Fund Managers See Glimmers of Hope Amid Clouds for 2025 🌥️
(Approximate reading time: <5 minutes)
Despite a modest 0.9% forecast for French economic growth in 2025, private equity managers are identifying emerging opportunities even in a politically and economically uncertain landscape.
Macro and Political Context: A Mixed Forecast 🌦️
- Recession Ahead: 65% of managers surveyed by CFNEWS anticipate a recession in 2025, though fiscal concerns and domestic political instability are their primary worries.
- Tax Pressure : The potential reform of carried interest is causing concern. Some GPs are considering relocating in response to stricter tax measures in France.
- Geopolitics and Energy : Conflicts in Ukraine and the Middle East continue to impact commodity costs and macroeconomic stability.
Private Equity Dynamics: Caution with a Hint of Optimism 🤔
- Recovery in Sight : The private equity barometer turned positive, indicating a rebound in activity for 2025, though the year is still described as "recovering."
- The Role of Operating Partners : These internal experts boost IRRs (35% on average versus 26% without them) but also increase fund expenses.
Sectoral Trends and Market Consolidation 🔍
- Consolidation on the Rise : Deals like IK Partners with Wendel highlight a polarized market between large multi-strategy players and small/mid-cap specialists.
- Diversified Strategies : 42.5% of GPs are considering internal changes for 2025, including launching new funds, pursuing external growth, or bringing in new investors.
Outlook and Key Trends to Watch 👀
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Top 10 Most Attractive Sectors for 2025:
- 83.3% Aerospace/Defense ✈️
- 60.6% Healthcare Services 🏥
- 54.9% Energy/Environment 🌍
- 52.1% Business Services & Consulting 🧑💼
- 42.3% Digital/IT Services 💻
- 36.6% Biotech/Medtech/Pharma 🧬
- 36.6% Financial Services 💰
- 19.7% Industrial Goods & Services 🏭
- 18.3% Agri-food 🌾
- 14.1% Education 📚
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Challenges in Fundraising : Weak exits are slowing capital raising.
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Critical Size Matters : Single-strategy players must adapt to remain competitive in a market where asset management often exceeds €1 billion.
Analysis : 2025 could mark the beginning of a moderate yet pivotal recovery, with GPs betting on innovation and adaptability to navigate challenging winds.
Written by: Loïc KUATE LOWE
Source: CFNEWS.