Growth Capital Trends in TMT
The private equity (PE) landscape within the Technology, Media, and Telecommunications (TMT) sectors is undergoing a transformative phase in 2025, characterized by strategic geographical expansion, technological innovation, and evolving media consumption patterns. Drawing from recent insights published by reputable financial sources, this report synthesizes the key trends, priorities, and strategies shaping the industry, offering actionable insights for senior PE professionals.
Deal Activity: A Shift Towards High-Value Transactions
Recent data highlights a complex deal environment in the TMT sectors. According to a PE Hub article published on June 10, 2025, global PE deal volume declined by 34% year-over-year in May 2025, with deal counts dropping from 1,087 to 889 compared to May 2024. Despite this, the year-to-date deal value has risen significantly to $330.25 billion, up from $276.85 billion in the first four months of 2024. Within the TMT sector specifically, 302 PE-backed deals were recorded in May, with application software leading at 148 deals, followed by systems software (30 deals) and electronic equipment and instruments (23 deals). This suggests a strategic pivot towards fewer but higher-value transactions, reflecting cautious optimism amid market uncertainties.
| TMT Deal Statistics (May 2025) | Number of Deals |
|---|---|
| Application Software | 148 |
| Systems Software | 30 |
| Electronic Equipment & Instruments | 23 |
| Total TMT Deals | 302 |
Geographical Expansion: Europe and Japan as Key Markets
PE firms are increasingly looking beyond traditional markets, with Europe and Japan emerging as focal points for TMT investments. A PE Hub report notes that Europe offers “enormous opportunities” due to its favorable regulatory framework and early subscriber growth in streaming services. Erik Hodge, a managing director at The Raine Group, emphasizes the potential for European content to globalize effectively, citing investments like Mediawan’s acquisition of Leonine Studios in 2024, backed by KKR and Atwater Capital. Similarly, Japan is gaining attention for its growing demand for digital infrastructure. A PitchBook article highlights Ares Management’s $2.4 billion data center fund, launched to address Tokyo’s increasing cloud and AI needs, signaling a robust appetite for technology infrastructure investments.
Sector-Specific Trends
Technology: Investing in Infrastructure and AI
The technology subsector is witnessing significant PE activity, particularly in digital infrastructure and artificial intelligence. The Ares data center fund underscores the critical role of infrastructure in supporting the cloud and AI-driven economy. AI is not only a target for investment but also a tool for enhancing portfolio company performance. As noted in the PE Hub report, AI is driving the “next wave of technology disruption” by reducing content creation costs, improving production efficiency, and aiding content discovery, particularly in media and SaaS companies.
Media: Adapting to New Consumption Patterns
The media landscape is evolving rapidly, with platforms like YouTube and podcasting at the forefront. The Raine Group’s Erik Hodge highlights YouTube’s positive trends, including ad growth, content-commerce linkages, and increased viewership across older demographics, which broadens its market appeal (PE Hub). The successful acquisition of Moonbug Entertainment by Candle Media for nearly $3 billion in 2021 exemplifies the value of digital content creators. Additionally, podcasting is shifting from audio-only to video formats, resembling talk shows and opening new monetization and licensing opportunities. Content libraries remain resilient, with licensing values continuing to “defy gravity” as consumers gravitate towards familiar content.
Telecommunications: Supporting Broader TMT Growth
While specific telecommunications trends were less prominent in the reviewed sources, the sector remains integral to TMT, particularly as it intersects with technology through advancements like 5G and IoT. The focus on data centers and digital infrastructure indirectly supports telecom growth, as these investments enhance connectivity and data processing capabilities.
AI as a Transformative Force
AI is emerging as a pivotal element in PE strategies, both as an investment opportunity and a value-creation tool. Beyond its role in technology infrastructure, AI is transforming portfolio companies by streamlining operations and enhancing content delivery. For instance, in media, AI improves content discovery algorithms, making platforms more user-friendly and increasing engagement. This dual role positions AI as a critical priority for General Partners and Operating Partners seeking to maximize returns.
Exit Strategies and Market Conditions
The current market environment is influencing exit strategies, with PE firms facing challenges in selling assets acquired during low-interest-rate periods. While specific exit strategies were not detailed in the sources, the optimism for 2025 dealmaking suggests that firms are preparing for improved liquidity as market conditions stabilize. The focus on high-value deals and strategic acquisitions, such as Mediawan’s expansion, indicates a preference for building robust portfolios that can command premium valuations in future exits.
Optimism for 2025
Despite the May dip in deal volume, industry leaders are optimistic about 2025. The PE Hub article quotes The Raine Group’s Erik Hodge, who anticipates increased activity driven by a deal-friendly political climate and resolving macroeconomic uncertainties. This outlook is crucial for PE professionals planning their investment strategies, suggesting a rebound in deal flow and opportunities for value creation.
Notable Investments and Firms
Several high-profile investments highlight the vibrancy of the TMT sectors:
- Ares Management: Raised $2.4 billion for a data center fund targeting Japan’s cloud and AI growth (PitchBook).
- The Raine Group: Actively pursuing media opportunities, with Erik Hodge leading efforts in entertainment and content, including YouTube-born investments (PE Hub).
- KKR and Atwater Capital: Backed Mediawan’s acquisition of Leonine Studios, strengthening their European media portfolio.
Conclusion
The TMT sectors remain a cornerstone of private equity investment in 2025, with firms adapting to a dynamic landscape through strategic geographical expansion, a focus on technology infrastructure, and innovative media strategies. The integration of AI, both as an investment theme and operational tool, underscores the industry’s forward-thinking approach. As deal activity is poised to rebound, PE professionals must stay attuned to these trends to capitalize on emerging opportunities and drive value creation.