2026 Private Equity Midyear Outlook (Debevoise)

Summary

• Total private equity capital raised in Q1 2026 rose 11% from the prior quarter but remained 10% below Q1 2025, and H1 2026 fundraising of $250 billion lagged H1 2025 by 13%.p.3
• Over half of the private equity capital raised in Q1 2026 came from the ten largest funds, compared to a decade average of 26.8%.p.3
• US interval and tender offer private credit vehicles recorded $25.6 billion in net inflows throughout 2025, before most evergreen credit managers posted net outflows in Q1 2026.p.3
• Global secondaries volume was approximately $40 billion in Q1 2026, down around 11%, while 27 continuation vehicles closed versus 11 a year earlier.p.5
• The AI-driven repricing of software, the SaaSpocalypse, produced an estimated $300 billion decline in market capitalization.p.18
• The UK's new carried interest regime taxes carry as deemed trading income at an overall rate of up to 47%.p.7

Key insights

1. Three market shocks, the SaaSpocalypse, redemption stress in evergreen private credit and the war in Iran, weighed on fundraising in the first half of 2026.p.3
2. Orion Mine Finance Fund IV ($2.2 billion) and Kinterra Critical Materials ($950 million) were among the five largest Q1 real assets funds.p.4
3. The FTC announced a proposed consent order requiring Rollins to stop enforcing noncompetes against more than 18,000 employees.p.9
4. Washington enacted a broad noncompete ban effective June 30, 2027.p.10
5. Foot Locker agreed to a $148,000 penalty, $1,000 for each of 148 separation agreements with violative whistleblower award waivers.p.11
6. The retail investment strategy would lower the MiFID II threshold for elective professional clients to EUR 250,000 from EUR 500,000.p.15
7. Chapter 11 filings involving liabilities of at least $10 million are at a five-year high and US private credit default rates are elevated compared to 2025.p.17
8. Debevoise expects the effects of the private credit and software shocks to prove transitory, with investors refocusing on value opportunities.p.4