While private equity has been instrumental in meeting the financial and demographic challenges of the US pension system, its role in Europe remains a matter of debate. European investors need to familiarize themselves with this asset class and understand its evolution. While no one has a crystal ball, a number of scenarios are emerging that point to a growing role for private equity in pension funding.
This trend is reflected in a geographical diversification, particularly in favour of Europe and Asia, which has already been observed for several years. At the same time, a more fluid articulation between listed and unlisted markets is emerging, suggesting new ways of structuring portfolios, to the benefit of private equity. Added to this is the acceleration of digitization, creating new investment opportunities in technology, while facilitating the operational transformation of companies acquired by funds.
Towards a thinning of the boundary between public and private markets
All these dynamics point to continued growth for private equity, and to its expansion on an international scale. Investment structures such as funds of funds, specialized venture capital funds or participatory financing platforms enable investors to diversify while gaining access to high-potential emerging sectors.
The growth of private equity could be boosted by the emergence of new hybrid models. By combining elements of participatory financing and venture capital, this asset class enables investors to take part in smaller-scale projects while benefiting from portfolio diversification.
In this way, the boundary between public and private markets could become increasingly fine. Thanks to heterogeneous financing models, private companies could be taken public more quickly. Private equity could thus come closer to public market returns, while offering higher growth opportunities.
The need to ensure technological and ecological transitions
Private equity is also tending to open up to a wider range of alternative assets: infrastructure, renewable energies, cutting-edge technologies and so on. Sectors that are both growth-generating and aligned with sustainability objectives. This is a way of responding to the concerns of investors, whether they are concerned about their social and environmental impact, or simply looking for returns. This diversification can only support the development of private equity. A trend that reflects both changing markets and new expectations.
The continuing rise of new technologies is also accompanied by a greater number of companies looking for financial leverage. This could lead pension funds to turn more towards private equity. This is good news for investors, as sectors such as artificial intelligence, fintech and cybersecurity offer particularly attractive prospects for long-term returns. However, while these innovations can be a source of substantial growth, they still require careful risk management.
Global investors are also tending to make greater use of private equity investment strategies aligned with sustainability objectives. They are increasingly focusing on companies that adopt socially and environmentally responsible practices. This type of approach, which combines return and impact, could attract more investors, particularly those seeking to meet stakeholder requirements in terms of ESG criteria.
In addition to benefiting its investors, private equity also has a key role to play in a country's economic competitiveness. "Private equity can be used to efficiently allocate capital, notably by reallocating it to companies with strong potential but limited access to credit or growth levers. It can also play a role in disseminating management, marketing and business practices, by systematizing the adoption of best practices among portfolio companies," explains Antoine Levy, economist and assistant professor at UC Berkeley, in an exclusive interview with Altaroc.
Private equity buoyed by emerging markets
Private equity could also benefit from considerable international opportunities. Pension funds play an essential role in financing global projects, from infrastructure to green technologies, while responding to the need to increase their returns.
Global investors are taking advantage of the development prospects of emerging markets, where investment opportunities are booming. This is because developing countries represent areas of high growth potential. Another way of diversifying portfolios while maximizing long-term returns.
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In 2024, investments in Asia Pacific increased by 8.1% year-on-year, reaching $138 billion 46. In Latin America, General Atlantic and Dragoneer are demonstrating this appeal with an investment in Arco Educação, a Brazilian company specializing in educational content and technology. In January 2025, they jointly invested $1.5 billion to delist the company from NASDAQ and steer it solely towards private equity 47.
A trend that must be supported by political decisions
Regulatory changes will play a crucial role in these developments. If legislators continue to progressively relax certain restrictions on alternative investments, pension funds could increase their allocation to private equity. However, this will only happen if a balance is maintained between returns and security, with strict control of systemic risks.
Pension funds thus have to navigate between the need to offer high returns and the responsibility to protect the interests of retirees. While these challenges are significant, innovations in investment models and increased diversification in private equity could provide an answer. Investors should therefore continue to monitor these developments in order to take advantage of private equity opportunities, which undeniably look promising for pension financing.
More information
Africa needs investment for its energy transition
Less publicized, transactions in Africa are not non-existent and offer unparalleled growth potential. This is particularly true in the financing of start-ups specializing in technologies linked to the energy transition. Over the last decade, the increase has been meteoric.
While in 2015 Nigerian footballer and businessman Ademola Adesina struggled to raise a million dollars for a solar energy startup, things have since changed. In the space of a few years, Ademola Adesina has raised over $30 million for the same company.
Furthermore, since 2019, African companies specializing in climate engineering have raised over $3.4 billion, and the opportunities are also very encouraging. The continent needs investment to the tune of $277 billion to meet its climate targets by 2030 48.
45 https://www.amf-france.org/sites/institutionnel/files/private/2023-09/230911-private-equity-etat-des-lieux-et-vulnerabilites-l.-grillet-aubert-fr_0.pdf
46 https://www.deloitte.com/global/en/offices/apac/perspectives/2025-asia-pacific-private-equity-almanac.html
47 https://latinfinance.com/2024-deals-of-the-year-awards/2025/01/31/private-equity-deal-of-the-year-general-atlantic-dragoneer/
48 https://apnews.com/article/africa-climate-tech-startup-funding-462006ed8 e3e28fe4eb9221dde174a11
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