No more than a handful of Australia and New Zealand-focused buyout funds achieve partial or final closes in any one year. This pattern has become entrenched over the past two decades, AVCJ Research’s records show, with spikes in fundraising attributable to the odd larger offering. Will 2026 be different?

About a dozen mid-cap managers could be in the market with their latest flagship strategies at some point before year-end. At a time when LPs globally are becoming more selective in their commitments, this represents an opportunity to run the rule over much of the GP landscape. Not all funds will find favour, Australia’s enduring appeal as part of an Asian private equity portfolio notwithstanding.

“Those GPs are inviting all the LPs to attend their AGMs [annual general meetings],” said Liam Coppinger, a senior managing director and head of Asia Pacific private equity at Manulife Investment Management. “You are going to get everyone’s pitch book, everyone’s materials, you can put them side by side and have a pretty transparent view of what is available and what is investable.”

Manulife has four GP relationships in Australia: BGH Capital and Pacific Equity Partners (PEP) at the large end with funds of more than AUD 3bn (USD 2.1bn); and Adamantem Capital and CPE in the sub-AUD 1bn space. While comfortable with this exposure, Coppinger would consider additions that bring either incremental diversification to the portfolio or scope for outperformance plus co-investment.

BGH and PEP are not fundraising this year. Adamantem and CPE could be, though they have yet to formally launch. The likes of Anchorage Capital, Armitage Associates, Crescent Capital Partners, Five V Capital, and Quadrant Private Equity are said to be in similar positions.

Others have already started the journey. Whiteoak launched its second fund at the end of 2024, did an accelerated first close to move on a deal, and is aiming to finish on AUD 250m within a few months. Potentia Capital has reached AUD 550m against a AUD 750m target for Fund III, while Allegro Funds, currently seeking AUD 800m for Fund IV, is on track for a AUD 300m-plus first close next month.

Advent Partners and Fortitude Investment Partners – targeting up to AUD 700m for Fund IX and AUD 200m for Fund I, AVCJ previously reported – launched in 4Q25. Pemba Capital Partners, aiming to raise AUD 900m for Fund IV, was scheduled to kick off the process in early 2026.

Troubled timing

In this context, the prospect of 13 partial or final closes over the next 10 months morphs into a more likely scenario of a few fast fundraises interspersed with assorted delayed launches. Indeed, the game of shadows around what constitutes being in market has already begun.

“There’s a lot of ‘Yeah, we’re coming back,’ and then nothing happens,” said Frewen Lam, a managing partner at Roc Partners. “Some processes kicked off last year and were not one and done. Others are soft marketing but really dragging it out to appear like they are not in the market. It’s about managing the negative perception of being in the market and things not happening quickly.”

He adds that private equity firms preparing to launch might want to “to push some capital out the door, so it strengthens the story on the way in.”

This goes to the heart of Australia’s mid-market fundraising congestion. Over the course of a roughly 18-month period through mid-2022, eight of the managers mentioned earlier raised funds on the back of surging pandemic-era exits. Since then, liquidity has been muted amid geopolitical instability, a flatlining and at times inflation-troubled domestic economy, and a persistently unbridgeable bid-ask spread.

Australia and New Zealand PE exit volume topped USD 32bn in 2022 before abruptly returning to a pre-COVID-19 level of USD 8.3bn a year later, according to AVCJ Research. This was followed by a revival in 2024 and 2025, with volumes of USD 23.4bn and USD 16.2bn, respectively, but the numbers are distorted by infrastructure and utilities-related assets.

In 2024, it was the USD 16.2bn of data centre business AirTrunk. In 2025, six of the 10 largest exits – with aggregate proceeds of USD 7bn – involved transportation, energy, data centres, hospitality operations, and agriculture. In each instance, the vendor was not a traditional private equity fund.

“Exits have been a bit sluggish in Australia versus the mid-market globally. We had a phenomenal number of exits in the last quarter of 2025, resulting in some great returns, and most of them were in the US and Europe,” said Rachael Lockyer, head of Australian PE and MLC Private Equity.

“We are waiting for the IPO window to be fully open in Australia, which may help the flywheel effect where large-cap private equity exits assets before buying more from mid-cap private equity. Geopolitical uncertainty might be making large corporates hold back on M&A as well. Historically, corporates have been a strong exit avenue for Australian mid-market GPs.”

Liquidity channels

This assessment of different liquidity channels broadly matches feedback from mid-market managers. Anthony Kerwick, a managing director at Adamantem, described 2024 as “a year when we expected to do more on exits,” although last year and early 2026 offered more cause for optimism.

The firm offloaded Linen Services Australia to Macquarie Asset Management in April 2025 and has since exited the home care division of healthcare provider Zenitas and agreed to sell animal feed producer Hygain. Both are trade sales to domestic buyers.

Kerwick observed that multinationals have always been highly selective regarding Australia M&A – needing strong strategic rationale to participate – and global macro volatility is hardly an incentive to act. He is more optimistic about sponsor-to-sponsor exits, citing the rise of capital pools with different investment timelines and risk-return profiles.

Allegro has delivered three exits in the past 12 months, one of which went to one of these pools of capital: a core-plus infrastructure investor bought a shipping division out of portfolio company Team Global Express. Another business, aftermarket hydraulic services provider Questas Group, was considered a likely trade sale but ended up going to private equity.

“There was global interest, but buyers from the US and Europe are moving a bit slower, being more cautious,” noted Chester Moynihan, a founding partner at Allegro. “In the past, we used to get mystery Chinese buyers as well, groups supposedly able to pay a fortune, but those have evaporated.”

That said, Lockyer is not alone in observing a recent pullback on the sponsor side. All three of Quadrant Private Equity’s exits across its two buyout strategies since the start of 2025 – Prime 100, Quad Lock, and QMS Media – have been trade sales. According to Marcus Darville, a managing partner at the firm, it was a case of private equity being unusually meek rather than strategic buyers being aggressive.

Quadrant has also been historically reliant on the IPO channel, taking more companies public than any other mid-market GP over the past 15 years. However, activity tends to happen in relatively short and infrequent bursts. For all the talk of a resurgence in 2026, Darville warns that the market is still blighted by negative perception of post-IPO sell-downs, which can undermine the pricing of PE-backed offerings.

Of the eight managers that raised funds during the 18 months through mid-2022, only one has achieved a final close under its flagship strategy since then. Quadrant, for example, used to emphasise velocity of capital, aiming for compressed investment and realisation periods. It raised three mid-cap buyout funds between 2014 and 2019. The most recent fund in this series closed on AUD 1.24bn in late 2020.

Without referencing individual managers, Todd Shin, a partner at Axiom Asia, points to an environment in which seemingly every thwarted attempt to right-size bloated portfolios and generate distributions leads to fund launches being pushed back by a few months.

This cannot continue indefinitely – not least due to fund life constraints – so inclinations to hold on for an improved valuation may ultimately be replaced by compromise. The fate of exit processes that stumbled last year and are being revived in 1H26 will influence on the timing of new fundraising activity.

“With so many options in the market, LPs can pick and choose. GPs that can point to DPI [distributions to paid-in] and businesses with good trajectories will find it easier to raise capital,” Shin said.

“Meanwhile, a lot of managers are trying to make themselves more attractive by offering co-investment to LPs. We have seen an increase in co-investment opportunities in the past few quarters as people gear up for fundraising.”

Differentiated narratives

These dynamics also facilitate comparison across other metrics, from longstanding issues in the Australian market such as team stability and succession planning to more recent phenomena like private wealth fundraising. Even the private markets impact of a recent sell-off in global software stocks is highlighted given how certain mid-cap managers have targeted the space in recent years.

Moreover, LPs are increasingly looking for private equity firms that can demonstrate differentiation in strategy as well as in returns. The emergence of sector specialists like technology-focused Potentia are perhaps the best example of this, but even generalists have become narrower in scope.

Advent describes its remit as predominantly healthcare and technology, yet within those it prioritises areas like allied health and enterprise software. In the same way, Nick Miller, a partner at Fortitude, outlines a relatively broad range of sectors – technology, healthcare, food and beverage, infrastructure services – but then homes in on specific verticals chosen for being repeat performers.

“These might be niche areas, but if you find the number one or number two player, you can expand and sell to a larger player in the broader sector,” he said. “Once you understand the market and the participants, opportunities come to you. The founder of a pharmaceutical distribution business recently came to see us because he wanted help scaling and we’re one of few GPs with experience in this space.”

For LPs, sector isn’t necessarily the starting point when assessing competitive edge. Manulife, for example, grew so frustrated with non-standardised and arguably self-serving sector classifications drawn up by GPs that it produced its own. If a manager is deemed to be of institutional quality, the next phase in due diligence often concentrates on the what and how of deal-making, not the where.

“Are you first institutional capital? Are you focused on founder-owned businesses? Are you doing platform buildouts or privatisations?” said Coppinger. “I think being differentiated by origination is more important than by sector. Australia is a small market and so you can be overly specialised.”

Allegro is among the most clearly defined in that sense because of its roots as a turnaround investor. The broad deal types are familiar – corporate carve-outs, founder partnerships, special situations – but the firm claims to distinguish itself by addressing situations other GPs wouldn’t touch.

“The underlying theme is we are solving for something other than price,” said Moynihan. “There is complexity in the asset or on the vendor side that means they value what we bring to the table. It could be reflected in tricky structures with debt-for-equity. We do that; not many other sponsors would.”

Kerwick of Adamantem avoids using terms with overt turnaround connotations when discussing strategy, but there are similarities in language around origination and transformation. The firm targets situations where opportunities can be unlocked by changing capital structures or addressing misalignment between shareholders. Carve-outs and take-privates fit this profile.

“We think that deals involving bespoke negotiation and diligence processes and relationship building play to our origination strengths,” said Kerwick. “If it’s a nice clean business, 100%-owned, being put on the block to get the best result for shareholders, what are we going to see that no one else will see?”

Best practices

Ultimately, managers sit at different points on the same scale, rather than in separate silos. This feeds a cynicism, in some quarters, regarding consistency in self-definition and the notion of a signature deal type. From an LP due diligence perspective, it’s about finding behavioural patterns that suggest a team can continue to buy well and create value in a market seen as increasingly competitive.

“We want to see how a speciality is manifested in the raw metrics. Do they have proprietary deal flow and build from the ground up? That’s what generally leads to better entry valuations,” said Axiom’s Shin.

Axiom tends to back generalists in Australia, but it would consider a proven sector specialist. Fund size is more of a red line: pushing beyond AUD 500m shifts the competitive dynamics around entry and exit. Several others suggest AUD 1bn as the reasonable cut-off for a mid-market fund.

As Australian managers prepare to come back to market, several factors are weighted in their favour. First, the local GP universe is not unstable or overpopulated, and anticipated fund size targets for the coming vintage are largely in line with the previous one.

Second, historical returns have generally been strong. At MLC, for example, Australia has outperformed every other region since the PE programme started. Third, overseas LPs that account for most of the capital raised by mid-cap managers are still pivoting Asian allocations towards developed markets. Australia’s legal transparency and emphasis on control transactions are plus points.

“Australia is still a beneficiary of capital not being deployed in China,” said Roc’s Lam. “It’s not like Japan, where I’ve yet to meet a manager that has struggled to raise in the last 24 months and most are blowing through targets. But there is still positive momentum around capital wanting to find a home here. Even deal-by-deal firms looking to raise first-time funds are finding some institutional demand.”

For these reasons, Sunil Mishra, a partner at Adams Street Partners, expects relatively strong re-ups and successful fundraises. This does not mean entirely smooth processes, however, as LPs with budget for only a couple of Australian funds look to push some commitments into the next financial year. Combined with existing uncertainty around exits, it is potentially a recipe for timeline disruption.

In these circumstances, effective communication is imperative, whether the objective is cultivating LP relationships by telling a differentiated story or shoring up existing support for a delayed launch.

“Being transparent – showing LPs what you’ve done in different situations, going into granular detail – before you even start fundraising puts you in good stead,” said Lockyer of MLC. “If an LP is interested, they may hold a spot for you. Using co-investment strategically by offering it to potential incoming LPs, is also helpful.”