Private Equity To Revive As IPOs, Corporate Activity Increases – Pictet

Tom Burroughes

3 February 2025

A relatively fallow period for private equity – in part caused by a slowdown in exits caused by fewer share flotations in recent years, worsened by post-pandemic rate rises – appears to be ending, according to Pictet Wealth Management, part of , in its 2025 outlook.

Under a newly-elected US president Trump, who promises deregulation and a desire to keep rates low, the environment looks positive for IPOs, the Swiss private bank said.

“Private equity has had a few difficult years,” Géraldine Sundstrom, head of investment offering, Pictet WM, told a briefing for journalists last week. An expected rise in mergers and acquisitions and IPOs should give investors in privately held firms more opportunities to exit their stakes, and encourage more vigour in the sector, she said.

“We have seen all these headwinds become tailwinds,” Sundstrom said. “The machinery is re-starting.”

In 2021, there was a total of 2,729 IPOs; the number fell sharply, with 1,390 such flotations in 2024, according to Pictet, sourcing figures from Bloomberg.

For more than a decade, wealth managers and their clients have been urged to allocate more private equity, credit, infrastructure and real estate in portfolios. In reality, HNWIs typically hold low single-digit percentages in these areas, although a number of reports (see here and here for example) foresee an upward trend.

“The interest by wealthy clients in this asset class is growing,” Sundstrom said, adding that clients are under-invested compared with where they could be.

Elsewhere, Pictet prefers to hold US and Japanese equities versus eurozone and emerging market stocks. “The continued strength of the US dollar, superior growth metrics and the prospect of tax cuts and deregulation mean US risk assets look more enticing,” the firm said. “Valuations in the US, particularly in the tech sector, look high but can be justified by substantial free cash flow. Indeed, our focus remains on cash-rich companies overall.”

During the briefing, Pictet discussed the possibility of sweeping US tariffs on Canada, Mexico, China, and possibly the European Union. The Swiss bank said the UK is probably less likely to be targeted than these other countries. In general, US tariffs will have a more detrimental effect on the world economy than during Trump's first term of 2017 to 2020 because conditions were less weak back then, it said.

Pictet said it expects the US dollar to be strong against most major currencies for most of this year; it also continues to regard gold as a “strategic asset.” Besides gold, the Swiss franc is worth considering in a negative scenario is.

Another area worth attention, Pictet said, is the hedge fund space, given the ability of such funds to produce returns in difficult market conditions.

Pictet was asked about last week’s falls in stocks of “Magnificent Seven” equities, such as those of Nvidia, following the reports of China’s DeepSeek AI app and how it was, allegedly, far cheaper to develop than US counterparts.

The last few years have witnessed unprecedented concentration of US firms driving most market performance, Sundstrom said. “This kind of concentration…won’t last forever and will mean-revert and performance would be a lot broader. Maybe this is a catalyst…it could be a rotation from the companies that are more semiconductor-orientated,” she said.