Private Debt, Growth Equity to Lead Fundraising in 2025
General partners (GPs) are expressing strong optimism about the private market fundraising climate in 2025, anticipating a robust recovery and growth in capital-raising opportunities. Notably, 57% of GPs identify private debt as a critical investment area, with 81% expecting investor demand for this asset class to increase over the next two years.
Similarly, growth equity (66%), venture capital (53%), and real estate (51%) have emerged as the top three new asset classes they are most likely to target. GPs are most optimistic about fundraising for growth equity, with 84% expecting a surge in LP demand over the next 24 months, according to a survey of 300 GPs and 200 LPs across North America, Europe, and Asia Pacific conducted by CSC.
“Persistent higher interest rates have made leveraged buyouts more expensive, prompting many GPs to shift towards growth equity as a preferred investment strategy,” Marshall Saffer, managing director, Funds and Capital Markets, CSC, said. “This trend is particularly visible in Asia Pacific, where 72% of GPs are considering launching funds in this space.”
According to the report, Future Private Capital CFO 2025: Transforming Challenges into Opportunities, GPs are prioritizing regions with strong growth potential. North America remains the top market, with 52% of GPs targeting it for expansion due to its established infrastructure and investor base. Asia has emerged as the second most popular region, surpassing Europe, with 49% of GPs focusing on opportunities there compared to 45% in Europe. This shift underscores Asia’s rising appeal, as noted by Agnes Chen, regional managing director for APAC at CSC: “APAC’s rising appeal is a testament to growing investor confidence in the region.”
The broader private markets landscape is also showing promising signs of recovery. According to McKinsey’s Global Private Markets Report, private equity began to rebound in 2024, marked by increased dealmaking and distributions. For the first time since 2015, distributions to LPs outpaced capital contributions, indicating that investments are maturing and returning capital to investors. This milestone is likely to boost confidence and spur further fundraising efforts in 2025.
While the outlook is bright, challenges such as historically low distribution rates and elevated interest rates persist, as outlined in MSCI’s Private Capital in Focus report. However, a significant counterbalance exists: investors hold approximately $2 trillion in dry powder. This substantial reserve suggests 2025 could see a surge in investment activity as market conditions align.
