If 2023 was the year of waiting, 2024 was the year private equity (PE) finally shook off the dust and got moving again. After a sluggish fundraising environment and high interest rates made dealmaking tough, PE investors came back with a vengeance (though not without some battle scars). The question now is: which sectors are poised to dominate in 2025, and which tried-and-true industries will continue to hold strong?
A Market Reawakens
Private equity had a mixed bag in 2024. While traditional PE fundraising globally saw its third straight year of decline—down 24% year over year, secondary fundraising surged, helping firms unlock liquidity in an otherwise tight market. That’s a huge sigh of relief for limited partners (LPs) who have been desperate for liquidity.
According to McKinsey, large private equity deals made a strong comeback, with transactions over $500 million gaining momentum. Sponsor-to-sponsor exits picked up, and new-issue loan value for PE-backed borrowers nearly doubled, signaling renewed investor confidence.
Where Is The Money Flowing?
If there’s one thing private equity investors love, it’s a growth story. In 2024, that story was written by data centers, AI-driven infrastructure, and energy. Nearly 40% of industry players across North America expect data centers to be a hotbed of investment in 2025. Meanwhile, 64% of investors are bullish on energy—specifically oil and gas—as supply chain constraints and geopolitical concerns drive up demand for reliable resources.
Fintech also had a banner year in our own backyard. Canadian investment in the sector surged to nearly US$10 billion across 121 deals, up massively from US$1.1 billion across 129 deals in 2023 (across PE, Venture Capital, and M&A). That staggering jump was fueled by major transactions like the US$6.3 billion take-private deal of Montreal-based Nuvei and a US$1 billion private equity investment in Plusgrade.
Meanwhile, new U.S. tariffs on Canadian steel and aluminum, along with potential broader trade restrictions, could complicate cross-border deals. The uncertainty may delay investments in the short term, but some PE firms are already eyeing U.S.-based acquisitions to sidestep tariff impacts.
While AI might be one of the “newer” kids on the block, some sectors never go out of style. Healthcare continues to be a cornerstone of private equity investment, with firms investing billions in medical services, pharmaceuticals, and life sciences. Despite a steady pace of investment, deal volume dipped from 2023, likely due to high interest rates—but 2024 still saw five transactions surpass $5 billion, up from 2023 and 2022.
What’s Next for 2025?
Looking ahead, PE firms are gearing up for a busy year. A whopping 72% of industry insiders that participated in Torys PE Pulse 2025 expect deal activity to ramp up, with 20% predicting a more buyer-friendly market. One major shift on the horizon mentioned in the report? The gap between buyer and seller valuations is finally narrowing, with 80% of respondents expecting pricing to become more aligned, making transactions smoother.
Another trend to watch is how private equity firms are expanding into new areas. By teaming up with traditional asset managers, they're aiming to tap into the trillions of dollars in brokerage and retirement accounts. Firms like KKR and BlackRock have already launched liquid investment options, such as ETFs and hybrid vehicles. While this creates exciting opportunities, it also raises key concerns about liquidity, valuation, and regulatory oversight.
Looking ahead to the rest of 2025 and beyond, private equity is poised for a busy year, with strong growth in sectors like data centers and energy. In fact, according to Preqin, assets under management are expected to reach $12.0tn by 2029—doubling year end 2023 numbers. The narrowing of valuation gaps and the rise of more liquid investment options point to a dynamic market, though challenges around liquidity and regulation persist. Investors will need to balance new opportunities with the complexities of a changing landscape.