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Private equity groups increased their activity in Europe last year, taking advantage of the continent's economic problems to snap up major companies with low valuations.
The total value of European buyouts worth more than $1 billion has increased at more than double the rate of the rest of the world, a Financial Times analysis of Dealogic data shows.
Major deals worth $133 billion were concluded on the continent in 2024, an increase of 78 percent on the previous year. This 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 feasting on Europe's wealth Cheap companies.
Large transactions included a $6.9bn Consortium agreement for investment platform Hargreaves Lansdown and A deal worth $5.5 billion by Toma Bravo to acquire private cybersecurity firm Darktrace in the UK, and companies including Brookfield have agreed to take a $3.8 billion stake in French renewable energy developer Neoen.
The challenging economic outlook – with weak growth forecasts, political turmoil and geopolitical threats – and the strength of the US dollar have encouraged US private equity funds to target specific countries within Europe, according to Neil Barlow, a partner at law firm Clifford Chance.
“Some of the more stable economies within Europe, such as the UK, the Nordic countries and Germany (have become) a focal point for private capital providers,” he said.
European stock exchanges, including the London Stock Exchange, are facing difficulties in dealing with the exodus of companies, as companies move their listings to the United States or go private with the support of buyout companies.
The value of so-called European private equity deals that included a majority stake of more than $1 billion jumped 44 percent to $52 billion last year, Dealogic data shows, with 15 such deals compared to 10 the previous year.
European stocks have traded at lower valuations than those listed in the United States over the past decade. But the gap has been widening, and the STOXX Europe 600 now trades at a record discount to the S&P 500 in the United States.
However, private sector acquisitions accounted for a smaller proportion of the total value of large acquisition deals in 2024 than the previous year.
There have been a number of large transactions where ownership has flipped between different private equity firms, or where the composition of the consortium of private capitalists has changed.
In December, the investment arm of Goldman Sachs Asset Management has agreed to a deal worth more than two billion euros To acquire Dutch pharmaceutical company Synthon from British buyout firm BC Partners.
Earlier in 2024, Swedish buyout group EQT has approved the sale A stake in schools business Nord Anglia was transferred to a consortium of investors who valued the company at $14.5 billion, while EQT retained control.
However, small deals have increased faster in the rest of the world than in Europe. Acquisitions in which the majority stake was worth between $50 million and $1 billion rose just 1 percent in Europe last year, compared to 16 percent in the rest of the world.
Richard Hope, of private markets firm Hamilton Lane, said it was “not surprising” that the continent was growing slower than the rest of the world for smaller deals.
“The market size in Europe is less than a billion euros,” he said, adding that the lower end of the market was suffering from “the overall headwinds that exist in the region.”
Alexis Maskell, of private equity firm BC Partners, said the buyout market in Europe is “very fragmented and diverse, but… you can take on market-leading, but relatively unknown, companies larger than $1 billion, usually” at a discount compared to with its counterparts in the United States.
Additional reporting by George Steer
