Ten Takeaways from Jefferies’ Second Indian Energy Transition Trip

In September, Jefferies hosted a group of investors in India as part of its annual forum and broader efforts to study the country’s energy transition. Since the last trip two years ago, there were notable shifts across the macro, company, and policy landscape.

India — now the world’s fourth-largest renewables market by capacity, with a record 25 gigawatts added in the past year — is on track to become the second-largest within the next five years.¹ While renewables growth has been impressive, several other areas remain in flux. Below are ten key takeaways from companies, policymakers, and experts from the week.

Acceleration in Renewables Adoption: India’s clean capacity additions over the past two years have exceeded JEFs expectations, with record growth in the first half of 2025 alone. Installed clean capacity now stands at roughly 240 gigawatts — nearly half the 2030 target. Solar and storage are now cheaper than new coal in many states, supported by $3 billion in central and $6 billion in state-level subsidies.

Clean Energy Manufacturing Ecosystem: Two years ago, companies like Reliance, Adani, and ReNew outlined plans to build clean energy manufacturing facilities. Today, driven by the government’s Approved List of Module Manufacturers (ALMM) policy, India’s capacity has reached around 100 gigawatts. The policy has tightened supply but also created an opportunity to expand manufacturing and capture higher margins. By June 2028, the ALMM is expected to broaden to include ingots and wafers.

Distribution Companies: The financial health of power distributors was a major concern two years ago, with expectations that policy reform would ease the strain. Conditions have improved but revenue challenges persist, especially as rooftop solar adoption grows.

Transmission Bottlenecks: The interstate transmission charge waiver has spurred major buildout, but is now being phased out and will end in June 2028. Each reduction raises renewable power costs, which could slow both transmission and capacity expansion—though falling battery prices may soften the blow.

Rooftop Solar: One area of clean adaptation facing potential challenges is rooftop/residential solar. DISCOMS have seen lost revenue as consumers adopt rooftop solar (a challenge not unique to India).² ³ However, given the aforementioned revenue challenges of DISCOMS and their importance to the overall power system, this could have an outsize impact on the energy transition picture. Further adoption in rural areas remains a challenge as updates to home infrastructure are often required for installations.

Hard-to-Abate Sectors: While progress in power generation has been remarkable, sectors like steel, cement, aviation, and chemicals remain difficult to decarbonize. India’s rapid industrialization makes these challenges especially pressing.

Macro Backdrop and Capital Trends: Overall, while a 25x forward PE for MSCI India (ex fin) makes valuation challenging, the equity market backdrop for Indian companies remains positive going forward.

Record IPO Activity: 2025 is expected to be the second-best year in Indian capital market history, with $18.5 billion in IPO capital raised. Both deal sizes and volumes continue to rise.
Domestic Investors Rising: More than 55% of anchor IPO allocations now go to domestic investors (up 10 points from two years ago). Market depth and investor appetite remain strong, but supply of large deals is congested.

Company Updates: During the forum, several companies expressed plans around power (both conventional and green) and related infrastructure.

Adani Group: Plans to more than double coal-fired capacity within five years while expanding renewable capacity to 50 gigawatts by 2030. Adani Energy Solutions also raised $1 billion for transmission and distribution projects.
JSW Group: Its $7 billion green steel plant in Maharashtra will transition from natural gas to hydrogen-based production. The company’s GreenEdge brand offers customers steel with verified emission reduction certificates.
Solar Energy Corp of India (SECI): Cutting-edge tenders combining solar, wind, and storage are enabling gigawatt-scale projects, supported by declining storage costs. Transmission and distribution delays remain a constraint.

National Green Hydrogen Mission: India’s Green Hydrogen Mission and plans to set up owner operations in this area were prominent two years ago, but talks around this were significantly more muted and absent this year. The overall demand story around green hydrogen has played a role; however, it might also be too soon to see material developments.

Trade Tensions and Energy Transition: Geopolitical unpredictability has heightened India’s focus on energy self-sufficiency — both in production and manufacturing. Policymakers and companies emphasized balancing competition with cooperation with China as India aims to become a major green tech manufacturer.

India’s role on the global stage continues to grow, with trade developing at breakneck speed. The country’s sustainability and transition strategy is following a similar path, with areas of great strength and others still taking shape. The interplay of these factors makes the strategy one to watch in the coming years.

For more insights from Jefferies’ Sustainability & Transition Team, consult the full report.

https://www.outlookbusiness.com/planet/industry/india-second-largest-renewable-market-2030-growth ↩︎
https://csep.org/working-paper/rooftop-solar-a-trade-off-between-consumer-benefit-and-discom-finances/ ↩︎
https://www.responsiblelending.org/media/widespread-residential-solar-energy-adoption-threatened-industry-sales-and-financing-model ↩︎

The Rise of GP-Led Secondaries in Venture Capital

The venture capital ecosystem has undergone a structural shift. As venture-backed companies have opted to remain private for longer, distributions for fund limited partners (LPs) have become increasingly constrained. This liquidity bottleneck has prompted general partners (GPs) to explore alternative solutions – chief among them, GP-led secondary transactions.

Once viewed as a niche strategy, GP-led secondaries – particularly, continuation vehicles and fund recapitalizations – are becoming a mainstream tool for venture managers. These transactions allow GPs to extend the holding period of high-performing assets, provide liquidity to limited partners, and continue longstanding partnerships with company founders and management teams. In today’s market, GP-led secondaries are no longer experimental, but instead, a core part of the exit toolkit, particularly for funds managing portfolios of later-stage companies.

Flexible Transaction Structures to Meet Liquidity Needs

The flexibility of GP-led structures has been a key driver of their adoption in venture. Depending on LP liquidity needs, fund age, and portfolio concentration, GPs can tailor continuation vehicles (CVs) and other GP-led secondary structures to meet a wide range of objectives.

Several structural applications have emerged:

Multi-Asset Strip CVs: These vehicles include a subset of high-conviction assets, often across multiple funds, into a new vehicle managed by the GP and backed by secondary investors
Full Fund Wind-Down CVs: Older funds nearing the end of their term can use continuation vehicles to provide a clean exit for LPs while allowing GPs to continue managing promising assets
Fund Recapitalizations: Existing fund structure remains in place, while secondary investors provide liquidity to LPs for a strip of their exposure
Tender Offers: GPs offer liquidity to LPs on a voluntary basis at the fund-interest level, enabling those who wish to exit to do so while others remain invested

These structures are increasingly common among top-tier venture firms and are being used across a broad spectrum of managers – from emerging managers with concentrated portfolios to established firms managing large, multi-fund platforms.

Secondary Capital Availability

As GP-led applications have broadened, so too has the capital base supporting them. Dedicated venture secondary investors, broader secondary fund platforms, and institutional LPs are increasingly participating in venture GP-led transactions. This growing pool of capital has made pricing more competitive and execution more efficient.

Investors recognize the opportunity to access curated portfolios of venture-backed companies with meaningful upside potential and alignment of interests with GPs.

Transaction Construction Considerations

Thoughtful transaction construction is essential for both GPs and secondary buyers in GP-led transactions. GPs must balance the desire to extend high-potential assets with the need to offer fair liquidity options to existing LPs. This requires:

Rigorous asset selection
Market-driven pricing obtained via an arm’s length auction process
Clear communication with stakeholders

On the buyside, investors are underwriting venture assets based on projected exit proceeds. This includes evaluating company fundamentals, exit routes, and GP track records. Exposure to well-performing companies, sectors, and geographies is key – especially in multi-asset CVs.

The Future of the Venture GP-Led Market

Looking ahead, the venture GP-led market is poised for continued growth and institutionalization. Several trends will shape its evolution:

Mainstream Adoption: GP-led secondaries are no longer experimental. They are increasingly viewed as a strategic tool for liquidity management and portfolio optimization.
Expansion Across Fund Sizes and Strategies: While historically concentrated among large managers, GP-leds are now being used by emerging managers and across both late-stage and mid-stage portfolios.
Improved Pricing and Execution: As capital availability grows and underwriting becomes more sophisticated, pricing is expected to remain strong, with tighter bid-ask spreads and faster execution timelines.

Ultimately, GP-led secondaries offer a powerful solution to the liquidity challenges present in the venture capital space. When executed thoughtfully, they unlock value for all stakeholders: providing liquidity, extending upside, and reinforcing long-term alignment. As the venture ecosystem continues to evolve, GP-leds will remain a cornerstone of modern portfolio management.

From Last Resort to First Choice: How Real Assets Secondaries Are Powering Liquidity and Strategy

Until recently, sponsors investing in real assets sectors were slower to adopt continuation vehicles to deliver liquidity for their limited partners. Some viewed this transaction structure as the option of last resort for stranded assets or worried that valuations would reveal a meaningful discount to reported NAVs.

Things are different today: sponsors are increasingly tapping the secondary market not only to generate liquidity solutions for their energy, real estate, and infrastructure assets, but also to achieve their long-term strategic objectives. For example, GPs navigating a challenged fundraising environment have pursued continuation vehicles for trophy assets, enabling GPs to continue riding winning horses, while establishing new institutional relationships that could generate primary funding commitments down the road.

In recent years, the fundraising and M&A environment within real assets has fluctuated depending on the sector. Some, such as oil and gas, saw declines due to commodity price volatility and ESG-driven restrictions during the COVID pandemic. Others, such as real estate, experienced a dramatic decrease in 2022-2023 due to interest rate hikes and a dearth of financing. By the end of 2024, however, stabilizing macroeconomic conditions enabled year-over-year deal activity¹ to rebound, with a 14% increase in deal count and an 8% increase in deal value, respectively.

We saw a similar uptick in GP-led secondaries activity, with continuation vehicle transactions accounting for 19% of all private equity exits in the first half of 2025, up from 7% in 2022. Real assets transactions account for roughly 10-15% of this transaction volume, propelled by institutional and private investors alike maintaining or increasing private real assets allocations amid a flight to resilience and stable, long-term yields.

Here is what we see spurring interest across each of the major sectors within real assets today.

The Energy & Power Sector

Over the next decade, the world is expected to add approximately 800 terawatt-hours of power to its grids each year, equivalent to Japan’s current annual electricity demand.

In 2024, total private market energy investment surpassed $80 billion globally, driven by ever-increasing power demand for new data centers and digital infrastructure, factories, electric vehicles, and heating and cooling systems. Energy assets are prime targets for private equity investors, as they often offer a favorable combination of yield and potential valuation appreciation over the medium to long term.

Investments in conventional energy private markets are also accelerating. In the years leading up to the pandemic, many institutional investors, including U.S. and European pension funds and endowments (traditionally a fixture of fossil-fuel funding), rotated away from these sectors due to restrictive ESG mandates and growing demand for energy transition exposure.

However, it has become clear that the global energy transition will not happen overnight: fossil fuels still provide over 80% of the world’s energy, and many oil and gas assets offer compelling, yield-oriented returns in an otherwise DPI-starved private investment environment. It’s why many formerly reticent investors are giving oil and gas assets another chance – especially with the energy transition thesis unfolding more slowly due to funding, policy, and scalability challenges. Similarly, wealthy families seeking long-term, yield-oriented, and inflation-hedged investment opportunities are increasingly eyeing energy investments. The numbers tell the story: gas-focused M&A quadrupled between 2023 and 2024², exceeding $20 billion for the first time since 2016. That growth has continued in 2025 as fundamentals continue to improve, and the U.S. regulatory environment proves accommodating to large-scale domestic natural gas investment.

In recent years, private equity sponsors have had a free run of private market energy deals, with strategics mostly sitting on the sidelines. This is no longer the case. Strategics have shown a growing interest in acquiring real assets, specifically in oil, gas, and various types of power generation. In the case of natural gas, specifically, international acquirers are seeking to establish their presence and exposure to the actual hydrocarbons being produced by purchasing assets throughout the value chain. This creates a competitive commercial advantage through the strategic control of favorable marketing and offtake arrangements.

The Real Estate Sector

Following sharp declines in 2022 and 2023, transaction volumes in private real estate stabilized in 2024, reflecting a renewed alignment between buyers and sellers and an increase in optimism around the sector’s recovery. Market participants entered 2025 expecting near-term interest rate cuts to provide relief for real estate asset valuations, although that recovery has been slower than anticipated.

Nevertheless, global fundraising for closed-end real estate funds surpassed $100 billion³ last year, primarily for value-add and opportunistic real estate opportunities. Since wholesale market improvement was slower to materialize, shifting many investors’ risk-return calculus, deployment focused on high-yield strategies and distressed asset acquisitions.

This year, private U.S. real estate funds are expected to generate above-average returns⁴, driven by a growing pool of distressed deals and improving market fundamentals.

With a softening macroeconomic backdrop pointing towards interest rate cuts in the months ahead, cap rates are expected to decrease, which would support higher valuations. Sponsors and other investors who have raised funds but have not deployed them in the past few years cannot stay on the sidelines forever. With the market stabilizing, expect buyers to become more aggressive underwriters and sellers to adjust their long-term value expectations. This should narrow the bid-ask spread that has persisted for over two years.

The Infrastructure Sector

The increasing demand for data centers, power generation, and grid upgrades is also leading to a massive infrastructure renaissance. As a result, deals – particularly secondary market transactions – in infrastructure private markets have been gaining momentum, with the market experiencing record transaction volumes and steady growth over the past two years.

Infrastructure remains one of the fastest-growing private market sub-segments, propelled by the prospects of liquidity at attractive valuations and long-duration, often inflation-linked cash flows.

Infrastructure-specific secondary market volume was approximately $16 billion⁵ in 2024, with growth projected to reach $21 billion by 2027. Secondary infrastructure deals increased from 2% to 4% of total LP-led secondary volume between 2023 and 2024⁶. Meanwhile, GP-led infrastructure secondaries accounted for approximately 42%⁵ of the total market’s volume in 2024, as managers sought to maintain exposure to top-performing assets that are otherwise impossible to replicate or replace.

A Move Toward Specialization

Across the real asset value chain, the market continues to grow significantly deeper and more enticing for fund sponsors. Some are building or expanding dedicated real assets investment teams possessing the sophistication and experience necessary to underwrite complex secondary transactions. Elliott Management, for example, is utilizing the continuation vehicle market⁷ to expand its energy opportunity set. As the market continues to evolve and expand, we expect these dedicated real assets secondary strategies to proliferate, as specialization and deep industry knowledge prove to be important differentiators.

Sources:

How Sovereign AI Became the New Arena for State Power

AI has increasingly become one of the key strategic areas global governments are focused on – with each aiming to secure the talent, data, and infrastructure to build and control advanced systems at home. This push — which NVIDIA’s Jensen Huang has popularized as sovereign AI — reflects a broader return of state power to global markets.

On a recent webinar, the Jefferies Washington Strategy Team spoke with Professor Ahmed Banafa of San Jose State University, who highlighted five key themes shaping this competition.¹

Defining Sovereign AI

Sovereign AI is a nation’s ability to develop, deploy, and govern AI on its own terms. It’s about achieving autonomy across the full AI stack — data, infrastructure, and algorithms — so countries maintain strategic control. Unlike nationalization, which means direct government ownership, sovereign AI often includes private companies working in step with national goals. The U.S. shows this model in action through public-private partnerships and export controls, like the recent NVIDIA deal requiring 15% of revenue from China-bound chip sales to go to the federal government.

Major Powers in the Lead

The race for AI sovereignty is intensifying among major powers. China has narrowed its AI gap with the U.S. to roughly a year, leveraging civil-military fusion and partnerships with firms like Alibaba and Huawei to target global leadership by 2030. The EU is pushing GAIA-X, an effort to build a secure, interoperable cloud that avoids reliance on U.S. giants like Amazon and Microsoft. But fragmented regulations and slower innovation remain hurdles for Europe’s competitiveness.²

Middle Powers on the Rise

Countries like Saudi Arabia and the UAE are emerging as important players in the sovereign AI landscape. Saudi Arabia’s HUMAIN initiative launched ALLAM, an Arabic-language generative AI model, alongside plans to train one million citizens in AI. The UAE is investing heavily in data centers and domestic infrastructure. These moves reflect a broader shift: regional AI ecosystems forming outside the U.S.–China axis, with ambitions to cut dependence on foreign tech by the early 2030s.

Opportunities and Risks

Sovereign AI can boost security, protect privacy, spur local economies, and create high-skilled jobs. It also supports autonomy in critical sectors like healthcare, finance, and defense. But the trade-offs are real: high infrastructure costs, siloed ecosystems, risks of bias from localized datasets, and limited talent diversity. These factors could slow innovation and lead to duplicative efforts across borders.

Global Norms vs. Fragmentation

Efforts at global AI standards — through the UN, for example — may help set rules around privacy, ethics, and explainability (how an AI arrives at its outputs). These norms may help mitigate risks of unchecked AI proliferation and foster transparency across borders. However, with geopolitical competition and divergent regulatory philosophies, fragmentation is likely to persist.

The Implications for Investors

The push for sovereign AI favors domestic hardware makers, cloud infrastructure providers, and compliance specialists. NVIDIA, AMD, and firms advising on regulation stand to benefit. At the same time, investors need to account for volatility tied to export controls, shifting alliances, and uneven regulation. Key moves to watch include government funding levels, commitments to domestic buildouts, and the emergence of new regional AI hubs.

Looking Ahead

Sovereign AI is both an engine of innovation and a source of geopolitical friction. For investors and policy-makers, the challenge is to anticipate how governments will wield their power — and to position ahead of a future where AI leadership is defined less by global tech platforms and more by national borders.

Find more insights from the Jefferies Washington Strategy Team at Jefferies Insights.

https://www.linkedin.com/in/ahmedbanafa/ ↩︎
https://javatar.bluematrix.com/docs/html/a7dc138c-bb75-47df-a184-403e9f462229.html ↩︎

India’s IPO Market: Signs Point to a Strong Finish to 2025

India’s public markets are navigating a complicated mix of global and domestic challenges, but Jefferies’ Head of Equity Capital Markets, Jibi Jacob, sees encouraging signs for the rest of the year.

Tariffs, shifting investor flows, and secondary market volatility have tempered activity in recent months, but Jacob believes momentum is building toward a stronger finish to 2025. His advice to clients: stay ready.

Deal Sizes Rising, Investors Ready

India’s equity capital markets have grown in both scale and sophistication.¹ Average deal sizes are climbing, and unlike many other regions, India offers unique flexibility for private equity firms seeking full exits.

“India’s markets now have the depth to take 100% PE-owned clients public and deliver full exits over time,” Jacob explained. “No other market really has the capacity to do that.”

This depth is reinforced by investors’ willingness to back issuances even when proceeds are secondary. In many markets, primary capital raises dominate. In India, large shareholder exits don’t deter demand. “Indian investors understand the lifecycle of PE firms,” Jacob noted. “Block trades aren’t viewed as a negative. This attitude really helps PE firms with price realization compared to private sales.”

That dynamic has supported an annual pipeline of more than $20 billion in secondary blocks, underscoring the strength of India’s domestic capital formation. Against this backdrop, Jacob expects 2025 to bring the largest wave yet of billion-dollar IPOs — seven or more compared to just three in 2024. A long list of multinational subsidiaries (Hyundai’s record $3 billion listing in 2024 being the benchmark) are preparing to test the waters.² “The outlook is very encouraging,” he said.

Foreign Flows: At a Turning Point?

Foreign ownership of Indian equities is at its lowest level in a decade, and the MSCI India Index has lagged broader emerging markets by nearly 25%.³ Jacob, however, thinks the trough may be behind us.

“From a growth perspective, India is always a bright spot in emerging markets,” he said. “The market is a bit expensive, but it will stay that way as long as growth expectations remain strong.”

If in U.S., rate cuts begin which is what the street is expecting, Jacob believes foreign flows could return more meaningfully as investors chase better returns. Larger deal sizes also help. “India would have always had an EM allocation before, but now the same funds who have experience in India are getting their global funds to participate because there is a wider level of liquidity than ever before,” he added.

Tariffs and Global Headwinds

“There’s no question tariffs are an overhang,” Jacob acknowledged. “The longer they last, the greater the potential hit to growth. But they may also accelerate the push for domestic consumption, labour reforms and tax changes, much like the economic reforms of the early 1990s.”

Prime Minister Narendra Modi has already cut taxes to cushion the impact.

Staying Ready: Lessons from 2022

For companies preparing to go public, Jacob recommends they not wait too long.

“We remind clients of 2022. 2021 was one of the best years ever. Naturally we thought 2022 would be a rock-solid year as well, but Russia invaded Ukraine, and the markets tapered down globally. In 2021, we had 12 straight months of IPOs. In 2022, two or three months accounted for 60% of the volume,” he said. “Windows open and close quickly. Since it takes six to nine months to list from a standing start, readiness is everything.”

Jefferies is urging issuers to be prepared to move. “Don’t get distracted by the noise,” Jacob advised. “As long as the structural story for Indian equities is intact, the market will give you opportunities, but you need to be in position when the window comes.”

The upcoming festive season, running from September through year-end, could provide a tailwind. “Diwali lifts everyone’s spirits. We expect to see a strong deal calendar, with IPOs every month if not more,” he added. Jefferies has already led 12 IPOs in the last 12 months, raising $7.6 billion for clients.

Sector Trends: Beyond Tech and Consumer

India’s IPO market remains one of the most diversified globally, with strong activity across multiple industries. Jacob sees financial services, technology, and healthcare as the leading fundraising sectors for 2025, with industrials beginning to emerge as well.

“India isn’t just a one- or two-sector market story,” he said. “Investors have appetite across the spectrum, and that makes the market more resilient over time.”

Looking Ahead

Macroeconomic uncertainty, from tariffs to shifting U.S. economic momentum, will continue to shape India’s equity capital markets in the months ahead. But Jacob believes the fundamentals remain supportive.

“With valuations closer to long-term averages, large issuances in the pipeline, and secondary markets showing signs of stabilization, the setup for a stronger finish to 2025 is in place,” he said. “Our message to clients is simple: be ready.”

https://www.jefferies.com/insights/the-big-picture/what-will-drive-indias-growth-for-the-next-20-years/ ↩︎
https://www.hyundai.com/worldwide/en/newsroom/detail/hyundai-motor-india-makes-history-with-indiaE28099s-largest-ipo-and-plans-to-expand-investment-and-localize-ev-supply-network-0000000853 ↩︎
https://www.google.com/search?q=msci+india+index&oq=msci+india+index&gs_lcrp=EgZjaHJvbWUyBggAEEUYOdIBCDE5NDJqMGo3qAIAsAIA&sourceid=chrome&ie=UTF-8 ↩︎

The Exit Doors Are Open

After two years of muted dealmaking by private equity sponsors, we have seen a healthy pickup in M&A and IPO activity and expect more momentum through next year.

First, measurable M&A metrics have been trending higher over the last couple of months, including pitch activity (both pitches that have occurred and those already scheduled), number of deals signed, number of buyers at the “finish line”, and number of buyers pre-empting processes. We anticipate pitch activity and process launches to accelerate into year-end. Another good leading indicator: multiple buyers have emerged for high-quality businesses at levels not seen since 2021, and deals are being signed.

Second, what we see and hear from you:

Changing mood at Investment Committees: However you want to characterize it – risk on, leaning in – sponsors are more aggressively pursuing companies. We have witnessed four processes in the last month with pre-emptive sponsor bids, including re-bids in some cases. Higher-quality businesses are attracting multiple potential buyers at the finish line, and we are also seeing multiple buyers for most processes, compared to the “1 ½” buyers at the finish line typical of the past two years.

Macro factors, such as lower volatility, increased economic confidence, and declining interest rate expectations, have certainly provided a tailwind. However, the most critical factor driving activity is a sponsor’s conviction behind their investment thesis. Private equity is bringing its traditional operational toolkit and leveraging AI, which is in the early innings of driving value. M&A processes need to incorporate these value drivers, as our PE clients are actively deploying AI across non-tech industries to bring significant margin uplift. While the pressure to deploy capital is always present, given the J-Curve, sponsors will only do deals when they make sense.

Sellers are becoming more active: Sponsors are increasingly gearing up for exits, driven by portfolio companies growing into valuations (primarily through growth versus multiple expansion), and narrowing bid-ask spreads. Valuations are approaching levels that enable sponsors to achieve solid multiples on invested capital that are at or often above their marks. Meanwhile, the “bid” side has moved upward to levels that selling sponsors were targeting one to two years ago. The average hold is currently at a record period, as many sponsors delayed exits for the last two years while waiting for markets to improve. When you combine the growing number of sell-side transactions that haven’t been completed with the increased availability of portfolio companies held for six years or more, you have a recipe for a lot of actionable deals.

To capitalize on these opportunities, consider revisiting busted auction logs, surveying long-in-the-tooth portfolio companies and sponsors focused on DPI, and attending Jefferies’ private company conferences this Fall. There is a high probability that more companies will come to market over the next twelve months, some through more bespoke and targeted M&A processes.

Dovetailing with our outlook for accelerating private equity activity, we also see a resurgence in large-cap LBOs and a wide-open IPO window.

Large-Cap LBO Resurgence: The last few months saw several $3+ billion deals and five at $7+ billion. Many followed the “updated” M&A/sponsor playbook for syndicating large equity checks, which includes:
- Forming consortiums.
- Identifying sovereign wealth funds and LPs early to play critical partner roles.
- Generating equity co-investment demand through rapidly growing retail channels.
- Tapping into record depths in the preferred market.
- Achieving robust financing terms with competitive processes amongst banks and between direct and broadly syndicated loan markets.

Jefferies recently deployed this playbook on two transactions: we served as Lead Financial Advisor for PCI Pharma in its equity recapitalization and Joint Financial Advisor to STADA Arzneimittel, representing the largest European LBO M&A deal of 2025. In this market, there is no shortage of banks and direct lenders competing for $5+ billion financing structures. Other drivers of the large-cap LBO resurgence include abundant dry powder and actionable opportunities (especially in the public equity markets). While the IPO market is now wide open, a sizable backlog in the IPO pipeline remains, which could prompt sponsors to pivot to M&A exits.

The IPO market we have been waiting for: Global equity markets are at or near all-time highs, volatility is at sustained low levels, and recent IPO aftermarket performance has been exceptional and broad-based: Average U.S. IPO aftermarket performance has been 30%+, with sponsor IPO performance even better. We have waited three years for this IPO market, with Jefferies CEO Rich Handler and President Brian Friedman recently writing, “the stars are probably as aligned as one can hope to achieve successful outcomes.” Jefferies Macro Strategist David Zervos recently penned “The Uncertainty Hoax,” in which he said, “For the naysayers who have completely misjudged financial markets this year, the word ‘uncertainty’ has become a constant cover for failure.”

Two final macro tailwinds are bolstering the case for continued optimism.

AI has arrived as a meaningful value generator: Private equity has always been a clear leader in operational value creation, and now artificial intelligence has arrived as a major value driver. The use and benefits of AI are no longer just speculative or aspirational in portfolio companies. It now provides real value and enhances profitability well beyond summarizing information. Companies are increasingly utilizing AI to support pricing models, optimize logistics and inventory management, and uncover new growth opportunities. AI is driving a more fundamental change in businesses of all sizes and sectors than many on Wall Street realize.

Retail has the potential to transform the private equity industry dramatically. Anytime an asset class has a dramatic influx of capital, there will be opportunities and pressures. In the coming months and years, an influx of retail capital will create alternative paths for sourcing LP equity co-investments and also for exits, alter the M&A landscape (much like the continuation fund product which Jefferies remains quite active with), challenge private equity in their deal sourcing to deploy capital, and heighten the importance of operational value-add. Private equity will adapt.

We look forward to a busy remainder of the year. Our team consistently strives to add value through creative ideas and content, innovative structures and financing solutions, and exceptional execution.

Partners Capital Investment Group Announces Transfer of Managed Account Platform to Subsidiary, Establishes Strategic Relationship with Leucadia Asset Management

Secondary Market Surge: How Evergreen Vehicles Are Writing Private Equity’s Next Chapter

In 2025, the rapidly expanding secondary market is coinciding with the rise of evergreen vehicles targeting non-institutional investors. This is not a coincidence. This is a timely convergence of supply and demand that’s reshaping how capital flows into private markets.

Evergreen vehicles, which are open-ended funds often structured under the Investment Company Act of 1940 (“’40 Act”), have surged to an estimated $80 billion in assets under management, doubling over the past 18 months¹. That figure likely understates the true scale, as several managers are deploying capital from private evergreen structures that are not yet required to disclose fundraising activity or dry powder levels.

At the same time, secondary markets are offering precisely what evergreen vehicles need: mature, cash-flowing assets that enable them to deploy capital quickly and diversify broadly. Jefferies estimates that approximately 41% of evergreen NAV is now allocated to secondaries², reflecting a deliberate strategy to match investor demand for liquidity and immediacy with seasoned private equity exposure. In fact, several managers have launched secondaries-only evergreen vehicles to squarely capitalize on the market opportunity.

Despite broader market volatility, transaction activity across both evergreen and secondary strategies has remained resilient. The timing couldn’t be better, with non-institutional investors increasingly seeking semi-liquid access to private markets, and secondaries providing the mechanism to deliver it.

Why Wealth Investors Favor Evergreen Funds

Evergreen funds offer several advantages for high-net-worth individuals and wider non-institutional investors, who have historically faced barriers to private market access:

Immediate capital deployment into seasoned assets
Periodic liquidity, often quarterly, versus the multi-year lockups typical of traditional private equity
Broad diversification across sectors, geographies, and deal types
Lower investment minimums and streamlined subscription processes

Importantly, evergreen vehicles are structured to issue Form 1099s instead of K1s, which are more common in traditional private equity. This makes tax filings easier and faster for individual investors, especially those who file independently.

How are Evergreen Vehicles Participating in the Secondary Market

As evergreen vehicles gain traction, their role in secondary transactions is becoming more sophisticated and strategic. Key areas of participation include:

Diversified, buyout-focused LP portfolios of well-known managers
Upsizing total commitment amounts alongside drawdown fund capital into GP-led transactions
Smaller, often syndicate-level check sizes into GP-led transactions

These approaches allow evergreen vehicles to deploy capital efficiently while maintaining flexibility across deal structures.

Why Investment Managers Are Eager to Launch Their Own Evergreen Funds

For investment managers, evergreen structures offer compelling advantages that align with long-term strategic goals. Key drivers include:

Expansion of stable assets under management with sticky, perpetual capital
Continuous capital raising with recycling of cash flows, resulting in a flywheel of investible capital
Expanded buying capacity, which amplifies deal-winning power, especially in secondary transactions

To fully capitalize on these benefits, managers must invest in robust cash management capabilities and establish or rely on existing distribution networks tailored to non-institutional channels.

Looking Ahead: A Market in Transition

The rapid growth of the secondary market and the emergence of evergreen vehicles accessing private investments have converged at an opportune moment. Non-institutional capital is helping to address the secondary market’s undercapitalization, easing the liquidity strain caused by historically low distributions.

This trend is still in its early stages, with evergreen vehicles expanding in scale and diversity to meet rising demand. As these vehicles grow, they will support larger commitments to individual companies, increasingly replacing upsized drawdown fund checks with lead equity investments from evergreen capital pools. Investors will benefit from a broader range of evergreen strategies, including those focused on private equity secondaries, credit, or infrastructure. Importantly, the penetration of non-institutional capital into private markets remains limited. With global financial wealth exceeding $305 trillion3, even a modest reallocation toward private markets—particularly secondaries—could unlock a generational shift in capital formation.

1: Based upon publicly available data; Funds registered under the SEC’s Investment Company Act of 1940 (’40 Act).

2: Based upon publicly available data; Portfolio composition calculated as a % of NAV as of March 31, 2025.

3: https://www.bcg.com/publications/2025/global-wealth-report-2025-rethinking-rules-for-growth#:~:text=Global%20financial%20wealth%20reached%20%24305,Cross%2Dborder%20flows%20accelerated.

Washington, Markets, and the Road Ahead: Key Takeaways from Jefferies’ Mid-Year Policy Update

On a recent Jefferies webinar, leaders from the firm’s Washington Policy & Sustainability, and Global Macro teams explored how U.S. policy and global macro trends are shaping investor behavior heading into the second half of the year.

The session featured Aniket Shah, Global Head of Washington Policy and Sustainability & Transition Strategy, in conversation with Mohit Kumar, Jefferies’ Chief Economist, and was moderated by William Beavington, Equity Specialist Sales, TMT.

Trump Advances the Platform He Ran On

Six months into the new administration, the policy environment is proving more predictable than many expected. U.S. Economic Policy Uncertainty (EPU) has dropped meaningfully since “Liberation Day,” when the administration sharply raised tariffs earlier this year.¹ Monthly EPU peaked at 7.5% and has fallen to around 2%; daily EPU has dropped from over 9% to about 5%.

Part of that decline may reflect the perception that — whether or not one agrees with the agenda — President Trump is following through on what he campaigned on.

From immigration and trade to taxes and deregulation, the president’s policy platform aligns closely with his campaign promises. Border enforcement has tightened, with illegal crossings dropping from 250,000 per month under the prior administration to 25,000 in June.² Tariff rates have risen sharply, from a weighted average of 2% to nearly 18%. The administration is also working to make Trump-era tax cuts permanent, with future offsets coming from cuts to Medicaid, clean energy programs, and EV incentives.³

One event investors are watching closely is the Fall 2025 Deregulation Agenda, due in October from the Office of Information and Regulatory Affairs.⁴ Federal agencies will be required to lay out how they plan to lower regulatory costs in line with the administration’s direction. Shah noted that while deregulation so far has mostly come through non-enforcement, this will be the first time agencies must formally detail how they intend to roll back rules — particularly in areas like energy and permitting.

A Strong Industrial Platform with a Focus on AI

A hands-on industrial policy has been a central feature of the president’s agenda.

Shah pointed to the Department of Defense’s recent public stake in MP Materials, a rare-earth mining company, as an early example.⁵ The company’s stock rose 20% on the news. More moves like this are likely, especially with a federal AI action plan expected soon. The administration is weighing $100 million in incentives to attract high-skilled software engineers from China, India, and South Korea, and is also looking to speed up permitting for power infrastructure to meet rising compute demand.

Shah tied these efforts to the broader goal of maintaining U.S. leadership in AI. The White House has floated a moratorium on state-level restrictions and is pushing for stronger federal control over AI regulation. The aim, he said, is to position the U.S. as a center of excellence — one with both the talent and infrastructure needed to stay ahead.

How Markets Are Responding to Recent Policy Moves

Kumar offered a readout on how markets are absorbing all this.

U.S. equities and credit are both near record highs, but he described the rally as driven more by positioning than by fundamentals. In April, investors were as underweight U.S. assets as they’ve been since the global financial crisis.⁶ As prices rose, they were forced to chase the market. Flows into passive funds accelerated the move, and enthusiasm around AI helped sustain it.

Still, he noted, the underlying picture has held up better than many expected. Recession fears have eased.⁷ Unemployment peaked at just 4.5%, well below levels typically associated with recession. Jefferies expects the S&P 500 to finish the year higher, and sees room for improvement in credit markets as well.

When Tariffs Might Start to Show Up in the Data

The effects of tariffs haven’t fully shown up in the data yet. Kumar said supply chain impacts tend to take about three months to register. That means July’s economic data, due in August, will offer the first clear read. There are other possible drag factors, too. If immigration and government hiring both slow, payroll growth could fall by 50,000 to 60,000 jobs per month. That could bring net new jobs close to zero.

At the same time, the administration’s new tariffs are expected to generate around $200 billion annually — roughly the cost of its new budget package, the OBBB.⁸ Shah noted that level of revenue will be politically difficult for future presidents to unwind. The current tariff regime, in other words, may be sticky.

The Fed’s Position Amid Expanding Executive Power

The Fed’s role also came up. The Supreme Court has recently expanded the president’s power over independent agencies, allowing more control over personnel and budgets. But it has drawn a clear line around the Fed, referring to it as a “quasi-private” institution, distinct from other agencies.⁹ ¹⁰ Shah suggested that this distinction is aimed at maintaining international trust in the central bank.

There’s been speculation about whether Powell will be replaced. While Shah acknowledged that some “auditioning” is already happening behind the scenes, he and Kumar agreed that removing Powell could be more trouble than it’s worth. The Fed’s credibility remains key to maintaining dollar strength and market stability, particularly in Asia.

How U.S. Markets Compare to Global Alternatives

Looking abroad, Shah pointed to China’s upcoming 15th Five-Year Plan, due in October, as a key moment.¹¹ It will lay out the country’s industrial priorities and likely reinforce the U.S.’s desire to respond with its own industrial policy. Southeast Asia may benefit in the short term, but Kumar sees the U.S. as the more attractive market over the next five years. Europe, he argued, faces demographic challenges, slower growth, and heavier regulation. Asia, while dynamic, is grappling with its own productivity constraints. Meanwhile, U.S. tech is still early in its AI cycle, and financials remain strong.

For investors, the second half of the year will bring several key signals: the deregulation agenda, AI policy, and China’s industrial roadmap. Much of the year’s direction has already been set — but how those plans take shape could determine what markets do next.

https://www.csis.org/analysis/liberation-day-tariffs-explained ↩︎
https://www.axios.com/2025/03/04/illegal-border-crossings-february-decline-trump ↩︎
https://www.nbcnews.com/news/us-news/trump-big-beautiful-bill-tax-changes-rcna219853 ↩︎
https://obamawhitehouse.archives.gov/omb/oira ↩︎
https://www.ft.com/content/79b1693a-0788-4dc6-b431-027695534c62 ↩︎
https://www.youtube.com/watch?v=kw9qp3XSzKM ↩︎
https://www.wsj.com/economy/economists-us-recession-expectation-survey-91e45d95?gaa_at=eafs&gaa_n=ASWzDAgsTQfz65Dp1Kmri7I5bA8TUPUeUoDaxkgD-op-pfcbJFSzo24Nz5LUdfFMatM&gaa_ts=687fbd4a&gaa_sig=srxIxtcvmweB08GL8L8ktQOBGmSzOWuI7dIDWLNLhunGHCaeK2hnEBCUiTxm77p38n6XNkLvD_Yk6ZqN1XWxbw ↩︎
https://www.whitehouse.gov/obbb/ ↩︎
https://www.cshlaw.com/resources/u-s-supreme-court-authorizes-immediate-changes-at-independent-federal-agencies/ ↩︎
https://www.supremecourt.gov/opinions/24pdf/24a966_1b8e.pdf ↩︎
https://www.china-briefing.com/news/chinas-15th-five-year-plan-what-we-know-so-far/ ↩︎

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