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Private equity groups increased activity in Europe last year, taking advantage of the continent’s economic woes to snap up large companies at depressed valuations.
The total value of European deals worth more than $1bn has grown at more than twice the rate of the rest of the world, a Financial Times analysis of Dealogic data shows.
About $133bn of major deals were made on the continent by 2024, an increase of 78 per cent on the previous year. That compares with an increase of 29 per cent worldwide, to $242bn.
The data is the latest evidence that private equity firms are eating up Europe’s wealth low cost companies.
Major deals have included a $6.9bn consortium agreement for investment platform Hargreaves Lansdown and a $5.5bn deal with Thoma Bravo taking over private internet security company Darktrace in the UK, and firms including Brookfield have agreed to take a $3.8bn stake in French renewable energy producer Neoen.
A challenging economic outlook – with weak growth forecasts, political unrest and environmental threats – and the strength of the US dollar have encouraged US private equity funds to focus on certain countries within Europe, according to Neil Barlow, partner at law firm Clifford Chance.
“Some stable economies within Europe, such as the UK, the Nordics and Germany (have become) the main destination for private equity investors”, he said.
European stock exchanges, including the London Stock Exchange, are grappling with corporate migration, as companies move their listings to the US or go private with the support of buyout firms.
The value of Europe’s so-called private equity deals that involved a large sum of more than $1bn jumped 44 per cent to $52bn last year, data from Dealogic, which has 15 such transactions compared to 10 last year.
European stocks have traded at lower prices than those listed in the US over the past decade. But the gap is widening, with the Stoxx Europe 600 now trading at a record discount to the US S&P 500.
However, private individuals made up a smaller portion of the total gross sales in 2024 than the previous year.
There have been many large transactions where ownership has shifted between different private equity firms, or where there has been a shift in the ownership group of private equity firms.
In December, the investment arm of Goldman Sachs Asset Management has agreed a deal worth more than €2bn to acquire Dutch drug maker Synthon from UK buyout firm BC Partners.
Before 2024, Swedish buyout group EQT has agreed to sell a stake in schools business Nord Anglia to a consortium of investors that valued the business at $14.5bn, with EQT retaining control.
However, subcontracts increased more rapidly worldwide compared to Europe. Sales where the gross figure was between $50mn and $1bn grew just 1% in Europe last year, against 16 percent globally.
Richard Hope of independent marketing firm Hamilton Lane said it was “no surprise” that the continent had recorded slower growth than the rest of the world for small deals.
“The European volume market is an area of less than €1bn”, he said, adding that the lower end of the market was suffering from “strong winds in the region”.
Alexis Maskell of private equity firm BC Partners said that the European market was “very fragmented and diverse but . . . you can find a market leader, but relatively low on the radar, companies larger than $1bn”, often “at a discount to their US peers”.
Additional reporting by George Steer
