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Private equity groups ramped up activity in Europe last year, taking advantage of the continent’s economic woes to snap up big companies at depressed valuations.
The total value of European buyout deals worth more than $1bn increased at more than twice the rate of the rest of the world, a Financial Times analysis of Dealogic data shows.
Some $133bn of large deals were struck on the continent in 2024, a 78 per cent increase on the previous year. That compared with a 29 per cent increase in the rest of the world, to $242bn.
The data are the latest evidence that private equity firms are feasting on Europe’s wealth of cheap companies.
Big transactions included a $6.9bn consortium agreement for investment platform Hargreaves Lansdown and a $5.5bn deal by Thoma Bravo to take private cyber security company Darktrace in the UK, and firms including Brookfield agreeing to take a $3.8bn stake in the French renewable energy developer Neoen.
A challenging economic outlook — with weak growth forecasts, political turmoil and geopolitical threats — and the strength of the US dollar has encouraged US private equity funds to target specific countries within Europe, according to Neil Barlow, a partner at law firm Clifford Chance.
“Certain more stable economies within Europe, such as the UK, the Nordics and Germany [have become] a focal point for private capital providers”, he said.
European stock exchanges, including the London Stock Exchange, have been grappling with an exodus of companies, as businesses relocate their listings to the US or go private with the backing of buyout firms.
The value of European so-called take-private deals which involved a majority stake of more than $1bn jumped by 44 per cent to $52bn last year, the Dealogic data show, with 15 such deals compared with 10 the year before.
European equities have traded at lower valuations than those listed in the US for the past decade. But the gap has been widening, and the Stoxx Europe 600 now trades at a record discount to the US’s S&P 500.
However take-privates made up a smaller proportion of the total value of big buyout deals in 2024 than the year before.
There have been a number of big transactions where ownership has flipped between different private equity firms, or where the composition of a consortium of private capital owners has shifted.
In December, the investment arm of Goldman Sachs Asset Management agreed a more than €2bn deal to acquire Dutch drugmaker Synthon from UK buyout firm BC Partners.
Earlier in 2024, Swedish buyout group EQT agreed to sell a stake in schools business Nord Anglia to a consortium of investors who valued the business at $14.5bn, while EQT retained control.
Smaller deals did increase faster in the rest of the world compared with Europe, however. Buyouts where the majority stake was worth between $50mn and $1bn grew only 1 per cent in Europe last year, against 16 per cent in the rest of the world.
Richard Hope of private markets firm Hamilton Lane said it was “no surprise” that the continent had recorded slower growth than the rest of the world for smaller deals.
“The volume market in Europe is the sub-€1bn space”, he said, adding that the lower end of the market was suffering from “the macro headwinds present in the region”.
Alexis Maskell of private equity firm BC Partners said that the buyout market in Europe was “both fragmented and very diverse but . . . you can source market leading, but relatively under-the-radar, companies larger than $1bn”, typically “at a discount to their peers in the US”.
Additional reporting by George Steer
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