We are pleased to share our Q1 2026 Keystone Market Update, which explores the evolving dynamics across private markets at a moment of growing complexity.
As at the start of 2025, the market narrative entering 2026 was that it would be another "banner year" for private markets. Since year-end, a combination of market shocks (Software/BDC sell-off, Iran War) and persistent structural dynamics (New Exit Game, Twin Scarcities) have resulted in a slowdown in capital markets activity.
Our North Star for gauging the health of private markets, and the potential for a rebound in transaction activity, continues to be the intrinsic value spread to reported NAV. This measure was nearing parity in late 2025 but has widened as a result of the recent macro shocks. Moreover, the “New Exit Game” continues to prove more secular than cyclical, contributing to constrained exit activity, extended hold periods, and ongoing pressure on liquidity and fundraising.
Distribution yields remain below historical levels, fundraising conditions are tight, and consolidation across GPs continues to accelerate. Meanwhile, risks tied to software exposure and the interconnection between private equity and private credit is beginning to draw greater attention – a topic we explore in more detail in the Appendix of the Market Update.
In this update, we use our proprietary Nowcast framework to evaluate how these dynamics are interacting in real-time, what they appear to signal for returns and liquidity in the near-term, and where we see both risk and opportunity emerging for GPs and LPs in the year ahead.