The year 2025 is set to be an uncertain one for investors in private markets, with particular concerns surrounding Donald Trump’s political agenda. However, experts also identify opportunities.
Experts consulted by Investment Officer anticipate that Trump’s policies could rekindle inflation. “Higher inflation means we could face elevated interest rates for years,” said Paul van Hastenberg, partner at Clavis. “This could impact market transactions and company valuations.”
IBS describes high inflation as “an Achilles’ heel” for private markets. “History shows that while inflation often trends downward, it can resurface for a period. This would not bode well for many investments,” said Koen Ronda, head of private markets at IBS. “In the short term, it’s not favourable for stock markets or private markets.”
Another pivotal year?
Despite the risk of rising inflation, experts remain optimistic about opportunities in private markets. While 2024 didn’t turn out to be the pivotal year Van Hastenberg hoped for, he believes 2025 could be—despite greater uncertainties compared to a year ago. Trump’s policies could also yield positive effects, particularly for the local economy, directly benefiting small and medium-sized American enterprises.
Overall, private markets tend to favour Trump, notes Ronda. “Especially in the U.S., private companies are likely to face less regulatory pressure. That’s a positive development, as the FTC previously seemed poised to target private companies following numerous small acquisitions that gave parties significant market shares.”
Van Hastenberg acknowledges the difficulty of determining which theme will dominate next year: Trump’s stimulative policies or their side effects, such as higher inflation and interest rates.
He also questions how much Europe will be impacted by Trump’s policies. “Valuations here are considerably lower, making it an opportune entry point, but geopolitics could complicate matters.”
“Europe faces more structural challenges, but there are certainly opportunities for private investors to help European companies grow,” predicts Hylke Hertoghs, Managing Director at Marktlink Capital.
Opportunities in the mid-market and real estate
Experts see the greatest opportunities in the lower tiers of the U.S. and European mid-market, as small to medium-sized companies are less heavily financed and therefore less sensitive to interest rate fluctuations. “Large corporations are often already in the hands of private equity. The low-hanging fruit has been picked,” said Van Hastenberg.
Clavis is cautiously optimistic about non-traditional real estate after significant market corrections in recent years. Van Hastenberg sees potential in student and senior housing, healthcare centres, and logistics real estate.
Clavis is also enthusiastic about venture capital. “There are numerous global challenges in areas such as climate change, food transition, and healthcare. These present opportunities for innovative companies, and consequently for venture capital to invest in such enterprises.”
Conversely, IBS is less favourable towards core infrastructure projects. “Existing infrastructure projects are heavily indebted, which is risky—especially in a sector undergoing rapid innovation. Why would an investor put money into a toll road when drones could revolutionise transport in the future? That’s a risk we’re not willing to take.”
Movement in exit markets
Despite uncertainties, IBS observes continued strong demand for private investments among clients. “This aligns with the megatrend of companies increasingly avoiding public listings, reflecting the era we’re in. In 2019, venture capital unicorns often bypassed the entire private equity segment and went straight to IPOs. That’s no longer the case.”
IBS is now seeing renewed activity in exit markets. “The IPO market often shows the first signs of movement, but data from PitchBook and Preqin indicate that large strategic buyers are becoming active again. That’s where the big money lies.”
Ronda added: “We’ve spoken to various M&A managers and advisors who report that many discussions initiated in early 2024 but stalled during the year are now being revived. This suggests a surge in transactions for 2025.”
As distributions pick up, large institutional players are expected to allocate more funds, enabling companies in private equity portfolios to deliver attractive returns, experts predict. “What’s in the barrel doesn’t spoil—it just needs to be tapped,” said Ronda.
Dit artikel is het tweede deel van een tweeluik over private markten. Deel 1 was een terugblik op 2024, dit is een vooruitblik op 2025.