1. AI & Infrastructure—Fueling the Digital Backbone
Artificial intelligence remains a central force in private equity’s growth trajectory. Firms aren’t just funding AI startups—they’re investing heavily in the infrastructure that powers them. Data center investment has surged, with PE deploying over $31 billion in U.S. infrastructure deals through the first half of 2025, largely for AI-related use cases. These assets are critical: data centers already consume more than 2% of global electricity—and are projected to reach 3–4% by 2030.
2. Cybersecurity—A Resilient Win
Security solutions continue drawing premium valuations. Mid-market cybersecurity firms have fetched 8× trailing revenue, reflecting their subscription-led, mission-critical value. PE and VC investments in the space nearly doubled in 2024 to $8.5 billion, indicating growing investor confidence in cybersecurity’s long-term resilience.
3. ESG & Sustainability—From Niche to Norm
Environmental, Social, and Governance (ESG) integration is no longer optional—it’s mainstream. Private equity firms are leveraging ESG as a strategic differentiator, focusing on investments like green energy, clean-tech, and impact-driven businesses that deliver stronger long-term returns.
4. Private Credit—Filling the Financing Void
As banks retreat from mid-market lending, private equity and alternative lenders are stepping in. The global private credit market, already at $1.5 trillion, is projected to nearly double by 2029. These funds provide direct financing and distressed debt solutions—crucial strategies in a high-rate environment.
5. Emerging Markets & Niche Strategies
Firms are increasingly looking beyond saturated markets to Southeast Asia, Latin America, and Africa—targeting sectors like fintech, infrastructure, and healthcare. Business services and industrial sectors also present ripe opportunities for digitization, consolidation, and AI integration. For example, Q3 2024 saw $11.4 billion invested in industrial automation companies, up from $780 million the previous year.
6. NAV Finance—Growing Fund-Level Lending
Net Asset Value (NAV) financing, once niche, is gaining traction. PE managers increasingly use NAV loans to unlock capital from existing portfolios, particularly as traditional bank funding shrinks post-banking crises. Demand for NAV financing is reportedly stronger than ever.
7. Co-Investments & Sovereign Influence
Co-investments remain attractive to limited partners—offering lower fees, direct exposure, and greater control. Meanwhile, sovereign wealth funds are playing bigger roles, providing cornerstone equity and direct investments, with nearly $30 billion deployed in U.S. private equity so far in 2025.
What’s Driving This Momentum?
- AI-fueled demand powers both hardware (data centers, infrastructure) and software (cybersecurity, analytics).
- ESG mandates and performance are aligning values and valuations.
- Dislocation in traditional lending channels has created space for private credit and NAV financing.
- Geopolitical shifts and trade instability are pushing deals toward regional markets.
- LP sophistication and capital diversification (via co-investments and sovereign channels) are reshaping deal dynamics.
