The private capital markets in Europe, the Middle East, and Africa (EMEA) are navigating a complex landscape in 2025, marked by liquidity challenges, strategic shifts, and emerging opportunities. This midyear update revisits six key predictions made in December 2024, offering a deep dive into how these trends are unfolding. From record-breaking private equity (PE) fundraising to the transformative AI boom, here’s a comprehensive look at the state of EMEA private capital markets halfway through the year.
A Resilient yet Challenging Environment
The EMEA private capital markets are grappling with a tougher dealmaking environment in 2025. Flattening interest rates, following a cycle of rising debt costs, have favored debt providers while challenging those seeking financing for large deals. This has driven a surge in alternative strategies like private debt and venture debt, while large debt-heavy transactions have fallen out of favor. Meanwhile, a persistent liquidity crunch, particularly in venture capital (VC), has limited exits, impacting returns for limited partners (LPs). Geopolitical volatility, including uncertainties around US tariffs, has further complicated the exit landscape, prompting investors to explore secondaries as a liquidity solution.
Despite these challenges, opportunities abound. The AI sector is experiencing unprecedented growth, and regions like the Middle East and North Africa (MENA) are emerging as hotspots for capital inflows. Below, we break down the key trends shaping the EMEA private capital markets in 2025.
1. European PE Middle-Market Fundraising: A Record Year in Sight
Prediction: PE middle-market fundraising would return to growth, surpassing its 2021 peak of €70 billion.
Midyear Update: This outlook is tracking better than expected. Year-to-date (YTD), middle-market fundraising is projected to reach €100 billion, a 55.9% year-over-year (YoY) increase, driven by a 35% YoY surge in deal value in 2024. Notable Q1 fund closings from firms like CVC Capital Partners, Oakley Capital, Ardian, ICG, and Adelis Equity, alongside Thoma Bravo’s €18 billion European fund, highlight growing US PE interest in the region. Monetary easing and favorable economic conditions are fueling this momentum, though potential US tariffs could trigger a market downturn, prompting LPs to scale back commitments due to the denominator effect.
Key Takeaway: European PE fundraising is on pace for a record-breaking year, but external risks like tariffs loom large.
2. PE GP-Led Secondary Exits: A Vital Liquidity Solution
Prediction: GP-led secondary exits would grow by double digits, reaching $66 billion in 2025.
Midyear Update: While 2024 was a record year for GP-led secondaries ($50–$60 billion), 2025 YTD data shows a lag, attributed to market volatility from US tariff uncertainties and data gaps (with two-thirds of exits assigned a default $500 million value). Notable deals include Ardian’s Syclef continuation vehicle and Inflexion’s $30.5 billion multi-asset fund, the largest in Europe to date. Despite the lag, GP-led secondaries remain a critical exit strategy as sponsors seek liquidity in a volatile market.
Key Takeaway: GP-led secondaries continue to gain traction, though market and data challenges temper growth.
3. European Venture Debt: A Muted but Relevant Market
Prediction: Venture debt deal value would remain significant but not surpass 2024 levels.
Midyear Update: This outlook is tracking as expected. YTD, €8.6 billion has been raised across 128 deals, down 31.5% in value and 49.9% in volume YoY. Larger deal sizes, such as United Petfood (€1.4 billion), FINN (€1 billion), and Capital on Tap (€888 million), have supported value metrics. The venture-growth stage dominates (66% of deal value), with late-stage deals rising to 18% from 6%. New lenders like Western Technology Investment have entered the top 10, while established players like BNP Paribas and Barclays maintain strong activity. A muted IPO market may sustain debt demand.
Key Takeaway: Venture debt remains a key financing tool, though activity is quieter as expected.
4. VC-Backed IPOs: A Concentrated Recovery Amid Volatility
Prediction: The IPO market would see a concentrated recovery in 2025.
Midyear Update: This outlook is not tracking as hoped, largely due to unforeseen geopolitical volatility, particularly US tariff policies under President Trump. YTD, €3.6 billion in IPO value has been generated from just four exits, compared to €11.2 billion in 2024 (dominated by Puig’s €10.9 billion listing). Excluding Puig, 2025 shows a YoY uptick, but overall activity remains low. US listings by firms like eToro, Coreweave, and Hinge Health highlight resilience, while Klarna’s potential US IPO could shift momentum. However, risks remain skewed to the downside.
Key Takeaway: IPO activity is concentrated and volatile, with geopolitics dampening optimism.
5. AI Investment: A Revolutionary Boom
Prediction: AI investments would set new records in both PE and VC.
Midyear Update: This outlook is tracking strongly. YTD, €7.6 billion and €4.2 billion have been invested in VC and PE AI deals, respectively. Standout transactions include the €1.4 billion buyout of UK-based AI content creator Metaphysic and a €0.6 billion raise by Google DeepMind’s Isomorphic Labs. AI’s impact spans industries like content creation and drug discovery, with growth in infrastructure (data centers, semiconductors) and supportive policies like the EU’s Artificial Intelligence Act fueling the boom.
Key Takeaway: AI remains a transformative force, on track for record-breaking investment.
6. MENA Private Market Fundraising: A Slow Start with Potential
Prediction: MENA fundraising would exceed $20 billion in 2025.
Midyear Update: This outlook is not tracking as expected, with only $2.1 billion raised across 17 funds YTD. A significant uptick is needed to meet the $20 billion target. Despite the slow start, initiatives like Saudi Vision 2030 and pro-business policies continue to drive capital flows into sectors like real assets, green energy, and IT. Domestic and international LPs, alongside government support, bolster long-term potential.
Key Takeaway: MENA fundraising lags but retains strong growth prospects.
Looking Ahead: Opportunities Amid Uncertainty
The 2025 EMEA private capital landscape is a tale of resilience and adaptation. AI investments and PE middle-market fundraising are poised for record-breaking years, while GP-led secondaries and venture debt provide critical solutions in a liquidity-constrained environment. However, geopolitical uncertainties, particularly US tariffs, and a cautious IPO market pose challenges. As investors navigate this dynamic landscape, strategic shifts towards alternative financing and emerging regions like MENA will be key to unlocking opportunities.
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