Tight capital, smarter deals in store for private markets across H2 2025
Despite a turbulent start to private markets this year, several themes have become clear in the first six months, marking a profound shift in how capital is allocated, risk is assessed and growth is pursued. From impact investing to valuation resets and the rise of secondary trading, the sector is getting ready for a new era, according to Jamie Green, Executive Chairman of PrimaryMarkets.
The exuberance of recent years has given way to hard-nosed realism. Early and mid-stage technology companies, in particular, have seen a material compression in valuations. With a stronger focus on interest rate volatility and capital scarcer, gone are the days of mega-rounds and sky-high burn rates.
“The interest rate volatility has forced a recalibration. Founders are raising smaller rounds, with stricter terms and more focus on profitability,” he said. “Venture firms have dry powder, but they’re deploying it slowly, with heightened scrutiny on business models and a sharper eye on governance.”
With IPO markets sluggish and M&A activity at a low point, investors are turning to secondary trading platforms to unlock liquidity. Structured platforms like PrimaryMarkets are gaining traction, offering compliant and transparent ways to buy and sell stakes in unlisted securities.
“We’re seeing unprecedented interest in the secondary space,” said Green. “Investors want liquidity, and issuers are recognising the need for better transparency and engagement, even if they aren’t listed on a public exchange.”
Looking ahead, the outlook for private markets is best described as one of cautious optimism. Interest rates may have peaked, but central banks are unlikely to rush into cuts. The cost of capital will stay elevated, forcing businesses to prove capital efficiency and pursue sustainable growth.
Equity investors will lean toward companies that can thrive without repeated capital injections, while debt transactions such as leveraged buyouts face stricter covenant demands and higher hurdle rates.
Fundraising, too, will remain selective. Experienced mid-market managers with clear sector specialisation and exit track records are likely to find support, while emerging strategies may struggle to secure commitments.
“Alignment of interests, fee discipline, and deep sector knowledge are more critical than ever,” Green noted. “Institutional investors are being extremely selective. It’s not about spray-and-pray anymore but about precision targeting.”
ASIC’s scrutiny of private offerings is intensifying, and the debate over sophisticated investor eligibility is far from over. Advertising practices, disclosures and transparency will all come under sharper focus. Meanwhile, proposed changes to unrealised capital gains tax is sending waves across the private capital landscape, especially for long-hold assets.
Despite the uncertainty, several sectors continue to attract robust investor interest. Energy transition, clean tech, and grid modernisation are high on investment radars. Digital infrastructure including data centres, fibre, and cybersecurity remains resilient as demand for bandwidth and security intensifies. Healthcare, aged care and biotech are also emerging as structural winners, driven by demographic pressures and rising health system demand.
“Private markets are proving resilient by adapting,” Green concluded. “We’re seeing more structure, more discipline and a clearer path to long-term value creation. This is a pivotal moment and those who embrace the new rules of the game are going to lead the next cycle.”
