Private markets enter 2026 with more clarity and a healthier competitive landscape than at any point in the past three years. After a volatile 2024 and a stop-start 2025, investors are now positioned to deploy into a market that has repriced, rationalised, and reopened in key areas.

Looking ahead to 2026, the macro backdrop can be framed around three interrelated shifts. First, investment opportunities are broadening, with a wider set of regions and asset classes coming into focus. Second, yield curves are beginning to steepen as short-term interest rates decline, encouraging investors to move out of cash and into risk assets. Third, expectations for a softer US dollar are building, which could support emerging markets and have implications for portfolio hedging and allocations.¹

Against this backdrop, private markets remain central to how institutions seek return, diversification, and resilience.

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2025 in Review: From Tariff Shock to Re-Acceleration

Macroeconomic twists and turns kept investors cautious for much of 2025. US tariff announcements were widely expected, but their initial levels and the April pause in activity were not, leading to a brief stalling in deal and exit volumes.

By the second half, activity had clearly re-engaged:

• Global private equity deal value reached $522bn in Q3 2025, the highest quarterly level since late 2021.²
• Cumulative global PE deal value across buyout, venture, and growth is estimated at $1.4tn for full-year 2025, also the strongest since 2021.²
• Global exits picked up meaningfully: exit count in Q3 2025 was 17% higher than Q2 and 13% higher than Q1, with global exit value on track to reach around $1tn, about 33% higher than 2024.

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Global private equity exits rose in Q3

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HarbourVest notes that, while the tariff shock slowed Q2, managers spent that period stress-testing supply chains and “future-proofing value.” By Q3, dealmaking confidence had returned, with both investment and exit activity rising.

Regionally, the picture was nuanced:

• North America: US PE deal value in Q3 2025 reached $291bn, up 21% quarter-on-quarter and 21% year-on-year.²
• Europe: PE deal value hit €148bn in Q3, a 19% increase over Q2, with exits up 92% by value to €84bn.²
• APAC: In Q3 2025, Asia-Pacific private equity deal value reached $30.6bn across 253 announced deals, up from $21.2bn in the previous quarter, indicating a rebound in regional activity.³
• Fundraising remained challenging across private markets in 2025. The year is tracking toward a further decline, continuing the multi-year downward trend in LP commitments.

Despite this, overall the message at the end of 2025 is clear: the trough is behind us, and private markets are moving into a more constructive phase.

Macro Setup for 2026: Broadening, Steepening, Weakening

Franklin Templeton’s three macro themes help frame the opportunity set for 2026¹:

• Broadening: Opportunities are expanding geographically and across asset classes, as Europe benefits from lower rates, APAC from structural growth, and private credit and secondaries from structural demand.
• Steepening: With short-term policy rates beginning to fall in the US and Europe, yield curves are expected to steepen. This should encourage investors to rotate out of cash and money-market funds into equities, private credit, and longer-duration fixed income, supporting transaction activity and refinancing.
• Weakening: A softer US dollar would be supportive for emerging-market debt and equity, and could influence allocations to global private strategies and hedging decisions.

Overlay this with:

• New highs in US equity markets
• The resumption of the Fed’s rate-cutting cycle, and
• Persistently elevated geopolitical risk and trade uncertainty,

and you get a backdrop where private markets are positioned as both a diversifier and a source of structural growth.

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Key Themes for Private Markets in 2026

1. Operational Value Creation Takes Center Stage

The era of easy gains driven by rising valuation multiplesis largely behind us. Private equity managers are now deriving the majority of their returns from operational improvement, efficiencies, pricing power, digital transformation, and strategic repositioning, rather than from multiple expansion.

This shift is reshaping the competitive landscape in several ways:

• Firms with deep sector expertise are consistently outperforming broad generalist strategies.
• Operating teams are playing a much larger role in underwriting and post-deal execution.
• Return dispersion across managers is widening, increasing the importance of disciplined manager selection.

The next deployment cycle is expected to look materially different from vintages of the early 2020s, with more realistic entry valuations, a renewed focus on fundamentals, and a greater reliance on hands-on value creation rather than market-driven uplift.

2. AI as a Portfolio-Wide Efficiency and Deployment Theme

Deloitte’s 2025 GenAI in M&A study shows that 88% of private equity M&A teams report meaningful generative AI investment, compared with 77% of corporates. AI is now a pervasive theme across sourcing, underwriting, and portfolio operations.

Private Equity is heavily investing in GenAI

Share of PE and coorporate M&A functions that report meaningful GenAI investments

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On the deployment side:

• AI and machine-learning startups attracted around $193bn of venture funding by Q3 2025, more than half of global VC value.⁴
• US companies dominate AI funding, reflecting the strategic importance of the space.

Beyond software, the AI infrastructure stack, data centres, power, cooling, and networking require trillions of dollars of capex through 2030, with McKinsey estimating up to $7tn of investment under certain scenarios.⁵ This will be financed across the spectrum: infrastructure equity, private credit, real assets, and growth equity.

For 2026, we expect:

• Continued take-privates and carve-outs where AI capability is central to the thesis.
• Significant deployment into data-centre platforms, energy infrastructure, and related ecosystems.
• AI to remain a key driver of both opportunities and operating improvements across portfolios.

3. Liquidity Still Front and Centre – Secondaries and Exits

Investors and managers remain intensely focused on liquidity. As traditional exits slowed, the secondary market surged. Jefferies estimates H1 2025 secondary volume at $103bn, up 51% year-on-year, with full-year 2025 expected to exceed $210bn.⁶

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Secondary market volume breaks records

Annual transaction volume ($bn)

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Secondaries are no longer a niche; they are becoming a strategic allocation:

• LP-led deals for liquidity, portfolio clean-up, and rebalancing.
• GP-led continuation vehicles across buyout, credit, and infrastructure, allowing GPs to hold high-conviction assets while offering LPs a choice of liquidity or roll-over.
• Increasing use of NAV loans, preferred equity, and structured solutions.

Exit markets show real progress; Q3 2025 global PE exits were up 8% in count vs Q2 and on pace to reach around $1tn of value.²

We expect 2026 to bring further normalisation, with a larger share of exits coming from sponsor-to-sponsor transactions, trade sales, and a gradually reopening IPO window

4. Asset-Class Opportunities for 2026

Looking ahead, several private market segments stand out as particularly well positioned for the year ahead¹:

• Private equity: Favour secondaries, given attractive pricing, shorter J-curves, and structural advantages in today’s environment of still-muted exit markets.
• Private credit: Focus on asset-based finance and commercial real estate debt, where collateral and structure provide differentiated risk/return and correlation characteristics.
• Real estate: Remain cautious on traditional offices, but see opportunities in multi-family housing, industrial/logistics, and select alternative sectors.
• Infrastructure: Digital infrastructure, decarbonisation, deglobalisation-driven supply-chain assets, and demographics-linked infrastructure remain key themes.

5. Democratisation, Evergreen Structures and Product Innovation

The “weakening dollar” and “steepening curve” backdrop, combined with policy changes, is driving continued democratisation of the private market. Evergreen and semi-liquid vehicles are growing rapidly. PitchBook estimates wealth-focused evergreen fund AUM at around $427bn in 2024, with forecasts of $1.1tn by 2029, implying c. 20% CAGR.⁷

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Base-case wealth-focused evergreen fund AUM forecast ($bn) by structure

Regulatory moves, such as ELTIF 2.0 in Europe and reforms to DC pensions in markets like the US and UK, are opening private markets to broader pools of capital and driving product innovation across secondaries, private credit, and infrastructure.

For banks and wealth managers, this means:

• More choice in vehicle types (evergreen, interval funds, semi-liquid structures).
• The need for clearer liquidity frameworks and client education.
• Integrating private markets into standard multi-asset offerings rather than treating them as side-pockets.

Where We See the Best Opportunity Set in 2026

Drawing these themes together, several opportunity areas stand out:

• Mid-market buyouts, particularly those with deep operational capabilities and sector specialisation.
• Private credit, with the most attractive opportunities in asset-based financeand infrastructure-linked credit.
• Private equity secondaries, offering compelling pricing, shorter duration, and enhanced liquidity.
• AI-related infrastructure, including data centres, power generation, cooling, grid upgrades, and storage.
• Real assets aligned with energy transition, logistics networks, and essential infrastructure.

Across all areas, manager selection is critical, with widening dispersion and a clear gap expected between top-tier and weaker platforms.

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Implications for Financial Institutions and Wealth Manager

For banks, asset managers, and platforms, 2026 is less about discovering a new asset class and more about upgrading how private markets are used:

• Shift from product distribution to portfolio architecture, integrating private markets into risk, liquidity, and income frameworks.
• Use secondaries and semi-liquid vehicles to manage liquidity and pacing, not just commitments.
• Equip front-line advisers with coherent narratives around AI, energy transition, and regional diversification.
• Tighten manager-selection processes, recognising that vintage 2026 may look very different from 2020–23 in terms of dispersion and alpha.

A Strong Vintage Year in the Making

After two years of adjustment, private markets head into 2026 with:

• more attractive entry valuations,
• more realistic earnings expectations,
• better-defined liquidity tools, and
• powerful structural themes in AI, infrastructure and energy transition.

History suggests that vintages following periods of repricing and liquidity stress often deliver strong long-term returns.

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Author

Saad Adada, CFA

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_Sources:

_{1-     https://www.franklintempleton.co.uk/articles/2025/institute/2026-private-markets-outlook-executive-summary}

_{2-     https://pitchbook.com/news/reports/q3-2025-global-pe-first-look}

_{3-     https://kpmg.com/xx/en/what-we-do/industries/private-equity/pulse-of-private-equity/aspac.html}

_{4-     https://www.bloomberg.com/news/articles/2025-10-03/ai-is-dominating-2025-vc-investing-pulling-in-192-7-billion}

_{5-     https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-cost-of-compute-a-7-trillion-dollar-race-to-scale-data-centers}

_{6-     https://www.jefferies.com/wp-content/uploads/sites/4/2025/08/Jefferies-Global-Secondary-Market-Review-July-2025.pdf}

_{7-     https://pitchbook.com/newsletter/forecasting-the-growth-of-wealth-focused-evergreen-funds}