Private equity in 2025 – strategic shifts and the rise of corporate services
By Robin Harris, CFA | Regional Head of APAC, Ocorian
When private equity first emerged around 40 years ago, it was largely a niche sector dominated by founder-led firms focused primarily on leveraged buyouts.
Early strategies were straightforward - source deals and maximise leverage. However, the global financial crisis forced the industry to adopt clearer, more repeatable models for value creation that went beyond financial engineering to include strategic planning and operational improvements.
Following this period, a prolonged era of rock-bottom interest rates and steady economic growth fuelled a surge in dealmaking and asset valuations. Many general partners (GPs) benefited simply by riding this wave of liquidity and market expansion. But as the industry emerges from the latest downturn, it’s clear that the coming decade will not be a simple replay of past cycles.
With the era of ultra-low interest rates and effortless multiple expansion firmly behind us, the emphasis is shifting toward value creation through operational performance, robust fund structuring, and smart use of corporate services.
As we look to 2025 and beyond, asset managers face a private equity landscape that demands strategic clarity, efficiency, and innovation.
Rising margin pressure demands operational efficiency
The traditional “2 and 20” fee structure remains widely used, but significant fee compression is redefining firm economics. Increased competition for capital and the expansion of co-investment options have led to widespread fee reductions, even among established GPs.
Adding to this pressure is the blurring line between private and public markets. Major traditional asset managers such as Vanguard and Franklin Templeton are creating alternative investment products for retail investors beyond tech-driven public markets. Meanwhile, alternative giants like Blackstone and Hamilton Lane are rolling out lower-fees products and offering new private market access points to high-net-worth individuals. This trend raises the possibility of large firms competing primarily by tracking market performance (beta) rather than attempting to outperform it (alpha).
At the same time, with the end of the low-interest-rate environment, generating attractive returns will increasingly depend on improving portfolio companies’ operational performance. As a result, private equity firms must prioritise operational efficiency, as return generation now hinges more on portfolio improvement than financial engineering. This shift requires investment in talent, data analytics, technology, and emerging tools like generative AI – all costly endeavours, especially to build in-house.
GPs increasingly turn to trusted corporate service partners to handle non-core functions such as fund administration, SPV setup, and regulatory compliance, helping them remain lean while scaling effectively. Firms that fail to make these preparations for tighter margins risk falling behind as economic pressures intensify.
Fundraising becomes more selective and sophisticated in a changed capital environment
Fundraising today is challenging and will likely remain so until dealmaking and distributions recover. Capital is increasingly concentrated among the largest, best-established funds with strong track records. Winning in this environment demands a clearly articulated value proposition and a professional investor relations operation that resembles a top-tier B2B sales organisation rather than relying on informal networking.
In parallel, the composition of capital sources is evolving. Private wealth and sovereign wealth funds (SWFs) are driving much of the growth in alternative assets under management over the next decade. Private wealth is particularly attractive because individual investors hold roughly half of global capital yet represent only 16% of alternative assets.
Alternatives firms are racing to expand distribution through private banks, registered investment advisers, and semi-liquid structures offering lower minimums and greater liquidity.
To capture this growth, firms are investing heavily in private wealth teams and forging partnerships with large asset managers like Capital Group, State Street, and BlackRock. These alliances aim to provide wealthy individuals with broader access to alternative investments.
SWFs, with approximately $6 trillion in AUM projected to grow to $17 trillion by 2035, are also reshaping the capital landscape. Leading SWFs such as ADIA and GIC have significantly increased their allocations to alternatives, focusing on partnerships and co-investments with large funds. Their growing sophistication and scale will reshape capital flows and present both opportunities and challenges across the private equity landscape.
Capturing this opportunity requires fund managers to deliver institutional-grade infrastructure, governance, and cross-border operational support, often via outsourced corporate service partners.
Scale becomes a source of competitive advantage
While smaller, alpha-generating firms remain critical to the market, scale now provides a growing edge. Larger firms benefit from economies in back-office functions such as finance, compliance, and technology. They can afford to invest in sector-specific expertise, data platforms, and brand development, reducing key-person risk and enabling broader client service.
That said, there remains a vital role for smaller, differentiated firms that consistently generate alpha. These firms must clearly define their unique strengths and invest strategically in capabilities that drive superior, repeatable returns. In an environment where capital is abundant, ideas and execution are the true differentiators.
Mid-sized and emerging managers must sharpen their competitive edge by clearly articulating differentiated strategies and partnering with firms that can help them achieve scale without adding operational complexity. Outsourced corporate services, including entity management, fund accounting, and regulatory filings, allow firms to remain focused on investment while ensuring resilience and institutional credibility.
Smaller firms must be disciplined in managing growth and ensuring each fund vintage delivers exceptional results. True differentiation is essential to stand out to limited partners (LPs) and remain competitive.
Strategic M&A reshapes the competitive landscape as industry consolidation intensifies
As scale becomes more critical, M&A activity in private equity is no longer an exception, it’s a trend. Over 180 transactions involving alternative asset managers have been recorded since 2021, as firms seek to expand into new asset classes, scale distribution, and build comprehensive capabilities.
This wave of consolidation increases the need for corporate due diligence, multi-jurisdictional structuring, and post-acquisition entity management. Trusted corporate service providers are playing a critical role in helping firms execute M&A activity efficiently and integrate complex operational systems across markets.
Looking ahead: Corporate services as a strategic enabler
The private equity industry in 2025 is operating in a more complex and competitive environment than ever before. Margin compression, evolving investor bases, the scale imperative, and rapid consolidation are reshaping how firms grow and compete.
The private equity industry in 2025 faces a more complex and demanding environment than ever before. Compressed margins, evolving capital bases, the imperative of scale, and rising M&A activity are redefining how firms compete and grow.
Success will depend on a firm’s ability to execute with precision, differentiate with purpose, and invest in the right operational infrastructure. The role of corporate and fund administration services has never been more strategic, helping GPs stay agile, compliant, and investor-ready across jurisdictions.
Firms that innovate, differentiate, and deliver genuine value creation will emerge as the leaders in this new era — where simply riding market cycles is no longer enough.
How Ocorian supports private equity asset managers
As alternative investments gain traction globally, private equity fund managers are seeking partners who can support every phase of the fund lifecycle. Ocorian provides tailored corporate and fund services, including:
Fund formation and structuring
SPV setup and administration
Regulatory and cross-border compliance
Entity governance and reporting
Capital markets and private wealth connectivity
Our experience supporting GPs and LPs in over 20 jurisdictions makes us the trusted operational backbone for many of the world’s leading and emerging private equity firms.
If you or your clients are rethinking how to deliver value in today’s market, our team is ready to help.
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