Private Capital

What you need to know

• Exits are back: Exit markets are beginning to open around the globe, with exit values up from 2025. Larger sales of premium assets and alternative liquidity solutions like GP-led secondaries are driving this momentum.
• Bigger is better: Headline deal activity has been driven disproportionately by larger transactions including in particular a surge of sponsor take-privates.
• AI both a disruption and an opportunity: Private capital is focusing on AI as both an investment vehicle and deal execution tool.
  

Exits markets reopening

After years of constrained liquidity, there is cautious optimism that the exit market is beginning to reopen in H2 2026, with improving buyer appetite and a broader range of routes available to sponsors seeking to realise value. Globally, announced exit value rose nearly 20% in H1 2026 to US$468 billion, with trade sales accounting for the majority of exit value as corporate acquirers emerged as a critical source of liquidity for PE-backed assets. While the number of exits steadily re-emerges, exit deal value is up, with H1 2026 up 25.3% from H1 2025.

US

The US exit market in H1 2026 presented an apparent contradiction: strong value alongside stagnant volume. PE buyout deal volume across North America fell to ~400 transactions in H1 2026, yet aggregate buyout value reached almost US$400 billion – heavily front-loaded in Q1 at US$204 billion. US PE exit value fell 46.3% quarter-on-quarter in Q2, yet mega-exits of US$1 billion or more accounted for 61% of US Q2 exit value across just 23 transactions. Premium assets are clearing at scale, but little of the wider backlog is reaching liquidity.

The shift in LP behavior is equally telling. Distributions to paid-in capital (DPI) has overtaken internal rate of return (IRR) as the metric that LPs are focused on as exit activity increases. Top-performing managers on a DPI basis are raising quickly, while smaller and first-time funds contend with extended timelines and reduced targets — the result being a growing share of dry powder sitting with the biggest names. North America fundraising reached US$120 billion in Q2 alone across 208 funds – but capital is concentrating with the biggest names, including KKR’s US$23 billion North America Fund XIV and Clearlake’s US$14.8 billion Fund VIII. The common thread across each of these metrics is concentration. Liquidity is returning, but not broadly. Capital continues to flow to the largest sponsors, the highest-quality assets and the most established managers. As in the UK and APAC, sponsors have shown a willingness to transact when quality assets become available but remain cautious on assets that cannot support premium valuations or a compelling operational value creation thesis.

UK

Like global data, the UK has seen an increase in the value of exits, with aggregate value doubling to £23.4 billion. However, for lower quality assets, an exit backlog persists, with only 96 exits completed in the UK in H1 2026 (down ~30% year-on-year).

Quality differentiated businesses continue to command high multiples, while assets lacking clear growth trajectories remain on the shelf.

In response, sponsors are increasingly relying on a now well established alternative liquidity toolkit, with the following solutions seeing particularly frequent and widespread use in the UK market:

• GP-led secondaries accounted for ~20% of exit value in 2025, driven predominantly by single-asset continuation funds – a trend that has continued in H1 2026.
• Structured solutions, including preferred/structured equity and minority stake sales, are being used to generate LP distributions without requiring a full-scale exit at a perceived undervalue.

APAC

PE-backed exits in Australia and the broader Asia-Pacific region are firmly back in 2026.

In the APAC region, PE exit value reached US$111 billion by the end of Q2 2026, with Australia contributing US$9.5 billion across 32 transactions. Notable Australian exits this year include Jardine Matheson's US$2.4 billion acquisition of I-MED Radiology Network from Permira, Brookfield's sale of Multiplex to Japan's Obayashi Corporation for US$646 million and Bain Capital's sale of Estia Health to a consortium led by Stonepeak for US$1.8 billion.

Sponsor exits are expected to continue in the Christmas pre-signing rush with a number of large global sponsors in active processes to dispose of major assets.

Megadeals and take-privates

One of the more notable features of the 2025–2026 recovery is that headline deal activity has been driven disproportionately by larger transactions and take-private deals.

US

The defining feature of the US market in 2026 has not been transaction volume but transaction scale. The US market reflected a flight to quality, with PE sponsors and consortiums deploying record capital into large-cap transactions. US PE buyout value reached US$357.5 billion across 1,151 transactions in the first three quarters of 2026. Exit activity, meanwhile, remains heavily concentrated at the top – mega-exits of US$1 billion or more accounted for 77.9% of US Q3 exit value across just 34 transactions. Sponsor-backed take-privates and infrastructure plays dominated the largest deals of the half, headlined by:

• March 2026: The consortium comprising CalPERS, QIA, GIP and EQT agreed a US$38.4 billion take-private of AES Corp, a global power company – a signature PE move into regulated, dispatchable infrastructure;
• March 2026: Sysco Corp agreed to acquire Restaurant Depot from Leonard Green & Partners for US$29.1 billion – the largest US food distribution deal in a decade;
• January 2026: Brookfield Asset Management acquired YES Communities from GIC for US$10 billion, gaining exposure to tens of thousands of manufactured home sites across 18 US states – a play on defensive, inflation-linked residential cash flows; and
• April 2026: A Stonepeak / Bernhard Capital consortium agreed a US$5.75 billion take-private of regulated utility Cleco Corp, extending the “HALO” asset thesis driving PE into long-duration infrastructure.

UK

Activity in the UK market supports the wider PE trend of sponsors executing fewer, larger transactions, with funds prioritizing trophy assets that hold a defensible market position and can withstand challenging macro-economic conditions.

This flight to quality drove over 21 UK deals above £1 billion in 2025 (£62 billion combined, up from £37 billion in 2024) and 2026 has continued the pattern, headlined by:

• May 2026: TDR Capital acquired Escode in a primary buyout for £3.09 billion;
• June 2026: EQT agreed to acquire Intertek in a £9.4 billion take-private;
• July 2026: KKR and ECP agreed to acquire DCC Energy in a £5.75 billion take-private;
• August 2026: Apollo acquired EasyJet in a £5.7 billion take-private.

The popularity of take-privates in the UK reflects several converging factors:

• UK-listed companies are increasingly viewed by sponsors as a comparatively inexpensive source of “quality” assets, with many continuing to trade at a discount to global peers;
• easing financing costs have improved the feasibility of larger transactions; and
• record levels of UK dry powder are creating pressure to deploy capital at scale.

Public markets offer scale and quality that UK private markets cannot always match, making take-privates an increasingly attractive route for sponsors to deploy larger cheques.

Bigger but fewer deals and the P2P boom are two sides of the same coin: the flight to quality defines what sponsors want; P2P defines where they can find it at scale.

APAC

In APAC, private equity deal value increased 1.2 times year-on-year in Q1 2026 (from US$80.18 billion to US$98.34 billion), with Australia accounting for approximately 5.2% of total APAC PE deal value. Southeast Asia's PE deal value surged 3.5 times year-on-year (from US$9.79 billion to US$34.31 billion), propelled by global investors executing megadeals in digital infrastructure.

H1 2026 has seen a marked acceleration in public-to-private activity across Asia-Pacific, with PE buyouts outperforming the wider M&A market despite softer deal volumes. In Australia in particular, there has been a surge of sponsor take-privates including:

• a KKR-backed consortium comprising Amwins Group and Dragoneer Investment Group agreeing to acquire Steadfast Group for US$5 billion;
• EQT's proposed takeover of Cleanaway Waste Management for US$6.6 billion; and
• Brookfield Asset Management's proposal to buy Reliance Worldwide for US$2.9 billion.

With sponsor-led take-privates gathering momentum across the region, the second half of 2026 looks set to be just as active.

AI Rewires the Deal Thesis

AI is reshaping private capital on two fronts:

• as an investment theme, with AI venture funding reaching US$355.9 billion in H1 2026, representing 86% of all venture dollars; and
• as an operating thesis, where sponsors are embedding AI across diligence, portfolio monitoring and value creation.

The result is faster decision-making but fresh questions around liability, algorithmic bias, data governance and human oversight.

US

While AI continues to attract significant capital, the bigger story may be how sponsors are deploying it internally. US buyers accounted for US$601.8 billion of Technology, Media, and Telecommunications (TMT) deal value across 1,692 transactions in H1 2026—but leading firms increasingly see AI less as an investment theme than as a performance tool. Sponsors now use AI to screen larger deal pipelines, analyze CIMs and diligence materials, review contracts and support IC processes. The 2026 Bain/StepStone GP Outlook finds that firms see the greatest AI benefits in sourcing and diligence, enabling teams to evaluate far larger opportunity sets without proportionate headcount growth.

AI is also embedding in portfolio management. Sponsors use AI-driven tools to flag customer churn, optimize pricing, improve procurement, forecast demand and monitor operations in near real time. Rather than waiting for monthly reports, teams deploy portfolio-wide dashboards aggregating operational, commercial and financial data—enabling earlier intervention and sharper value-creation plays. Advent International's "IC Robot", trained on a decade-plus of IC materials and deal outcomes, shows how AI is shaping decisions across the investment lifecycle. The edge is no longer just owning AI businesses—it’s using AI to invest better and build better companies.

UK

Capital continues to flow at pace and volume across the AI value chain. TMT deal value increased from £10.3 billion in H1 2025 to £14.8 billion in H1 2026, representing 11% of total UK deal value. However, sponsors are seeking to balance AI exposure by increasingly favoring businesses with defensible “AI moats”, including “Heavy Asset, Low Obsolescence” (HALO) businesses that are harder to replicate through software. AI risk is now a core diligence issue, with sponsors stress-testing business models, margins and exit valuations against potential AI-driven disruption.

At portfolio level, use cases include back-office automation, consumer data analytics for pricing and sales, predictive maintenance and AI-embedded products. This reflects the wider shift to operational value creation: Bain estimates EBITDA growth of 10–12% is now needed to deliver a 2.5x MOIC over five years, versus ~5% historically. As hold periods extend and multiple expansion becomes less predictable, AI-enabled operational improvement is increasingly viewed as a means of accelerating EBITDA growth and supporting future exit valuations.

APAC

Similar to global trends, capital is flowing into APAC's AI value chain at an accelerating pace. AI now accounts for 23% of post-boom venture capital activity (up from just 7% in the 2020–22 cycle), and AI-adjacent infrastructure is attracting outsized rounds. Australian superannuation funds are leaning in, with capital invested in AI-linked deals rising in 2026, yet the A$4.5 trillion superannuation pool allocates just 4.4% to PE and venture capital, compared with 14% among global pension funds – a gap that signals significant untapped potential. Australia's innovation credentials sharpen the opportunity: the country produces 1.22 unicorns per US$1 billion of venture capital invested, a ratio unmatched globally. As in the UK, AI disruption is driving greater selectivity, sponsors are stress-testing targets for AI disruption risk and, in some cases, bringing forward exits ahead of anticipated market shifts.