“The big money is not in the buying and the selling, but in the waiting.” – Charlie Munger
Private markets have required patience recently. Higher interest rates and uncertain markets slowed activity, which meant fewer companies were being bought and sold and less cash returned to investors. That dynamic is beginning to change. More businesses are finding new owners, and activity across private markets appears to be slowly improving.
The biggest story right now is, unsurprisingly, artificial intelligence (AI), and it is showing up everywhere. In venture capital, AI companies are attracting enormous amounts of capital and dominating the headlines. In private equity, firms are using AI to improve operations and drive efficiencies across their portfolio companies, even as the technology begins to potentially disrupt industries where private equity has historically been successful. In real estate, data centers, which serve as the backbone of AI, have become one of the hottest assets in the world as investors race to build the infrastructure required to support the technology.
Private credit is where the mood starts to shift a bit. After more than a decade of rapid growth, some signs of stress may be appearing. Default rates ticked up in 2025, including a few high-profile situations such as auto parts supplier First Brands, and major firms like Blue Owl and Blackstone have seen heavy withdrawal requests from investors, putting them in uncomfortable positions. What has been especially interesting is the tone across the industry. Instead of competitors taking advantage of one another’s troubles, rival firms have circled the wagons, insisting that everything is fine, which is not the kind of solidarity we typically see on Wall Street. For the past few years, we have been reducing our exposure to private credit. When interest rates were near zero, private credit offered much higher returns than bonds, but today much safer bonds pay more than they used to, making the risk-return tradeoff for private credit far less compelling, at least for now.
Things We’re Watching
Private Credit Stress
- Redemption pressure is hitting some major firms, raising questions about systemic risk vs. isolated issues. For now, it appears manager-specific but highlights how quickly liquidity can fade—making manager selection and discipline critical.
IPO Pipeline
- Several of the most valuable private companies in the world such as SpaceX, OpenAI, and Anthropic may soon list their shares on the stock market, testing public market appetite for mega valuations.
401(k) Access
- Policymakers are exploring ways to allow private market investments inside 401(k) plans. While this could unlock a massive new source of capital, it also raises questions about risk, fees, and complexity for everyday investors.
Questions?
Mindy Mitchell, CAIA®
Blake Freund
privatemarketteam@monetagroup.com
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