Global private equity fundraising fell sharply in Q1 2025, highlighting growing strain on the asset class as persistent high interest rates, sluggish exit activity, and geopolitical uncertainty continue to weigh on LP allocations, according to a report by Bloomberg.
The report cites data from PitchBook as revealing that firms raised just $116bn globally in the first three months of the year – a 35% drop year-over-year – putting the industry on pace to fall short of the $531bn raised in 2024, which was itself a subdued year by historical standards.
While 2024 saw a modest rebound in realisations that helped speed up fundraising cycles, those gains now appear at risk. PitchBook analyst Jinny Choi warned that if macroeconomic volatility and protectionist trade policies persist, exit markets could seize up again, stretching the fundraising timeline and placing pressure on sponsors’ ability to return capital.
The ongoing cash flow constraints facing many portfolio companies – particularly those acquired during the peak valuation years of 2021–22 – are exacerbating the challenge. Many of those deals were financed with cheap leverage that has since become costlier to refinance, while growth projections have moderated. Moody’s Ratings cautioned last month that sponsors face a “difficult environment” for both managing and exiting assets, with business sentiment deteriorating amid renewed US-China trade tensions under President Donald Trump’s administration.
In response to limited distributions, LPs have increasingly turned to the secondaries market, using it as a tool to manage overexposure and generate liquidity. Secondaries fundraising reached $52.1bn in Q1 — nearly half of 2024’s full-year total — signalling that demand for GP-led restructurings and LP stake sales remains high.
Other alternative asset classes are also facing fundraising headwinds. Venture capital collected just $18.7bn in Q1, putting 2025 on track to be the weakest VC fundraising year in over a decade. Real estate strategies saw a modest uptick to $19bn, but remain challenged by performance drag and liquidity constraints across both opportunistic and core funds.
In contrast, distressed debt is emerging as a bright spot. Oaktree Capital Management raised a headline $16bn in Q1, pushing distressed strategies to $21.4bn in total — well ahead of pace to exceed their five-year annual average of $28.5bn.
