Private Markets May See a Brighter 2025

Hopes for more M&A activity could lead to more deals and liquidity.

Art by Andrea D’Aquino


Hopes for a more business-friendly White House to spur mergers and acquisitions activity and bring needed liquidity to private markets has several institutional asset managers looking forward to 2025.

Falling interest rates may also bring some relief to certain private markets as global central bankers, including the Federal Reserve, loosen monetary policy. Yet there is still plenty of uncertainty to leave investors cautious, such as if the U.S. economy sputters.

Market watchers are also looking out for potential risks in private credit, as that sector booms, and in private real estate, where the weakness in office buildings persists. President-elect Donald Trump may have a pro-business view, but his “America First” agenda of increasing tariffs and possibly stricter immigration policy could bring global economic uncertainty, according to Sean Duffin , a senior investment director for capital markets research at Cambridge Associates.

“While it is unclear whether these policies will be enacted as proposed, we anticipate strong rhetoric and the potential for retaliatory measures by other countries should increase global economic uncertainty,” Duffin wrote in a report.

Liquidity Is Key

The swift pace of global interest rate hikes between 2022 and 2023 dried up liquidity, changed valuations and hampered many managers’ fundraising ability across asset classes, particularly in areas such as private equity and venture capital. Rate cuts in 2024 loosened monetary policy, but the extent of the damage from higher interest rates remains unknown, while the pace of future cuts is also unclear.

For Raphi Schorr, a partner in and the deputy chief investment officer of HighVista Strategies, the big story for 2025 is whether liquidity returns, independent of interest-rate levels.

“Liquidity is complicated thing,” Schorr says. “People use it in a lot of different ways, but one of the tests will be the M&A market. The health of the M&A market will have an impact on everything, including credit.”

Raghav Khanna, managing director for Oaktree Capital Management’s global private debt strategy, expects the fundraising environment to improve generally across private markets, particularly in private credit.

“Assuming the Trump administration facilitates an increase in M&A activity, managers could have more investment realizations that potentially lead to an increase in distributions,” Khanna said. “We expect this will drive a pickup in [limited partner] allocations.”

Private Credit Remains Active

Fundraising in many markets was challenging in 2024, but private credit fundraising remained a bright spot, especially core middle-market-sponsored direct lending. However, that has led to more competition in sponsor-backed direct lending, softening returns as spreads narrow, according to Khanna.

With the Fed cutting rates, “lower spreads combined with lower base rates aren’t a recipe for higher prospective returns,” he says.

But Trump’s election may have changed the environment in two ways, Khanna continues. First, more M&A activity may increase demand for both middle-market and large-cap sponsor-backed direct lending, possibly widening spreads and improving returns. Second, rates may not fall as much as previously anticipated if the new administration’s economic policies are inflationary.

“The path toward lower interest rates from here now seems less clear,” Khanna says.

Potential Uptick in IPOs

Private equity still grapples with the hangover from overinvestment in 2021, as assets bought just before the rate-hike cycle kicked in are too rich for institutional asset owner limited partners to achieve the exit multiples they want, which is stifling fundraising, says Tyler Adkerson, growth leader for private equity and transactional solutions at WTW.

“Money that the LPs put into those vintages is still tied up, so it’s impacting fundraising on a go-forward basis,” he says.

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IPOs ≥ $50 Million Market Cap

  Proceeds in billions (US$)
  Number of IPOs

1,000

$160B

$142.4

750

$120B

$85.3

$78.2

500

$80B

$46.9

$46.3

$35.5

250

$40B

$30

$29.6

$18.8

$19.4

$7.7

0

$0B

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024


Source: Renaissance Capital as of 12/17/2024


But a confluence of factors—including recent interest-rate cuts, hopes for improved M&A activity and general partners starting to return money to LPs in the secondary markets —has Adkerson “cautiously optimistic” for 2025. The few IPOs launched in 2024 performed well, so if the economy and markets stay strong, IPOs could pick up in the second half of 2025, although he is not looking for a wave of companies going public. He still expects private equity to use secondary markets, joint ventures and continuation vehicles as popular ways to provide exit opportunities for LPs.

According to HighVista’s Schorr , hedge funds are likely to continue to look to listed small- and mid-cap companies to take advantage of market inefficiencies, since the large caps are dominated by artificial intelligence, weight-loss drugs and the indexes. The highly leveraged, tightly risk-controlled multi-strategy funds that invest just outside the mainstream will continue to attract most hedge-fund capital, he adds.

At least one endowment is shifting away from hedge funds and using an options-based exchange-traded-fund strategy to mitigate risk, according to Bloomberg. The University of Connecticut’s UConn Foundation sold its hedge fund position in the endowment’s $634 million investment portfolio and replaced it with buffer ETFs. Those ETFs use options to limit losses but cap gains.

Real Estate, Infrastructure Have Promise

AI’s influence is seen in these sectors as well, as demand for data center real estate is projected to increase as the macro digitalization theme affects many industries, according to Nuveen experts.

Donald Hall, global head of real estate research for Nuveen, also notes that with interest rates off their peak, certain commercial real estate segments have bottomed, such as medical office and senior housing buildings. Those sectors will benefit from long-term demographic trends, and he prefers locations with growing, educated and diverse populations. Office real estate still has room to fall, he adds.

Justin Ourso, global head of infrastructure for Nuveen, expects continued global investments in the transition to clean energy, most notably in solar power, battery storage and offshore wind power. Even in the U.S., green energy buildouts should continue.

“Despite political shifts, we expect capital to continue flowing toward profitable investments,” Ourso says.

Risks to Outlooks

Market shocks always upend year-ahead forecasts, but uncertainty can cloud predictions, and uncertainty about the U.S. economy lurks in the background.

With fewer market participants expecting a recession, a slowdown in growth or even a mild recession could hamper private markets, Adkerson says, making some private companies hesitant to launch IPOs until later in the year.

Some market participants are also looking at potential risks to the private credit boom. The International Monetary Fund estimated the global market at about $2.1 trillion in 2023, much of it in North America.

S&P Global Market Intelligence research recently raised concerns about the market’s opacity. Near-record new lending in 2024 was easily absorbed, but with credit default swap spreads trading near multi-year lows, it suggests this new activity is not yet reflected in the market’s view of credit risk. S&P is also concerned that private and public credit are becoming intertwined, as banks seek new partnerships and fund managers attempt to access public markets with new investment vehicles.

Involving more individual investors in private credit creates the problem of headline risk if people are wiped out because of a lack of regulation, Adkerson says.

“Historically, whenever it's an individual and not an entity that's getting harmed, it creates more of a problem,” he says.

More on this topic:

Equity Strength May Come From More Than Just Mag 7 in 2025
The Plethora of Unknowns Means Questions for Bond Investors in 2025
Consultant IDs Trends That Will Define Hedge Fund Industry in 2025
Strong US Economy, AI Lead to Positive Outlook for 2025 Markets

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CFA Establishes GIPS Guidance for OCIO Providers

Effective December 2025, the framework – which has been in development for several years – will be mandatory for firms that claim compliance with GIPS standards.



The CFA Institute has released its
guidance statement for OCIO portfolios, which aims to develop a framework for outsourced CIO providers to comply with Global Investment Performance Standards, or GIPS.  

The framework follows an exposure draft guidance statement for OCIO standards, published in September 2023, and a public comment period which lasted from September to November 2023. The guidelines will be effective December 25, 2025, for firms that claim compliance with the GIPS standards. 

Worldwide, OCIO providers manage more than $3 trillion in assets, and that number is set to continue to grow. Cerulli Associates expects the OCIO industry to manage more than $4 trillion in assets by 2028, driven, in particular, by demand from endowments and foundations.  

The guidance statement considers firms that are an OCIO provider and subject to the guidelines if they provide both strategic investment advice and investment management services to clients.  

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A firm which provides one service but not the other will instead follow the existing GIPS Standards for Firms. Additionally, the guidelines for OCIO portfolios applies to providers that manage all of a portfolios’ investment mandate; for example, if a provider only manages one asset class in a client portfolio, this firm would follow the GIPS Standards for Firms, rather than the new OCIO guidance.  

The guidance includes standards for OCIO composites, fee schedule disclosures, use of asset allocation ranges, distribution of GIPS reports to clients and benchmark selection. 

The guidance also includes a section addressing how firms managing OCIO portfolios should account for performance of legacy assets “that they might wish to sell but may not be able to sell on a timely basis or even on a longer-term basis.”  


The guidance gives firms managing portfolios including legacy assets three options for determining which OCIO portfolios are considered discretionary and will be included in a required OCIO composite, and says firms must “establish a composite-specific policy for the treatment of legacy assets and apply the policy consistently.” 

The options are:  

  • Exclude OCIO portfolios from composites portfolios with legacy assets when the legacy assets materially affect the ability of the firm to implement its intended strategy. A firm may consider the amount of legacy assets and type of legacy assets when making this determination. 
  • Include OCIO portfolios in composites portfolios with legacy assets, regardless of the amount or type of legacy assets, because the firm determines that it can manage these portfolios to its intended strategy. 
  • Include OCIO portfolios in composites the portion of the portfolio that excludes legacy assets when the non-legacy portion of the portfolio is consistent with the mandate for an OCIO Portfolio. 

The guidelines can be viewed here: 

Related Stories: 

CFA Institute Produces Plan to Gauge OCIO Performance 

How to Measure OCIO Performance 

2023 CIO Allocator Insights Webinar Series: OCIO 

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