Private equity has targeted Europe for large acquisition deals

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Private equity groups have ramped up activity in Europe over the past year, taking advantage of the continent’s economic woes to snap up large companies at inflated valuations.

The total value of European buyout deals worth more than $1 billion is double that of the rest of the world, according to a Financial Times analysis of DeLogic data.

In the year A total of $133 billion in major deals will take place on the continent by 2024, a 78 percent increase over the previous year. That compares to a 29 percent increase in the rest of the world, to $242 billion.

The data is the latest evidence that private equity firms are eating up Europe’s wealth. Cheap companies.

Large Transactions a 6.9 billion dollars Mutual agreement for investment platform Hargreaves Lansdown and A 5.5 billion dollar deal Companies including Brookfield have agreed to take a $3.8 billion stake in French renewable energy developer Neon, according to Thoma Bravo.

A challenging economic outlook — weak growth forecasts, political turmoil and geopolitical risks — and the strength of the U.S. dollar has encouraged U.S. private equity funds to focus on certain countries in Europe, said Neil Barlow, a partner at law firm Clifford Chance.

Some stable economies in Europe, such as the UK, the Nordics and Germany, have become focal points for private equity providers,” he said.

European stock exchanges, including the London Stock Exchange, have struggled with exits as companies move their listings to the U.S. or are backed by buyout firms.

Most of the shares worth more than $1 billion rose 44 percent to $52 billion in European private equity deals, compared with 15 such deals last year, according to Dialogic data.

European stocks have traded lower than those listed in the US for the past decade. But the gap has widened, and the Stoxx Europe 600 now trades at a steep discount to the US S&P 500.

But private equity accounted for a smaller share of the total value of large acquisition deals in 2024 compared to the previous year.

There have been a number of large transactions where ownership has been flipped between different private equity firms or combinations of private equity owners have changed.

Investment arm in December Goldman Sachs Asset Management has agreed a deal in excess of €2bn. to acquire Dutch drugmaker Synthon from UK buyout firm BC Partners.

Earlier in 2024 A Swedish buyout group has agreed to sell EQT. In the schools business, Nord Anglia has a stake in a consortium of investors that values ​​the business at $14.5 billion, while EQT retains control.

Compared to Europe, smaller deals have increased faster in the rest of the world. Most share buybacks valued between $50mn and $1bn grew by just 1 per cent in Europe last year, compared with 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 seen slower growth than the rest of the world with smaller deals.

“The volume market in Europe is below €1bn,” he said, adding that the lower end of the market is suffering from “macro headwinds in the region”.

Alexis Maskell, of private equity firm BC Partners, said that while the European buying market is “fragmented and very diverse . . . You can find companies over $1 billion, especially the market leader “at a discount to their peers in the US.”

Additional reporting by George Steer