2025 Market Overview
Definitions and Disclosures
Investment Activity
We cover a few of the hottest topics in the private markets today in our market overview: Poor returns relative to the public markets and lack of exits in particular. There is another one that is a part of the lack of exits issue: The slow pace of M&A activity and the slow pace of overall deal activity.
2024 saw contribution activity (deal activity) barely eke out a gain over 2023’s numbers, but we are still down almost 30% from the 2021 peak and back to 2019 levels. Similar to the liquidity discussion, you are seeing average contribution levels reach levels last seen during the GFC.
If the private markets were a musical score, we are somewhere between adagio and grave.
time to deploy capital overhang
private equity & private credit
private markets unfunded capital
USD in Billions
annual private real assets contributions
annual private equity & credit contributions
annual private markets contributions
The real asset sectors are also well below average levels of contributions. Infrastructure has seen the largest drop over the last few years and continues to fall. High prices? Political uncertainty? It’s hard to know.
Yes, we know, you’ve waited for this chart all year.
This slow pace is reflected across all the equity sectors, and the best you can probably say is that it has at least stabilized at these low levels. We’ll note something that we mentioned earlier: We are at relatively sluggish deal activity levels, which are similar to what we saw in 2002 and 2009, recessionary periods with declining public markets. Those are not the conditions we are seeing today.
This is the one that matters but, interestingly, from the inverse question of, “Is there too much money in the private markets?” This measures the ratio of deal activity to dry powder, in this case, in the equity sectors. What is most interesting is that the times markets have done best are after periods in which there is a great deal of overhang. Generally, that is because deal activity is slowed, the exact environment we are in now. Notice that the overhang was at its lowest in the ’21 and ’22 periods. Those did prove to be relatively poor times to buy because of high prices and rapid deployment. So, next time someone tells you they are worried about capital overhang, what should you do?
Not sure if you should open this issue, but you should certainly open this overview and look at the time to deploy that overhang chart.
We’ve said repeatedly that this is one of the least important charts in the overview, but one that generates a huge amount of attention. We won’t belabor our reasons why this chart is overrated. Go to any Hamilton Lane Market Overview from prior years and you will see our reasons set out.
We will point out that the capital overhang numbers have barely increased over the last few years. Additionally, 30% of that dry powder is from the pre-2021 vintages. It is unlikely that much of that capital will be called.
Here’s the chart we do look at carefully.
2025 Market Overview
annual private equity & credit contributions
annual private real assets contributions
The real asset sectors are also well below average levels of contributions. Infrastructure has seen the largest drop over the last few years and continues to fall. High prices? Political uncertainty? It’s hard to know.
Yes, we know, you’ve waited for this chart all year.
Definitions and Disclosures
time to deploy capital overhang
private equity & private credit
This is the one that matters but, interestingly, from the inverse question of, “Is there too much money in the private markets?” This measures the ratio of deal activity to dry powder, in this case, in the equity sectors. What is most interesting is that the times markets have done best are after periods in which there is a great deal of overhang. Generally, that is because deal activity is slowed, the exact environment we are in now. Notice that the overhang was at its lowest in the ’21 and ’22 periods. Those did prove to be relatively poor times to buy because of high prices and rapid deployment. So, next time someone tells you they are worried about capital overhang, what should you do?
Not sure if you should open this issue, but you should certainly open this overview and look at the time to deploy that overhang chart.
We’ve said repeatedly that this is one of the least important charts in the overview, but one that generates a huge amount of attention. We won’t belabor our reasons why this chart is overrated. Go to any Hamilton Lane Market Overview from prior years and you will see our reasons set out.
We will point out that the capital overhang numbers have barely increased over the last few years. Additionally, 30% of that dry powder is from the pre-2021 vintages. It is unlikely that much of that capital will be called.
Here’s the chart we do look at carefully.
private markets unfunded capital
USD in Billions
annual private markets contributions
2024 saw contribution activity (deal activity) barely eke out a gain over 2023’s numbers, but we are still down almost 30% from the 2021 peak and back to 2019 levels. Similar to the liquidity discussion, you are seeing average contribution levels reach levels last seen during the GFC.
If the private markets were a musical score, we are somewhere between adagio and grave.
This slow pace is reflected across all the equity sectors, and the best you can probably say is that it has at least stabilized at these low levels. We’ll note something that we mentioned earlier: We are at relatively sluggish deal activity levels, which are similar to what we saw in 2002 and 2009, recessionary periods with declining public markets. Those are not the conditions we are seeing today.
We cover a few of the hottest topics in the private markets today in our market overview: Poor returns relative to the public markets and lack of exits in particular. There is another one that is a part of the lack of exits issue: The slow pace of M&A activity and the slow pace of overall deal activity.
Investment Activity
