A significant majority of GPs (79%) expect deal returns to increase this year – a marked rise from just 24% in 2024 – reflecting a broader industry rebound after a challenging few years for deal-making and fundraising, according to Investec Bank’s Private Equity Trends 2025 Report.
Notably, 38% of respondents anticipate their next fund will experience a “blockbuster” increase of 25% or more, signalling heightened expectations for growth in the year ahead. This marks a stark contrast to 2024, when just over a fifth of respondents foresaw a down round for their upcoming funds. This year’s survey reveals only 3% anticipate a similar outcome.
An increasing number of GPs expect to raise commitments from the typical 2-3% range, with one in ten expecting GP commitments to fall between 6-10%. This shift comes in response to a growing selectivity among LPs, and a desire among GPs to strengthen alignment with investors and bolster fundraising momentum.
The evolving debt market also plays a key role in shaping the outlook for 2025. The report reveals that over half of GPs expect to work with new lenders in 2025, a reversal from last year’s survey, where 56% of respondents reported a contraction in lender activity.
The influx of new lenders is seen as a potential catalyst for improved borrower conditions, with 54% of UK-based managers anticipating either narrowing margins or the relaxation of documentary controls.
Outside the UK, GPs are somewhat more cautious, with only 35% expecting more lenient terms from lenders.
Despite this optimism, lenders are maintaining discipline, with 43% of respondents reporting lower leverage multiples compared to the previous year. While interest rates have come down, the cost of borrowing remains elevated, making additional leverage more expensive.
In terms of exit strategies, private equity professionals are planning for a dynamic and competitive landscape. More than half of GPs (54%) expect trade sales to be the most active exit route over the next two years, with 50% considering two portfolio companies for an IPO during the same period.
The continued pressure on traditional exit routes has led to a greater reliance on continuation vehicles, with over 40% of GPs indicating they are likely to use continuation funds as a key exit option within the next 12 months.
The survey was based on 253 responses from a prequalified panel, conducted between January 7 and January 22, 2025. Among the respondents, 178 were based in the UK, 75 in Europe, including 22 in Germany, 14 in Spain, and 11 in France.
In terms of AUM, 4.3% of respondents had over €5bn, 43.9% had €1bn-5bn, and 51.8% managed under €1bn. The survey also included respondents from various roles, such as Investment Directors, CFOs, VPs of Finance, and Directors of Finance/Investments.
