Good morning, {{first_name}}! This week we're covering private equity`s most attractive macro-driven investments, the average probability of default has improved since early year market uncertainty, and the Federal Reserve is expected to raise rates by 25 basis points

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MICROSURVEY

Our latest survey points to a clear shift in investor thinking. 41% of respondents selected AI and automation as the macro theme most likely to create the greatest opportunity over the next three years, well ahead of healthcare and aging demographics at 18%.

The conviction is even stronger among M&A and corporate development professionals, where 50% chose AI. Asset managers split their enthusiasm between AI and private credit, with both capturing 40% of responses. PE sponsors were more diversified, with 33% favoring AI, while industrial reshoring and infrastructure modernization each attracted 22%.

The signal is less about one winning sector and more about duration. Investors are concentrating on themes that can reshape industries across multiple economic cycles rather than relying on a near term recovery.

Bottom line: capital is moving toward structural change, and thematic specialization is becoming increasingly important to sourcing and underwriting.

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PRIVATE CREDIT CORNER

Credit conditions are moving in the right direction. Across the sectors shown, the average probability of default improved in 19 of 20 industries, while the Q2 2026 portfolio average sits at 7.0%.

The bigger signal is the dispersion beneath that headline. Aerospace and Defense saw default probability fall 32.8%, Insurance improved 36.8%, and Equipment declined 29.3%. Investment Management was the lone sector moving the other way, with default probability rising 10.3%.

For private credit managers, that creates a more selective lending environment rather than a broad risk reset. Improving portfolio averages can support deployment, but sector level underwriting still matters when default probabilities range from roughly 1% to more than 12%.

The opportunity is increasingly in relative credit selection. As systemic stress eases, returns may depend less on avoiding the entire market and more on identifying which borrowers are improving faster than their pricing suggests. (More)

PRESENTED BY CAPLINK X PE 150

Artificial intelligence has moved beyond experimentation. The real question for private equity firms is no longer whether to adopt AI, but how to turn it into measurable value across the investment lifecycle.

On November 18, PE150 and CapLink Group will host the AI / Data & Insight Private Capital Breakfast, an invitation-only gathering at London's May Fair Hotel that will bring together operating partners, deal teams, portfolio executives, and technology leaders to discuss what AI adoption actually looks like inside private equity.

The morning will feature three practitioner-led discussions:

Interested in attending? Register or request the full agenda here.

Interested in sponsoring? Email [email protected]

DEAL OF THE WEEK

Hellman & Friedman is engineering a partial exit from TeamSystem at an €8–10 billion valuation, highlighting how private equity sponsors are increasingly creating liquidity without relying on traditional IPO markets.

The transaction will see Francisco Partners acquire roughly 10% of TeamSystem, while KKR and other investors are expected to take an additional minority stake. H&F will remain the controlling shareholder, allowing it to crystallize part of its investment while retaining exposure to the Italian software group’s future growth.

The structure is particularly notable because it resembles a “private IPO”: new institutional investors enter, the incumbent sponsor returns capital, and the asset remains private.

For PE firms facing longer hold periods and constrained exit markets, TeamSystem is another example of how minority secondaries are becoming a practical alternative to full exits. (More)

DEALS TRACKER

Brookfield → Reliance Worldwide | $2.9B
Brookfield Asset Management agreed to acquire Reliance Worldwide, the ASX-listed plumbing supplies manufacturer, for $2.9B. The deal gives Brookfield exposure to a scaled building-products platform and adds another sizable industrial transaction to the sponsor’s pipeline. More

Brookfield → Center Parcs | ~$6B Valuation
Brookfield is reportedly in talks to recapitalize U.K. holiday parks operator Center Parcs at roughly a $6B valuation. Rather than pursuing a conventional exit, the potential recap would offer another example of sponsors using alternative structures to generate liquidity while retaining exposure to established assets. More

EQT + Norges Bank → Acciona Energía
EQT and Norges Bank Investment Management are preparing a joint bid for renewable power producer Acciona Energía, with Ardian also reportedly competing for the asset. The process puts several major institutional investors head-to-head for a large-scale European renewable energy platform. More

Quorum Cyber → Ontinue
Quorum Cyber, backed by Charlesbank Capital Partners and Livingbridge, agreed to acquire Ontinue from EQT. The transaction expands Quorum’s cybersecurity platform within the Microsoft ecosystem and highlights continued sponsor-backed consolidation in a sector where scale, recurring revenue and specialized capabilities remain attractive. More

HEADLINE OF THE WEEK

The lower rate playbook just took a serious hit. The ECB raised rates 25 basis points, the US 10 year Treasury yield crossed 5%, and economists now broadly expect the Federal Reserve to raise rates by 25 basis points as persistent inflation and higher energy prices force central banks back toward tightening.

For private equity, the issue is bigger than another quarter point move. Sponsors spent much of the past cycle waiting for cheaper financing to reopen the deal and exit markets. Instead, higher long term yields are pushing borrowing costs back up, putting renewed pressure on LBO leverage, entry multiples, refinancings, and the valuations required to generate acceptable returns.

The implication is simple. Firms can no longer underwrite around an eventual return to cheap capital.

So What? The next PE cycle may reward sponsors that can create returns through EBITDA growth, disciplined entry pricing, and flexible capital structures, rather than relying on multiple expansion or falling rates to do the heavy lifting. (More)

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