Key Takeaways
- • Preqin forecasts a cautious recovery in private equity driven by three structural factors: lower interest rates, reduced valuation mismatches between buyers and sellers, and institutional investor shifts from public to private allocations.
- • 856 private equity funds raised US$507 billion in the first nine months of 2025 (75% of 2024's full-year total), with deal value at $470 billion, 18% below 2024, suggesting full-year 2025 will track similarly to 2024 performance.
- • Exit value totaled $304 billion in the nine-month period, representing only 70% of 2024's full-year exit value—signaling persistent challenges in returning capital to limited partners.
- • Top-quartile funds from 2020-22 vintages are outperforming historical peers, while bottom-quartile funds approach zero returns; this performance bifurcation is driving LPs to become more selective in fund commitments.
- • Asia Pacific private equity is positioned for substantial outperformance through 2030, with Preqin forecasting average buyout IRRs to nearly double from 6% to 12%-13%, and growth fund IRRs to rise to 11% from 0% or worse—marking a marked reversal from the 2021-2024 period.
Summary
Preqin's latest global private equity report signals a cautious recovery trajectory for the asset class, though one tempered by persistent structural headwinds. According to the analysis, 856 private equity funds raised US$507 billion during the first nine months of 2025, capturing approximately three-quarters of 2024's full-year fundraising total. Deal value in the same period reached $470 billion, trailing 2024 by 18%—metrics that suggest full-year 2025 results will closely mirror 2024's aggregate performance rather than represent meaningful acceleration.
Exit activity presents a more concerning picture. The nine-month exit value of $304 billion represents only 70% of 2024's full-year exit total, underscoring continued challenges in capital repatriation to investors. This gap reflects what industry observers describe as a persistent mismatch between GP and LP expectations on valuations and exit timing, a tension that has characterized the sector since 2022.
Victoria Chernykh, Preqin's vice president for private equity, identifies three catalysts for the anticipated recovery: declining interest rates that reduce discount rates for buyout multiples, narrowing valuation gaps between buyers and sellers that had stalled deal flow, and systematic capital reallocation by institutional investors away from public equities toward private asset classes. These macro-level tailwinds form the foundation for the cautiously optimistic medium-term outlook.
The report reveals pronounced bifurcation in fund performance and deal structure. Net internal rates of return for top-quartile funds from 2020-22 vintages exceed those of prior vintage periods, while bottom-quartile funds frequently deliver near-zero returns. This dispersion is reshaping LP behavior: limited partners are becoming demonstrably more selective with capital deployment. Notably, 12% of surveyed LPs—double the proportion from a year prior—now plan to reduce private equity allocations, despite most remaining committed to the asset class overall.
Asia Pacific represents the most compelling opportunity zone. Preqin forecasts that Asia Pacific private equity will substantially outperform during the 2024-2030 period relative to the 2021-2024 interval, projecting average buyout IRRs to rise from approximately 6% to 12%-13%, while growth fund IRRs are expected to climb to around 11% from 0% or worse. Secondaries fundraising has also demonstrated relative strength, offering an alternative mechanism for capital recycling and LP liquidity.
Exit activity presents a more concerning picture. The nine-month exit value of $304 billion represents only 70% of 2024's full-year exit total, underscoring continued challenges in capital repatriation to investors. This gap reflects what industry observers describe as a persistent mismatch between GP and LP expectations on valuations and exit timing, a tension that has characterized the sector since 2022.
Victoria Chernykh, Preqin's vice president for private equity, identifies three catalysts for the anticipated recovery: declining interest rates that reduce discount rates for buyout multiples, narrowing valuation gaps between buyers and sellers that had stalled deal flow, and systematic capital reallocation by institutional investors away from public equities toward private asset classes. These macro-level tailwinds form the foundation for the cautiously optimistic medium-term outlook.
The report reveals pronounced bifurcation in fund performance and deal structure. Net internal rates of return for top-quartile funds from 2020-22 vintages exceed those of prior vintage periods, while bottom-quartile funds frequently deliver near-zero returns. This dispersion is reshaping LP behavior: limited partners are becoming demonstrably more selective with capital deployment. Notably, 12% of surveyed LPs—double the proportion from a year prior—now plan to reduce private equity allocations, despite most remaining committed to the asset class overall.
Asia Pacific represents the most compelling opportunity zone. Preqin forecasts that Asia Pacific private equity will substantially outperform during the 2024-2030 period relative to the 2021-2024 interval, projecting average buyout IRRs to rise from approximately 6% to 12%-13%, while growth fund IRRs are expected to climb to around 11% from 0% or worse. Secondaries fundraising has also demonstrated relative strength, offering an alternative mechanism for capital recycling and LP liquidity.
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