Welcome to the third edition of our ‘Navigating the Future’ series. This edition focuses on the key trends from H1 2025 as we progress to end of the year.

We ended 2024 with a bearish outlook for 2025 which has so far not disappointed. As this edition details, against a backdrop of continued geopolitical uncertainty, we continue to see fundraising challenges, cooling but persistent inflation and low levels of deal activity. These conditions have sparked trends such as record-breaking levels of secondary transactions, an expansion of the capital pool in private markets, lowering of interest rates and regulatory reform aimed at supporting growth.

Fundraising – challenging conditions continue to permeate, recovery not expected until 2027

In H1 2025, despite an overall increase of 2.6% in commitment terms comparing H1 2025 with H1 2024 (from $34.35bn to $35.24bn) there is a further concentration of the market as the number of funds decreased by 55% (from 49 to 22). In fact, H1 2025 saw the lowest number of UK based private equity funds close in the last 3.5 years, with the next lowest being H2 2024[1].

Preqin forecasts global fundraising in private capital to recover from 2027 and forecasted to exceed the previous high of 2021 in 2029, with greatest gains within VC and Infrastructure asset classes[2].

Deal activity – deal volumes at lowest point over last 5 years

In H1 2025, despite the value of private equity and venture capital deals increased 18.7% YoY, the number of such deals fell 9%[3].

M&A deal volumes decreased across all geographies in Q1 2025. In fact, Q1 2025 had the lowest number of deals of any quarter over the last 5 years[4].

Secondary markets – 2025 set to be a record-breaking year for secondaries

2024 closed as a record-breaking year for secondaries with $162bn of closed transactions, ahead of the previous record set in 2021 of $132bn[5].

One of the trends seen is the use of single asset continuation vehicles which represents 48% of the GP-led volume in 2024.

Retailisation

Private equity managers have sought capital from a wider pool as institutional fundraising has declined over an extended period. Product innovation has been necessary in local European markets such as the EU’s ELTIF 2.0 and the UK’s LTAF to support this as traditional closed-ended investments aren’t suitable for the retail investor that expects liquidity[6].

In the UK eyes look toward the defined contribution pension market with assets in the UK expected to hit £1 trillion by 2030.

Semi-liquid vehicles

In 2024, semi-liquid vehicles accounted for nearly one-third of total fundraising, underscoring their growing importance in private market secondaries and enable syndicate investors to consistently deploy capital regardless of flagship fundraising status[7].

There are only a small number of firms who have the distribution models to offer such vehicles which has resulted in a concentrated market. It is expected that this will evolve over time as firms refine their distribution models to accommodate.

UK inflation

Golman Sachs expect the Bank of England to lower rates more than the markets have currently priced as we progress through 2025. They expect UK inflation to align with other advanced economies with a reduction in food/energy prices in the UK, they expect a return to inflation target in 2026[8].

Carried interest: A new taxation era in the UK

The carried interest regime is currently transitioning to a new approach effective 6 April 2026 from being taxed as capital gains to trading income, a move designed to align taxation norms with global benchmarks. The capital gains tax hike to 32% adds another layer of complexity, particularly for non-UK residents providing services to UK-based funds. The regime change is placing the UK with one of the highest tax rates in respect of carried interest across the globe and is currently under careful consideration by private capital managers.

Regulatory reform to promote growth

As government policy clearly targets growth such as the UK government setting a new approach to regulators supporting growth and the European Commission reaffirming their focus on growth, regulators are actively undertaking their supportive regulatory reform programs such as the FCA’s plans to ease regulation for alternative asset managers – click to Belasko insight.

Navigating change

As a leading fund administrator, Belasko remains committed to supporting our clients in navigating any change or uncertainty, as well as offer tailored solutions to help fund managers thrive and avail of new opportunities on the horizon.

To discuss in more detail, please reach out to Nick McHardy, our head of funds, at: nick.mchardy@belasko.com.

[1] https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/7/uk-private-equity-fundraising-rises-26-in-first-half-91359483

[2] https://pro.preqin.com/insights/research/reports/preqins-state-of-the-market-h2-2025 (p28)

[3] https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/7/global-private-equity-deal-value-up-19-in-h1-2025-91443230

[4] https://pro.preqin.com/insights/research/reports/preqins-state-of-the-market-h2-2025 (p34 and 36)

[5] https://www.blackrock.com/institutions/en-us/insights/market-update-h1-2025

[6] https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/6/private-markets-push-into-retail-europe-slowed-by-risk-profile-regulations-89493101

[7] https://www.blackrock.com/institutions/en-us/insights/market-update-h1-2025

[8] https://www.goldmansachs.com/insights/goldman-sachs-research/why-is-uk-inflation-still-so-high