Apr 2026
This year’s IBA Private Investment Funds Conference in London reflected a market that is adjusting to a prolonged period of change. While the themes were familiar, the consensus was clearer than in previous years: fund managers, investors, and advisers are no longer positioning for a short-term correction, but for a structurally different private capital landscape. Our team was represented by Theo Lefkos, Nicholas Pattman, Matthew Harkness, Elizabeth Denman and Jennifer Sangaroonthong.
AI as a New Baseline, Not a Buzzword
As anticipated, artificial intelligence was a thread that ran through virtually every session. The discussion has moved decisively beyond experimentation or future potential. The overriding consensus was that AI is firmly embedded in how funds operate and invest and is unequivocally here to stay.
Fund general counsel reported a growing expectation – both internally and from LPs – that legal advisers are aligned on AI from the outset and across every stage of the fund life cycle. AI considerations are also becoming increasingly prominent in investment committee papers, particularly in assessing portfolio company risk, scalability, and exit readiness. One private equity sponsor even noted the appointment of an AI board observer, underscoring how seriously governance around AI is now being treated.
DPI Takes Centre Stage
While IRR remains relevant, the conference confirmed a clear shift in investor priorities: DPI has emerged as the primary performance metric. With liquidity top of mind, LPs are increasingly focused on actual cash returns rather than projected performance. This change is influencing fund strategy, pacing decisions, and exit timing, placing additional pressure on managers who are long capital but short realisations.
Sector Preferences and a Tough VC Backdrop
On strategy, the market appears selective rather than cautious. Entertainment, sports, aerospace, data centres, and infrastructure were repeatedly cited as “hot” sectors, benefitting from long‑term structural demand and, in some cases, government or quasi‑sovereign support. Infrastructure and data centres in particular continue to attract crossover capital.
By contrast, venture capital remains challenging. Despite green shoots in certain sub‑sectors, sentiment suggests that valuation resets and fundraising constraints are still working their way through the system, with no immediate rebound expected.
Secondaries and GP‑Led Momentum
The prolonged fundraising slowdown has created fertile ground for secondaries. GP‑led transactions, in particular, continue to dominate, with explosive growth driven by a combination of liquidity needs, asset quality, and sponsor creativity. Continuation vehicles are increasing in both size and sophistication and are now firmly established as a mainstream portfolio management tool rather than a last resort.
GP Stakes and Middle‑Market Consolidation
The GP stakes market is also evolving. Speakers widely predicted further GP consolidation, especially in the middle market. Notably, these transactions are increasingly driven by strategic alignment – platform expansion, geographic reach, operational depth – rather than a pure “highest bidder wins” dynamic. Cultural fit and long‑term value creation are now central deal drivers.
LPs Hold the Line
Unsurprisingly, LPs continue to hold the upper hand in negotiations. A recurring observation was that any slightly non‑standard or GP‑friendly LPA provision now requires a credible “war story” to justify its inclusion. As a result, side letters are becoming longer and more complex, and managers are under pressure to offer strategic LP discounts, preferred fee arrangements, and co‑investment opportunities to secure commitments.
There is also a sharper focus on end‑of‑life fund terms. As one panellist memorably put it, “we are all now openly negotiating the divorce at the engagement party.”
From the GP perspective, familiar pressure points remain. Managers are pushing NAV facilities to fund follow‑on investments, seeking pre‑consent for increasingly large continuation vehicles (often paired with an upfront agreement to roll GP commitments), and drafting more robust conflict provisions to reduce the need for LPAC approvals later in the fund’s life.
Australia in the Spotlight
Finally, Australia attracted notable attention. The rapid growth of Australian pension funds has created a deep pool of capital with a strong appetite for deployment, positioning the market as an increasingly influential global LP base.
Overall, the conference painted a picture of an industry that is adapting pragmatically. Innovation, particularly around AI and liquidity solutions, is being embraced, but against a backdrop of tighter economics, tougher negotiations, and a more disciplined investor mindset.