Tech Separates PE Winners

Welcome to this week's Capital Call - your Wednesday dose of private market insights without the jargon. At OneFund, understanding market shifts is crucial for making informed investment decisions.

Pour yourself something nice and dive in. 

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🧠 THE BIG IDEA

AI Won't Drive Private Markets to $24T…But It Will Determine Who Gets the Biggest Slice

Despite recent trade tensions and market volatility, private capital AUM is still projected to reach $24.1T by 2029, growing steadily from today's $19T base.

The road ahead features more complexity than the 2010-2020 boom, with a measured 5.2% annual growth rate reflecting today's more challenging environment.

In this new landscape, competitive advantage comes less from access to capital and more from operational efficiency — particularly in how firms leverage AI to identify opportunities, accelerate value creation, and shorten holding periods.

📈 MARKET MOVERS

📈 Fed holds rates steady despite Trump's criticism:The Federal Reserve is maintaining current rates amid political pressure, extending the higher cost of capital environment that's challenging dealmakers and influencing exit timelines. View the analysis

🌐 Franklin Templeton launches $875M secondaries fund: Franklin Templeton and Lexington Partners have introduced their first Luxembourg-domiciled evergreen PE secondaries fund for international wealth investors, further expanding alternatives access beyond institutional channels. Get the details

💸 PE accelerates push into retail investor channels: The SEC is looking to loosen accredited investor rules as PE firms develop new retail-focused products, potentially creating new fundraising avenues as institutional relationships face challenges. See Axios coverage

🚆 Vitruvian acquires Great Rail Journeys for £200M+:The transaction demonstrates continued PE interest in resilient consumer travel assets with predictable cash flows. Learn more

🔍 DEEP DIVE

How AI is Reshaping Private Capital's Growth Trajectory

What's increasingly top of mind for investors and operators is building data science capabilities, developing AI-enabled value creation initiatives that drive portfolio-wide impact, and scaling external AI partnerships. This focus on technology comes at a critical time for the industry, as holding periods have reached historical highs.

McKinsey's Global Private Markets Report reveals companies in private equity ownership for more than four years now comprise 61% of all buyout-backed assets, up from 55% in 2023 and the ten-year average of 53%. These extended timelines create both challenges and opportunities for technology-forward firms.

Among the innovations gaining traction, FTI Consulting's recent AI Radar for Private Equity survey shows PE executives are shifting their AI focus from incremental improvements towards business model evolution. Leading firms are developing three key plays: transforming portfolio companies' core business models, centralizing AI orchestration at the firm level, and building AI transformation into both sell-side narratives and buy-side diligence.

The impact is already measurable in specific cases. According to Bain's 2025 Global Private Equity Report, portfolio companies implementing AI have seen significant cost reductions: 40% in select content production processes, 15-20% via automated lead generation, 15% in customer care, and 10-15% in software development.

While fundraising remained challenging in 2024 — down 24% year-over-year according to McKinsey, the industry's technological evolution is creating clear differentiation between leaders and laggards that will likely determine which firms capture the largest share of private capital's next $5T of growth.

🧰 TACTICAL TAKEAWAYS

• Assess manager AI capabilities when conducting due diligence, particularly regarding data analytics that can compress holding periods and improve deal sourcing.

• Consider evergreen fund exposure as this segment is projected to grow at 10.2% annually through 2029, faster than traditional drawdown funds at 4.1%.

• Review portfolio company AI readiness as operating partners increasingly view technology infrastructure as a driver of exit multiples.

🗳️ COMMUNITY POLL

🧵 WEEKEND READS

(Because some light market analysis pairs wonderfully with Saturday coffee)

• 🔄 Public-private market boundaries continue to blur - KKR and Capital Group have launched two joint products allowing retail investors with as little as $1,000 to access private debt markets, signaling a significant shift in asset allocation strategies.

• 🛡️ KKR Executives Downplay Tariff Impact on Portfolio - Despite market volatility, KKR leaders report 90% of PE holdings will see limited tariff effects and have deployed $10B since the announcement, highlighting how market dislocation creates opportunity.

• 🪙 Why Private Equity Is Betting On Tokenization - With traditional exits constricted, firms like BlackRock and Franklin Templeton are exploring blockchain-based tokenization to create new liquidity channels for illiquid assets in high-rate environments.

👋 WANT IN?

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The OneFund Team

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