Managers pivot to private debt and real assets

Private debt and real assets are driving private markets activity, with alternatives accounting for more than 50 per cent of new manager searches, according to bfinance.

The bfinance Manager Intelligence and Market Trends Report for the third quarter of 2025 found that private markets represented 52 per cent of all new manager searches in the 12 months to September 2025. This was led by private real assets at 24 per cent and private debt at 16 per cent, the report said.

However, bfinance noted that demand for new private equity managers dipped during the third quarter, with fewer but larger manager searches instead targeting diversified, secondaries and evergreen strategies.

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According to bfinance, limited exits and muted distributions remain concerns for limited partners within private equity. The consultancy’s research suggests that limited partners are favouring stability and inflation protection.

Private markets activity nonetheless strengthened, particularly in European direct lending, evergreen credit strategies, and value-add real estate, the report said. Infrastructure themes linked to the energy transition and digitalisation also remained key drivers of investor interest.

“Headline sentiment has steadied, but investors remain valuation-aware and selective. There is clear demand for quality, liquidity and diversified sources of return as institutions position portfolios for a more uncertain macro and policy environment,” said Mark Mortlock, marketing director at bfinance.

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Overall, private equity accounted for 23 per cent of searches, while emerging market equity reached its highest share on record at 50 per cent of all mandates. Global equity searches fell to 35 per cent, as institutions sought regional and single-country strategies including Japan, Europe, India and Gulf cooperation council markets.

The report added that managers continue to adapt to a slower realisation environment as valuations stabilise. Deal activity has been driven largely by add-on acquisitions and growth capital opportunities, rather than large buyouts.

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