Private Equity: A Negative First Quarter
After ten consecutive quarters in positive territory, the Ramify Private Equity Index (RPEI) closed Q2 2025 in negative territory (-0.4%). Two factors stand out behind this unprecedented decline since its launch in 2022: a 9% drop in the dollar following the Liberation Day announcement by Donald Trump and a highly detrimental idiosyncratic event for evergreen real estate, with the correction of Novaxia One. Despite these shocks, the fundamentals of individual private equity remain solid, and several segments continue to show robust momentum.
An Unusual Quarter
The second quarter of 2025 marks a break in the until-now linear trajectory of the RPEI. The index dropped by –0.4%, compared to a rise of +0.9% in Q1, a shift largely attributable to the sharp depreciation of the dollar (–9% over the quarter). Funds with significant exposure to the United States, which feature prominently in the index, faced this currency volatility without being able to neutralize it in the short term.
In addition, there was a distinct but significant effect: the –15.67% decline in the evergreen fund Novaxia One, related to the denial of two building permits. This event mechanically impacted the entire evergreen sub-index, resulting in –0.6%, while excluding just this fund would have shown a performance of +1.2%. Without Novaxia One, the total performance of the RPEI would be –0.1%, close to stability.
However, this atypical configuration does not alter the medium-term outlook: industry professionals surveyed by Neuberger Berman remain largely optimistic. Nearly 75% of international managers do not anticipate any significant valuation adjustments in the short term, contrary to listed markets, which are more sensitive to macroeconomic shocks.
Comparisons with other asset classes illustrate this situation. The MSCI World posted a +11.5% gain in dollars for the quarter but only +2.5% in euros, completely offset by the dollar's depreciation. Global bonds remained almost stable at +0.1%, while variable capital real estate investment trusts, via the RSCPI index, rose +1.1%, confirming the stabilization of the real estate market following adjustments at the year's start.
Highly Varied Performances
Beyond the immediate effects, the quarter reveals a marked dispersion among segments. The most European-focused strategies are also the most resilient. Private debt advanced by 1.2%, confirming its ability to generate regular returns: since the inception of the RPEI, it has delivered an annualized performance of 6.7%. Buyout also performed well (+1.1%), driven by several dynamic funds, including Private Corner Wealth Expansion (+10%) and Ciclad 7 Private Investors (+3%).
Conversely, currency-sensitive strategies saw more significant declines. The secondaries ended the quarter at -1%, mainly due to some funds' exposure to the dollar, such as Opale Stratégies Secondaires (-8.3%). Growth capital, weakened since 2024, continues its slow decline (-0.6%). The most penalized segment remains real estate in private equity (-2.8%), a direct consequence of the drop in Novaxia One.
The evergreen case offers one of the most instructive insights of the quarter. While Novaxia One's setback affects the sub-index, the long-term trend remains positive: since its launch, the evergreen has shown a hit rate of 65%, meaning a majority of quarters in outperformance. This episode underscores the importance of thorough due diligence and intra-segment diversification, as performance is closely related to management quality and the opportunity pipeline.
The issue of systemic risk in private debt is also clarified. Publicized cases (Cantor Group V, First Brands, Tricolor, Broadband Telecom) concern very specific segments—structured credit and asset-based lending—and not the funds comprising the index, which are primarily positioned in direct lending. The latter benefits from rigorous mechanisms: enhanced documentation, protective covenants, and a direct relationship with the borrower.
Spreads are tightening due to increased competition among lenders but remain more attractive than on syndicated markets: around +520 basis points in private, compared to +390 basis points in public. Some tensions are emerging, though: the use of PIK (Payment-in-Kind) interest has risen from 6.9% to nearly 20% of the market in three years, indicating occasional vulnerability but also the structural flexibility of private credit.
For Ramify, this quarter serves as a reminder that private equity can be temporarily exposed to exogenous shocks—currency, political, regulatory—but remains fundamentally robust. As Samy Ouardini, co-founder of Ramify, summarizes, it highlights « the importance of rigorous fund selection, supported by thorough due diligence and strengthened oversight of vehicles."
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
