PitchBook News - Forecasting VC returns by vertical

While PE returns continue to trek back to double-digit territory, private credit returns are flying high.

All seven managers posted double-digit returns for their credit strategies, validating these managers' headlong push to expand capabilities in this asset class. Credit strategies continue to command the lion's share of capital raised, accounting for over 60% of capital inflow in Q4.

Private wealth and insurance channels also remain key growth vectors for the managers to scale their capital bases. By the end of 2024, assets in perpetual strategies for the Big Seven totaled $1.6 trillion, up 19% YoY and representing 41% of total AUM.

As for trends in the greater GP landscape, deals involving GPs as acquirees or investment targets have surged in the last year.

There were nearly twice as many majority or minority deals in alternative franchises in 2024 than in the year before, reflecting increased investor appetite and a continued wave of consolidation in the industry.

Robust GP deal activity may drive up valuations and inhibit GP stake dealmaking until more sellers come to market.

For more data and analysis, download our US Public PE and GP Deal Roundup.

 

Performance has also been strong, with 13.3% annualized returns over the past 15 years, second only to PE among broad fund categories. Opportunistic buying and selective asset exposure contribute to this differentiation, particularly during periods of market dislocation.

Growth has been evident in fundraising, with secondaries funds accumulating over $100 billion in commitments in 2024—a testament to increasing allocator interest, particularly among new entrants to private markets seeking to ramp up exposures to private assets relatively quickly.

2025 has started strong, too, with Ardian raising $30 billion for its ninth flagship vehicle focused on secondaries; 22% of commitments came from private wealth clients, double the share from its predecessor.

However, LPs should be mindful that distributions have been slower than historical norms, as secondaries funds still rely on favorable exit conditions to translate acquired stakes into realized cash.

Additionally, many secondary transactions involve a double layer of fees, with investors paying both the original fund's fees and those of the secondary fund acquiring the stake.

Still, with strong fundraising, solid historical performance, and a growing supply of transaction opportunities, secondaries remain a compelling strategy.

Read more in our latest US Market Insights and Private Capital Indexes report.

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