March 13, 2026
LPs have a new regional favorite. Investors are also reassessing AI risk, according to Adams Street research.
LPs continue to rely on private markets to outperform their liquid counterparts in the long term and are currently experiencing liquidity issues. A current study by Adams Street also comes up with a finding that may surprise market experts more: Europe is replacing the USA as the preferred investment region! Appropriately, the study was named “Great Recalibration”. In addition, artificial intelligence is increasingly being recognized as a risk.
“Private markets have moved past the era in which multiples simply increased and liquidity was always available,” says Jeffrey Diehl, Managing Partner & Head of Investments at Adams Street. “The environment has become more demanding and rewards operational excellence, industry specialization and discipline in deal selection. Successful investors and managers are those who see liquidity as part of the strategy and not as a given.”
Europe ahead of North America for the first time
One of the survey’s most striking findings is that Europe has overtaken North America as the most attractive region for investing in private markets in 2026. Respondents cited attractive valuations, political support and opportunities in European SMEs as the main drivers. While North America remains central to most portfolios, geopolitical tensions and concentration risks are driving LPs to diversify their investments geographically more actively.
At the same time, geopolitical risk is gaining importance as a strategic factor: nearly nine in 10 LPs expect it to have a significant impact on private markets strategies – led by concerns about U.S.-China relations.
When asked about the best regional opportunity, investors voted for both the USA and Europe in 2025 with 62 percent each. In 2026 it was only 54 percent for the USA. For Europe, approval remained almost constant at 61 percent. For China, approval rose by six points to 42 percent and for Japan by as much as eleven points to 28 percent.
The study also focuses on artificial intelligence. According to Adams Street, AI is rapidly evolving from a thematic opportunity to an operational imperative. Technological disruption is now cited as a key risk by 28 percent of LPs – a significant increase from 17 percent last year – reflecting the growing influence of AI on valuations, competition and business models. At the same time, along with co-investments, technology and healthcare continue to be among the most promising sectors for 2026: 39 percent of those surveyed named these areas as the ones with the most attractive opportunities.
“AI is no longer a ‘nice-to-have’ differentiator,” Diehl said. “It is a value driver. Investors expect managers to not only have access to AI-enabled companies, but to embed AI capabilities in their portfolios to improve acquisition, due diligence and operational performance.”
Authors:
Patrick Eisele
Tags: Private market investments / private assets
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