Featuring latest research on Private Credit (Partners Group, Neuberger Berman, MS); PE (Bain, Adams Street); Alts as an asset class (JPM, Blackstone, HarbourVest); RE/Infra, Tech, Energy (PWC, BCG)
Welcome to the latest edition of The Valt Journal. In every issue, we cover the best and the latest insights into the global private markets. The Valt Journal is a repository of time sensitive and timeless research, delivered to your inbox every 2 weeks, so you don’t have to look anywhere else!
Quickly scan the list of all 2025 investment outlook reports here!
TVJ Spotlights 🔦 featured in this edition:
Global healthcare private equity report 2025 (by BlackRock)
Co-Investments: Dispelling the myth of adverse selection (by Adams Street)
Fund finance: NAV financing unlocked (by Partners Group)
Building the future: Megatrends and investment themes (by Blackstone)
Navigating private credit’s next act (by Neuberger Berman)
Numbers this edition Links: 43 Authors: 28
PRIVATE MARKETS AND ALTERNATIVE ASSETS
TVJ Spotlight 🔦
✏️ Building the future: Megatrends and investment themes Blackstone Megatrends reshaping industries today are AI, infrastructure, life sciences, and the digital economy. AI requires a c.$2T investment in global digital infra by 2030; US power demand to rise by 40% over next 10 years. Key sectors include logistics, data centers, and infra, clean energy. In emerging markets the focus is on India, specifically in EVs and real estate.
✏️ Alternative investments in 2025: Top five themes to watch JP Morgan Key drivers: a persistent US housing shortage, rising demand for AI-driven infra, normalizing interest rates, and increasing capital investment to support innovation. PE is expected to rebound, with focus on tech, industrials, and real estate. Private credit, particularly asset-backed ($500B in a $20T market) and direct lending strategies, presents attractive yields.
✏️ Private market predictions 2025 HarbourVest Key trends in PE include vertical integration, with wealth managers and PE firms exploring synergies; sectors like AI and space ($2T combined opportunity in <10 years); and a potential record-breaking year for IPOs and buyouts. The rise of private wealth is reshaping the market, while liquidity is expected to improve, spurring deal activity.
📝 On bubble watch Oaktree Howard Marks warns about the tech bubble, highlighting its psychological aspects in this memo. Bubbles are driven by irrational exuberance, fear of missing out, and optimism, which can lead to huge losses when reality sets in. While innovation is often good, it can be overhyped, leading to overvaluation and eventual collapse, as seen in TMT and housing crises.
✏️ Global investor sentiment 2025 OTPP A recent survey of 1,200 global investors shows optimism for 2025, with 70%+ investors viewing the private market investment environment as favorable. Key drivers include rapid tech advancements, like AI, cost of capital, M&A activity, liquidity, private credit availability. In India, a tech hub, 91% see the pace of technological change as favourable to investors.
✏️ Three performance drivers could help hedge funds rev up returns Wellington Management Hedge funds performed well in the 1990s and 2000s due to high-security dispersion, macro volatility, and higher interest rates, which created favourable conditions for equity long/short and macro funds. As inflation, fiscal spending, and government involvement rise, a more volatile environment could benefit hedge funds. Managers are likely to generate more alpha, making hedge fund exposure a valuable part of portfolios with critical manager selection.
✏️ The new standard in portfolio allocation Institutional Investor Institutional investors in Europe and Middle East are planning to increase their allocations to private market assets, driven by rising geopolitical risks and market volatility. Major focus on increasing private credit and real estate debt holdings (data centers and retirement facilities) to capture high interest rates and illiquidity premiums. These investments are valued for their income-generation potential, diversification benefits, and insulation from fluctuations.
✏️ M&A outlook 2025: Expectations are high BCG The M&A landscape is poised for a recovery in 2025, driven by declining inflation, lower interest rates, and improving valuations. Sentiment is strongest in US and Europe, particularly in tech and financial services, while APAC remains sluggish due to economic uncertainty. Growing opportunities in sectors like healthcare, energy, TMT, consumer and industrials
📝 Fund finance: NAV financing unlocked Partners Group NAV financing (c.$600B by 2030 vs $100B in 2022 at 25%+ CAGR) is a crucial tool in private markets to address challenges like slow fundraising and tough asset exits. It enhances value for LPs by increasing investment capacity and capital management efficiency, while offering GPs flexible, cost-effective financing options. Clear objective is vital as private credit grows.
✏️ Sector focus: Continuing our 2025 private credit outlook LGIM The infrastructure debt market saw strong activity in 2024, driven by energy security, decarbonisation, and digitalisation, with a focus on sectors like LNG, renewables, and data centres. The real estate debt market offers attractive opportunities in sectors like living, logistics, and retail parks, despite market corrections, with strong private credit prospects.
TVJ Spotlight 🔦
✏️ Navigating private credit’s next act Neuberger Berman Private credit has experienced rapid growth over the last 15 years, and this trend is expected to continue, expanding beyond direct lending into areas like asset-based and specialized lending - key sectors include IP/royalty financing, NAV lending, venture lending and regulatory capital relief trades (c.$330B collective addressable market).
✏️ The role of private credit in the expanding LDI toolkit HarbourVest As corporate defined benefit plans exceed 100% funded status, many sponsors are exploring private credit as an alternative to traditional liability hedging strategies. Adding senior direct lending to a portfolio can boost yield and provide sector diversification without significantly increasing volatility, especially for closed or frozen plans. However, sponsors must manage duration mismatches and liquidity needs to optimize their portfolios and returns.
✏️ Frontier Bonds: reward versus risk is still attractive in 2025? Abrdn Frontier market bonds have a positive outlook for 2025, with improved fundamentals, declining default risk, and attractive yields. Fiscal consolidation efforts, debt restructurings, and the reopening of primary markets have strengthened these markets. While risks remain, even if US Treasury yields rise massively, frontier bonds are still expected to offer good returns.
📝 Global healthcare private equity report 2025 Bain Global healthcare PE reached a record-breaking $115B in 2024, driven by an increase in large deals, particularly in biopharma and medtech. US led with 65% of global deal value, while Europe saw a surge in biopharma and medtech deals, with 5 $5B+ deals vs 2 in 2023. APAC saw a 49% decline in deal volume, reflecting a shift in regional dynamics.
TVJ Spotlight 🔦
📝 Co-Investments: Dispelling the myth of adverse selection Adams Street Lead GPs are motivated to build strong, long-term relationships with LPs, making it unlikely that they would offer co-investment opportunities on weaker deals. Data across multiple economic cycles shows no evidence of adverse selection, with co-investment deals performing similarly to all deals by lead GPs. Successful co-investment requires good deal flow and careful alignment with the lead GP and selection of the most attractive investments to ensure returns.
✏️ Next in private equity: Trends shaping 2025 and beyond PWC PE firms are adapting to challenges by diversifying into new asset classes and regions, such as private credit and infra, but face operational complexity as they scale up. Focus is shifting from traditional financial engineering to building robust value creation plans, emphasizing improvements in talent, pricing, and operations. Sustainability is a key differentiator.
✏️Asia private equity 2025 preview: Exits and liquidity ION Analytics India is becoming a key market for secondary deals, with increasing activity in direct stakes and portfolio transactions despite challenges in deal flow. While sellers are reluctant, due to price dislocations and macro pressures, the demand for exits remains strong, especially in emerging markets like India, Japan, and Vietnam. The outlook for 2025 suggests a rebound in PE exits, growing secondary deals and narrowing bid-ask spreads as interest rates stabilize.
✏️ VC-backed unicorns still waiting for the exit lane to open Institutional Investor The VC industry continues to struggle, with unicorns still underperforming and IPOs and funding remaining subdued. While AI investments have fueled some growth, overall exit activity has been minimal. Valuations remain mismatched, most exit deals are small, failing to meet investor expectations. 2025 is expected to be more business-friendly.
✏️ Why mid-market healthcare private equity firms are outperforming Bain Mid-market healthcare PE funds have outperformed larger funds and maintained strong deal volume in a challenging environment. These funds are diversifying their focus beyond traditional provider assets into healthcare IT, provider services, biopharma, and medtech. A shift toward "buy-and-build" strategies and tuck-in acquisitions has helped drive value.
📝 Key themes for 2025: Riding the real estate recovery Nuveen Key opportunities in Real estate credit, US medical office, senior housing in US and Japan, necessity retail in Europe and US, student housing in APAC and Europe, self-storage in Europe and US, light industrial and affordable housing in US.
📝 2025 Inside real estate outlook: Poised for growth Principal Asset Management Commercial real estate (CRE) values have adjusted, and while the office sector remains a concern, opportunities will emerge in structurally-driven sectors such as data centers, logistics, and residential properties. Real estate debt is a top strategy for 2025.
📝 Current developments for the real estate industry PWC The US real estate market is showing cautious optimism for 2025, with 65% of investors expecting good profitability despite high interest rates and regulatory changes. Transaction volume has slightly increased, with a focus on sustainable growth markets and opportunities in sectors like data centers and digital infra driven by AI and energy security needs.
📝 Economic growth opportunities in a greening world BCG The transition to a green global economy is creating opportunities worth $2T, with the potential to grow to $11 trillion by 2040. Areas like critical minerals, green tech, industrial materials, and services are critical . However, large-scale transitions will face challenges, including competition, technological evolution, and market volatility.
📝 How digital and AI will reshape health care in 2025 BCG In 2025, digital health is shifting from telemedicine and digital therapeutics to AI-driven solutions that integrate healthcare more effectively. AI will enhance chronic disease management, personalize treatments, and empower healthcare providers with decision-making tools. Advancements like smart implants, wearable devices, and GenAI applications will improve patient care, while AI-driven workflows will optimize healthcare systems.
✏️ Finding investments where disruption meets transformation JP Morgan Investors can capitalize on the growth of climate adaptation solutions, such as weather-proofed homes and resilient infrastructure while addressing AI’s environmental impacts with efficient energy and water solutions. Additionally, shifting geopolitical policies and regulations are driving investments in the energy transition.
✏️ Next in banking and capital markets 2025 PWC Investors are focusing on strategic expansions, including infrastructure lending and AI-driven efficiencies. The rapid adoption of AI and data management is reshaping the sector, offering opportunities for banks to enhance operational efficiency, improve customer experiences, and attract top talent wile focusing on profitability.
✏️ Next in asset and wealth management 2025 PWC Asset and wealth management (AWM) firms are adopting holistic strategies to address challenges like expanding into new markets (private credit, crypto) and managing competition. With a focus on growth, firms are leveraging mergers, partnerships, and AI advancements to diversify, streamline operations, and enhance client experiences, operational efficiency, data analysis, faster market responses and add new revenue streams.
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