Private Markets Outlook: Opportunities in a Reshaped Market

Market Review and Q3 Outlook

KEY SUMMARY POINTS

  • Lower volatility, structural tailwinds, and product innovation are driving renewed institutional interest across global private markets, despite macroeconomic uncertainty.
  • Exit challenges persist in private equity, but secondaries and continuation funds offer creative liquidity solutions.
  • Real estate and infrastructure are gaining momentum, while venture capital and private credit face mixed dynamics.

The Milken Global Conference in Los Angeles (May) and SuperReturn International Conference in Berlin (June) remain seminal events each year for private market managers (general partners, or “GPs”) and investors (limited partners, or “LPs”). Presentations and conversations continued to focus on the lack of monetizations from vintage private equity funds. While trade policy-induced public market volatility has not immediately impacted valuations, it has kept floating rate borrowing costs elevated and left both the IPO window and the ability to sell to other financial buyers effectively shut. The resulting lack to distributions to LPs has compromised fundraising efforts, and in turn, the ability to sell existing portfolio companies to new buyers.

How have distributions trended over the last ~25 years?

DISTRIBUTIONS-OVER-CARRYING-VALUE (DoCV) OVER TIME


Graph illustrating distributions over carrying value (DoCV) over time

Source: MSCI. As of May 31, 2025.

If this sounds familiar, it is because we have focused on this theme for the past two years. It remains our contention that many mid-sized, monoline firms face an existential challenge in retaining talent. However, we also believe that if it is a difficult environment to sell, it is a compelling time to buy. Others in the industry appear to agree. The market has responded with product innovation in the form of secondaries funds, which allow LPs to buy into older vintage funds at a discount to NAV, and continuation funds, which enable GPs to return capital to LPs without selling prized companies at unattractive valuations.

PRIVATE EQUITY INDEX: QUARTERLY RETURN BY SOURCE


Graph illustrating private equity index quarterly return by source

Source: Wolfe Research, PitchBook.

CUMULATIVE PE EXIT VALUE RELATIVE TO LONG-TERM TREND (US$B)


Graph illustrating cumulative PE exit value relative to long-term trend

Source: Wolfe Research, PitchBook.

The inability to realize gains has led to a buildup of aging assets, with NAV from buyout holdings seven years old or older now accounting for 40% of total buyout fund NAV.

BUYOUT FUNDS AGE AS EXIT ROUTES NARROW


Graph illustrating buyout funds age as exit routes narrow

Source: Wolfe Research, PitchBook.

Real estate has been a bright spot so far in 2025, while venture capital remains challenged by a soft IPO market—its natural exit strategy. Sentiment in both markets seemed to trough in 2023. In real estate, property-level bid-ask spreads have narrowed, and the number of new fund launches is already at 80% of the 2024 levels. Supply has been muted across most property classes, and visibility on vacancies and rent growth is improving in the office sector. Venture capital interest continues to be concentrated in AI, with a number of large funds—potentially counterproductive in early-stage financings—receiving the lion’s share of inflows.

Private credit may finally be taking a breather. For the first time, according to the index provider Preqin, the number of funds has declined, suggesting LPs are committing to large funds. Private credit funds raised US$58.9 billion in the first quarter— 2.5 times the amount raised in the first quarter of 2024. Total private capital AUM stands at US$1.62 trillion, according to BNP Paribas, with 24% in dry powder. Managers have been re-underwriting and stress-testing existing positions for tariff risk. Short-term interest rates have remained elevated as the Fed has been on pause, supporting yields for an asset class that is predominantly floating rate.

Europe, in general, has seen renewed interest, partly due to the prospect of fading U.S. exceptionalism, and partly due to infrastructure-specific opportunities. Deficit spending is rising across Europe as NATO participants move to meet defence spending targets in hopes of mitigating tariffs. We expect public-private partnerships to fund the majority of new infrastructure projects. Data centres remain the focal point across technology, infrastructure, and real estate, attracting substantial investment. Accordingly, where optimism reigns, caution is warranted. Data centres with low energy costs and long-term leases to hyperscalers should perform well, though ongoing capital spending requirements and the risk of obsolescence remain long-term concerns.

In 2020, infrastructure ranked fourth in performance and accounted for 1.3% of assets in institutional portfolios, according to Preqin data. By 2024, when infrastructure ranked first in performance, it represented approximately 2.2% of assets in institutional portfolios. Over the same period, private pension allocations to infrastructure doubled (as a proportion of AUM), and the asset class became the third-largest alternative holding within public pension portfolios.

While private assets generally missed the “Magnificent 7”-driven public equity market party in 2024, they also skated through the volatility of post-Liberation Day in April. With private markets continuing to demonstrate lower volatility, and infrastructure specifically benefiting from the predictability of long-lived, regulated assets, we believe more investors will begin to integrate private market assets into their portfolios.

To open this article in a shareable format, click here.

About the Author

Geof Marshall


Geof Marshall, CFA

SVP, Head of Fixed Income & Lead – Private Markets
CI Global Asset Management

Geof Marshall, SVP, Head of Fixed Income & Lead – Private Markets, joined CI GAM in 2006 and leads the fixed income group’s high yield team efforts in addition to leading the private markets group. Geof is also the lead manager on CI GAM’s income strategies, and co-manages the private markets and income & growth funds as well as a number of multi-asset fixed income portfolios. He brings over 25 years of valued industry experience to his role at CI GAM, especially in asset allocation and analyzing, managing and trading corporate bonds, leveraged loans, and private credit. Prior to CI GAM, Geof was a portfolio manager at Manulife Financial. Geof is a CFA charterholder with a Bachelor of Arts in Political Science from the University of Western Ontario. He is also a member of the CFA Society Toronto and sits on the Investment Committee at the Royal Ontario Museum.

IMPORTANT DISCLAIMERS

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.

Certain names, words, titles, phrases, logos, icons, graphics, or designs in this document may constitute trade names, registered or unregistered trademarks or service marks of CI Investments Inc., its subsidiaries, or affiliates, used with permission. All other marks are the property of their respective owners and are used with permission.

Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what CI Global Asset Management and the portfolio manager believe to be reasonable assumptions, neither CI Global Asset Management nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed.