Private equity industrial sector investment pacing for new high in 2026

Private equity investment in industrials is on pace for a year-over-year increase in 2026 as fund managers latch onto the powerful trends in AI infrastructure, supply changes and defense.

The announced value of private equity and venture capital deals targeting the industrial sector totaled $82.06 billion globally between Jan. 1 and May 31, compared with a full-year 2025 total of $140.99 billion, according to S&P Global Market Intelligence data.

If investment in the sector maintains the current pace, the 2026 deal value could exceed the $160.47 billion annual total recorded in 2022 and set a new high in at least six years.

The global build-out of data centers and other infrastructure to support AI, electrification and grid modernization, the rerouting of global supply chains and growing global defense spending are among the key trends drawing private equity to the industrial sector, said Michael Fiore, industrial products M&A leader at PricewaterhouseCoopers International Ltd.

At a time when AI disruption is roiling the software sector, fund managers are increasingly viewing industrials as a safe haven.

"They're making products, they're shipping products. It's a hard asset. People can touch and feel it," Fiore said.

AI and industrial 'renaissance'

Executives at alternative asset manager Apollo Global Management Inc. have repeatedly described what they see as a "global industrial renaissance," driven by investments in utilities, digital infrastructure and the global energy transition.

Speaking on the firm's first-quarter earnings call, Apollo CEO Marc Rowan said this renaissance was creating huge investment opportunities for private capital across a range of companies in the industrial sector.

"This is infrastructure. This is energy. This is energy transmission. This is an energy transition. This is advanced manufacturing. This is defense, and it's AI and data," Rowan said.

The global data center boom is fueling private equity interest in the power grid and, in particular, information and communications technology, said John May, founder and CEO of CORE Industrial Partners LLC.

"Any business that touches the data center space is of great interest right now and investors are looking to take advantage of the heavy growth in the AI sector," May wrote in emailed comments.

Among the largest private equity-backed industrial sector deals of 2025 was Apollo's $2.33 billion acquisition of a majority stake in Kelvion Holding GmbH, a German manufacturer of heat exchangers. At the time of acquisition, Kelvion's "largest and fastest-growing segment" was its data center business, according to Apollo.

Aerospace and defense subsector deals surge

Deals targeting the aerospace and defense subsector attracted $23.36 billion in private equity and venture capital investment in 2025, second only to trading companies and distributors within the wider industrials sector.

Private equity investment in defense accelerated faster in Europe than in the US or the rest of the world. European defense budgets are growing in response to the Russia-Ukraine war, drawing private capital.

Still, the vast majority of private equity defense investment targets North America. Deal activity has been spurred in part by a US pivot toward cheaper, reusable and AI-enhanced weapons, such as the autonomous drone technology being developed by Anduril Industries Inc.

A $2.50 billion funding round for Anduril, led by venture capital firm The Founders Fund LLC and T. Rowe Price Group Inc., was the eighth-largest private equity or venture capital deal in the industrial sector in 2025, according to Market Intelligence data. It was one of two aerospace and defense deals to rank in the top 10.

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Largest deals

The $28.22 billion acquisition of aircraft leasing company Air Lease Corp. ranked as the largest deal announced in 2025.

The company, now known as Sumisho Air Lease Corp., was acquired by an investor group including Sumitomo Corp., SMBC Aviation Capital Ltd., and private equity firms Apollo and Brookfield Asset Management Ltd.

The median deal size for a private equity or venture capital transaction in the industrial sector surged to $11.6 million in 2025, up from $7.2 million in 2024 and the highest median deal value recorded in five years, according to Market Intelligence data.

Core Industrial's May said the unsettled macroeconomic backdrop meant dealmakers were avoiding smaller industrial companies seen as less resilient in the face of tariffs and supply chain disruptions.