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Private equity has been in a low-grade slowdown for years, locked in a Groundhog Day loop.<\/p>\n
\u201cYou hear it every year now,\u201d said Kyle Walters, PitchBook analyst. \u201cYou heard it in 2023, where private equity said: \u2018It could come back this year.\u2019 Then, you get to 2024, and 2024 is going to be a different year. Then, you get to 2025 and 2025 was a bit better, and people say \u2018maybe this is the year.\u2019\u201d<\/p>\n
U.S. private equity\u2014with more than $3 trillion in assets under management\u2014has been locked in a cycle of geopolitical uncertainty and possible rate hikes, along with the challenges of a rapidly concentrating market with limited exits. This was true in Q3 2026: Exit value for the quarter was down 14.1% year-over-year and deal value was down 13.6% year-over-year, according to PitchBook data.\u00a0<\/p>\n
\u201cAUM for the asset class isn\u2019t growing nearly like it used to,\u201d said Walters. \u201cA 12% annual growth rate over the last ten, 15 years. We\u2019re closer to half that now\u2026 This is the new norm, putting capital to work with headwinds in the market, and bringing companies to market with unresolved issues.\u201d\u00a0<\/p>\n
Fundraising, Walters pointed out, is especially tough and has \u201cdefinitely gotten harder over the last 18 to 24 months,\u201d he said.\u00a0<\/p>\n
\u201cPart of that is because of limited exits,\u201d Walters told Fortune. \u201cIf you\u2019re not getting distributions from your GPs, you have less capital to deploy, so you have to concentrate on fewer managers. That\u2019s what we\u2019re seeing take shape. But that\u2019s not to say there are fewer managers raising capital. It\u2019s that fewer managers are crossing the finish line, they\u2019re fighting over scraps of the fundraising pie.\u201d<\/p>\n
This isn\u2019t true of everyone, of course. The biggest firms remain massive. Take KKR, which hit its $300 billion fundraising goal (originally slated for three years, the raise took 30 months). However, a possible set of new interest rate hikes (even before the end of the year) could throw the sector into even more turmoil.\u00a0<\/p>\n
\u201c[If there\u2019s a rate hike] instead of some gradual recovery I\u2019ve been imagining, you probably get a Q4 that looks a lot like Q3,\u201d said Walters. \u201cThat\u2019s not bad, it\u2019s not at 2025 levels but still above the doldrums you saw in 2022 and 2023 where activity wasn\u2019t really happening at all. PE has penciled a lot of this in, so they\u2019ve kind of broadly accepted that there\u2019s a rate hike coming. So, if it doesn\u2019t, it\u2019s a pleasant surprise. You\u2019ll still see transactions take place\u2014it\u2019s just not going to be at the scale we hoped for coming into the year.\u201d\u00a0<\/p>\n
As the weather forecast in Groundhog Day goes: \u201cIt\u2019s going to be cold, it\u2019s going to be gray, and it\u2019s going to last you the rest of your life.\u201d\u00a0<\/p>\n
See you tomorrow,<\/p>\n
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com<\/p>\n
Submit a deal for the Term Sheet newsletter here.<\/p>\n
Joey Abrams curated the deals section of today\u2019s newsletter.<\/p>\n
VENTURE CAPITAL<\/p>\n
– TypeSafe AI, a San Francisco-based developer of AI models for software automation, raised $870 million in funding. Andreessen Horowitz led the round and was joined by Sequoia and existing investor DCVC.<\/p>\n
– Oratomic, a Pasadena, Calif.-based developer of fault-tolerant quantum computers, raised $475 million in Series B funding. ARCH Venture Partners, Spark Capital, Khosla Ventures, Index Ventures, General Catalyst, and Bezos Expeditions led the round.<\/p>\n
– Oxide Computer Company, an Emeryville, Calif.-based developer of on-premises cloud computing systems, raised $445 million in Series D funding. Eclipse led the round and was joined by USIT, Riot Ventures, Jane Street, and others.<\/p>\n
– Kapta Space, a Seattle, Wash.-based developer of spaceborne radar payloads, raised $24 million in Series A funding. Washington Harbour Partners and Bison Ventures led the round and were joined by MetaVC and others.<\/p>\n
– Loops, a San Francisco and Istanbul, Turkey-based commerce AI startup, raised $3.5 million in seed funding from a16z speedrun, NTT Docomo, Connecticut Innovations, Alumni Ventures, and Monday Capital.<\/p>\n
EXITS<\/p>\n
– AEA Investors and British Columbia Investment Management Corporation acquired Rensa Filtration, an Aurora, Ill.-based manufacturer, distributor, and service provider of consumable, high-purity air-filtration solutions for mission critical, high-growth applications, from Audax Private Equity. Financial terms were not disclosed.<\/p>\n
#U.S #private #equity #deal #PitchBook<\/p>\n","protected":false},"excerpt":{"rendered":"
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