Alternatives in 2025
Outlook 2025: Real Assets and Resilient Strategies in a Shifting Private Markets Landscape
Square Groupe recently followed the insights shared at the Preqin Alternatives in 2025 seminar — a key touchpoint for assessing current dynamics and investor sentiment across private markets. The themes that emerged align closely with what we observe in our daily work with clients: a strong pivot toward resilient asset classes offering tangible value, stable cash flows, and potential for operational upside.
After a challenging period, private equity is showing encouraging signs of recovery:
- Global fundraising reached USD 482 billion by Q3 2024, down from USD 781 billion in 2023, but with improving sentiment.
- 50% of LPs plan to increase their allocations to private equity over the next 12 months (versus 28% in 2023).
- Small and mid-market buyouts are regaining traction, seen as a core engine for alpha generation and operational value creation.
Real Estate: Value-Added Strategies Come to the Fore
The real estate market is adjusting to higher rates and shifting investor priorities:
- Core and value-added strategies are emerging as preferred plays, as pricing becomes more realistic and financing terms begin to ease.
- ESG considerations remain critical, especially in renovation-led projects and healthcare real estate, where sustainability aligns with long-term institutional mandates.
- Real estate debt is also regaining relevance, offering risk-adjusted yield and useful diversification.
Private Debt: A Defensive Foundation
Private debt continues to strengthen its position within institutional portfolios:
- Direct lending represented 79% of global private debt fundraising by Q3 2024, with USD 93 billion raised.
- Fund management fees in this segment have declined by 26 basis points year-on-year to 1.42%, improving net returns to LPs.
- For investors focused on predictable income and downside protection, private debt offers an attractive inflation hedge.
Infrastructure: Reliable Returns in a Volatile World
While fundraising has slowed compared to the post-COVID peak, infrastructure remains a core long-term allocation for many investors:
- Infrastructure debt strategies continue to benefit from their revenue visibility and low correlation to macro risk.
- Green infrastructure and energy transition projects are becoming central pillars of allocation policy, particularly in Europe.
Expanding Access: The Rise of Private Wealth Allocations
One of the most structural shifts highlighted by Preqin is the ongoing democratization of private markets:
- In Europe, ELTIF 2.0 is enabling broader retail participation through evergreen vehicles, simplified subscription processes, and lower minimum investment thresholds.
- Managers that can provide diversified, multi-asset private market solutions in a frictionless format will be best positioned to serve this growing segment.
Conclusion
At Square Groupe, we believe the private markets landscape in 2025 will reward asset managers and investors who combine deep sector expertise with execution agility and operation. Our strategy focuses on income-generating companies and operational real estate, particularly in healthcare and lifestyle sectors — offering robust investments for long-term value creation and a downside protection. We see continued opportunities in European private equity, particularly where baby boomers do not have kids interested in pursuing the family business and prefer to sell in order to retire.
We are particularly active in industrial, healthcare and hospitality assets.