Private equity targets IPO ‘escape velocity’ on AI winners

KEY TAKEAWAYS

• Blackstone reported a surprise jump in Q4 distributable earnings as deal exits surged 59%, with president Jon Gray saying dealmaking has reached “escape velocity.”
• Goldman Sachs strategists forecast US IPO proceeds will reach a record $160 billion in 2026, though software sector disruption has already postponed some listings.
• Private equity returns have gradually rebounded from a post-2022 slump, but the S&P 500 Index is offering similar returns over the past decade, weakening the investment case for PE.

Background

Elon Musk’s SpaceX combined with AI startup xAI in February at a $1.25 trillion valuation ahead of an expected IPO, the largest merger of all time and a prelude to what could be a record year for public listings. OpenAI and Anthropic are also positioning for debuts, with Anthropic closing on a fundraising round of $30 billion at a $380 billion valuation.

The wave of AI mega-deals is fueling optimism across private equity. Blackstone president Jon Gray said dealmaking has reached “escape velocity,” calling 2026 the “year of the IPO” after the company took Medline public in December.

The issue

Following a slump during the 2022 stock rout, private equity funds have seen a gradual rebound through Q3 2025, with venture capital catching up strongly. But the S&P 500 Index is offering similar returns over the past decade, weakening the investment case for PE.

Blackstone smashed expectations for realizations in Q4, with net exits surging 59% to the highest level in more than three years. Distributable earnings rose 3% to $2.24 billion, beating analysts’ predictions of a drop to $1.94 billion. The firm has about $198 billion in capital available to deploy and plans IPOs for Jersey Mike’s, Entrata and Copeland after the Medline debut, Gray said.

Blackstone is also boosting its stake in Anthropic to $1 billion as part of the AI startup’s $30 billion raise. OpenAI, valued at $830 billion, is also preparing for a public listing. Blackstone-backed Liftoff Mobile postponed its IPO in February after an AI-driven software selloff spooked investors, a reminder that the same forces powering mega-deals can shut the door on smaller listings.

Goldman Sachs strategists forecast US IPO proceeds will reach $160 billion in 2026, more than three times the roughly $48 billion raised last year. “We expect solid economic activity, improved CEO confidence, friendly monetary policy, and continued equity market appreciation this year,” the strategists wrote. But they noted heavy weighting of software companies in the IPO pipeline as a risk, with total issuance potentially ranging from $80 billion to $200 billion depending on whether marquee names proceed.

Tracking

Track Blackstone’s realizations and earnings estimates with the EEG function:

• Type “blackstone” in the command line and select BX US Equity.
• Type “earnings estimate graph” and select EEG. The shortcut is BX US Equity EEG.
• Click Actuals vs Estimates button at top right.
• Set Period to Quarters, click 5Y and set a 2027 end date.

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