NEW YORK (Reuters) - Blackstone expects an improved environment for mergers and acquisitions and a pickup in the market for initial public offerings to help the buyout giant sell and exit more than twice the number of investments in 2025, a top executive told Reuters.  

"IPO markets are open. The cost of capital has come down. The 2021 vintage, which resulted in a significant increase in volume for private equity deployment, will be four years old in 2025, so some of these deals, the ones that have done well, will be ready for an exit," said Martin Brand, head of North America private equity at Blackstone, in an interview at the Reuters NEXT conference in New York.   

Leading buyout firms have been gearing up for a recovery in leveraged buyout volumes in 2025, aided by lower interest rates, the need to deploy billions of dollars of raised capital, and a surge in opportunities tied to the booming artificial intelligence sector.

Lower interest 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 of the world's biggest buyout firms, including Blackstone, are starting to pursue large leveraged buyouts, as the financing outlook improves. 

"Large transactions will continue to happen and maybe even get larger. The financing market is certainly there," said Brand. 

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

Earlier this year, Blackstone agreed to buy Australian data center operator AirTrunk for $16 billion. In September, Vista Equity Partners and Blackstone reached an $8.4 billion deal to take collaboration-software maker Smartsheet private.

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

BULLISH ON 2025

Large buyout firms are expecting a strong U.S. economy to be a big driver of M&A activity in the near term.

Brand said it is too early to assess the impact of tariffs and deregulation on the economy under the incoming administration of President-elect Donald Trump.

"We're generally confident in the (U.S.) economy," he said. "It seems to be gathering momentum."

Blackstone, the world's largest alternative asset manager, has assets under management of about $1.1 trillion, as of the end of September. 

The firm, under Chief Executive Stephen Schwarzman, has identified the boom in generative artificial intelligence as a key growth driver. 

On a recent quarterly earnings call, Schwarzman said Blackstone manages $55 billion in data center assets that are currently being developed or under construction, and the firm has zeroed in on $70 billion in further investment opportunities in the sector.

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