Brookfield is one of a number of private equity funds adopting a cautious approach to European deals, despite having ample cash, choosing to focusing on exit strategies before committing to new acquisitions, according to a report by Reuters.
European private equity-backed transactions are becoming more selective, with auction processes slowing and drawing fewer bidders. The report cites Stephen Pick, Barclays’ head of M&A in EMEA, as highlighting that to ensure viable exits, firms are increasingly divesting business divisions or taking partial stakes to make assets more marketable.
Private equity firms globally must address a two-fold challenge: deploying their substantial “dry powder” while managing a backlog of aging portfolio companies.
Deal values in Europe, the Middle East, and Africa (EMEA) reached $297bn in 2024, up 23% from 2023 but still far below the $509bn peak of 2021, according to Dealogic data. Simultaneously, equity capital markets remain subdued, with total share sales in the region hitting just $146bn this year – about half the 2021 volume.
For many large private equity-backed companies, public markets remain the primary exit strategy, given the limited appetite for mergers and acquisitions at scale.
For instance, Bain Capital and Cinven are preparing an IPO for German pharmaceutical firm Stada, valuing the company at €10bn ($10.5bn). Talks to sell the firm to financial sponsor GTCR stalled, highlighting the challenges of finding buyers for larger assets.
Despite challenges, private equity firms have made some notable exits. Switzerland’s Partners Group recently sold German metering company Techem to US-based TPG and co-investor GIC for €6.7bn.
