2025 Private Markets Outlook: Reflecting on 2024 and Key Trends for 2025

TL;DR

• Private markets show stability and resilience in 2024 despite the increase in the yields of the US Treasury, geopolitical tensions, and technological disruptions.
• AI, healthcare, and infrastructure were leading sectors in sector-specific investment growth.
• Companies are becoming increasingly private to facilitate access to capital, control and flexibility, and prevent regulatory burdens.
• ESG will not be a niche trend but rather the centre of investment diversification because it is a better investment in the long run.
• Wealt is democratising private market accessibility, lowering the barriers to private investments, and increasing transparency.

Like every start of a new year, we want to recap what happened in the past year, understand how the capital markets and investment world evolved, and what were the significant shifts in the investment sentiment. When we look back at 2024, private markets were between innovation and resilience. The year was defined by macroeconomic stability, technological disruption, and the reawakening of investor interest in critical industries. Inflation slowed, central banks gently tweaked the interest rate lower globally, and private equity deal-making regained momentum. With this background and patterns, we will define and understand how the emerging trends will shape the private markets in 2025.

Reflecting on 2024

As we turn the page to 2024, the market turmoil of the post-pandemic sell-off faded; it was a year of global recovery in dealmaking, especially in private markets, although IPOs remain subdued. Despite the ongoing tensions worldwide, the global private markets remained resilient and closed with an uptick as the recovery in asset valuations helped the market. The years of US elections are always tough, and 2024 was no other; polarised political agendas of the two camps have been poorly reflected over the US bond market, where the Fed kept its cautionary tone up a notch after Trump’s victory put additional risks over inflation in the long-term. U.S. yields remained high, geopolitical tensions like the Middle East regional war, and technological disruptions like cyber attacks were on the headlines all year. With slowing inflation and increased recession risks in Europe, European central banks kept their dovish stance against the Fed, allowing the US dollar to gain further ground close to year-end. We witnessed a cautious but optimistic return of investor confidence.

Despite a hesitation beginning in 2024, the demand for private equity grew again. Of all the subsectors, Climate tech and AI were the most attractive to investors, and regulations were most accommodating to the additional access to private markets. These aspects have helped create the necessary enduring environment to counter the threats worldwide and create the conditions for further growth in 2025.

Macroeconomic stability and market dynamics

After more than two years, consumer inflation rates gradually returned to normal. Consequently, central banks, especially in developed economies, reduced interest rates to encourage public and private investment. The Federal Reserve and ECB implemented a small reduction chain, demonstrating belief in the overall trend.

Public markets performed well, as large international markets saw double-digit increases by the end of the fiscal year. On the same line, markets for private equities also reflected this optimism. Global M&A activity was 27.6% in value and 13.3% in volume, higher than in Q3 2023 by Q3 2024.

Image source: HarbourVest - 2025 Market Outlook

The declining interest rate in private markets also tempered financing costs, causing the revival of M&As. Bid-offer valuation gaps were further tightened, enabling PE firms to increase global deal value to $1.3 trillion with over 23,000 deals by the first half of 2024, although still quite far from the 20-21 era. Sectors such as healthcare, AI, and infrastructure stood out as primary beneficiaries of this renewed activity, and we will analyse them in the next section.

Sector-specific investment growth

We saw specific investment growth in the healthcare, artificial intelligence, and infrastructure sectors in 2024. Software, with $67 billion; commercial products, with $27.46 billion; and pharmaceuticals and biotechnology, with $21.36 billion, were the sectors most invested in in 2023. Interest remained high for the same verticals in 2024 as well. This shows the evolving dynamics of global markets and investors' focus on long-term and resilient sectors.

Artificial Intelligence (AI)

AI remained the leading sector in investment policies in 2024 and emerged as the key driving force in changing the efficiency of various industries.

• The worldwide AI market is $184.04 billion in 2024 and is expected to grow by $826.73 in 2030.
• AI startups raised $11.4 billion in Q3 alone, with 566 deals representing over 2/3 of global AI funding and 45% of global AI deals.
• The US, the leading country in AI investments, has invested $250 billion in 4,645 companies.
• The UK AI market will be over £4.5 billion in 2024 and is expected to grow beyond £20 billion by the end of the decade in 2030.

Healthcare

With advancements in AI, telemedicine, and increased precision in healthcare, the healthcare sector remained a cornerstone of private investments.

• There were 1,400 deals in the healthcare sector until the first half of 2024, which is 22.16% higher than in H1’23.
• The healthcare services market will reach $8.9 trillion in 2024%20of%207.4%25.) at a compound annual growth rate (CAGR) of 7.4%.
• Biopharma companies have secured deals worth $100 million or more.
• AI in the healthcare market reached $26.69 billion in 2024 and $148.4 billion by 2029, at a CAGR of 48.1%.

Infrastructure

Infrastructure investments are growing rapidly as the global economy prioritises sustainable development, renewable energy, and technological upgrades in transportation and smart cities.

• The global infrastructure sector is projected to require $69 trillion in investments by 2035 to keep pace with economic growth.
• The smart cities market is expected to reach $79.94 billion in revenue in 2025, with a CAGR of 9.59% from 2025 to 2029.
• Over the last three years, PE firms have invested more than $100 billion in data centre projects.
• The UK's National Infrastructure and Construction Pipeline has projected £164 billion in planned infrastructure investments between 2023 and 2025.

Rise of secondary markets

2024 was a landmark year for the secondary markets, with significant growth, higher deal volumes, and increased investor participation. As private equity funds mature and liquidity increases, the secondary market becomes necessary for portfolio optimization. In the first three quarters of 2024, private equity investment reached $1.3 trillion, a 30% increase from 2023. Indeed, H1 2024 has the highest secondary market transaction volume ever observed, around $72 billion, with a CAGR of 16% since 2013.

Investors actively use secondary markets to rebalance portfolios, manage liquidity risks, and unlock the trapped value of private equity assets. The market has also become a preferred route for investors seeking liquidity via early exits without making a huge headline in the market. Aside from personal investors, secondary transactions serve as bridge finance to help firms manage their capital requirements in the time gap between one funding round and the other or in a period that is detrimental to fund-raising.

Technological innovations

Technological advancements, from artificial intelligence (AI) to blockchain, shaped investment landscapes in 2024. It hasn’t only affected the invested companies and VC firms leveraging technology in their operational efficiency to uncover opportunities, mitigate risks, and enhance returns.

• AI-powered decision-making was the key to operational efficiency with predictive analytics, automating routine processes, and portfolio management. 75% of PE firms use AI for value creation and expect a 30% improvement in decision-making.
• Blockchain technology disrupts private markets by enhancing transparency and liquidity while decreasing transaction costs. The total size of illiquid asset tokenization globally was valued at $1.5 trillion in 2024 and is expected to grow to $16.1 trillion by 2030.
• Green technologies like renewable energy products, carbon capture, and sustainable industrial processes are becoming staple investments. Global investments in climate tech in 2024 went over $70 billion, and ESG regulation demands and consequent investments in auxiliary categories powered the private market investors. One-third of them have shifted their portfolio towards climate tech to capture more ESG.

Longer private periods

When anyone starts a company, their initial goal is to open it for initial public offerings (IPOs), but lately and especially in 2024, we have seen that this trend has changed. In 1980, the median age of a company at its IPO was six years, but by 2021, the median age has increased to 11 in 2021. Companies are now delaying their IPOs more than ever, enjoying a record of funds availability, technologies, and globalisation.

• Companies now have higher access to capital, which has resulted in longer private periods to secure the funds needed for operations and growth at those strategic rates.
• The existing private financial markets are more developed, and penetration into global financial markets is more accessible than before.
• Founders without IPOs have more control over their companies and more flexibility in their operations, policies, and major decisions.
• Many regulatory requirements (eligibility criteria such as minimum net worth, pre-tax operating profit, etc. or process regulations such as registration statements or post-effective periods) and compliance costs came with the go-public decision.

This trend will remain unchanged in the future, and such companies will remain private for even more extended periods. In this regard, investors must modify traditional approaches by incorporating elements related to private market opportunities.

Waiting for 2025

The momentum from 2024 will set the trends of private markets. The year 2025 will bring significant growth opportunities, disruptive innovations, and a reshaped private market landscape. Private equity has survived bad economic periods and can change when the market demands it, making us expect a promising future. Technological advancement increases as macroeconomic stability improves and sustainable investment becomes the focus; 2025 presents possibilities of revolutionising private markets in a more definitive way.

Growth

Last year, private equity shined in five major market crises over the last 25 years, such as global financial crises or the COVID-19 outbreak. Even though the last four years have had challenges for investors, recent research shows that private equity has done well, with +8% outperformance vs. the MSCI All-Country World Gross Index. This resilience of private markets comes from a different industry sector composition than public equities and cash structures that enable fund managers to sustain investments and course through markets over the long run. So, we see that a long-term investment focus creates value even in world economy volatility.

Image source: Schroders - Outlook 2025: Private markets

Infrastructure

Investment in infrastructure continues to be a powerful lever of private equity operations due to the need for energy transition, digitalisation, and sustainability. PE firms and companies invested billions of dollars into data centres, which consume over 2% of the world’s electricity and are expected to increase their consumption to 4% by 2030. With such needs, opportunities will rise in both traditional and renewable power sources. Also, with the hybrid models, private and public market exposures were combined, unlocking new investment and growth opportunities since the expected infrastructure market size is $282.92 billion by 2029.

Rise of impact investing with ESG

Sustainability and impact investing are no longer niche strategies or trends. They became core components of how investments are managed, and with strong ESG performance, companies do better in the long run. Since the United Nations launched the Principles for Responsible Investment Initiative, the world’s leading proponent of responsible investment. Recent research shows that 60% of asset managers now think private markets have superior ESG prospects than public ones. This view reflects a burgeoning tendency toward sustainable investment techniques in PE.

• Electricity demand has been on the rise, mainly due to enhanced usage of AI, primarily in data centres.
• As climate change becomes more addressable as an international priority, private market investors will continue to declare net-zero goals that determine goals for cutting the carbon intensity of their portfolios.

AI-driven deal activity

AI continues to be the key driver of private markets and other investment strategies, with improvements in power and accuracy. AI companies accounted for 20% of all venture funding in Q3 2024 and a record amount of funding in companies, such as xAI raising $6 billion or OpenAI’s $6.6 billion funding. AI also impacts companies' M&A activity. 64% of business leaders plan to use M&A to support their AI capabilities in the next 12 months. This trend shows that the improvement of AI will also cause companies to adopt digital transformation and change the competitive advantages of markets. Leaders say AI's significant impact on the workforce and tech use will continue in 2025 and support the transformative potential for private markets and the broader economy.

AI affects the private markets by increasing the number of investments it makes and also affects markets by improving productivity with AI-driven tools in companies (even VCs are using predictive modelling and risk assessments to determine which companies to invest in), saving costs up to 70%, and making other investment types stronger, such as real estate with data centres or healthcare facilities.

Wealt’s role in democratising private market access

Wealt is leading the change toward opening private markets traditionally reserved for the top 1% and large institutional investors. Through technology and innovation, Wealt Club is opening the door and allowing you to access private market deals, changing the investment universe for many.

• Private markets typically involve significant management and performance fees, which can erode returns. Wealt lowers the barriers and fees and allows you to invest with minimum amounts.
• Information about private investments is often less transparent than that of public markets, making it challenging for investors to assess risks and performance. Wealt offers transparent expense sheets and real-time updates about your investments.
• Private market investments often have long lock-up periods, limiting access to capital when needed. Wealt creates platform liquidity for secondary market transactions with syndicated investors among Wealt Club members.

With these policies, Wealt is trying to democratise processes in private markets, creating a hub for more fair investments. Join the Wealt Club today and democratise private market access together.

Closing thoughts on unlocking potential in 2025

As we look ahead to 2025, private markets will remain reliable and innovative. We will be part of a transformative world with AI-empowering investments and business operations, growing sustainable infrastructure, and ESG-reshaping priorities. Companies like Wealt will continue to try to democratise private market access for broader participation with inclusivity and transparency in the centre.

2025 is promising. Understanding and accepting the trends from 2024 will unlock new investment solutions and generate long-term impact. Let’s start our investment year together!