The private equity (PE) industry stands on the verge of significant transformation. Firms are rethinking established strategies, adopting new technologies, and exploring diverse funding sources. In 2024, we highlighted key trends such as artificial intelligence (AI), infrastructure, value creation, working capital, and retail market expansion. As we look ahead to 2025, some of these themes persist in a refined form, while new forces—from sovereign wealth funds to advanced change management—are reshaping the landscape.
Below are six pivotal trends that will define private equity in 2025.
1. Infrastructure Investment
Why it matters
Private equity firms continue to pour significant capital into infrastructure, especially in energy and digital sectors. The proliferation of AI and other advanced technologies requires robust data centers, fueling massive investment opportunities. Over the last three years, PE firms have deployed more than US$100 billion in data center projects.
Key opportunities
• Data centers: An evolving space with high energy demands. Data centers already account for more than 2% of global electricity usage—a figure projected to rise to 3%-4% by the decade’s end.
• Power sources: Traditional and renewable energy options to power data centers present new avenues for PE investments.
• End-to-end value chain: From software and hardware vendors to operations and maintenance, every layer of the data center ecosystem offers potential for PE firms.
2. Artificial Intelligence (AI)
Why it matters
AI remains a top priority for private equity, although its focus has shifted from conceptual exploration to practical implementation. In 2024, PE firms experimented with AI’s potential; by 2025, they’re deploying AI solutions that streamline workflows and enhance diligence.
Key applications
• Diligence and origination: AI-driven tools can classify and validate large volumes of transaction documents, reducing processing costs by up to 70%.
• Productivity enhancements: AI helps prioritize workstreams, automate repetitive tasks, and unlock employee capacity for higher-value activities.
• Portfolio performance: By leveraging AI analytics, PE firms can identify revenue growth opportunities and operational efficiencies across portfolio companies.
3. Growth as a Unifying Theme
In 2024, value creation and working capital were two separate focal points. In 2025, these goals merge into one overarching objective: growth.
Growth drivers
1. Advanced analytics and automation
• Accelerated deal sourcing, deeper due diligence, and effective portfolio monitoring through data-driven insights.
2. Strategic resource allocation
• Offshoring, onshoring, or outsourcing non-core functions to optimize costs and sharpen focus on high-value activities.
3. Transparent reporting
• Rising stakeholder demands for visibility into performance and risk require robust reporting frameworks.
4. Expanded service offerings
• Adding tax, compliance, and operational support capabilities to stand out from competitors and deliver greater value to investors, particularly when IPO opportunities remain in flux.
4. The Rise of Sovereign Wealth Funds (SWFs)
Why it matters
Sovereign wealth funds are projected to influence the US market more heavily, seeking higher returns and diversification. PE firms are capitalizing on this influx of capital, forming strategic partnerships that reshape the investment landscape.
Key trends
• Cornerstone investments: SWFs injecting significant capital into commingled vehicles.
• Co-investments: Working side by side with alternative asset managers for larger deals.
• Dedicated accounts: Tailored investments targeting specific sectors or risk profiles for sovereign investors.
• Direct investments: SWFs investing independently in sectors with strong long-term prospects.
Already in 2025, SWFs have pumped US$30 billion into private equity deals for US companies, bringing cumulative investment since 2018 to US$367 billion.
5. Broadening the Definition of Capital
Why it matters
Private equity firms continue to fill the financing gap left by traditional lenders. By diversifying capital solutions, PE firms meet the demands of businesses that often can’t secure funding through public markets or conventional banking channels.
Key developments
• Private credit surge: With US$1.5 trillion in assets under management—and projections to reach US$3 trillion—private credit plays a vital role in funding emerging and middle-market companies.
• Competitive capital markets: As more private capital flows in, the cost of borrowing declines, expanding access for companies in need.
• Innovative fund structures: Semi-liquid funds and similar mechanisms offer new ways for non-institutional and retail investors to participate, allowing regular entry and exits (monthly or quarterly).
6. Change Management: The Human Element
Why it matters
As private equity firms handle larger, more diverse investments, effective change management becomes crucial. From overhauling back-office systems to aligning leadership teams, a people-centric approach underpins sustainable transformation.
Key focus areas
• Organizational transformation: Firms must integrate new technologies and processes while ensuring employees understand and embrace change.
• Collaboration between stakeholders: Greater alignment between deal executives and operating partners drives successful execution of the investment thesis.
• Culture as a growth lever: Targeted employee support, skill development, and well-aligned rewards can boost both morale and financial outcomes.
Looking Ahead
Private equity assets under management have soared by 135% since the start of the COVID-19 pandemic. By 2028, PE AUM is forecast to reach US$8 trillion, underlining the industry’s rapid growth trajectory. As firms refine their strategies—whether through AI, infrastructure projects, sovereign wealth partnerships, or innovative capital structures—the focus remains on value creation and long-term success.
References
1. Global Data Center Electricity Usage Forecast
2. Sovereign Wealth Fund Assets Projection
3. Private Credit Fund Growth Trends
4. PE AUM Forecast Post-COVID-19
Summary:
In 2025, six critical trends are taking center stage in private equity: the continued emphasis on infrastructure and AI, an evolved approach to driving growth, heightened involvement from sovereign wealth funds, a broader scope for private capital, and the rising importance of change management. Collectively, they present both challenges and extraordinary opportunities for PE firms aiming to optimize returns and create sustainable value.
