Warburg Pincus sees uptick in private equity deals in 2025

By Echo Wang and Carolina Mandl

NEW YORK (Reuters) - Warburg Pincus expects a material uptick in deals in the private equity industry in 2025 and 2026, driven by pressure to return capital to their investors, its chief executive officer Jeffrey Perlman said in an interview at the Reuters NEXT conference in New York on Tuesday.

After couple of years with a low volume of deals, Perlman said sellers of companies will be more willing to reduce their prices in order to get a deal concluded, while buyers may also increase the amount they are willing to pay.

“The industry bought a lot in 2021. It was a very tough vintage ... A little bit more time for growth allows them to grow into probably some of the marks on those assets, which would then allow them to probably transact and feel a little bit better about it than would have been the case 12, 18, 24, months ago.” said Perlman, who joined Warburg in 2006 and has since helped oversee the buyout firm's expansion in Asia.

Leading private equity executives are optimistic about a rebound in leveraged buyout volumes in 2025, fueled by lower interest rates, billions of dollars of unspent capital, and a surge in opportunities tied to the booming artificial intelligence sector.

Lower rates bode well for private equity firms, after a spike in financing costs in the last two years made financing leveraged buyouts more expensive and big deals hard to clinch. Yet some large transactions are breaking through, as the financing outlook improves.

In November, Blackstone struck an $8 billion deal to acquire sandwich chain Jersey Mike's Subs, in what was one of the biggest buyouts of the year.

U.S. private equity and venture capital deal volumes have reached $423 billion so far this year, compared to $440 billion for the entire year in 2023, according to data from Preqin.

Perlman took over as CEO of Warburg in July, succeeding Chip Kaye who became co-chairman of the New York-based firm. Former U.S. Treasury Secretary Timothy Geithner serves as chairman alongside Kaye, who had served as CEO of Warburg since 2001.

Perlman's elevation to the role marked only the third generation of leadership for the firm in its history.

Warburg Pincus currently has about $86 billion of assets under management, with active investments in more than 230 companies across several industries in its portfolio. The firm traces its roots to an investment banking firm called E.M. Warburg, which was founded in New York in 1939 by German-American businessman Eric Warburg.

When asked if Warburg Pincus considered going public, Perlman ruled an IPO out. "I think if we were ever in a situation where I feel like we'd be at a competitive disadvantage by not being public, then I think, like any leader, you have to revisit that. I think the opposite is true right now."

To view the live broadcast of the World Stage go to the Reuters NEXT news page:

(Reporting by Echo Wang and Carolina Mandl in New York; Editing by Nick Zieminski)