Q1 2025 US PE BREAKDOWN
Executive Summary:
- Tariffs and economic uncertainty are impacting risk appetite and market volatility.
- PE ecosystem well-positioned to navigate uncertainty with ample dry powder and longer investment horizons.
- Key risks include exit activity, with 3,800 US PE-backed companies holding for 5-12 years.
- Valuations may face challenges if portfolio companies face slowing sales amid GDP deceleration.
Deals:
- PE deal activity in Q1 2025 reached $259.7 billion, up 24.6% QoQ and 36.1% YoY.
- Take-private activity surged, with the $23.7 billion acquisition of Walgreens Boots Alliance by Sycamore Partners as a highlight.
- Large-cap deals like WBA have significant impact on aggregate figures and indicate investor risk appetite.
Spotlight: Southeast Asia Private Capital Breakdown:
- PE activity in Southeast Asia saw a moderate rebound in 2024, driven by easing interest rates and positive economic outlook.
- Healthcare and datacenters are key sectors for PE investment in the region.
Exits:
- PE exit activity in Q1 2025 reached $186.6 billion, with Venture Global LNG's IPO contributing significantly.
- Exit count and value remain 20-30% above pre-pandemic averages, indicating steady recovery.
- Exits to corporates and sponsor-to-sponsor exits are both strong, with exits to corporates accounting for 68.3% of Q1 exit value.
Fundraising:
- PE fundraising in Q1 2025 slowed, with $56.7 billion raised across 79 funds.
- Buyout remains the dominant strategy for fundraising, with growth equity's share jumping to 33.4%.
- Megafunds and middle-market funds are key fundraising vehicles, with several megafunds actively raising.
Performance:
- PE fund performance is expected to regain double-digit returns in the back half of 2024 and early 2025.
- Exit activity is improving, supported by sustained success in public markets and lower cost of capital.
- PE remains well-positioned to navigate near-term challenges and capitalize on market dislocations.
