Many limited partners (LPs) remain under-allocated to alternatives, yet investor confidence in private markets, including credit, remains high, with 83 per cent planning to maintain or increase capital deployment in 2025.
According to a new global survey by Goldman Sachs Asset Management, which manages $540bn (£405bn) in assets, the majority of respondents see opportunities in infrastructure (93 per cent), followed by private equity (82 per cent), real estate (81 per cent) and private credit (70 per cent).
More LPs are under-allocated than over-allocated, signalling continued expansion into new strategies, with private credit the second-highest area of under-allocation at 43 per cent versus 12 per cent over-allocation, according to Goldman Sachs. The largest areas of under-allocation are co-investments and secondaries, with 62 per cent and 45 per cent, respectively, below target.
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“The proliferation of new managers in the last cycle, alongside new fund launches by existing general partners (GPs), has created a more competitive fundraising landscape,” said Matt Gibson, global head of the client solutions group at Goldman Sachs. “LPs are more discerning than ever, and value creation will become the main determinant of success.”
In 2025, 43 per cent of LPs plan to deploy more capital year-on-year, up from 39 per cent in 2024. Another 40 per cent expect to maintain last year’s pace, a similar proportion to the previous survey, despite a lack of distributions.
Co-investments, secondaries and evergreen structures were highlighted as gaining traction, with over 50 per cent of institutional LPs investing in or considering evergreen vehicles for private credit, the highest across all asset classes.
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“Private credit, with its unique features, will continue to be an important source of financing activity as deal activity accelerates,” said James Reynolds, global co-head of private credit at Goldman Sachs. “Returns will matter, and GPs with strong origination pipelines, experience through credit cycles, and scaled platforms should differentiate themselves.”
GPs continue to see valuations as the top challenge for new deployments, cited by 63 per cent of respondents. For exits, valuations were identified by 60 per cent as the main challenge, second only to macroeconomic uncertainty.
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