The author, Alex Yang, is Head of Greater China and Southeast Asia for Brookfield’s Private Equity Group.
The private equity market is well-positioned for more robust deal activity and strong performance through the remainder of 2025 and beyond. With some central banks commencing rate-cutting cycles, valuations have stabilised, and more asset owners are willing to sell than in recent memory.
Opportunities are especially strong in industrials and essential services such as financial infrastructure. The US remains a key market for PE dealmaking, while Europe offers value plays in global businesses. In the Asia Pacific, supply chain shifts are unlocking pan-Asia buyout prospects, and the Middle East is fast emerging as a PE hotspot, driven by diversification efforts and robust GDP growth.
However, the formula for success in private equity is changing. With interest rates likely to stay above pre-pandemic lows, private equity managers can no longer rely as heavily on cheap debt to boost deal financing and equity value as they did several years ago.
Managers who can source high-potential opportunities, access flexible capital and lean on the expertise of their global network will see this environment create more value for businesses and investors.
As such, operational expertise is the key lever that firms will need to drive excess returns.
Key strategies to enhance operations
An operations-oriented investment approach generally involves a combination of strategic repositioning, operating excellence and enhanced commercial execution.
Perhaps even more foundational, we find that when investment and operations teams work together and on equal footing, it can dramatically improve cash flow and drive value in several areas, including:
- Commercial strategies: Through a top-to-bottom review of a company’s products and services, sales territories, acquisition strategies and governance practices, managers can refine areas like pricing, focusing on the highest-quality growth investments and optimising the company’s go-to-market approach.
- Organisational structure: Aligning corporate hierarchy and headcount with business strategy facilitates the delivery of business goals.
- Manufacturing operations: Implementing best-in-class processes can enhance productivity and reduce fixed expenses—ultimately, making high-quality products at a competitive cost.
- Technology: Implementing AI can help portfolio companies focus on high-value workflow by optimising manufacturing processes, automating computer coding, developing marketing plans, etc. to reduce administrative or error-prone tasks.
Where to find attractive opportunities
Industrials and essential business services, such as financial infrastructure, are presenting particularly compelling opportunities for private equity managers.
Industrial businesses will require substantial capital to upgrade their technology systems with AI and robotics, and with rising geopolitical uncertainty, many are also investing heavily to reshore manufacturing processes and strengthen their supply chains.
Financial infrastructure, such as online payment systems, is also in need of rapid evolution. Companies and people are seeking to transact faster from anywhere, anytime and on any device.
Yet, much of the infrastructure that supports this still operates on analogue systems, with many assets held by financial companies lacking the expertise to transform from ageing systems to new-age digital operations.
Geographically, the US remains the largest private equity market and presents opportunities across nearly every sector, particularly industrials.
For decades, manufacturing growth has stagnated as companies increasingly relied on international supply chains to shift production capacity offshore. As a result, capital investment and labour productivity have declined in manufacturers, along with their competitiveness.
Europe also presents attractive opportunities to find assets for value, especially given the number of leading global businesses headquartered in Europe.
The Asia Pacific is becoming an increasingly integrated region, given the continued shifts in supply chains. We are seeing buyout opportunities in pan-Asia businesses that are not only seeking capital, but also operational expertise.
The Middle East is also fast becoming a major focus for private equity investing. The Gulf Cooperation Council (GCC) region is experiencing strong growth in gross domestic product (GDP) due to a growing population, significant infrastructure investment and expanding trade relationships. And its strategic plans to diversify away from oil also create opportunities for private capital providers with experience in the region.
Navigating risks amid uncertainty
Often, short-term noise or disruptions detract from the underlying positive fundamentals of the market. Rates will rise and fall, markets will fluctuate, and government policies will change from year to year.
Private equity managers that can look beyond the noise and implement operational improvements across their portfolio offer investors excellent opportunities for strong long-term returns.
