The alternative assets industry continues on a strong growth trajectory according to research data. Assets under management in the alternative assets space are projected to reach nearly $23 trillion globally by 2027, driven by robust investor demand and fundraising.

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Private equity and real estate remain the largest and most well-established alternative asset classes. However, segments like private debt, infrastructure, and natural resources are gaining increased traction among investors looking to diversify their portfolios.

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Geographically, North America dominates the alternative assets landscape, accounting for nearly two-thirds of the global assets under management. Data highlights an ongoing consolidation trend in the North American alternative assets market.

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Despite the industry's growth prospects, it faces new challenges stemming from geopolitical tensions, rising inflation rates, and higher interest rate environments. These macroeconomic factors present potential hurdles that alternative asset managers must navigate. It is also important to note the evolving role of service providers supporting the alternative assets ecosystem. As the market matures, these ancillary players are becoming increasingly crucial in facilitating transactions and providing specialized expertise.

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​​​​​The outlook for private equity in 2025 is one of cautious optimism, tempered by ongoing macroeconomic and geopolitical uncertainties. While a full return to pre-2022 levels of activity may not materialize immediately, several factors suggest a more supportive environment for the industry.

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Moderating Cyclical Headwinds:

The consensus among economists points to a moderation of the cyclical headwinds that have impacted dealmaking since mid-2022. This, combined with the industry gradually emerging from the shadow of the unprecedented dealmaking spree of 2021, should provide a push for increased activity.

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Supportive Rate Environment:

A more supportive interest rate environment is anticipated to further boost private equity activity, facilitating deal financing and improving return prospects.

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Resurgence in M&A and IPO Activity:

A revival in mergers and acquisitions (M&A) and initial public offerings (IPOs) is expected to contribute to a more active exit market, providing crucial liquidity for LPs.

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Continued LP Allocations:

Despite recent challenges, investor interest in private markets remains strong. A significant portion of LPs (around 30%) plan to increase their private equity allocations in the next 12 months, driven by the asset class's long-term performance trajectory and diversification benefits.

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Focus on Value Creation:

The emphasis on operational excellence and strategic transformation will intensify. GPs will need to demonstrate a clear, differentiated value proposition to attract capital and generate returns in a competitive landscape.

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Evolving Fund Structures:

The development and adoption of new fund structures, such as continuation vehicles and open-end funds, will continue to address LP liquidity demands and broaden the investor base to include high-net-worth individuals.

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Geopolitical and Trade Policy Impacts:

Geopolitical instability and shifts in trade policy will remain critical challenges, requiring managers and investors to navigate complex global dynamics.

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