Private Markets Turn Optimistic: Why Investors See Stronger Exit Opportunities Ahead

The findings come from its global "Turning the Corner?" survey of more than 250 General Partners (GPs) and Limited Partners (LPs), which shows sentiment holds steady or improves across asset classes relative to 2024 levels, with the most optimism in real assets.

According to the release, managers expect a clear pickup in exits. GPs say they are most likely to pursue strategic sales and sponsor-to-sponsor deals, and more of them consider initial public offerings as an option over the next year compared to last year. "Valuations remain elevated, but with strong capital markets and lower financing costs, dealmaking conditions look more favourable," said Michael Bruun, global co-Head of Private Equity at Goldman Sachs Asset Management.

The survey adds that continuation vehicles are also seeing increased use, while LPs are becoming more active sellers in secondary markets to manage liquidity and rebalance portfolios.

Investor positioning, the survey notes, shows many LPs still below target across several strategies, including infrastructure, private credit, and private equity, as they expand and diversify their programs. James Reynolds, Global Co-Head of Private Credit, says "private credit, with its unique features, will continue to be an important source of financing activity," adding that returns depend on origination depth, experience through cycles and scale. The survey says co-investments and secondaries remain the largest areas of under-allocation among LPs.

The release highlights growing optimism for infrastructure and real estate. "Infrastructure is benefitting from strong structural tailwinds... The asset class has a 20+ year track record of resilience and inflation protection," says Tavis Cannell, Global Head of Infrastructure at Goldman Sachs Alternatives.

Jim Garman, Global Head of Real Estate at Goldman Sachs Asset Management, says opportunities are emerging as valuations and transactions stabilise, but selection remains crucial. Matt Gibson, Global Head of the Client Solutions Group, says allocators with mature programs consolidate with existing managers while also seeking new managers capable of "idiosyncratic alpha."

Despite slower distributions, most LPs plan to maintain or increase deployment in 2025, according to the survey. Harold Hope, Global Head of Vintage Strategies at Goldman Sachs Asset Management, says investors use secondaries to gain diversified exposure with shorter duration and the potential to mitigate the J-curve, while providing liquidity to GPs and LPs when exit pace trails historical averages.

Respondents also track longer-term shifts. More institutions consider evergreen structures across asset classes, and a large share sees artificial intelligence as a key driver of industry change. For risks, geopolitical conflict ranks highest for the second straight year, while concern about recession and borrowing costs eases amid lower rates or expectations of cuts in major markets, the release added.

- ANI