear portfolio backlogs and make realizations remained unrelenting.
• Continuation vehicle volumes continued to climb as managers made full use of the alternative exits routes available to them.
• Fundraising remained challenging, as LPs held off from backing new funds liquidity and program cash flows improved.
• Positive sentiment did begin to build in the second half of the year, with banner deals in Q3 2025 boosting year-on-year deal value comparisons.

Elliott Brown

Global Head of Private Equity

A Year Defined by Resetting Expectations

The private equity market entered 2025 with optimism that early signs of deal momentum, stabilizing valuations, and modest improvements in liquidity would translate into a sustained recovery. But as the year unfolded, shifting macro conditions, uneven policy signals, and persistent portfolio pressures forced managers to recalibrate those expectations. While pockets of activity strengthened − particularly in later quarters − the broader environment remained characterized by caution, selective dealmaking, and a continued focus on managing through legacy backlogs. This backdrop frames the dynamics that shaped GP sentiment and market behavior across the remainder of the year.

A Slower Than Expected Deal Recovery

GPs’ hopes that 2025 would finally be the year that private equity M&A activity rallied, never quite materialized, as shifts in US trade policy and volatile stock markets put the deal recovery on hold.

Despite the DOW reaching all time highs, the last 12 months have not been easy for private equity managers, who started 2025 with the expectation that flattening inflation and interest rate cuts in key markets would signal a turn in deal activity figures following a 36-month period of declining buyout transaction flows.

US tariff announcements in April, and the subsequent market dislocation, dashed any hopes of a deal revival in 2025, but in the final two quarters of the year, once dealmakers had assessed the impact of tariff shifts on earnings and portfolio companies, buyout activity did show signs of improvement.

Global buyout deal value for Q3 2025 hit US$377.34 billion, according to Dealogic figures analyzed by law firm White & Case – the best quarterly figures recorded since the market peak of 2021 and 59 percent above Q2 2025 totals. This lifted the buyout deal value for the first nine months of 2025 to US$911.04 billion, bringing it in line with full-year figures for 2024 and putting the buyout market on track to exceed US$1 trillion in annual deal value for the first time since 2022.

Landmark deals – most notably the $55 billion take-private of video game developer Electronic Arts in the biggest leveraged buyout in history – also pointed to an improving backdrop for buyout deals.

Crucially, momentum on the new buyout front was mirrored when it came to exits, with global exit value for the 9M 2025 coming in at US$468.02 billion – 84 percent up on the same period in 2024 and already ahead of the full-year exit value totals for 2023 and 2024.

After the initial tariff announcement shock, dealmakers gradually returned to business as the global economy rode out tariff disruption and interest rate cuts in the US, UK and Europe filtered through capital markets and brought down debt costs, facilitating more affordable deal financing.

Fundraising lagged deal rebound

The uptick in exit activity, while encouraging, was not large enough to put a meaningful dent in the backlog of unsold assets that had built up since 2022 and constrained the ability of managers to make distributions to their LPs.

According to PwC, the private equity industry still held an estimated US$1 trillion of unrealized assets halfway through 2025. Bain & Co.’s analysis, meanwhile, highlighted that while current exit volumes were broadly in line with 2019 levels, buyout managers were holding twice as many assets in their portfolios now as they were then.

With limited cash returns coming back to them, LPs had limited wiggle room to make commitments to new funds.

Fundraising through the first three quarters of 2025 fell to US$569.5 billion, according to PEI figures – the lowest fundraising total for a Q1-Q3 period in five years and around 22% down on the fundraising for the corresponding period in 2024.

GPs adapted to clogged exit channels by using alternative methods to unlock liquidity. At the beginning of 2025, Bain’s analysis showed that nearly one in every three portfolio companies in buyout portfolios (30%) had already undergone some form of liquidity event, ranging from minority stake sales and dividend recaps to NAV financings and continuation vehicle (CV) deals.

The continuation vehicle (CV) structure, in particular proved a popular option for expediting liquidity, with figures from Jefferies showing that CV deals accounted for almost a fifth (19%) of private equity exits through the first half of 2025.

The CV structure proved to be flexible through the course of the year, with GPs not only making us of single-asset CV liquidity at relatively attractive valuations (90% of single asset CVs priced above 90% of NAV, according to Jefferies) but also constructing multi-asset CVs to provide investors with much wider and deeper liquidity optionality.

The rise of non-institutional capital

The challenging fundraising market also served to strengthen the tailwinds behind the rise of private wealth investment into private equity.

The constraints in the institutional fundraising market obliged managers to broaden their investor base and innovate to unlock new pools of investors – most notably in the non-institutional space.

This drove a significant increase in the formation of evergreen fund structures (including interval funds and semi-liquid funds, among others), which were launched to facilitate more flows from private wealth into private equity strategies.

Analysis from HSBC Asset Management found that the net assets for the largest 16 private equity-focused evergreen funds registered with the US Securities and Exchange Commission (SEC) increased more than sixfold between 2021 and 2025, from US$10 billion to US$61 billion. The increase between 2024 and 2025 alone was 68%, reflecting the rapid growth of the non-institutional wealth channel through the year.

Retooling the private equity production line

For private equity managers, grasping the CV and private wealth opportunities not only necessitated a shift in investment and fundraising strategy, but also a significant operational overhaul.

As CVs and private wealth grew in 2025, managers encountered added layers of complexity in their operational model.

In the CV context, for example, asset pricing and reporting transparency, not to mention the capacity to support additional fund structures, demanded enhanced reporting and back-office capability. GPs also had to manage LP wariness of CV structures when they were in an incumbent investor position, particularly in multi-asset deals where portfolio companies included in the package were valued as a group rather than individually. Managers had to respond by producing granular pricing detail, as well as providing comprehensive reporting for the CV structures on their books.

GPs who dipped their toes into the non-institutional fundraising market, meanwhile, found that they had to ramp up their investor relations content output to reach a much broader, more disparate non-institutional investor base, often through distribution partners.

GPs also had to scale up back-office capability to service the preferred fund structures that non-institutional investors sought out when making allocations to private equity. New requirements included publishing monthly NAV figures and managing liquidity sleeves to ensure that vehicles could meet redemptions.

In addition, managers had to step up as LPs undertook detailed reviews of their fund exposures through the cycle of market dislocation – raising the bar on GP reporting.

From back office to front office, 2025 proved a challenging year for private equity firms − one that GPs nonetheless managed to navigate and adapt to.

Conclusion

Taken together, 2025 was a demanding but defining year for private equity. Managers contended with volatile markets, tighter operational and reporting requirements, and shifting investor dynamics, yet continued to broaden liquidity routes and refine their models to manage complexity. The year’s developments ultimately underscored the sector’s ability to adapt under sustained pressure.

Private Debt:
2025 Year in Review

Private Debt highlights from 2025

• Private debt posted good returns for investors and enjoyed strong fundraising support in 2025.
• Patchy M&A markets, however, limited deployment opportunities and increased competition for deals.
• Private debt managers reduced margins and eased lending terms in the race to win financing mandates.
• The formation of private credit continuation vehicles and private credit CLOs climbed in 2025, reflecting the asset class’s sophistication and maturity.

Jessica Mead

Global Head of Private Debt

A Year of Strength and Structural Change

Private debt delivered another strong year in 2025, buoyed by resilient performance, healthy investor demand, and the asset class continued appeal as a flexible source of capital. While macro volatility and tariff-related market dislocations influenced deployment conditions, private debt managers benefited from fundraising momentum and borrowers’ growing preference for speed, certainty, and tailored structuring.

At the same time, intensifying competition, evolving loan features, and new fund architectures signaled a sector continuing to mature and expand its role within private markets.

Performance, Fundraising, and Market Dynamics

Strong investor returns and steady fundraising support underpinned private debt’s solid performance in 2025.  The asset class delivered exceptional risk-adjusted returns for LPs and continued its run of outperforming leveraged loan, high yield bond, and investment grade debt markets.

At a time when fundraising in other private-markets asset classes stalled and sputtered, fundraising for private debt in first nine months of 2025 reached US$252.7 billion – a record high for any Q1-Q3 period – as investors recognized private debt’s exceptional performance.

Competition Intensifies

Private debt’s unique selling points – speed and certainty of execution, no requirement for borrowers to obtain credit ratings, and flexible structuring – proved particularly relevant for borrowers in the first half of the year.

Tariff tumult saw public debt markets all but shutter in Q2 2025, with figures from White & Case and Debtwire recording a 16% fall in US and European syndicated loan and high yield bond issuance between the first and second quarters of 2025, opening the way for private debt players to fill the void.

Through the second half of the year, however, as the tariff fallout settled, syndicated loan markets reopened and rallied strongly to present stiff competition for private debt players in market still characterized by limited deal financing transaction flow.

According to Bloomberg, Wall Street banks had built up a pipeline of more than US$20 billion of M&A debt financing heading into the final quarter of 2025, winning mandates off private credit players by pricing debt at very low margins. Private credit players also faced pressure to defend existing loan books, as the low pricing offered by leveraged loan markets lured private credit borrowers with the opportunity to refinance debt at cheaper rates.

Private debt players had to respond by squeezing margins and upping leverage. Figures from Deloitte show that the margins on most private credit loan issuance dropped below five percent in 2025, while margins greater than six percent became a rarity. Leverage multiples increased during the same period, with around one in two new deals leveraged at more than 4x. There was a sharp spike in the volume of private credit deals levered at 5x or more.

Private debt funds also had to offer other bells and whistles to stand out from the crowd. Payment-in-kind (PIK) features, which allow borrowers to add interest payments to the principal balance of a loan rather than paying in cash, for example, became an increasingly common feature in private debt structures.  

Research from investment bank Configure Partners showed that the inclusion of PIK features in terms when private debt loans were issued increased from 14.8 percent of loans in Q2 2025 to 22.2 percent in Q3 2025. The margins on these PIK facilities also compressed in 2025, as lenders narrowed pricing to win transactions.

Ratings agency Moody’s, meanwhile, noted that covenant-lite structures, historically only a feature of syndicated loan issuance, had become more common in the private credit space.

Dealing with Defaults

Private debt players also had to contend with growing concerns around default risk after the headline-grabbing defaults of auto-sector lender Tricolor and car parts supplier First Brands, where private credit lenders had exposure. Following the defaults, some industry executives expressed concerns that more hidden pockets of distress in private credit could emerge in the coming months, leading to potential losses for managers and investors.

Private credit was singled out for scrutiny following these defaults, even though BSL markets and banks carried exposure to the same borrowers, Indeed, private credit portfolios actually held up well in 2025, with KBRA DLD Default Research forecasting a direct lending default rate for 2025 of just 1.5 percent – lower than syndicated loan and high yield bond markets.

Nevertheless, covenant breaches did increase through the year, and even though breaches remained below longer-term averages, managers did have to invest more time and resources into managing portfolio credits in these situations.

A New Era of Operational Sophistication

In addition to building up their benches of workout and restructuring expertise, private debt players also had to upgrade their operating models as they followed private equity’s example and adopted new fund and distribution structures.

During the last year continuation vehicle (CV) structures became more prevalent in private credit, as private credit managers looked to extend hold periods for portfolio credits that hadn’t been able to exit to original timelines and required refinancings, term amendments and maturity extensions.

In workout situations extended hold periods were also required, although private credit funds also used CV deals to parcel up existing loan portfolios and sell to secondaries investors as a way to expedite payouts to existing investors.

The private credit market also saw an increase in the launch of private credit collateralized loan obligations (CLOs), which package up portfolios of private credit loans that are then securitized and sold off in tranches.

Bank of America forecast that the market was on track to deliver US$50 billion worth of private credit CLO formation by the end of 2025 – an all-time high. Executing private credit CLO deals required private debt managers to invest in additional accounting and legal expertise to manage the securitization process, structure special purpose vehicles to house portfolios, obtain ratings, and manage ongoing CLO administration.

Outsourcing partners stepped in to support private credit managers as they took on these higher back-office workloads and helped managers to focus on their core business of loan origination, underwriting and portfolio management in what proved to be an exciting but increasingly complex market.

Conclusion

Taken together, 2025 underscored private debt’s resilience and growing sophistication. Managers navigated a competitive environment marked by tighter margins, evolving borrower demands, and the increasing use of advanced fund and distribution structures.

Despite periods of market disruption, the asset class continued to attract capital and reinforce its role as a core component of private markets. As private credit strategies matured and operational expectations rose, the year demonstrated the sector’s ability to adapt, innovate, and maintain momentum in an increasingly complex landscape.

Real Estate:
2025 Year in Review

Real Estate Highlights from 2025

• Despite tariff dislocation and geopolitical uncertainty, 2025 was a year of recovery and relative stability for real estate on the equity side.
• Total real estate investment showed double-digit year-on-year gains in 2025, while real estate fundraising was set to beat 2024 totals.
• Lower interest rates in the US and Europe brought down financing costs and debt markets were open for business.
• The ongoing fall-out from the Chinese real estate crisis continued to linger and concerns about AI valuation bubble gave some cause for concern, but overall sentiment was positive the year drew to a close.

Maximilian Dambax

Global Head of Real Assets

Signs of Stabilization After Years of Volatility

Real estate entered 2025 on the back of prolonged macroeconomic and sector-specific pressures, including rising interest rates, weak bricks-and-mortar retail, and subdued office demand. Yet as the year progressed, falling financing costs, improving transaction activity, and pockets of resilience across logistics, data centers, and select regional markets signaled a broader reset.

While geopolitical uncertainty and tariff-driven volatility still weighed on sentiment, the asset class began to show clearer signs of stabilization compared with the disrupted post-pandemic period.

Market Recovery, Sector Divergence, and New Demands Drivers

After prolonged period of rising interest rates, declining bricks-and-mortar retail and falling office space demand post-pandemic, 2025 was a year of reset and recovery for real estate.

Despite market disruption in Q2 2025 following US tariff announcements, direct real estate investment activity rallied strongly in Q3 2025 to come in at US$213 billion for the quarter, boosting year-to-date transaction volumes by 21 percent on 2024 levels, according to JLL.

The STOXX Global 3000 Real Estate Index, meanwhile, was showing gains of close to 10 percent towards the end of 2025, as real estate real estate valuations stabilized following an extended run of market volatility and pricing uncertainty.

Steadier Outlook Support Fundraising

The improving backdrop for real estate investment was good news for private real estate fundraising, which fell to a five-year low in in 2024, but rallied through the course of 2025.

PERE figures showed real estate fundraising coming in at US$164.39 billion for the first nine months of 2025, a 24.1 percent year-on-year increase on the same period in 2024, and already close to matching the full year total of $167.39 billion for 2024. In another signal pointing to a fundraising recovery, the proportion of funds closing below target fell from 62 percent in 2024 to 49 percent through the first nine months of 2025.

Headwinds Still to Navigate

Annual fundraising for 2025, however, did not match the US$299.38 billion raised at the peak of the market in 2021, and global real estate assets under management remained on a downward slope, dropping to US$3.8 trillion according to the latest figures compiled by real estate industry associations ANREV, INREV, and NCREIF.

Green shoots did emerge, but the industry still had a way to go to claw back lost ground.

Real estate balance sheets were still stretched as a result of falling asset values and higher interest rates through the market downcycle. Refinancing debt remained challenging, and while lenders did afforded real estate borrowers breathing room by extending terms, a US$936 billion wall of commercial real estate debt is due to mature in 2026, according to S&P Global Market Intelligence, loomed over the industry

Real Estate investors also had to grapple with the ongoing fallout from the ongoing downturn in the Chinese real estate space, one of the biggest real estate markets in the world and a cornerstone of the Chinese economy, ran into its fourth year.

Despite various stimulus measures to support the Chinese market, real estate valuations didn’t improve, and large-scale developers have faced large losses and financial distress. The fallout rippled out, impacting other Asian property markets – and beyond.

Real estate investors also kept a close eye developments in the AI sector, the spur for investment in data center assets and one of the strongest real estate fundraising categories in 2025.

Three of the ten largest real estate funds that  closed in 2025 – the US$7 billion Blue Owl Digital Infrastructure Fund III, the US$3.64 billion Principal Data Center Growth & Income Fund, and the US$11.7 billion DigitalBridge Partners III Fund – were raised to invest in data center assets, which accounted for just under a third (31 percent) of real estate fundraising in 2025, according to PERE.

Rising concerns around the risk of an AI valuation bubble, however, surfaced in the final quarter of the year, leading to share price volatility in stocks with AI exposure.

Technology share prices stabilized following strong earnings reports and positive revenue forecasts from key players in the AI ecosystem, but real estate managers did take pause to spend more time sense-checking data center and AI investment cases.

Upward Trajectory

For all the complexities and challenges that managers encountered in 2025, interest rate cuts by central banks in the US, UK and Europe were a much-welcomed macro-economic development, and brought down debt servicing costs for real estate assets. This helped real estate dealmakers to refinance debt and push out maturity walls, as well as facilitate a clearer picture on asset valuations.

Indeed, closer alignment on pricing was observed in 2025 and positively impacted the market, with analysis from Savills analysis showing an increase in average real estate transaction sizes in 2025. According to Savills there was a 14 percent increase in the number of individual properties trading for more than US$100 million, and a 17 percent uptick in the value of portfolio and entity level deals. Big cheque sizes suggest increasing confidence on the part of buyers.

Fundraising trends, meanwhile, also indicated that private real estate managers were finding assets at attractive entry valuations, and add value to properties sentiment improved.

Opportunistic real estate investment strategies, which present the highest return potential but require significant upfront redevelopment and construction investment in underperforming assets, accounted for 40 percent of the real estate capital raised across the first nine months of 2025, according to PERE. This highlighted the opportunity to invest in assets that had been passed over in recent years because of market volatility.

Real estate investors also began to feel the benefits a favorable supply-demand imbalance (particularly in segments such as office real estate) that became a feature of the market as new developments went on hold due to market uncertainty and elevate financing costs in prior years.

In the office segment, for example, new groundbreakings had fallen to a record low in the US and Europe, according to JLL, and most new property pipelines had been pre-leased. As a result, global office leasing climbed to it is best level since 2019. Global office vacancy rates dropped, and prime sites were at a premium, supporting leasing growth.

Other real estate categories also looking in good shape, albeit with some regional differences.

In logistics real estate, for example, leasing improved in North America and Europe in Q3 2025, although Asia markets were more cautious on the back of tariff and export uncertainty, although logistics presented opportunity for savvy buyers who were able adapt to changes in trade policy. Retail was another bright spot, with store openings outpacing store closures in the US, according to JLL, while in Europe and high growth Asian economies premium sites were in high demand with space limited.

Real estate has had rough ride through the last 36 months, but as interest rates come down and valuations recover, 2025 marked a year where the asset class finally has a chance to turn the corner.

Conclusion

Despite persistent challenges—from the ongoing fallout in China’s property sector to volatility in office markets—2025 marked a turning point for global real estate. Falling interest rates, firmer transaction activity, and renewed investor appetite helped stabilize valuations and support a gradual recovery in fundraising.

Strength in logistics, data centers, and select regional markets further underscored the sector’s adaptability in the face of macro and structural headwinds. While not all segments rebounded equally, the broad improvement across pricing, liquidity, and sentiment suggested that real estate finally began to regain its footing after several difficult years.

Infrastructure:
2025 Year in Review

Infrastructure Highlights from 2025

• Private infrastructure posted excellent fundraising numbers in 2025 as managers reaped the rewards for delivering solid returns.
• Investment cases benefitted from favorable long-term growth drivers, with digital infrastructure and power driving deal flow.
• Areas of complexity emerged in the renewables sub-sector, where the US and European markets diverged.
• Infrastructure secondaries and infrastructure debt provided infrastructure GPs and LPs with welcome pools of liquidity.

Maximilian Dambax

Global Head of Real Assets

Growth Anchored by Fundamentals

Infrastructure continued to demonstrate resilience in 2025, supported by strong fundraising momentum, robust long-term demand drivers, and solid underlying fundamentals across core and emerging sub-sectors.

While market volatility, policy shifts, and technology-led disruption influenced activity, investors remained focused on the asset class’s capacity to deliver stable returns and capital deployment opportunities. These dynamics shaped a year marked by both sustained growth and evolving complexity across the global infrastructure landscape.

Market Performance, Capital Flows, and Sector Dynamics

The positive long-term outlook for infrastructure investment growth and a good run of returns boosted private infrastructure fundraising in 2025.

By the end of Q3 2025 private infrastructure fundraising had already achieved a record annual high, as fundraising for the first nine months of 2025 reached US$200 billion – the first time the asset class had crested the US$200 billion mark ever, according to Infrastructure Investor data.

The share of private infrastructure funds closing on target, meanwhile, climbed more than three-fold, from nine percent in 2024 to 31 percent in 2025. Funds also took less time to reach a close, with average time on the road down by more than six months when compared to the previous year.

The strong 2025 fundraising numbers reflected private infrastructure’s consistent returns performance. Analysis of the MSCI Private Infrastructure Asset Index by commercial real estate services and investment business CBRE showed private infrastructure posting 11.5 percent rolling one-year total returns – outperforming listed infrastructure and global bonds over a three- and five-year investment horizon.

The industry’s returns performance was grounded in solid underlying fundamentals, with the requirement for investment in water and sanitation, electricity and power, and transport and logistics capacity increasing as global populations grow.

These fundamentals supported positive growth in global private infrastructure investment, with CBRE analysis of Infralogic data showing a 22% year-on-year gain through the first nine months of 2025, with investment reaching US$960 million for the period.

Shifting Ground

One of the single-most important drivers of infrastructure’s overall performance and deal flow in 2025 was the data center market, where huge investment in AI spurred robust demand for digital infrastructure.

McKinsey forecast in the summer that capital expenditure on data center infrastructure could reach as much US$1.7 trillion by 2030 – predominantly driven by AI expansion.

The positive momentum from the data center boom rippled out into other infrastructure sub-sectors, most notably power. Electricity consumptive data centers drove up power demand and pricing, with McKinsey models projecting that data power center would require1,400 terawatt-hours of power by 2030, representing four percent of total global power demand.

There were, however, some bumps in the road for the AI growth story during the year. In August a research report compiled by the Massachusetts Institute of Technology (MIT) found that 95 percent of organizations were deriving zero return from investments in AI, raising concerns of an AI bubble. Market anxiety around the sustainability of AI spending peaked again in November, leading to share price drops across the board for large technology companies.

Positive earnings from chipmaker Nvidia – a key bellwether for the sector – eased AI bubble concerns, but the year closed with infrastructure stakeholders taking a more measured approach on AI and data center growth projections.

Renewables Reset

Renewable energy was another infrastructure sub-sector that encountered volatility and complexity in 2025.

In July the US passed legislation to phase out tax credits for wind and solar projects by 2027, rather than the original 2032 deadline. This left developers facing truncated project timelines and under pressure to accelerate project developments, or risk losing tax credit benefits.

The phase out of tax credits followed an earlier executive order from the White House temporarily withdrawing offshore leasing for wind power, as well as the Securities and Exchange Commission (SEC) dropping its defense against state-led lawsuits challenging its climate-related disclosure rule.

The shifts in the US led to divergence from the European position, where the EU retained the key pillars of its environmental legal framework, including the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), although the EU did bring forward proposals to ease the compliance burden of these directives for small and medium-sized enterprises.

The European Central Bank (ECB), meanwhile, continued to integrate climate risk into its operations, and the European Investment Bank (EIB) signed off on €15 billion of green transition funding.

This left infrastructure managers with US and European LP bases and operations having to walk a fine line between the ESG and climate priorities of US and European regulators and investors.

Nevertheless, renewables still represented the single biggest category for infrastructure fundraising in 2025, with the US$20 billion raised for Brookfield’s Global Transition Fund II – which will focus on investment in the transition to clean energy – the third biggest infrastructure fund close in the first nine months of 2025. Brookfield cited an “any and all” approach to ramping up power capacity as a key driver of low carbon energy production, with clean energy an essential component to meet growing demand for power, not just from data centers, but also from the electrification of transport and industry.

Political instability may have shaken up the investment case for investment in decarbonization and renewable energy infrastructure, but investors continued to see long term value in the industry.

Sophisticated Structuring to the Fore

Infrastructure also saw momentum build in areas such as infrastructure secondaries and infrastructure debt, which injected additional liquidity and flexibility into the asset class.

According to private markets investment adviser Stafford Capital Partners infrastructure secondaries deal volume was on track to climb by around 50 percent in 2025 and reach approximately US$15 billion for LP-led deals, and between US$15 billion and US$20 billion for GP-led transactions.

The increase was spurred by a combination of the liquidity requirements of private markets programs and the use of secondaries markets to manage exposure to regulatory change and geopolitical uncertainty.

Infrastructure debt provided a similarly useful pool of liquidity to complement infrastructure M&A and project development, as well as offering investors an opportunity to diversify their fixed income portfolios and lock in consistent yields uncorrelated to public markets.

Infrastructure debt assets under management (AUM) grew at a compound annual growth rate (CAGR) of 23.1 percent, according to Institutional Investor, and positioned infrastructure debt as an increasingly sizeable and influential constituent of the infrastructure funding mix.

The growth of these adjacent pools of capital in the infrastructure ecosystem provided valuable support to infrastructure dealmakers, who sought out partners to provide liquidity and share risk.

Conclusion

Overall, 2025 reinforced infrastructure’s position as a resilient and strategically important private markets asset class. Strong fundraising, dependable performance, and accelerating demand in areas such as digital infrastructure supported continued growth, even as policy shifts and renewables volatility added layers of complexity for managers and investors.

The expanding role of infrastructure debt and secondaries, combined with divergent regulatory developments across the US and Europe, further shaped capital flows and operating conditions. Despite these challenges, long-term fundamentals remained intact, underscoring infrastructure’s ability to adapt and attract capital in a rapidly evolving environment.

Market shifts over the past half decade have hastened investor demands for liquidity, particularly given the oscillating rate environment and global slowdown in IPO activity since 2021’s record-breaking run of exits.

This shift isn’t about demanding daily liquidity from long-term strategies but about structured, predictable access. Wealth platforms, family offices, and even traditional institutions want better rebalancing tools and tactical allocation options. There is a growing demand for vehicles that maintain exposure to illiquid assets while enabling timely, transparent access.

Illiquidity is Evolving – Access Without Compromise

The idea that illiquidity must always be the price of higher returns is being redefined. While private loans, equity stakes and infrastructure remain long-term in nature, the mechanisms for accessing and managing them are becoming far more flexible.

Today’s liquidity toolkit includes:

• Assets being raised in structured finance vehicles for flexible, diversified liquidity.
• Secondary markets, especially in private debt, offering earlier exit opportunities and greater price discovery.
• Fund structures such as evergreen and interval funds, which provide periodic liquidity windows.
• Credit solutions like NAV-based facilities that unlock interim liquidity without asset sales.

According to Allianz Global Investors, the private debt secondaries market is projected to exceed $20 billion annually by 2026.

Structured Solutions: Rated Note Feeders and
Collateralized Fund Obligations

Alongside traditional liquidity tools, Rated Note Feeders (RNFs) and Collateralized Fund Obligations (CFOs) are rapidly becoming differentiators in the private markets landscape. These structures are particularly appealing to regulated investors, insurers, pensions, and others that require rated exposure and favourable regulatory or capital treatment.

RNFs convert private fund interests into rated securities, allowing these investors to allocate through familiar vehicles that are streamlined and balance sheet friendly. The process of rating imposes discipline and transparency, and for some investors can reduce capital charges compared to unrated private fund equity.

CFOs, by contrast, securitize pools of fund stakes and issue tranches of rated notes with varied risk/return profiles. The senior tranches appeal to those prioritizing capital protection, while junior or subordinated tranches offer enhanced return potential.

CFOs allow asset owners to unlock value, rebalance portfolios, or meet distribution needs, all while avoiding involuntary asset sales. This capability is especially relevant when liquidity windows are tight or traditional secondary markets are thin.

In both cases, RNFs and CFOs don’t change the illiquid nature of the underlying assets, but they add optionality, allowing investors to engage in private markets with greater flexibility and layered exposure, and providing managers with structure to deploy and manage capital in more robust, scalable ways.

Private Debt Secondaries

While secondaries have long been a mainstay in private equity, the market for private debt secondaries is just now reaching a meaningful inflection point. Several structural and market-driven factors are accelerating this shift.

A large wave of credit funds, particularly in direct lending, launched after 2015 is now reaching maturity, prompting a natural evolution in how investors think about liquidity options. At the same time, improvements in transparency and access to loan-level data are making secondary pricing and due diligence more robust.

Private debt secondary transactions are taking a variety of forms, including traditional LP stake transfers, securitizations of loan portfolios, and synthetic liquidity solutions such as NAV-based lending. Each of these requires specialized operational infrastructure and introduces new complexities in fund administration.

As this segment continues to grow, fund administrators must be prepared to support more frequent valuations, manage complex data-heavy workflows, and facilitate smooth investor transitions.

Existing Barriers to Entry

Increased structural flexibility hasn’t automatically equated to broader accessibility. While managers can now design vehicles with lower minimums, more frequent liquidity windows, and no hard lockups, regulatory thresholds are simultaneously becoming more stringent.

The SEC’s recent proposal to raise the net worth and income requirements for qualified purchasers underscores this tension, making it technically possible to build more investor-friendly vehicles, but harder for many investors to meet the eligibility criteria.

This creates a growing disconnect between product innovation and actual access. To bridge that gap, managers increasingly need administrators with the distribution infrastructure, advisor relationships, and investor onboarding capabilities to match the right vehicles with the right audience.

Access aside, this evolution is also exposing gaps in legacy fund structures and back-office systems. Many were simply not built to support modern liquidity demands, especially when it comes to dynamic capital flows, multi-layered vehicles, and real-time data needs.

Meeting this moment requires a fundamental transformation in fund operations, underpinned by scalable infrastructure, rigorous governance, and forward-thinking administration.

The Administrator’s Role in Risk and Governance  

As private markets evolve to offer more liquidity, the responsibilities surrounding risk management and governance grow in parallel, particularly for fund administrators. Increased access does not diminish the need for control, in fact, it amplifies it. Fund administrators play a central role in ensuring that new liquidity mechanisms are implemented responsibly and in alignment with the fund’s structure and investor commitments.

This role spans multiple critical functions. On the risk side, administrators are tasked with monitoring collateral quality, conducting stress tests on redemption windows, and helping managers evaluate the operational impact of liquidity provisions.

From a governance standpoint, they ensure that liquidity terms are consistent with fund documentation and investor disclosures, mitigating the risk of misalignment.

Administrators must also stay ahead of an evolving regulatory environment. As bodies like the SEC and ESMA increase scrutiny of liquidity management practices in private funds, fund administrators will be expected to demonstrate preparedness, transparency, and procedural rigor.

In this context, administrators are no longer back-office support; they are strategic partners. Their ability to uphold risk and governance standards will be essential to maintaining fund integrity as the boundaries of illiquidity continue to shift.

Strategic Liquidity: The New Frontier

Liquidity in private markets is no longer a contradiction; it’s a competitive advantage. In asset classes like private debt, innovations in secondary markets and fund structures unlock investor access without sacrificing returns.

The firms that combine structural innovation with operational rigor will define the next phase of growth. For investors and managers alike, administrators are at the core of this transition, enabling the infrastructure, governance, and data frameworks that make next-generation vehicles possible.  

The Reality for Endowment Operations Team

Managing investment operations in an endowment or foundation is a delicate balancing act. Teams are often small, yet they oversee increasingly complex portfolios that now include alternatives alongside public markets, leading to a surge in data, valuation methods, and reporting requirements.

The pressure is relentless. Investment offices and committees demand daily insights into exposures, liquidity, and a multitude of associated information, while boards and donors expect transparency. Auditors require precise reconciliations, all of which must be delivered timely despite the various formats of data received from multiple custodians and investment managers.

For investment operations teams, the challenge lies in managing enterprise-scale complexity often without the required bandwidth. It’s essential to focus on what operations teams need to succeed.

What Ops Leaders Need

At Alter Domus, our strength lies not just in our alternative expertise but in how we integrate that knowledge across the full spectrum of holdings. We help investment teams achieve true total-portfolio visibility—connecting data from private funds, co-investments, and partnerships to the liquid exposures managed elsewhere.

The result is unified, institutional-grade reporting and governance that reflects the full reality of your portfolio. That integrated approach extends to how we collaborate with your existing partners.

Seamless Collaboration with Custodian Banks

We work closely with custodian banks to ensure that data and reporting flow smoothly across both public and private assets. Our systems and workflows are designed to complement custody platforms—enhancing, not duplicating, their capabilities.

For investment teams, this means maintaining established banking relationships while gaining a more complete and connected picture of portfolio performance. The result is a cooperative model that brings together the strengths of both worlds: the custodians’ scale and security with Alter Domus’ deep understanding of private markets.

The Challenge with Non-specialist Solutions

Many of the partners that serve endowments and foundations operate a model that was designed for traditional markets, excelling in equities and bonds but struggling with alternatives. Data silos hinder operations teams from achieving a unified portfolio view, and standardized reporting falls short of delivering the daily insights investment offices need.

Non-specialist solutions often overlook the complexities of private equity, private credit, hedge funds, and real assets. Capital calls, unfunded commitments, and bespoke valuations don’t fit into public market workflows, forcing teams to manually reconcile gaps and adapt templates for boards and auditors. For small endowment teams, these challenges lead to increased workload, risk, and confusion—contrary to the goals of ABOR and IBOR.

Aligning for Clarity and Control

For directors of investment operations, the challenge isn’t just more data — it’s delivering accuracy, timeliness, and transparency with small teams under mounting pressure.

That requires a model where ABOR and IBOR are aligned, reconciled, alternative-aware, and tailored to your governance needs.

For directors of investment operations, governance is the foundation of effective portfolio management, accurate data, and risk control. In today’s landscape of rising regulatory demands and complex alternatives, strong governance is also a strategic asset.

Future-proof governance enables teams to move beyond reactive measures, creating resilient systems that enhance accuracy and credibility. This shift allows teams to focus on high-value tasks that drive portfolio success.

Raising Standards with confidence

Operational teams must deliver timely, precise data to boards, auditors, and regulators, facing higher expectations for transparency and risk oversight. For leaders, this is an opportunity to demonstrate that governance is a competitive advantage.

Robust processes foster confidence, reduce rework, and empower investment committees with better decision-making tools. At Alter Domus, we see organizations that strengthen governance not only meet current demands but also confidently explore new strategies and investment opportunities.

What Future-Ready Governance looks like in Practice

Future-proof governance is about strengthening operational infrastructure. For investment operations leaders, it means:

• Resilient systems that maintain accuracy and continuity through staff turnover or market disruption.
• Scalable processes that can handle the growing demands of alternatives – managing capital calls, monitoring liquidity, and tracking performance, etc – without adding headcount
• Integrated reporting that provides a single version of the truth for boards, auditors, and investment committees.
• Independent oversight that validates calculations, reduces operational risk, and enhances credibility with stakeholders.

With these pillars in place, governance supports efficiency and insight rather than slowing things down.

Outsourcing as a governance accelerator

Many endowments and foundations operate with lean teams, making it challenging to invest in the infrastructure required for governance at scale. Outsourcing fund administration provides a solution by reinforcing internal teams rather than replacing them. A strong partner like Alter Domus delivers:

• Independent NAV and reconciliations, creating objectivity and reducing the risk of error.
• Best-practice processes, refined across hundreds of institutional clients and seamlessly integrated into the operating model.
• Technology-enabled transparency, giving operations leaders instant access to dashboards and reports without heavy internal investment.
• Capacity relief, allowing teams to redirect time and talent toward strategic projects rather than manual processing.

In this way, outsourcing becomes a governance accelerator, embedding institutional-quality controls and reporting into organizations with leaner resources.

Tangible benefits for operations teams

When governance is strengthened through the right systems and partners, operations leaders see immediate, positive impacts. Audits proceed with greater speed and efficiency, requiring fewer adjustments and minimizing back-and-forth communication. This streamlining allows teams to concentrate on strategic initiatives rather than administrative burdens.

Board and committee reports become timelier and more insightful, establishing operations as a trusted source of decision-ready intelligence. This evolution enhances the quality of discussions and decisions at the highest levels.

Risk oversight improves, enabling proactive monitoring of exposures, cash flows, and liquidity across complex portfolios, fostering a culture of preparedness. As operational credibility increases so does trust from boards, donors, and external stakeholders. This strengthened relationship, built on transparency and reliability, lays a solid foundation for future collaboration and success, positioning organizations for sustainable growth.

Governance as an enabler of operational excellence

For directors of investment operations, future-proof governance means building a robust infrastructure that navigates today’s complexities while adapting to tomorrow’s demands. It minimizes risk, boosts efficiency, and empowers teams beyond back-office functions.

At Alter Domus, we specialize in helping endowments and foundations achieve this balance. By merging deep expertise in alternatives with advanced technology and independent oversight, we transform governance into a strategic asset. The outcome is a reliable data environment, clear reporting, and investment staff focused on strategy rather than reconciliations. In this context, governance becomes an enabler of operational excellence, key to sustaining efficiency and trust for the future.

In private equity, scale is often measured by the size of funds raised or the number of deals closed. However, sustainable growth relies more on the operational backbone that supports these activities. Strong operations are the hidden lever of growth. They enable firms to raise larger funds, expand into new strategies, and gain investor confidence. As investor bases deepen and structures multiply, operational resilience becomes critical to managing rising investor volume without sacrificing accuracy, speed, and transparency.

How Strong Operations Unlock Growth in Private Equity

Private equity firms today face a complex operating environment. Expanding into adjacent strategies like private credit, real estate, or infrastructure necessitates improved reporting, compliance, and governance. Investors demand faster insights, greater transparency, and stronger controls. Without a scalable operating model, deal teams may struggle with manual processes, disconnected systems, or overextended staff, resulting in operational drag and stunted growth. The strain is especially evident as investor volume increases – more LPs, more reporting lines, and more complex allocation structures all demand greater automation and oversight.

Effective operations not only mitigate risk but also create operational alpha. Just as portfolio value creation drives financial alpha, streamlined operations allow firms to grow smoothly. Strong operations deliver several key benefits:

• Speed to scale: Managers can raise larger funds and enter new markets more quickly when their operating model is flexible.
• Investor confidence: Consistent, transparent reporting strengthens relationships with limited partners (LPs) and facilitates re-ups.
• Capacity for investor volume: Scalable platforms and standardized workflows allow managers to efficiently handle growth in LP counts and commitments, ensuring investor servicing keeps pace with fund expansion.
• Capacity without burnout: Standardized processes and automation allow talent to focus on strategic activities rather than repetitive tasks.
• Resilience at scale: Strong governance and controls minimize risks that could impede growth.

Operational alpha is not about cutting costs; it’s about unlocking growth capacity and creating a foundation for sustainable expansion. That includes the ability to absorb increased investor inflows, onboard larger number of LPs, and maintain consistent reporting quality as investor volume rises.

Private equity managers that scale effectively view operations as a growth enabler. Key features of strong operating platforms include integrated technology that connects portfolio, fund, and investor data for real-time decision-making; standardized workflows that reduce duplication and eliminate administrative bottlenecks; high levels of automation that eliminate manual processing errors. Robust governance and controls satisfy both LPs and regulators, while specialized expertise in fund administration, carried interest, waterfalls, and complex structures ensures accuracy and consistency. This combination becomes even more essential as investor volume expands across multiple funds, feeder structures, and geographies – transforming operations from a cost center into a driver of efficiency, resilience, and investor trust.

The investor lens: operations in due diligence

Limited Partners are increasingly evaluating a manager’s operational setup during the allocation process. They want to know:

1. Are reporting processes transparent and consistent across vintages?
2. Do compliance and governance frameworks meet global standards?
3. Can the manager handle growth without sacrificing accuracy or control?
4. Are systems capable of scaling with investor volume, ensuring transparency and responsiveness even as fund complexity grows?

Operational maturity has become a proxy for risk management and long-term sustainability. Firms that demonstrate strong operations inspire confidence, shorten diligence cycles, and position themselves for smoother fundraising. Conversely, those lacking operational strength may be perceived as fragile, regardless of their deal-making capabilities.

Alter Domus: a partner built for private equity scale

At Alter Domus, we focus on one principle: private equity firms shouldn’t have to choose between growth and control.

Built for Private Markets: Alter Domus North America has +1,800 experts including 500 dedicated Private equity experts with experience ranging from in-house finance teams, fund administrators, audit and tax, and home-grown talent.

Global scale, local knowledge: With over 6,000 professionals across 23 countries, we support cross-border funds while meeting regional regulatory demands.

Lift-outs and co-sourcing: We design people-first transitions that protect culture, retain institutional knowledge, and enhance scalability.

Technology-enabled delivery: Our advanced tools, such as investor reporting portals and automated waterfall calculations, allow firms to focus on value creation.

White-glove service and team structure: Our model emphasizes responsiveness and high-touch client service with a team curated.

The cost of weak operations

Of course, the inverse is also true – neglecting operational foundations exposes firms to risks that hinder scale:

• Investor reporting failures: Late or inaccurate reporting erodes LP confidence and can jeopardize future fundraising.
• Investor volume bottlenecks: When operating models can’t scale with growing LP bases, mangers face delays in onboarding, allocations, and data delivery−eroding confidence and fundraising momentum.
• Regulatory vulnerability: Weak compliance increases exposure to fines, reputational damage, and fundraising restrictions.
• Inefficient capital deployment: Delays in capital calls or distributions slow the ability to seize opportunities.
• Team burnout: Overburdening lean teams with manual tasks leads to mistakes and attrition, especially when continuity is crucial.

Firms that fail to invest in scalable operations ultimately find themselves constrained—not by market opportunities, but by their own infrastructure.

Dirk Sanden will be attending the FAROS Depositaries and Investment Management Company Summit on February 20th in Frankfurt. This premier gathering brings together decision-makers, industry experts, and thought leaders from across German depositaries and fund administration.

In an ever-evolving regulatory landscape, this event offers a valuable opportunity to connect with market experts and explore the latest trends, challenges, and opportunities in fund administration and services. If you’re attending, be sure to connect with Dirk in person!

Dirk Sanden

Luxembourg

Director, Sales & Relationship Management