SuperReturn 2025 Wrap: Private Markets Leaders See Europe Rising as US Faces Headwinds

In Brief:

Private markets titans gathered at SuperReturn 2025 in Berlin delivered a sobering assessment of an industry grappling with what Julian Salisbury of Sixth Street Partners called "bad vintage assets" that have created systemic "indigestion" throughout the market. Speaking from the wooden meeting huts and sweltering conference rooms of Europe's premier private capital gathering, executives painted a picture of an industry under siege from multiple fronts:

• Orlando Bravo of Thoma Bravo, fresh off closing a record $34.4 billion fundraise, declared that private equity has "lost its way" by becoming obsessed with unpredictable macroeconomic factors rather than operational value creation.

• Apollo Global's Jim Zelter challenged conventional wisdom about private market risk, arguing the future lies in investment-grade opportunities rather than leveraged transactions.

• Brookfield's Connor Teskey highlighted Europe's emergence as a refuge from US political uncertainty.

The consensus among attendees was stark: the industry faces a reckoning from over-priced deals originated during 2020-2021's easy money period, with approximately 30,000 private equity companies awaiting exits amid compressed valuations and limited IPO activity, forcing managers to innovate through continuation vehicles, geographic rotation, and fundamental strategy shifts to survive what many described as one of the worst downturns in recent memory.

Big Picture Drivers:

• Vintage Asset Crisis: Deals originated during 2020-2021's low interest rate environment at inflated valuations are creating widespread portfolio problems that must work through the system over multiple years

• Geographic Capital Flight: US political uncertainty and tariff volatility driving institutional investors to reallocate capital toward European markets and opportunities

• Credit Market Evolution: Private lending expanding beyond traditional leveraged transactions into safer investment-grade opportunities with established companies and real asset backing

• Liquidity Innovation Arms Race: Managers developing sophisticated structures like continuation vehicles, midlife co-investments, and evergreen funds to address the exit bottleneck and investor demand for returns

Key Topics Covered:

• Industry Self-Criticism: Unprecedented public criticism from industry leaders about strategic missteps, overpricing, and loss of operational focus over the past three years

• European Renaissance Debate: Whether increased deal activity and investor interest in Europe represents a sustainable shift or temporary rotation due to US instability

• Exit Strategy Crisis: How the industry addresses 30,000 companies awaiting realization amid fourth consecutive year of muted exit activity and compressed valuations

• Technology Disruption Threats: Artificial intelligence's potential to eliminate jobs while simultaneously creating massive infrastructure investment opportunities requiring careful risk assessment

Key Insights:

• Macro Obsession Destroying Value Creation: Private equity leaders have become dangerously distracted by unpredictable factors like interest rates, tariffs, and geopolitics instead of focusing on operational improvements and fundamental value creation within their portfolio companies, according to industry veterans who warn this shift threatens the sector's core value proposition.

• Bad Vintage Assets Creating Systemic Risk: The 2020-2021 period of excessive liquidity and inflated valuations has created what Salisbury describes as "a big pig in the python" of overpriced assets that will require years to resolve, forcing managers to either take significant losses or find creative solutions to generate returns for increasingly impatient limited partners.

• European Advantage Beyond Temporary Rotation: Multiple fund managers report significantly higher deal activity in Europe compared to the US, driven not just by political stability but also accommodative ECB policies, fiscal stimulus plans, and a less penetrated private credit market that offers better risk-adjusted opportunities for sophisticated investors.

• Investment Grade Private Credit Revolution: The largest growth opportunity in private markets involves lending to established, investment-grade companies rather than highly leveraged transactions, challenging traditional perceptions about private market risk profiles and offering institutions safer alternatives to volatile public markets during uncertain economic periods.

• Hidden Deal Flow Surge: While public transaction data shows declining activity, private structures like midlife co-investments, continuation vehicles, and corporate carveouts are generating substantial unreported deal flow, with some managers receiving over 800 opportunities annually precisely because traditional exit routes remain closed.

• Wealth Channel Transformation Accelerating: Industry executives predict that within three years, approximately half of high-net-worth investors will hold private market exposures through evergreen fund structures, representing a fundamental democratization that could reshape distribution and fee structures across the alternative investment landscape.

• Forced Sellers Creating Opportunities: The combination of fund life pressures, LP demands for distributions, and regulatory changes is creating a growing universe of forced sellers, providing opportunities for well-capitalized managers who can move quickly when others cannot, fundamentally shifting the power dynamics in deal negotiations.

• Technology Infrastructure Boom Despite Bubble Fears: AI and data center investments offer compelling risk-adjusted returns backed by long-term contracts with major technology companies, though executives warn about concentration risks and the need for specialized expertise to distinguish legitimate opportunities from speculative excess.

Memorable Quotes:

• "You have frankly a lot of bad vintage assets. I think of it as like a big pig in the python or the stuck assets that were originated when too much money came in, bought at too high prices." - Julian Salisbury, Sixth Street Partners, explaining how easy money policies created systemic portfolio problems

• "Private equity has lost its way in the last three years, but it'll come back. Private equity leaders have been too concerned about the macro... those are factors that as a business owner, business buyer, you cannot predict and certainly you cannot control." - Orlando Bravo, Thoma Bravo, delivering a sharp critique of industry focus

• "In the past, private has meant risky and illiquid and we would really challenge that convention. We're seeing it more and more on these investment grade opportunities that we've been a leader." - Jim Zelter, Apollo Global, defending the evolution toward safer private market strategies

• "We receive approximately 800 deals per year and it has been growing over years... precisely because the IPO market is shut down, they're not able to sell their companies, there are new opportunities for us." - José Luis González Pastor, Neuberger Berman, revealing hidden deal flow driving activity

• "A big focus, whether it's in private equity growth, real estate across our infrastructure, across the different asset classes: Do these people want or need to transact?" - Julian Salisbury, Sixth Street Partners, on identifying forced sellers in distressed market conditions

• "We're seeing lots of activity maybe it's just not so much in the buyout business that often generates the headlines. We're seeing a huge increase of activity in things like partnerships and corporate carveouts." - Connor Teskey, Brookfield, on dealmaking evolution beyond traditional LBOs

• "My personal forecast is that in three years, half of [high net worth investors] will have an evergreen product in their portfolios. Could be in private equity, could be infrastructure, could be in credit, but they will have one." - José Luis González Pastor, Neuberger Berman, predicting wealth channel transformation

• "It's a wonderful time to be a player in credit. For our perspective as a credit lender, you're getting paid for the first time in the last 15 years." - Jim Zelter, Apollo Global, on current interest rate environment benefits

• "The industry is a victim of its own success. Between 2014 and 2024, the industry tripled its dry powder and assets under management, but the level of exits has remained at the same level it was a decade ago." - Daniel Lopez-Cruz, Investcorp, on structural imbalances

• "I think it's very challenging for any firm, actually, to make a real success across Europe." - Rob Lucas, CVC Capital Partners, warning about execution difficulties despite regional enthusiasm

• "We are seeing lots of opportunities in Europe. Further, private credit is less penetrated in a European context than it is in the US, and we see that penetration continuing." - Blair Jacobson, Ares Management, on geographic investment thesis

• "Vista CEO says AI to force 60% of SuperReturn crowd to seek work." - Robert F. Smith, Vista Equity Partners, delivering a shocking prediction that prompted audible gasps from conference attendees

• "In our business, you always have to be selling and you always have to be buying. It is actually not a buy and hold forever business. That may be a great strategy, but if you want to do that, you go to the public markets." - Orlando Bravo, Thoma Bravo, emphasizing active portfolio management philosophy

The Wrap:

The SuperReturn 2025 conference revealed an industry at a critical inflection point, with traditional private equity models facing existential challenges from over-leveraged vintage assets, compressed exit opportunities, and fundamental shifts in capital allocation preferences. While executives delivered unprecedented public criticism of their own sector's recent performance, they also outlined emerging opportunities through geographic diversification, credit market evolution, and innovative financing structures. The emergence of Europe as a preferred investment destination, combined with private credit's expansion into investment-grade opportunities and wealth management channels, suggests successful managers are adapting to a permanently changed landscape where operational excellence and capital flexibility matter more than financial engineering and favorable market conditions. However, the industry must still navigate significant structural headwinds, including the resolution of approximately $1 trillion in dry powder, the workout of bad vintage assets, and proof that new strategies can deliver superior risk-adjusted returns without relying on the easy money conditions that fueled two decades of growth.