We are now a full two months on from the Liberation Day tariff announcement by President Trump. While amidst ongoing volatility in the bond and equity markets,¹ equity prices have returned towards their ‘pre-tariff’ levels,² trade tensions are re-emerging between the US and Europe.³

From the point of view of the private assets industry, the positive factors we note is that recession seems more unlikely.⁴ Earnings guidance from US and overseas firms has been mixed though arguably less grim than expected. Hard macro data is also holding up.⁵ ⁶ Add to that a range of rate cuts by central banks around Europe,⁷ ⁸ and a budding credit growth story for European banks, and the outlook is better than expected.

Secondaries and focus on Europe

In our conversations with operators we pick up a series of pivots by private equity managers.

The first is a sense that a number of larger, more established managers who have raised capital in 2024 and at the beginning of 2025 now feel that they have an opportunistic environment in which to put that to work. This is doubly so for secondaries — industry analysts at Pitchbook expect that secondaries as a sub asset class will account for nearly 4% of the private capital industry’s expected $24 trillion in assets by 2029.⁹

Secondly, several large managers have commented on in their AGM meetings is geographic diversification with a focus on Europe and the Middle East and India. In particular, efforts by European governments to attract talent (to cities like Milan and Madrid for example), the signal of intent by the German government¹⁰ and the EU on funding defence and infrastructure,¹¹ and the debate on channelling greater amounts of savings into private assets,¹² looks set to create a zone of opportunity for the sector.

In the US, while we expect to see the capital markets pipeline to be delayed until year end, the passage of the recent budget¹³ removes some regulatory uncertainty, and we expect that mid-level buyouts will pick up as many of the opportunities in relevant segments are potentially less impacted by tariffs, and as macro activity holds up.

Deglobalization and deregulation

Fourthly, amidst a sectoral pivot towards defence¹⁴ and AI¹⁵, we think that the theme of ‘deglobalization’ is going to drive investment in regional infrastructure (the Trump visit to the Middle East was a sign of this), in digitization, decarbonisation and data. We expect to see deregulation become a trend in these sectors, as has notably been the case in the UK recently.¹⁶

Further, it is now quite obvious that, despite tariffs, AI has not gone away. The decision by the Trump administration to change the rules on the diffusion of AI technology will likely generate greater usage in regions outside the US,¹⁷ though arguably may also create further security concerns.

From the point of view of transactions, an important event was the OpenAI acquisition of io.¹⁸ This is indicative of a ‘next generation’ approach to consumer centric applied AI. Indeed, we see a similar trend emerging in defence, whereby AI will be used to employ small groups of soldiers on the battlefield.¹⁹