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| The Daily Pitch |
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| Your edge on global private capital markets |
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| Happy Friday! Today's Daily Pitch looks at how UK pensions are making a big turn into private markets, explores why huge gaming deals like the massive EA buyout will remain rare, and dives into a resilient quarter for infrastructure SaaS. |
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| How UK pensions are making a private markets pivot |
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By Andrew Woodman, London Bureau Chief
For the past two years, the UK government has been rewriting the rules governing the flow of British retirement savings through the economy, with the potential to unlock billions of pounds for private markets.
What started in 2023 with the Mansion House Compact, a pledge to boost private market allocations from defined-contribution (DC) pensions, has evolved into a coordinated effort to steer an additional £74 billion (about $98.9 billion) of long-term capital into private assets by 2030.
The shift comes as public markets show clear signs of strain. According to our latest analyst note, the UK now has 10 times more PE- and VC-backed companies than listed ones—a dramatic reversal from a year ago.
With more corporate growth occurring outside the stock market, policymakers view DC pensions, which currently allocate less than 1% of their funds to private assets, as the missing link between savers and the broader economy. |
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The urgency is amplified by the shift from defined-benefit pensions, which were historically the UK’s main source of long-term, patient capital, to DC. While the former's assets have declined 12% year-over-year to £1.7 trillion in 2024, the latter's have increased to £650 billion, up 40% since 2019, although much of this is locked up in public markets.
There have already been a raft of regulatory changes aimed at increasing DC exposure to alternatives.
Long-term asset funds have provided DC schemes with a compliant vehicle to hold illiquid assets. Meanwhile, charge cap reforms mean that private funds' performance fees are no longer subject to a 0.75% annual fee cap—effectively removing a long-standing barrier to PE and VC investment.
Looking ahead, the Value for Money framework—a forthcoming UK regulatory regime—will require DC pensions to assess fund performance on a broader set of metrics, allowing the focus to shift from low fees to net returns.
Consolidation efforts, which include the push toward pension "megafunds" similar to those in Australia and Canada, are also expected to reinforce the scale needed to invest meaningfully in alternative assets. |
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• Infrastructure SaaS is proving to be a resilient area, clocking in at $5.2 billion in Q3 deal value—the second-highest quarterly total since early 2023. Download the report
• European PE dealmaking stalled in 2025, with overall value unchanged and deal count dropping sharply amid political uncertainty and slow-moving rate cuts. Review 2025's top 10 PE buyouts
• PE dealmaking in the aerospace and defense industry rocketed in Q3 as tariff chaos eased and investors considered the promise of bulging defense budgets. Read the report |
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| $55B EA deal unlikely to start a gaming trend |
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By Janelle Bradley, Private Equity Reporter
Private equity stunned the markets this year with a $55 billion buyout of Electronic Arts, an unprecedented move in a sector that had rarely seen more than single-digit billion-dollar investments. As optimism builds around potential rate cuts and the growing role of AI in creative industries, investors are wondering whether 2026 could usher in another wave of record-breaking deals.
For buyers, a key driver of their interest in gaming companies is the rapid growth of artificial intelligence, which they believe could reduce costs in an industry whose capital expenditure requirements have been increasing for years. |
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AI could potentially reduce costs by increasing the speed with which developers can experiment and create new intellectual property, said Spencer Pitman, senior manager of private equity at West Monroe, an M&A adviser.
This could be especially useful in the production of live service games, he added, which are designed to offer continuous updates of new content. A good example is Fortnite, one of the most popular games in the world, where new cosmetic items such as outfits and skins are rolled out weekly or monthly.
Despite the lucrative investment characteristics that video games represent to PE sponsors, the bifurcated nature of the market leaves investors with limited options.
Video game producers receive substantial venture capital for early-stage development, but the steady, cash-generative businesses that PE needs to borrow against are mainly found at the top end of the market.
"There's not this glut of the middle-market gaming companies out there for private equity," said Keith Campbell, M&A practice lead at West Monroe. |
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Smart reads that caught our eye.
• A once-trusted fly fishing brand is being boycotted by retailers after a PE roll-up. Retailers are dropping Simms Fishing Products from their catalogs over ownership changes and strategic decisions that came with it. [Bloomberg]
• A retrospective on the life and investments of Warren Buffett: Seth A. Klarman takes a look at the 95-year-old investor's successes ahead of his retirement. [The Atlantic]
• Has the youth sports industry created a national crisis? The $40 billion industry has pressured families into high-cost environments that are ultimately unnecessary, a US House subcommittee says. [USA Today] |
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