Global M&A trends in private equity and principal investors: 2025 mid-year outlook

Creating AI blueprints for portfolio companies. The rapid spread of generative AI based on large language models has created new opportunities for owner-operator funds to improve the efficiency of their own operations and that of their portfolio companies. Some funds are creating AI blueprints for certain functions that can be replicated across their portfolios. This is particularly the case with call centres involved in customer care, for which AI can accelerate response times and improve accuracy. AI is also being used for knowledge management, where the technology can be deployed to organise customer data and then enable companies to interact with it faster and more efficiently. Another area where we see internal AI deployment is in software development, with funds looking to achieve economies of scale and standardisation.

While such activities are taking place in several of the larger funds, few have publicly commented on them. One exception is Brookfield, which has detailed how it is selectively deploying AI across its portfolio to improve revenue and profit margins. Two companies in its residential infrastructure portfolio, Enercare and HomeServe, which provide 10.5m residential customers with services such as home plumbing, heating and cooling, and electrical system products, are using AI to automate repair calls—which currently account for about 45% of the 3.6m calls received every year. AI bots are being deployed to perform routine tasks such as scheduling appointments, freeing up human call agents to focus on higher-value customer calls. According to Brookfield, its AI bots have cut call times by 15–20% and increased customer satisfaction. At the same time, the smarter deployment of human sales agents has increased sales, upgrades and customer retention rates by about 25%.

Large funds are also looking to deploy AI to sharpen their deal processes. Investment teams are adopting AI research agents with advanced reasoning engines to improve deal sourcing, simplify initial briefings and clarify investment theses. Some larger funds are creating virtual investment committee ‘personas’ and AI advisors to simulate committee interactions and conduct scenario analyses. These AI solutions analyse historical data from numerous prior deals—typically at least 50—to create focused investment models, identify key risks and prepare deal teams effectively for investment committee reviews.

Value in motion: PE crosses sector boundaries to create growth

Our 2025 M&A outlook published in January discussed ways in which private capital is playing a significant role in funding the convergence of sectors, including bringing together technology players, energy companies and infrastructure firms to build and power new data centres to meet growing AI demand. 

Private capital is at the heart of this transformation because of its ability to bring together a wide range of sectors, marshal significant funds and devise flexible financing options. At a global level, sovereign wealth funds and other principal investors are playing an important role in this convergence trend, including in large-scale data centre projects. For example, xAI, Kuwait Investment Authority and Temasek recently announced plans to join the AI infrastructure partnership, formed in September 2024 by BlackRock, Microsoft and others to invest in data centres and supporting power infrastructure. Meanwhile, Saudi Arabia, through its sovereign Public Investment Fund, has launched a major AI initiative called HUMAIN to boost AI capabilities in the Middle East. In addition, Middle East and French investors have entered into a partnership to build a large AI campus in Paris—the largest of its kind in Europe.

We are also seeing partnerships in the energy space, such as NextEra Energy announcing a new framework agreement with GE Vernova to develop natural gas generation projects paired with renewable energy and storage.

Other forms of sector convergence include growing links between technology firms and healthcare, financial services and automotive companies, among others. These and similar cross-domain plays point to a structural shift in the global economy as new pools of value are being created from the clustering of industries around core human-centric activities such as how we power, how we build, how we care, and so on.

Examples of recent deals which illustrate this convergence theme among other sectors include Bain’s announced acquisition of HealthEdge (a next-generation software-as-a-service platform that connects health plans, providers and patients with a suite of end-to-end digital solutions); the acquisition of Edifecs (a healthcare data interoperability company backed by TA Associates and Francisco Partners) by Cotiviti (a data-driven healthcare solutions company backed by KKR and Veritas Capital); TPG’s acquisition, in partnership with corporate payments company Corpay, of AvidXchange (a provider of accounts payable automation software and payment solutions); and Main Capital Partners’ announced investment in Dutch automotive software player UnameIT.

Private equity’s new retail play: Retirement plans

In our 2024 mid-year M&A outlook, we highlighted efforts by leading private capital funds to woo retail investors. A new focus area is to attract retail investors in the US through individual 401(k) retirement funds. 

Several large PE groups have recently launched funds and similar investment products that are tailored for 401(k)s. KKR has partnered with Capital Group to launch two interval funds focused on credit strategies, with work underway to extend access for individuals interested in private markets through vehicles such as model portfolios and target date funds. These types of funds are designed to overcome one of the complexities of offering PE products to a broad public—namely, how to cope with simultaneous mass redemptions by placing some restrictions on when investors can sell (hence the name ‘interval’ funds). 

Apollo and asset manager State Street launched a fund in April 2025 that will let investors allocate 10% of their 401(k) portfolios to private markets. The following month, Empower, the nation’s second-largest 401(k) provider which oversees $1.8tn in 401(k) plans for 19m people, announced a partnership with private investments fund managers and custodians to offer private credit, equity and real estate in some retirement plans. 

Regulatory winds appear to be shifting in favor of this trend: media reports indicate the Trump administration is contemplating an executive order that would instruct federal agencies, including the SEC, to explore allowing PE and other private capital investments within 401(k) retirement plans, potentially removing the liability risk that remains an important obstacle to their adoption.