Fundraising momentum for private equity and private credit — once the dominant forces in alternative asset management — has slowed considerably in 2025, as constrained liquidity and extended exit timelines force investors to re-evaluate their exposure to illiquid assets, according to a report by Bloomberg.
The report cites data from JPMorgan Chase, as highlighting that private credit fundraising is on pace for its weakest year since at least 2018, with just $70bn raised through 22 July. Private equity isn’t faring much better, with capital raised globally in the first quarter falling 35% year-on-year to $116bn, based on PitchBook estimates.
The drop-off comes amid a slow-down in distributions, and subdued IPO markets. Although activity on that from is beginning to recover.
This liquidity crunch is lengthening fundraising timelines for private market managers. Private credit funds, in particular, are seeing timelines approach two years, the longest since the global financial crisis. The fundraising slowdown also reflects broader competition from more liquid public credit markets, with institutional appetite for leveraged loans and bank-originated risk rising again.
In private equity, exit activity has stalled amid weak M&A volumes and a subdued IPO market, leaving LPs with limited dry powder and less willingness to re-up in closed-end vehicles. Major institutional investors, including some large endowments and pension funds, are even exploring secondary sales of private asset holdings to free up cash.
Despite these challenges, capital is still flowing — just at a far more selective and measured pace. For many allocators, the bar for new commitments has risen sharply, and deployment preferences have shifted toward more liquid or near-term yielding strategies.
Some private markets executives are now turning to policy advocacy to help open new sources of capital. A top priority: expanding 401(k) access to private equity and private credit funds. The Trump administration is reportedly weighing reforms that could pave the way for retail retirement accounts to gain broader exposure to alternative assets — a move that could eventually unlock hundreds of billions in new capital.
