Alongside shared interest in more contemporary technology and financial services sectors, Australian funds also lean towards traditional, defensible industries, namely industrials and healthcare. Liquidity remains a global concern, driving the importance of secondary transactions; yet local general partners (GPs) show greater confidence in strategic acquirer participation and the re-emergence of equity capital markets. At the same time, they are doubling down on technology-driven operational transformation as a key lever for value creation and successful exits.
Confidence in deployment
Data from Grant Thornton UK’s Private Equity Pulse 2026 reveals 75 per cent of Australian GPs expect to increase investment levels over the next 12 months, broadly in-line with global sentiment.
Deal activity is expected to be driven primarily by an improved macro-economic environment (38 per cent), expected increased asset volumes (35 per cent), and availability of debt financing (34 per cent).
Sector priorities
Technology (32 per cent) and financial services (26 per cent) are prominent sectors both in Australian and globally, however, healthcare (28 per cent vs global 17 per cent) and industrials (28 per cent vs global 16 per cent) feature more prominently in Australia compared to other markets, reflecting appetite for sectors with defensible cash flows and tech-enablement potential. One in four Australian private equity respondents view sector specialism as the most effective way to differentiate their fund.
Note: respondents could select multiple answers; therefore, percentages may total more than 100%.
Fundraising realities
58 per cent of Australian respondents say fundraising is more challenging than a year ago, higher than the global average of 48 per cent. GPs are responding by:
- expanding limited partner (LP) bases (including retail and offshore investors) (58 per cent);
- introducing continuation funds and evergreen structures (49 per cent); and
- increasing transparency and reporting (52 per cent).
Is fundraising more or less challanging than 12 months ago for Australian respondents?
Note: respondents could select multiple answers; therefore, percentages may total more than 100%.
Value creation: back to basics
Operational transformation and cost optimisation lead Australian strategies (54 per cent), narrowly ahead of digital and technology upgrades (52 per cent).
ESG-led performance improvement ranks lower than global averages (40 per cent vs 46 per cent globally), signalling whilst important, most firms favour a returns-first approach.
Note: respondents could select multiple answers; therefore, percentages may total more than 100%.
Exit environment
Operational improvements in portfolio companies (21 per cent) are significant drivers paving the way to successful exits.
Secondary buyouts and longer holding periods are increasing in prevalence, notwithstanding Australian firms reporting less caution from strategic buyers compared to global peers (37 per cent vs globally 49 per cent). On the one hand, strategic buyer participation is creating greater competition for assets throughout deployment, however, is also opening up additional exit pathways.
Australia stands out for its relative optimism on IPO markets reopening (23 per cent vs global 18 per cent), signalling more confidence that public markets could re-emerge as a viable exit route in 2026. However, Australia shows a more measured outlook on whether market recovery and valuation rebounds will be the key drivers of successful exits in 2026 (12 per cent vs global 22 per cent).
Risk radar
Geopolitical instability, interest rate volatility, and currency fluctuations dominate global concerns. Australian firms differ, with sharper focus on slower GDP growth (28 per cent vs 19 per cent globally) and lower sensitivity to inflation (9 per cent vs 20 per cent globally). An economic downturn is seen as the biggest threat to private equity performance, cited by 37 per cent of Australian respondents (22 per cent globally). An example of the impacts surrounding growth confidence shocks over the last year included US ‘Liberation Day’ (2 April 2025) where tariffs reshaped global trade, slowing dealmaking for a number of months. Whilst Australian firms in services and technology faced limited direct impact, trade friction heightened caution, widened valuation gaps and complicated cross-border deals – particularly for assets tied to US revenue, global supply chains or industrial sectors like automotive, machinery and chemicals.
The above macroeconomic environment highlights the need for disciplined investment in sectors with strong tailwinds and operational value creation in 2026.
Innovation & disruption
AI-driven deal sourcing and due diligence (29 per cent) and democratisation via retail investor platforms (26 per cent), similar to that seen with the global trend, are viewed as the largest potential disruptors to traditional private equity models. Australian funds, however, are less convinced that real‑time portfolio monitoring tools will drive disruption (Australia: 1s5 per cent vs global 26 per cent). Interestingly, only 48 per cent of Australian respondents agreed that AI adoption in their firm was ‘more hype than impact’, which is below the global response of 60 per cent indicating Australian funds prioritise practical, results-driven AI adoption.
Conclusion
As Australian private equity firms step into 2026, they combine optimism with disciplined execution. Despite global headwinds and lingering trade uncertainties, Australian private equity firms are doubling down on sector specialism, operational transformation and technology enablement to unlock value. Strong confidence in deployment, a focus on defensible industries, and pragmatic fundraising strategies highlight resilience. The outlook is measured yet forward-looking, positioning Australia’s private equity market to adapt and thrive in an evolving global landscape.
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