We are pleased to present our Q1 2025 Market Update, offering real-time insights into private markets, including our 'Nowcasts' for near-term cash flow and valuation trends.
The dominant narrative in recent quarters has been the unbridled optimism surrounding the U.S. economy following the election results in November. U.S. equity markets continue to reach new heights, despite concerns over valuation levels. Several bubble indicators are flaring, but the relative lack of viable alternatives outside the U.S. has sustained asset prices (for now).
Heading into 2025, a key question remains: Will the post-election animal spirits in public markets (finally) spill over to private markets? Many are predicting a significant rebound in exit and fundraising activity, and while we believe the “headline” numbers could look strong compared to recent years, it’s important to put these figures in context.
In our view, while strong macro sentiment, public stock performance, and rising allocations to private markets are likely to boost fundraising and deal activity, the exit market will not fully rebound until the NAV overhang issue, which we've covered in prior quarters, is addressed.
We also examine the fundraising landscape, which remains divided with larger firms capturing a greater share as retail and insurance investments surge. We estimate the large pipeline of nearly fully deployed 2021-vintage funds will need to return to market in 2025, offering a more accurate test of the true health of fundraising—particularly for middle-market managers.
In the report, we explore these topics in detail and provide key themes to monitor in 2025 for both GPs and LPs. You can find the full market update here (Password: Arctos1!).
As always, we welcome your feedback and questions.