Key takeaways from the Private Funds CFO Network’s Europe Forum

By Justin Partington, Global Head of Fund and Asset Managers, and Vera Huang, Head of Data Solutions

We recently attended the Private Funds CFO Network’s Europe Forum in London, where industry leaders gathered to discuss the latest trends, challenges and opportunities in private markets. From the cautious adoption of AI to the ongoing fundraising struggles, here are some of the key insights and takeaways that emerged from the event.

AI in private markets: Promise and peril

Artificial intelligence (AI) is still in the early stages of adoption in the private markets sector. According to a survey done by the organisers, only 15% of asset managers have adopted AI, and half remain doubtful about its ability to deliver material gains. For many general partners (GPs), investing in technology—including AI—is no longer optional. However, tangible use cases remain scarce, and GPs are adopting a cautious approach.

The potential of AI is undeniable, from streamlining operations to enhancing deal sourcing and due diligence. Yet, as opportunities arise, so do risks. The rise of AI also introduces new security challenges, such as the threat of deepfakes and impersonation. These emerging threats require GPs to rethink their information security frameworks to safeguard their firms and clients from the evolving digital landscape.

Fundraising remains tough: Survive to ’25

Fundraising continues to be a challenging environment, with many firms facing an uphill battle to secure the capital they need. For GPs managing funds in the $1bn to $5bn range, a small but significant percentage are expecting their assets under management (AUM) to contract in the next year. For many, it’s become a matter of “Survive to ’25” as they navigate the current headwinds.

LPs in the driver’s seat: A shift in dynamics

One of the key themes discussed was the growing influence of limited partners (LPs). With LPs wielding more buying power than ever, many GPs are finding it necessary to secure key LP commitments before finalising fund structures. Larger LPs are increasingly pushing for structures that align with their preferences, placing additional pressure on GPs to adapt to these demands.

Syndication and co-investments: A double-edged sword

In response to the pressures of fundraising and deal execution, some LPs have started running syndications and co-investments. This strategy allows them to get deals done quickly and spread the risk across multiple investors. However, these arrangements can give rise to potential conflicts. Aligning interests between different LPs, managing decision-making processes and ensuring transparency can be challenging.

Meeting LP expectations: Reporting and liquidity pressures

As the industry evolves, LPs are increasingly focused on meeting expectations around reporting and liquidity. Traditional performance metrics like Distributions to Paid-In Capital (DPI) and Multiple on Invested Capital (MOIC) are coming under pressure as investors demand more frequent updates and greater transparency.

With wealth clients and other semi-liquid investors entering the private markets space, GPs must find ways to keep up with valuation frequency and adds further complexity to the equation. GPs are battling with how to balance LPs’ liquidity needs with the illiquid nature of private market investments. The frequency of valuations, once a point of contention, is now under increased scrutiny as investors expect more timely information on the value of their holdings.

Defining the optimal operating model

As private equity firms evolve to meet these new challenges, one of the key questions being asked is: What does an optimal operating model look like in today’s environment. The product-by-product framework might have worked in the past, but as firms scale and diversify their offerings, they may find it increasingly difficult to operate with this approach. Another emerging trend is the hybrid model, where GPs leverage external service providers’ expertise while maintaining control and governance over service delivery. This model allows firms to tap into specialised knowledge without sacrificing oversight and decision-making power.

Conclusion: The road ahead

The private equity landscape is at a crossroads. While challenges arise, particularly in the areas of AI adoption, fundraising and meeting LP expectations, opportunities also exist for those who can navigate the shifting terrain. The key to success will lie in adapting to new technologies, maintaining a flexible operating model, and finding innovative ways to manage both the risks and rewards of private market investing.

As the industry continues to evolve, GPs must be ready to embrace change—whether through AI, co-investment strategies, or more frequent reporting—while staying true to the long-term value creation that defines private equity.

If you’re interested in learning more about any of the topics mentioned in this article, don’t hesitate to contact us.