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| The Daily Pitch |
| PE, VC and M&A |
| Your edge on global private capital markets |
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| Good morning. In today's Daily Pitch, we look at how Japanese PE is defying a broader slowdown in Asia, a wealth manager's take on alts in 401(k)s and the Fed's third rate cut of the year. |
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| AI's unrestrained spending: Not a bubble, but an industrial revolution |
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By Rudy Torrijos, Director of Industry Research
The global race to build AI has triggered the single largest deployment of investment capital in history. Hyperscaler capital expenditures are projected to reach a cumulative $6.4 trillion through 2030, according to our debut report on the advanced computing industry.
This unprecedented spending is driven by a new economic reality: The demand for processors is uncapped because model performance scales directly with computing power. Fears of overinvestment are overblown, and hyperscaler capital expenditure is not akin to the dot-com bubble. |
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Instead, the industry has entered a secular supercycle. As chip architectures shift to 2-nanometer process nodes and Mixture-of-Experts architectures, the cost of inference is plummeting while the fidelity of "expert level" intelligence rises. This dynamic is propelling the semiconductor sector toward $3.7 trillion in cumulative data center revenue from 2026 to 2030.
The crucial milestone that will validate this massive outlay will be reaching the "60% threshold"—scoring higher than the average human adult on the ARC-AGI-2 benchmark. Achieving this level of fidelity is the gateway to agentic AI and true labor substitution.
Without achieving this, end-user productivity from developments in agentic AI and physical AI will be significantly limited beyond 2028. Once models reliably pass this threshold, enterprise adoption will accelerate further, moving from experimental chatbots to autonomous workflows that drive margin expansion.
But there is another formidable adversary: electrical power.
While silicon capabilities expand exponentially, power infrastructure moves linearly. Spending dedicated solely to power and cooling infrastructure to counteract these constraints is predicted to reach $1.2 trillion from 2026 to 2030. With grid interconnection queues stretching three to five years, power and thermal management equipment are the barrier to data center investment deployment.
For investors, the implications are stark. And a strategic pivot is expected: PE will move from passive real estate to consolidating the industrial supply chain (liquid cooling and power distribution), while VC will migrate to the "reasoning layer," where proprietary data creates moats against commodity models.
Far from a speculative bubble, this buildout represents a structural industrial revolution backed by record operating cash flows and the relentless physics of scaling intelligence. |
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| Private capital’s turning point: Predictions for 2026 |
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Affinity’s latest survey of nearly 300 private capital professionals shows a sharp shift in fundraising sentiment: investors seeing “less opportunity” to raise a fund dropped from 34% to just 15%. But optimism comes with new pressure. LPs are more selective, and more than half of respondents say proving value in the existing fund is their biggest challenge going into 2026.
The 2026 predictions report explores how firms are responding through better data, clearer value articulation, and increased operational discipline—while preparing for a competitive fundraising environment where differentiation hinges on evidence, not narratives.
Read the 2026 Predictions report |
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• Real assets fundraising has surged in 2025, fueled by trends in AI, digital infrastructure, energy security and supply chain restructuring. Read the report
• The Fed's latest rate cut could bolster M&A, and investors turn toward the 2026 IPO market. Find out more
• Building bridges between 401(k) plans and private markets will take all parties into uncharted waters. We sat down with iCapital to discuss what's at stake and what to expect. Here's the interview
• APG Group plans to cut up to 1,200 jobs by 2030—roughly a third of its workforce—as the Amsterdam-based pension fund manager seeks to reduce costs before reforms to the Netherlands' private pension system. Read more |
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| 5 charts: Why Japanese PE is so resilient in 2025 |
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By Emily Lai, Private Equity Reporter
Japan has proven to be one of Asia's most resilient PE deal markets this year despite a broader slowdown in the region, boosted by a vibrant mid-market and a rebound in carveouts.
The country recorded $29.4 billion in PE deals in the first three quarters of 2025, 30% higher than the total deal flow in 2024—already making it Japan's third-highest annual total in the past decade, according to PitchBook's 2025 Japan Private Capital Breakdown.
With 204 deals recorded in the first three quarters, this year is on course to match last year's total of 264 deals.
Japan has defied the broader trend of a deal slowdown in Asia. The continent saw $87.6 billion in PE deal value in the first three quarters, still 26% below last year's level. |
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The expanding base of more diverse transactions supported deal activity in Japan.
While buyouts made up nearly half of all PE deals and about 80% of deal value in 2024, the median PE deal value plummeted from roughly $325 million in 2021 to $27 million in 2024.
The data shows that while some investors see hands-on value creation opportunities through control-oriented transactions in large-cap deals, others look for smaller businesses, typically family-owned, that are seeking strategic capital for modernization or global expansion.
This year has also seen a rapid rebound in carveout activity in Japan, following the slowdown of the past two years.
In 2023, the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange both published papers urging executives to sell non-core or unprofitable businesses to boost shareholder value.
The effect has also trickled down into the country's mid-market. With roughly a third of Japan's small and medium-sized businesses owned by founders over 70, it created a steady deal pipeline where PE firms act as succession partners.
The reform also encouraged the privatization of undervalued publicly traded companies.
Some notable take-private deals include Bain Capital's $756 million acquisition of Japanese logistics company Nissin in May and EQT's $320 million take-private of Japanese digital healthcare platform provider CareNet.
We took a look at five charts showing Japan's strength. |
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