MoFo Global PE Trends 2024 and Outlook for 2025 PDF Free Download
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As ongoing geopolitical concerns and the new administration in the US add a layer of
unpredictability to the economy, what does 2025 have in store for the global PE market? In this
annual report, MoFo partners from around the globe review the key PE trends from 2024 and make
predictions from global, regional, and sector perspectives for 2025.
2024 Global Trends
Most of our 2024 predictions came true. As a recap, below are some key trends that we identied and how
our predictions fared.
• Rebound in M&A Activity: As predicted, the Federal
Reserve cut interest rates by 75 basis points in Q3
2024, spurring deal activity, particularly in the US, UK/
Europe, and Japan. While the US has shown economic
resilience, global M&A activity remains heavily impacted
by macroeconomic uncertainties, military conicts,
geopolitical events, and domestic economic slowdowns.
• Strong Middle Market M&A Amidst More High-End
Deals: While deal count for high-end deals was slightly
up in 2024 over 2023, as predicted, middle- and lower-
middle-market deals drove the vast majority of M&A
activity in 2024, despite a slight drop in deal count
compared to 2023. Concurrently, we have seen an
uptick in high-end deals above US$500 million. Most
deals were concentrated in the TMT, industrials, and
healthcare sectors.
• Finance: In 2024, private equity continued to see
evolving dynamics in the nancing landscape.
Competition from non-bank lenders increased in
2024. In terms of supply and demand, the return
of bank underwriting was slightly more muted than
our expectations, and direct lender activity moved
faster than we expected (i.e., margins on direct loans
dropped to their lowest levels in years). There were
also certain structural changes to the credit markets.
We saw signicant joint ventures form between banks
and private credit funds in a growing trend across the
industry. Alternative asset managers also combined
in ways that increased concentration at the largest
direct lenders. The evolving dynamics between banks
and direct lenders underscored a trend toward diverse
capital structures, enabling sponsors to remain agile and
innovative in deal-making.
• Tech Deals to Shine: As predicted, tech M&A increased
in 2024: according to our 2024 Tech M&A Report, the
total tech M&A transaction value for the rst nine months
of 2024 increased by 39% compared to the same period
in 2023. PE rms showed strong interest in tech M&A,
particularly focusing on emerging growth companies.
Businesses in the cybersecurity and AI sectors remain
top investment targets.
• Investment in Healthcare: As predicted, and despite
strong antitrust regulatory headwinds in the US, we have
seen more healthcare M&A deals in 2024, particularly
within the healthcare services, biopharma, and MedTech
subsectors. The upward trend is supported by strategic
acquisitions and continued advancements in generative
AI technology.
• China: As we anticipated, China-focused PE sponsors
turned to investors in the Middle East and Singapore to
raise funds and sought alternative exit channels, such as
continuation funds and secondary sales. In the face of a
sluggish domestic economy and geopolitical tensions,
PE rms are seeking to reduce their exposure to China
or are starting to adopt a “China Plus One” strategy to
diversify their portfolios.
• Take Privates: As expected, the PE-backed take-private
trend continued to hold steady in 2024 for various
reasons, including more reasonable and attractive
valuations, higher compliance and corporate governance
costs of remaining public, and the abundance of
dry powder held by PE rms. Challenges typically
associated with take privates remain, and PE rms
can be expected to deal with resistant boards, proxy
ghts, dissenting shareholders, and the heightened
risk of losing the deal at the last moment, after
having expended a considerable amount on fees and
expenses, as a bidder with a superior offer swoops in.
Japan’s take-private scene has gained momentum in
2024, driven by public market demands for corporate
governance reforms and optimization of efciency.
• Loud Detractors, Quiet Progress: Just as we
predicted, 2024 saw increased backlash against ESG
initiatives in the form of anti-ESG legislation, regulations,
litigation, and shareholder resolutions. Despite the
signicant attention these efforts received, their
success has been limited. Meanwhile, although some
organizations are backing away from the term “ESG”
and similar buzzwords, PE rms increasingly weighed
sustainability as a core consideration in investing and
hiring decisions, particularly where ESG concerns were
tied to operations, risk, compliance, and/or reputation.
MoFo Global PE Trends 2024
and Outlook for 2025
1
2025 Global Outlook
How will economic uncertainty impact PE investing in 2025? The following are our predictions:
• Increased M&A Activity: Following signicant
uctuation over the past three years, but building
upon momentum through the end of 2024, deal ow
in 2025 is expected to increase, particularly in the US
and Europe. While we are hesitant to claim that the
dam is about to break, given built-up demand, further
anticipated interest rate cuts, and companies under
pressure to implement future-minded growth initiatives,
the M&A market should be more robust in 2025 than in
the last 18 months.
• Uncertain Impact of Tariff Policies: Pro-tariff policies,
particularly from the US, could materially change the
M&A landscape. Depending on the scope of tariffs
that are actually implemented, such policies could chill
cross-border activity in jurisdictions most impacted
by tariffs, while tariff avoidance strategies could spur
other M&A activity as companies look to shore up their
supply chains in countries less impacted by new tariffs
and avoid increased costs.
• Shifting Global Regulatory Environment: While a
more lenient regulatory environment for M&A activity
is expected in the US in 2025, the general trend of
intensifying regulatory scrutiny over M&A activity
continues in other regions across the globe. While,
as noted, we expect global M&A activity to increase
in 2025, national security and anti-monopoly regimes
will remain inconsistent based on local geopolitical
and regulatory conditions and may impose signicant
impediments to completed cross-border M&A.
• Finance: As a corollary to our prediction of increased
M&A activity, we expect that deal volume will increase
for both bank and private credit lenders. Not only will a
tax-friendly administration in the US drive deal activity,
but we also anticipate that pent-up demand over the
last 18 months will contribute to a healthy, competitive
market environment as lenders seek to deploy
accumulated dry powder, particularly as quality assets
enter the market.
• PE Investments in Tech: According to our 2024 Tech
M&A Report, 54% of respondents expect tech M&A
deal volumes to increase over the next 12 months, up
from 48% in our previous survey. We anticipate AI to
be a driving factor in the increase in tech M&A, with
47% of respondents believing that AI/machine learning
targets offer the greatest opportunities right now. See
our AI section below for more details.
• Life Sciences and Healthcare: We expect PE
activity across life sciences and healthcare to gain
further momentum in 2025, driven by substantial
capital poised to fuel innovation, convergence, and
consolidation in the industry. See our Life Sciences
section below for more details.
• China: Barring the Chinese government taking very
signicant steps to kick start the Chinese economy, US
and UK headquartered PE rms are likely to continue to
reduce their exposure to China. However, some Asia-
headquartered, China-focused PE rms see the current
economic environment as providing a good buying
opportunity in China as long as they believe that the
Chinese economy will eventually dramatically improve
within a time period that makes sense for the funds
they manage. These rms may continue to complete
signicant, middle-market acquisitions in China in 2025
and acquire ex-China companies premised on a “China
story.” We also expect to see Middle East-based
sovereign wealth funds make signicant investments
in China in 2025, with a stronger emphasis on direct
investments and co-investments rather than LP
investments in blind pool funds.
• Take Privates: In 2025, we anticipate the PE-backed
take-private trend will continue in various jurisdictions.
More companies listed in the UK are expected to
delist from the London Stock Exchange in favor of
PE ownership, with PE owners seeking ultimately to
achieve a successful exit through a re-listing in the
US. On the other hand, PE rms are expected to
seek to take private US-listed, China-headquartered
companies as the US stock exchanges become even
more unwelcoming to Chinese companies. Nasdaq
has proposed to amend its rules regarding penny
stocks in August 2024, which may further compound
the challenges faced by China-based penny stock
companies listed on Nasdaq. Finally, we foresee PE
rms to continue to back take privates of Tokyo-listed
companies.
• More ESG Tug-of-War: The cultural and legal push
and pull surrounding ESG will continue into 2025.
The passage of the EU Corporate Sustainability Due
Diligence Directive (CSDDD) in 2024—on top of the EU
Corporate Sustainability Reporting Directive (CSRD)
and EU Sustainability Reporting Standards (ESRS) of
2023—should propel sustainability ahead in the market.
These regulations impact not just those companies with
signicant operations in the EU but also their customers,
suppliers, and partners, including many, if not most, PE
portfolio companies. On the other side of the Atlantic,
however, the administration change in the US will offer
a less friendly regulatory environment for ESG investing
and related corporate initiatives. Nonetheless, states like
California will continue to push forward with regulations
that track Europe and much of the rest of the world.
2
3
China
• GPs maintain cautious approach in China;
2025 remains a buyers’ market
• EV, Cleantech, energy & resources, and
healthcare may see more deals
• Control deals gain popularity as buyers
emphasize control over operation and exits
• Overseas expansion is key to growth for
Chinese GPs
Read More
United Kingdom
• Continued increase in PE
deal values
• Technology remains a key
area of focus for PE
• Companies listed in the UK
will continue to delist in favor
of private equity ownership
Read More
Europe
• Signs of recovery and increased deal
activity
• PE firms continue to utilize a wide range of
tools and strategies to mitigate risks
• Focus on tech, software, and ESG
Read More
Southeast Asia
• Continued growth in alternative assets,
e.g., private credit, infrastructure, logistics,
and renewable energy
• Healthcare will remain popular
• Regulatory challenges and anti-monopoly
scrutiny will intensify
• Secondary buyouts and continuation
funds are increasingly alternatives for exits
• Firms with expertise in local issues and
global trade rules are better positioned
Read More
Japan
• Economic and geopolitical factors driving
investment growth
• Increasing deal competition and potential
rise in hostile deals
• Carve-outs, owner/founder succession,
and growth equity continue to attract
investment
• Hot sectors include semi-conductors,
automotive parts, electronics, and life
sciences
Read More
India
• India presents a favorable investment
environment for foreign investors
• Secondary buyouts and strategic sales
become popular exit routes
• Foreign investors focus on robust business
model and proven financial performance
over high valuations
• Local presence and partnerships are
key to winning and executing more deal
opportunities
Read More
Latin America
• A continuation of digital transformation
initiatives across LatAm
• Energy and utilities expansion due to
capital from PE investors
• Foreign exchange challenges created by
currency volatility
Read More
United States
• Deal flow will continue to
increase
• Rise in sponsor assets
coming to market and
sponsor exits
• IPO market will return in
second half of 2025
• Cross-border activity is on
the rise
• Technology deals are back
Read More
Regional Perspective for 2025
Deal Flow Will Continue to Increase: There is
optimism that deal activity will continue to increase in
2025, with momentum having picked up in late Q3 and
Q4 of 2024 after an otherwise sluggish year. Further drops
in interest rates should help fuel deal activity.
Rise in Sponsor Assets Coming to Market and
Sponsor Exits: We saw a rise in sponsor assets
coming to market in 2024 and expect that to continue.
Processes that were previously shelved or abandoned will
continue to re-test the market, often with adjusted pricing
expectations.
IPO Market Will Return in Second Half of 2025:
After years of stagnation, the IPO market is expected
to once again provide a viable exit path for sponsors,
particularly in the second half of the year.
Cross-border Activity Is on the Rise: US sponsors
continue to look overseas for opportunities, fueled by the
strength of the dollar and the search for hidden value.
Technology Deals Are Back: Buyers are warming up to
technology M&A as pricing expectations between buyers
and sellers continue to converge, driven by the easing of
interest rates, the optimism for AI, and the emergence of
clear market leaders across industries and technologies.
United States
Digital Transformation Acceleration: We anticipate
a continuation of digital transformation initiatives across
LatAm, driven by a growing emphasis on e-commerce
adoption, payment systems and applications, and identity
security. Development of AI models and AI adaptation by
private companies still lags behind those in developed
markets.
Energy and Utilities Expansion: Energy transmission,
utilities, and other energy-related projects received the
most capital from PE investors in Brazil. We expect this
private equity focus on energy and infrastructure projects to
continue into 2025 and beyond.
F/X Challenges: Currency volatility and declining values
against the US dollar continue to create challenges for
foreign investors in both creating valuation models and
analyzing the associated risks of lengthy pre-closing
periods.
Latin America
Continued Increase in PE Deal Values: PE deal
values will increase, together with deal activity, as the cost
of financing has largely normalized and the US election
result leads to less friction for larger M&A transactions.
Deal activity will remain slightly subdued in businesses with
exposure to Eastern Europe and the Middle East, given
the continued geopolitical turbulence. As such, in these
businesses, we expect to see further extended hold periods
and additional portfolio company add-ons where possible.
Focus on AI: Technology remains a key area of focus for
PE, with the appetite for AI-focused businesses continuing
to increase. PE focus on investments in tech and AI is
expected to accelerate further, given the success of
AI-powered publicly listed companies and the continued
growth in private company valuations where AI plays a
significant role.
More Take Privates: As the US market continues to react
to the recent election result, companies listed in the UK will
continue to delist in favor of private equity ownership, with
PE houses once again seeking the ultimate aim of listing in
the US to secure a successful exit.
United Kingdom
Increased Deal Activity: In H2 2024, the PE market
showed signs of recovery and exit activity began to rise,
with a shift towards fewer but larger, higher-value deals.
With an expected lower interest rates and more PE deals,
we believe there will be a continued resurgence in deal
activity in 2025, despite the uncertain geopolitical outlook.
Mitigation of Risks: Valuation gaps are narrowing
as interest rates and inflation decrease from their peak
levels, coupled with better clarity on how companies have
performed in a challenging environment, leading to more
deals being completed. However, PE firms continue to
utilize various tools and strategies to address valuation
gaps, such as earn-outs, vendor loans, deferred payments,
and rollovers. There is an ongoing focus on driving revenue
growth and operational performance, including buy-and-
build strategies, particularly through regional diversification.
To mitigate risks, more PE firms are considering club deals.
Additionally, non-European investors are more interested in
European assets.
Focus on Tech, Software, and ESG: Tech and software
remain key areas for PE firms due to favorable financing
conditions. ESG factors are increasingly vital in investment
decisions despite integration challenges. PE firms are
enhancing ESG practices and focusing on growth capital
and energy sector investments.
Europe
4
Regional Perspective for 2025
Cautious Approach Continues in China: PE deal
activity remains slow, signaling sustained challenges that
could persist into 2025, which will remain a buyers’ market.
Momentum Continuing in Globalizing Sectors:
Despite potential impact from US tariffs, deal activity
and investments in resilient sectors where China has
demonstrated global competitiveness and benefited from
global collaboration, including EVs, clean technology, energy
and resources, and healthcare, are expected to grow. The
recent exclusion of the Biosecure Act from the US defense
bill is a significant win for Chinese biotech companies, as it
prevents them from being blacklisted from new US federally
funded research and contracts and maintains their access
to the US markets and collaborations.
Control Deals Gain Popularity: Popularity of control
deals rises as PE firms seek greater influence over value
creation and efficiency enhancement and control over exits.
Focus on Operational Efficiencies: PE firms prioritize
operational improvements to enhance portfolio company
value, especially amid shrinking exit options. Efficiency-
driven strategies could remain central in 2025 to maximize
returns.
Chinese GPs Eye Global Growth: Chinese GPs
emphasize a global strategy and expanding overseas
to enable portfolios’ global expansion and diversify deal
exposure, a trend that could be critical for growth amid
domestic and geopolitical challenges.
China
Growth in Alternative Asset Classes: Continued growth
in alternative assets, driven by a search for stable, long-
term returns amidst economic uncertainty. Southeast Asia
benefits as allocations grow in sectors like private credit,
infrastructure, logistics, and renewable energy.
Healthcare Sector Momentum Sustained: Healthcare,
particularly medical tech, health services, and Insurtech,
remains a key growth sector, driven by the region’s growing
middle class, increasing demand for quality healthcare, and
advancements in digital health and biotechnology.
Local Regulatory Challenges and Anti-Monopoly
Scrutiny: Regulatory scrutiny, especially in the tech sector,
will intensify in 2025, as anti-monopoly actions and stricter
enforcement take center stage in Indonesia and Vietnam,
Southeast Asia’s high-growth markets.
Hopeful Ease for Exit Backlogs: The backlog of exits is
expected to ease by mid-2025, as interest rates stabilize
and IPO markets recover. Despite short-term constraints in
the exit environment, secondary buyouts and continuation
funds continue to provide flexibility for PE firms.
Geopolitical Risks and and Opportunities: Intensifying
geopolitical risks will shape deal activity. SEA’s geopolitical
neutrality will create opportunities in supply chain industries,
but escalating tensions may complicate dealmaking.
Investments in key industries will require funds to navigate
ongoing changes in global trade rules.
Southeast Asia
Japan Investment Fueled by Multiple Factors:
Japanese M&A volume and PE dealmaking are at record
levels, with foreign investor interest increasing as a result
of several factors, including a weaker yen, low interest
rates, strong supply, a shift in capital away from China, and
Japan corporates looking to unlock shareholder value and
increase price-to-book ratios.
Increase in Unsolicited Offers and Competing Bids:
Historically in Japan, hostile takeovers have been viewed
negatively and Japanese mega banks were very hesitant
to finance these deals. However, perceptions appear to be
changing after the Japanese government published new
M&A Guidelines. Well-known Japanese strategic buyers are
increasingly willing to explore and launch unsolicited offers.
PE firms appear likely to follow suit as competition grows
for attractive acquisition targets.
PE Acquisition Focus: Carve-out deals, buyouts
from founders, and growth equity investments in late-
stage startups continue to attract significant interest
from buyout funds. Hot sectors include semiconductor-
related businesses, automotive parts manufacturers, and
electronics and life sciences companies.
Japan
Favorable Investment Environment: Relaxed foreign
direct investment (FDI) restrictions, tax reforms, and
supportive policies continue attracting foreign sponsors
from the US, Singapore, and the Middle East. These
investors are expanding local teams and increasing
exposure in India’s high-growth sectors, such as consumer,
healthcare, infrastructure, and real estate.
Diversified Exit Channels: While IPO and public
market sale remain the dominant exit routes for investors,
secondary buyouts by mega funds and strategic sales
are gaining traction, driven by portfolio companies’ strong
growth potential and attractive yields.
Valuation: Despite rising interest rates and geopolitical
uncertainties, the valuations of Indian companies remain
at premium levels compared to global peers due to
bullish public market sentiment, fierce competition among
domestic and foreign funds for quality assets, abundant
dry powder, and optimistic growth expectations. Foreign
investors are increasingly focusing on robust business
models and proven financial performance, rather than
chasing high valuations.
Local Partnerships Are Key: As a challenging
fundraising environment will likely continue into 2025,
those foreign investors that have established a local
presence and can leverage their networks with local
operators with extensive sectoral knowledge will likely
see more opportunities and thus be able to execute more
investments than those without strong local partners.
India
5
Regional Perspective for 2025
Momentum Is Building Up: Following a steady
recovery in 2024, PE deal activity across life sciences and
healthcare is expected to gain further momentum in 2025.
Significant capital is waiting to further propel innovation,
convergence, and consolidation in the industry.
Innovation: Spurred by last year’s high-stakes pipeline
deals of large-cap pharmaceuticals, payday prospects will
drive investments in early-stage biotechs. Areas of most
interest appear to be obesity/diabetes, oncology, and
longevity. We also see growing focus on women’s health.
Convergence: There is still enormous untapped potential
in gaining efficiencies and developing new business
models through digital technologies. In addition to the
current efforts to integrate physical and virtual healthcare
services, AI-powered solutions will play a critical role
in further transforming the life sciences and healthcare
industry.
Consolidation: As the value chain in the healthcare
ecosystem remains highly fragmented, there will be further
investments focusing on efficiency gains by consolidation
in areas such as clinical care, manufacturing, and
logistics.
Life Sciences
6
2025 Industry Focus
AI Tech Trends: In 2024, there was an uptick in
investment activity by businesses supporting the
development of technology to harness the capabilities of
increasingly sophisticated, and data-heavy, AI platforms.
This includes faster chip processing technology,
development of new architectures, and neural network
development. The following sectors are likely to attract PE
investors in the AI market in 2025: chatbots and virtual
assistants; agentic AI; AI devices; AI in cybersecurity; AI
in blockchain and Fintech; AI fraud prevention; training
and inference-optimized semiconductors and renewable
energy to power data centers; and AI in medical imaging
and diagnostics, drug development, and personalized
healthcare.
AI in PE Operations and Investments: PE firms are
increasingly utilizing AI for various purposes: assessing
investment opportunities and exit strategies, speeding
up due diligence, and optimizing portfolio company
performance and value by improving decision-making and
offering better tools for managing portfolios and risks.
US State Regulation of AI: In the US, we are seeing
more examples of state-level regulation. Dozens of bills
are flooding state legislatures and pending and newly
enacted legislation covers similar subject matter as the EU
AI Act. There is a growing trend, for example, to require
identification of AI content and tools.
EU Regulation of AI: The EU enacted the EU AI Act in
March 2024, with extra-territorial reach and significant
ramifications for providers, deployers, and users of AI
systems. Understanding and complying with the cross-
border evolution of applicable AI regulation will be a key
issue in 2025.
Asia Regulation of AI: Asia continues to present a
patchwork of regulatory postures toward AI. China has
focused on controlling generative AI content and ensuring
statutory accountability of AI service providers. Other
key jurisdictions like Japan, Hong Kong, and Singapore
have been vying to become regional AI investment hubs
by expanding public investment and tax breaks and
increasingly promoting AI developer-friendly copyright
rules regarding training datasets and copyright authorship.
Several jurisdictions such as South Korea, Singapore, and
India have published ethical guidelines that echo the risk-
based principles in the EU AI Law but are non-binding at
this stage, and that seems unlikely to change in 2025.
AI
7
2025 Industry Focus
continued
More Emphasis on the “S” and “G” in ESG: Though
the “E” will continue to overshadow the “S” and “G” in
ESG, PE firms will attend more closely to social and good
governance factors moving forward. Most notably, PE
firms that will be covered by the EU CSDDD will have to
develop procedures and know-how regarding human
rights-related due diligence and risk management.
Biodiversity as a Growing Force in ESG: In addition
to emissions reductions and other climate-related
metrics, private investors have begun to focus on another
aspect of environmental sustainability: biodiversity. The
deployment of innovative investment instruments and
practices focused on nature conservation—such as debt-
for-nature swaps and biodiversity financing—are expected
to increase in the years to come.
Though Double Materiality Will Gain Traction,
Traditional Materiality Will Remain King: With the
passage of the EU CSRD, ESRS, and CSDDD, double
materiality—the concept that both financial and non-
financial risks and opportunities may have a material effect
on an organization’s performance—will gain traction in
corporate reporting and PE firm investing. Nonetheless,
the ability to demonstrate the financial value-add of
sustainable business practices will remain essential to
answering the challenges from ESG detractors.
Litigation and Regulatory Challenges Will Continue:
There is no indication that the anti-ESG movement will
slow its roll, particularly with regard to climate and DEI
considerations. ESG claims made by portfolio companies
to consumers, investors, and regulators will increasingly
face scrutiny in the form of shareholder, consumer, and
state attorney general-led legal challenges. Moreover,
ESG funds should be prepared to face regulatory
backlash under the new US administration.
Compliance Considerations Will Grow Increasingly
Complex: The ESG compliance landscape is becoming
more and more complex. As companies and PE firms
face expanding due diligence and reporting requirements,
legal and compliance expertise will become increasingly
important. Compliance costs are expected to rise, making
it prudent for investors and companies to avoid “boiling
the ocean” and to instead focus on what is most material
to their business.
More and Better Data Is Needed: To follow through
on their ESG obligations and commitments, PE firms will
need to work with more reliable data. The lack of trusted
data or uniform metrics have been a source of frustration
and criticism. As sustainability-related practices draw
greater scrutiny, agreement on how to generate and
interpret data will become even more essential.
ESG
Headwinds Impacting Ag Deal Activity? New PE
investments into the Ag sector were down significantly
in 2024, as active investors in the space focused on
managing their portfolio and add-on activity, while new
investors were hesitant to invest in a sector affected
by tough macroeconomic issues. The AgTech sector,
in particular, was hit hard and we have seen valuations
come down significantly. The year 2025 could be one in
which sophisticated investors could find real opportunities
in a buyer-favorable environment.
Food, and Better-for-You Brands in Particular,
Remain a Bright Spot: Conversely, deal activity in the
food and beverage CPG sector has remained on par with
2023. The sector has proven resilient in comparison to
other consumer product sectors (and certainly better than
the market for Ag assets), as the demand for innovative
products focused on health and wellness continues to
grow.
Large Strategic Players: As occurred last year,
significant challenges and management changes at many
large strategic players may generate opportunities for
divestures. When results improve, strategics will become
more active in the acquisition space.
Regulatory Environment: The antitrust agencies had
focused on Ag under the Biden administration. It remains
to be seen how a new administration will approach
transactions in the space.
Food + Ag
Focus on Data Centers
Focus on Finance
Focus on Special Situations
Increase in M&A Activity and Asset Acquisitions:
As more data center platforms achieve substantial scale
and individual data centers achieve stabilization, there is
significant interest from financial investors and corporates
to invest in or acquire these platforms, or to acquire
assets on an individual or portfolio basis. There is also
increasing activity in equity investments into existing data
center platforms, providing additional sources of capital for
operators with a strong track record with customers across
Asia.
The Challenges of Debt: The high cost of debt and
conservative positions from lenders have made onshore
debt financing more challenging across Asia; provided,
however, that reasonably low-priced debt will remain
generally available for data center developments and
acquisitions in Japan. In addition, sustainability-linked
loans and other forms of green financing are increasing in
popularity throughout Asia and will continue to be a source
of financing for development in the region.
Larger Projects Driven by AI Demand: Customer
demand for data centers remains strong, with requests for
larger capacities and AI-ready data centers. Developers will
remain wary of power limitations and ESG concerns when
bidding for projects, particularly in the more developed
jurisdictions. This will result in greater emphasis on usage of
renewable power and tighter PUE thresholds. Developers
in Japan continue to face a comparatively tight market in
terms of supply of suitable land and availability of qualified
general contractors as well as escalating project budgets
due to rising MEP costs.
Development of GPU-as-a-Service in Asia: Asia,
excluding Japan, has traditionally lagged behind with
respect to the high-tier data center infrastructure required
to develop and deploy cutting-edge LLMs. There was a
major expansion of private investment into local GPU-
clusters and advanced data centers in Asia in 2024, with
particular focus on providing GPU-as-a-service. This was
due to the US government’s imposition of restrictions
on the export of physical high-end GPU hardware to
customers in China, but, as a side effect, has facilitated
access to AI-ready infrastructure for tech startups across
the region. This trend may come to a halt as we anticipate
that US export controls expected in 2025 will restrict GPU-
as-a-service to customers in China.
Wait and See: With a volatile global election year behind
us, macroeconomic certainty is around the corner in 2025.
We expect to see an uptick in activity after an initial wait-
and-see period as the implications of tax and trade policies
become apparent. Pent-up demand will drive a robust
year in theory, barring chilling effects from any unexpected
macroeconomic or geopolitical developments.
Multi-strategy Diversification: In response to high
levels of dry powder allocated to direct lending, an
increasing number of private credit funds have been
focused on diversification beyond corporate credits.
Notably, investment-grade private credit and private ABS
are generating broad interest, and we expect continued
allocation into this reportedly up-to-US$40 trillion market in
2025.
In the US, private credit activity remained muted
throughout 2024, with transactions mainly limited to
refinancings with existing lenders and add-on acquisitions.
Spreads tightened between banks and private credit as
lenders contended with increased competition to deploy
capital. The market ended the year with a slight uptick in
defaults and Chapter 11 filings compared to the prior year.
In Europe, private debt funds have maintained and
slightly increased their market share compared to banks.
Both banks and debt funds are actively engaged,
showing stronger appetite, though they remain selective
in evaluating assets and sectors. While European LBO
activity has been fairly muted, the most recent rise in
activity reflects growing market confidence, with more
deals expected in 2025.
Acquisition Opportunities in Bankruptcies Will
Continue: The year 2024 has seen a significant uptick in
the number of large US bankruptcy filings (US$1 bn+ in
liabilities) that have filed without a prearranged exit from
bankruptcy. The situation was similar in the UK and wider
European markets as businesses battled inflation and
higher interest rates. With the Federal Reserve signaling
that interest rates will remain higher for longer, we expect
ample opportunities to be available throughout 2025 to
sponsor Chapter 11 plans in the US or otherwise acquire
assets at attractive prices through insolvency proceedings.
Liability Management Gets Direct: While the US
broadly syndicated loan market and European bond
markets have seen increasing numbers of liability
management exercises (“LME”s), the direct lending
market has been largely spared. Given some high-profile
LME efforts in the direct lending space , the increasing
volume of mega-unitranche club deals, the expanding
secondary market for direct loans, and the loosening
of credit documentation, we expect more sponsors will
strongly consider LMEs in 2025, even as the Fifth Circuit’s
recent decision in the Serta Simmons Bedding litigation
may require distressed companies to eschew “uptier”
transaction for other types of LMEs.
8
Key Themes
Japan
EU
China
U.S.
MoFo Global
Contributors
Global
How Can MoFo Help?
• For more information on our insights into global PE trends in
2024 and the outlook for 2025, please contact the co-chairs of
our global PE Practice Marcia Ellis and Patrick Huard, or our
global contributors below.
• Subscribe to MoFo’s PE Brieng Room to stay up to date on
the hottest topics in the global PE space. Marcia Ellis
Omar Pringle Jörg Meißner
Greg SalathéRandy LaxerSteve DeCosse
Jennifer Seipelt
Jennifer Seipelt
Adam HarrisNozomi Oda
Rongjing Zhao Yilong Luo
Yemi Tépé
Finance Special Situations
Darío Avram Stuart AlfordTammy Davies
Southeast Asia
Greg Salathé Tabitha Saw Yemi Tépé
India
Per Lindberg Gary Smith Jeremy White
James Newton
Randy Bullard
Latin America UK
Andrew BoydSimon Arlington
Patrick Huard
James Beach
9
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01072025
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MoFo Global
Contributors
Matt Karlyn Chuan Sun
Suz Mac Cormac Tessa SchwartzGordon MilnerAlistair Maughan
Hayley Ichilcik
ESG
Aly El Hamamsy
Rachel Davidson
Matt Ferry Wolfgang SchönigAndrew Boyd
Craig Martin
Food + Agriculture
Data Centers
Tabitha Saw Chris SpaldingJoshua Isenberg Theo Seltzer
10
Andrew Boyd Mitchell Presser Omar Pringle
