Private equity faces a challenging 2024–25 as fundraising slows and liquidity tightens

Prolonged fundraising cycles, a thin exit market and constrained liquidity have combined to make 2024–25 a bruising period for private equity, with a handful of very large raises masking a broader and persistent slowdown across the industry.

According to the original report by Private Equity International, private equity fundraising reached $577.7 billion in the year to end-September, marginally below the $589.9 billion recorded in the equivalent period a year earlier. The third quarter contributed only $173.84 billion , the weakest Q1–Q3 total since the covid-19 pandemic , while the number of funds holding final closes fell sharply, from 2,521 in the first three quarters of 2024 to 1,681 over the same period this year. The report quoted a managing director at a global fund of funds manager on one of the practical implications: “the scarcity of mindshare that investors can give”. “That mindshare – the time that LPs have to engage with GPs and process and action these internally – is very limited,” the MD added in an interview with PEI.

Those constraints are visible in broader market data. S&P Global Market Intelligence reported that global private equity fundraising declined for a third straight year in 2024 to $680.04 billion, the lowest annual total since 2015, with fund closings down about 40% year-on-year. McKinsey’s Global Private Markets Report 2024 likewise documented a marked fall in private market fundraising , a 22% decline year-on-year to just over $1 trillion , while noting that buyout strategies and the largest managers continued to attract capital, intensifying a concentration trend. Industry analyses have also flagged a mismatch between supply and demand: Bain & Company estimated private capital chasing a limited pool of investor dollars, roughly $3 of demand for every $1 of supply, a dynamic that has pressured pricing and lengthened fundraises.

The weak exit environment has been a central cause. Reuters and other market observers documented sharply reduced M&A and IPO activity in 2024, prompting a search for liquidity that helped drive record secondary market transactions (surpassing $150 billion in 2024) even as secondary fundraising itself softened. Ardian’s $30 billion close for its ninth-generation secondaries platform was the standout: according to Ardian’s announcement, it is the largest-ever secondaries fundraise and drew a diverse base of limited partners, with private wealth clients representing 22% of the capital raised. Reuters described the fund as emblematic of a broader pivot toward secondaries as investors seek nearer-term liquidity and lower entry-price uncertainty.

That pivot has helped create a fundraising “barbell”, where a small number of very large vehicles and certain strategies outperform a much quieter middle. “It’s a bit of a barbell in terms of fundraising outcomes, with some [GPs] seemingly bucking the trend and raising funds very quickly,” Zac Williams, partner at Monument Group, said at a media roundtable in November. He added that the lower mid‑market remains attractive to limited partners because operational value‑add is perceived as easier to deliver in smaller companies than in larger, more mature businesses.

Another structural shift is the growing importance of the private wealth channel. The lead report and firms’ own disclosures show wealthy individuals are an increasingly material source of capital: Apollo told investors it raised $5 billion from the wealth channel in Q3 and more than $14 billion year‑to‑date, with Véronique Fournier, Apollo’s wealth management EMEA head, saying at a wealth conference in November, “About three years ago, [for] every dollar that we raise, 10 cents came from wealth. Today, it’s about 30 cents for every dollar… By 2029, it will be 50/50.” Blackstone likewise reported more than $11 billion raised from the wealth channel in Q3, with president and COO Jon Gray citing that as the firm’s highest quarterly take from wealth in over three years and signalling plans for targeted advertising to grow that pool.

Despite pockets of strong activity , large secondaries, mega funds from top-tier managers and a handful of regionally successful raises such as Hillhouse’s renewed Asia fundraising momentum , other indicators point to a more cautious industry stance. S&P’s data and other market trackers show dry powder has receded from its record highs, and fundraising totals and closures have trended lower for multiple years. That combination of reduced distributions to LPs, fewer exit routes and macroeconomic and geopolitical volatility has lengthened fundraising cycles, pushed managers to adapt go‑to‑market approaches, and increased the appeal of strategies and channels that can offer liquidity or differential return profiles.

For limited partners and general partners alike, the coming period will be a test of strategy and positioning. Managers who can credibly demonstrate differentiated sourcing, operational value‑add in the lower mid‑market, or access to near‑term liquidity via secondaries and structured solutions appear to be garnering disproportionate interest. At the same time, the industry faces a tug-of-war between concentration among the largest managers and the opportunity for emerging managers and specialised vehicles to capture capital that seeks higher return dispersion. As fundraising pressures continue, the market’s composition , and which parts of private equity prosper , will increasingly reflect who can adapt fastest to an environment in which capital is scarcer, patience is shorter and choices are more scrutinised.