Q3’26 Pulse of Private Equity — U.S. and global investment trends
A KPMG quarterly analysis of global private equity activity
Overview
The Q3 Pulse of Private Equity analysis reveals a market defined by focused capital deployment, disciplined underwriting, and strategic focus. While overall transaction volume remains selective, sponsors continue allocating substantial capital toward strategic assets. PE investment remained strong, reaching $1.5 trillion globally and $793.4 billion in the US at the end of Q3’26—only slightly off the 2025 pace. Capital is heavily anchored in critical physical and digital backbones, notably AI infrastructure, sovereign energy resilience, and modern industrial supply chains.
In the US, sponsors are prioritizing scaled platform investments and capital-intensive infrastructure over speculative growth. In Q3, US PE-announced four-quarter sums amounted to $1.1 trillion across 8,535 transactions. Capital is flowing aggressively toward data center buildouts, power generation, and specialized corporate carve-outs. While exit volumes remain measured as general partners resist discounted valuations, liquidity pathways are increasingly sustained through continuation vehicles, secondary market solutions, and strategic corporate sales.
Globally, dealmakers are navigating divergent monetary policies and regional dynamics. While the Americas region continues to account for the lion’s share of global capital deployment, cross-border appetite for energy transition assets and advanced industrial hardware remains pronounced across the EMA and ASPAC regions. Across all geographies, general partners are pivoting from legacy asset models toward operational transformation and tech-enabled modernization.
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Q3 2026 Pulse of Private Equity report
Download PDFU.S. insights
1
Steady US PE investment reached $793.4 billion across 6,223 deals by the end of Q3, tracking just behind 2025’s $1.1 trillion pace. Financing remained accessible for premium assets, evidenced by marquee megadeals like the $9.6 billion Seattle Seahawks buyout, the $7.7 billion Baldwin Insurance Group take-private, and the $7.0 billion secondary buyout of Aypa Power. However, a backlog in exits has bifurcated the market, driving a flight to quality toward larger, highly resilient platforms.
2
Liquidity becoming the central challenge
For the US PE market, the primary challenge in 2026 is capital recycling rather than capital availability. Extended holding periods caused by a constrained exit environment have suppressed distributions to limited partners, severely limiting their capacity to make new commitments. This friction has intensified market demand for alternative liquidity options, transforming continuation vehicles and secondary market solutions from occasional tools into core, permanent components of general partner capital management strategies.
3
Interest in AI rapidly moving beyond the technology space; energy sector sees benefit
In Q3, PE investors targeted AI through three strategic angles: investing in AI businesses, investing in the infrastructure that enables AI growth, and using AI as a lever for transforming the performance for their portfolio companies. Skyrocketing demand for AI capacity has catalyzed an enormous physical infrastructure buildout, spanning data centers, grid transmission, and water management. Consequently, energy and natural resources investment reached an eight-year high of $138.1 billion by end of Q3, putting it on track for a new historical record.
4
Exit environment remains challenging and highly selective
By the end of Q3, PE-backed exits lagged, securing $399.4 billion across 842 transactions. While twelve-month exit value rose to $626.1 billion, volume fell to a six-year low of 1,242 as sponsors resisted selling prized assets at discounted valuations. US industrial manufacturing was a standout, hitting a ten-year value high of $106.05 billion, while financial services neared a strong tally of $55.45 billion, reflecting a market highly concentrated on larger, premium strategic sales.
5
PE fundraising at lowest level since 2020
On track for its slowest year since 2020, U.S. PE fundraising secured $221.4 billion across 350 funds by the end of Q3, with rolling twelve-month totals hitting a post-2020 low of $297.4 billion. Slow distributions constrained LP capital, triggering a flight to scale: mega-funds over $1 billion captured $185.1 billion across 54 vehicles. Consequently, commitments concentrated heavily on established managers with strong realization track records, institutional scale, and highly differentiated deal-sourcing capabilities.
Trends to watch for in Q4’26
In the US, heightened rate uncertainty and potential cost-of-capital increases may impact investor confidence heading into 2027, making portfolio liquidity a top priority.
AI remains a dominant investment theme, especially as it converges with infrastructure, shifting to driving portfolio ROI while fueling massive dealmaking in grid energy and enablement infrastructure.
The theme for private equity heading into Q4’26 is adaptation. The industry has already adapted to higher financing costs and longer holding periods. Now it has to adapt to uncertainty around rates, rapidly accelerating AI disruption, and an LP base that increasingly wants distributions. The firms that can generate liquidity while using AI and operational transformation to create real earnings growth will be well positioned for the next phase of the cycle.
Donald Zambarano
US Private Equity Sector Leader, KPMG in the US
Global insights
1
Global PE market remains selective but strong, with $1.5 trillion invested at end of Q3’26
The global PE market in 2026 is defined by extreme selectivity. Through Q3, global investment reached $1.5 trillion across 14,650 deals—on pace for the third-best investment year on record despite the slowest transaction volume since 2020. Capital concentrated heavily on premium assets due to prolonged exit challenges, geopolitical tensions, and inflationary pressures, while central banks, including the Bank of Japan, European Central Bank, and US Federal Reserve, continued raising interest rates.
2
Americas attracts largest share of global PE investment, but ASPAC on track for best year since 2021
Through Q3, the Americas led global PE with $854.6 billion across 6,845 deals (including $793.4 billion in the US), followed by EMA at $521.3 billion and ASPAC at $137.8 billion. While the Americas and EMA saw rolling twelve-month declines, ASPAC was the sole region on an upward trajectory. ASPAC’s momentum was driven by major take-privates, including the $8.2 billion buyout of Qube Holdings and the $5.4 billion buyout of Steadfast Group.
3
AI ecosystem plays see strong PE interest; energy sector on track for new record high of PE investment
Global PE interest in AI has expanded beyond technology to the massive enabling ecosystem, fueling extensive deal opportunities in data centers, electrical equipment, and power generation. This shift propelled the global energy and natural resources sector to $243.3 billion in investment by the end of Q3, nearing a historic record.
4
Industrial manufacturing and automotive sectors likely benefiting from jurisdictional defense priorities
Outside of energy, only industrial manufacturing and automotive sectors are on track to exceed 2025 PE investment levels globally. Industrial manufacturing reached $122.6 billion through Q3, nearing its $163.3 billion record. Both sectors benefited from defense becoming a primary government spending priority, particularly in Europe. General partners are increasingly targeting the defense space, pivoting traditional manufacturing assets toward military hardware, physical AI applications, and advanced robotics.
5
Exit volume and backlog of exits remain a challenge
Through Q3, global PE exits appeared resilient at $985.2 billion, yet this value was concentrated across just 2,200 transactions—far below 2025’s pace. While twelve-month rolling exit value reached $1.4 trillion, transaction volume sank to a multi-year low of 3,295 despite record global portfolio assets. This lack of deal volume intensified LP liquidity pressures, which were partially offset by GP usage of alternative liquidity avenues like continuation vehicles.
Trends to watch for in Q4’26
Global PE investment heading into 2027 will remain highly selective, prioritizing take-privates, corporate carve-outs, and sectors aligned with the AI ecosystem. Exit volumes depend on sell-side valuation alignment and international IPO market reopenings, while tight fundraising conditions will continue concentrating capital toward large, established managers.
Globally, the energy sector is seeing incredible interest from private equity, driven by a combination of rising power consumption, the major demand for energy infrastructure to fuel AI, and the growing focus on energy security in different jurisdictions. And that’s on top of the energy transition and the need to upgrade aging infrastructure. As sectors go, it’s clearly a standout.
Gavin Geminder
Global Private Capital Leader, KPMG International
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