European private equity fundraising reached €118bn in the first half of 2024 and could be set for a record year, although there are signs a slowdown is due in the second half of the year, according to Preqin’s latest Alternatives in Europe 2024 report.
Preqin forecasts also highlight that capital targeting Europe is set to have lower growth from the end of 2023 to 2029 compared with North America. While Europe may lose ground to North America in future years from lower relative growth in assets under management (AUM), Preqin sees the growth profile of Europe as containing greater certainty, or lower risk, owing to the region’s broader exposure to the lower-risk asset classes: private debt and infrastructure.
As the European Central Bank’s policy rates start to fall in Europe, the report highlights the potential impact on private equity and private debt fundraising.
Looking to Europe-based private equity fundraising, fund managers raised €118bn in the first half of 2024. If the second half of the year were to replicate this pace, it would be a record year with €236bn secured, 30% higher than the previous record of €181bn in 2018.
European private equity’s success has been partly driven by Nordic-based managers who secured more capital in the first half of the year than in any other previous whole year. However, capital targeted by Europe-based private capital funds in market dropped in the first half of the year, from €812bn to €760bn, mainly driven by a decline in private equity funds. As fewer mega funds are raising in that asset class, fundraising’s pace may slow in the second half of 2024.
Europe-based private debt fundraising meanwhile, decelerated with €14bn raised in the first half of 2024, compared to €103bn cumulatively in 2022 and 2023. In the first half of 2024, UK-based private debt funds raised €6.9bn, West Europe-based managers €5.3bn, and Nordic-based managers €1.7bn.
Preqin’s data also shows that Europe’s share of alternatives AUM was almost €3.3tn, or 20.9%, of the global total, by the end of 2023 – the latest data available. Based on Preqin’s most recent forecast for the global alternatives industry, Europe’s share of AUM is expected to contract to 20%, or €5.5tn, by 2029 due to lower forecast performance and a slower pace of fundraising compared to North America, the dominant region.
While European AUM growth may be lower than North America, the region demonstrates a lower-risk AUM profile, with higher shares of private debt (15.3% of Europe’s private capital AUM) and infrastructure (18.9% of Europe’s private capital AUM) compared with North America’s 12.4% and 7.5%, respectively.
