Q2'25 Pulse of Private Equity

KPMG's Pulse of Private Equity report offers a detailed analysis of global private equity (PE) trends and investments.

In this quarter’s edition, our KPMG PE team dive deep into the factors affecting the market, movements in capital, and sector-specific insights that shape private equity activity in the current economic climate.

We examine several global and regional trends and provide an insightful spotlight on UK private equity activity. During Q2’25, the UK saw $36.8 billion in PE investment — up significantly compared to $24.8 billion in deals in Q1’25.

Pulse of Private Equity Q2'25

A KPMG quarterly analysis of global private equity activity

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Global highlights of Q2’25

Global PE investment totals $363.7 billion during Q2’25
PE deal volume drops from 4527 deals globally in Q1’25 to 3,769 in Q2’25
US sees $202.0 billion in PE investment in Q2’25 – more than half of global total

UK Private equity highlights from our Q2’25 report

The UK remains the largest private equity market in Europe, typically accounting for 25–30% of total deal value across the Europe region.

Fintech attracted significant attention and was a key focus for PE investment.
The UK’s mature PE ecosystem, is supporting a vibrant and growing PE middle-market
UK PE exit market remains weak; PE funds using continuation vehicles for high-quality assets
PE firms looking at AI as an enabler of performance

PE investors remain cautious amid lack of trade clarity

PE investment activity was somewhat muted in Q2’25, with proposed PE investment of $363.7 billion across 3,769 deals — down from $505.3 billion across 4,527 deals in Q1’25. Ongoing uncertainties related to tariffs, global trade, and supply chains, saw many PE investors holding back from signing deals despite a sustained volume of deals activity, particularly in the US.

Global private equity activity slows in Q2 2025 despite U.S. mega deals

In Q2 2025, the United States was home to the three largest private equity deals globally. Leading the quarter was Blackstone Infrastructure Partners’ proposed $11.5 billion buyout of TXNM Energy, New Mexico’s largest electric utility, amid ongoing consolidation in the U.S. power sector. The second-largest deal was the $10.5 billion proposed acquisition of portions of Boeing’s Digital Aviation Solutions by Thoma Bravo. Rounding out the top three was 3G Capital’s $9.4 billion take-private offer for Skechers USA, marking the end of the company’s 26-year tenure as a public entity.

Despite these headline transactions, overall private equity investment declined sharply across all regions between Q1 and Q2 2025. In the Americas, investment fell from $319.8 billion to $213.9 billion, while in Europe, it dropped from $136.6 billion to $117.4 billion. Asia experienced the steepest decline, with investment decreasing from $36.2 billion to $20.85 billion quarter-over-quarter.

Deal volume followed a similar downward trend. The Americas saw a drop to 1,771 deals, down from 2,260 in Q1; EMEA recorded 1,669 deals, down from 1,850; and ASPAC reported 220 deals, down from 282. The decline in both deal value and volume reflects a more cautious stance among PE investors, many of whom are adopting a wait-and-see approach amid ongoing economic and geopolitical uncertainties.

Increasing shift away from globalization towards regionalization

Given current geopolitical tensions, tariff uncertainties, and supply chain concerns, PE dealmaking has increasingly shifted from a global approach towards a more regionally focused one, with PE investors increasing their focus on companies focused on domestic or regional markets in order to better control and manage trade risks. Areas like healthcare, biotechnology, and other sectors with a predominantly regional focus saw solid traction during Q2’25, while industries like automotive and manufacturing saw PE interest pull back given their cross-border dependencies and exposure to tariffs. While PE investors did not shy away entirely from global assets during the quarter, they significantly narrowed their focus to only the highest-value assets.

Trends to watch for in Q3’25

As Q3’25 begins, PE investors globally are expected to remain selectively optimistic — focusing on high-quality assets, resilient sectors such as AI infrastructure and energy, and companies with strong domestic positioning. While caution persists, investors will be watching closely for positive signals from the US administration, greater clarity around interest rate policy from the Federal Reserve, and continued signs of corporate strength. These indicators could help unlock greater confidence and spur more consistent deal activity in the second half of the year.

On the AI front, both data centers and related connecting infrastructure will likely see strong interest over the remainder of the year, particularly given the regional nature of many of these investments.

The deal market in the UK could be somewhat volatile, particularly in sectors weathering the storm of the back and forth on US tariffs. With the recent trade deal between the US and the UK, market conditions will likely stabilize. Until then, however, many PE investors will likely remain very cautious with their capital. Despite the challenging headwinds, however, there is still a significant pool of dry powder in the PE market in the UK. Given that, PE funds are expected to continue to work hard to get deals done — taking innovative approaches as required in order to move deals forward. The bar for approval of new deals currently at PE Investment Committees is very high and as such we will see a bifurcation in PE deal activity. Super high quality assets will attract a disproportionate amount of PE attention and such assets will get sold very quickly and at a very good price. Other perceived less high quality assets will take much longer to complete with a higher risk of the sale process failing. As the US IPO market improves, it could spark some positive momentum on the exit front in the UK. This will be an area to watch over the next few quarters.

Q2 2025, saw global private equity activity remaining cautious amid ongoing geopolitical uncertainty and unclear trade and tariff policies. Global deal volume is down and pressure on exits is up. Ongoing uncertainties, saw many PE investors holding back from signing deals despite a sustained volume of deals activity. Yet capital does continue to flow towards high-quality, resilient sectors such as AI infrastructure and energy - and companies with strong domestic positioning. This signals that firms are becoming more selective. Despite the current geopolitical and trade uncertainties hampering the market regionally and globally, the UK bucked downward in deal trends, with the number of PE deals rising from 389 to 419 quarter-over-quarter.

Ben Honeywood

Partner

Private Equity Group, Jersey