Private Equity Edition
Volume 10
SEQH CAPITAL RESEARCH
Private Equity Edition – Weekly Brief
Week Ending January 21, 2026
Market Snapshot: The Great Unlocking
Exit markets have finally turned the corner after a three-year logjam, with sponsor-backed IPO and M&A activity accelerating into 2026 as rate cuts narrowed the bid–ask gap and stabilized financing conditions. Global secondaries volume reached roughly 226 billion dollars in 2025, with GP‑led deals up more than 50% year over year, underscoring how continuation vehicles have become a core liquidity tool rather than a niche solution. Megadeals remain a defining feature: 22 private equity transactions above 5 billion dollars totaled about 311 billion dollars in 2025, led by the 55‑plus billion dollar Electronic Arts take‑private, now the largest buyout on record.
Capital Flows: Dry Powder, Secondaries, and Private Credit
Global private equity dry powder still exceeds 2 trillion dollars, but deployment has clearly re‑accelerated, with U.S. buyout dry powder down from roughly 1.3 trillion dollars in late 2024 to about 880 billion dollars by Q3 2025. LPs have shifted from tolerating “jammed” portfolios to demanding distributions, elevating DPI over TVPI and pushing sponsors toward GP‑led secondaries and continuation funds that can return cash without selling their best assets. At the same time, private credit continues its structural expansion: non‑traded BDC fundraising hit roughly 10.1 billion dollars in Q3 2025 and a leading vehicle alone has raised on the order of 30‑plus billion dollars since launch, even as rising concerns about negative free cash flow borrowers and higher expected default rates require more rigorous manager selection.
Structuring and Liquidity: Continuation Vehicles and Retail Access
Continuation funds have moved into the mainstream, with nearly half of GPs now using GP‑led secondaries and continuation vehicles, and these structures are expected to account for about 20% of LP distributions in 2026. Performance data show many single‑asset and multi‑asset continuation vehicles have outpaced traditional buyout funds on net IRR and TVPI, reflecting the fact that GPs are effectively “doubling down” on their highest‑conviction companies with shorter, more visible value‑creation runways. In parallel, the policy push to bring private assets into 401(k) plans has accelerated: an August 2025 executive action plus pending regulatory guidance have catalyzed target‑date and collective trust structures that embed private equity and private credit exposure, with major managers and recordkeepers already rolling out retirement‑friendly vehicles.
Themes for 2026: Where Sponsors Are Betting
Two areas stand out in current deal flow and forward commentary: healthcare platforms and AI‑linked infrastructure. Healthcare private equity posted record deal value in 2025 despite heightened state and federal scrutiny, with sponsor focus on physician practice management, behavioral health, and tech‑enabled care models that can absorb wage inflation while growing volumes. On the AI side, consensus estimates now put 2026 AI infrastructure capex north of 500 billion dollars, and large alternatives managers are building out global data center and power portfolios to serve hyperscalers, while also moving up the stack into electrical equipment, cooling, and grid‑adjacent assets that benefit from the same trend with potentially more attractive entry multiples.
What This Means for Everyday and Professional Investors
For limited partners and sophisticated allocators, the message is clear: this is a deployment and realization window, not a time to sit entirely on the sidelines, but underwriting must assume flat or slightly lower exit multiples and place real weight on operational value creation, not financial engineering. For everyday investors gaining exposure through listed alternatives, BDCs, interval funds, or future 401(k) structures, the focus should be on manager quality, fee load, and alignment, prioritizing platforms that have demonstrated realized exits and prudent use of leverage over those marketing headline yields that lean heavily on aggressive private credit risk. In both cases, the opportunity set is improving, but the dispersion of outcomes is likely to widen, making manager selection and strategy differentiation more important than in the liquidity‑driven bull market of the prior decade.