Private equity firms increased their activity in Europe last year, capitalising on the continent’s economic difficulties to acquire large companies at lower valuations, according to a report by the Financial Times.
Major transactions included a $6.9bn consortium deal for investment platform Hargreaves Lansdown, a $5.5bn buyout of cyber security company Darktrace by Thoma Bravo, and Brookfield’s $3.8bn investment in French renewable energy developer Neoen.
According to the FT’s analysis of Dealogic data, the total value of European buyout deals over $1bn rose more than twice as fast as those in other regions. In 2024, $133bn in large transactions took place in Europe, marking a 78% increase from the previous year, compared to a 29% rise globally, which amounted to $242bn.
These figures reinforce the trend of private equity firms capitalising on Europe’s abundance of undervalued companies.
A challenging economic environment, characterised by weak growth forecasts, political instability, and geopolitical risks, along with the strength of the US dollar, has driven US private equity funds to focus on certain European countries, according to Neil Barlow, 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 markets, including the London Stock Exchange, have struggled with an outflow of companies relocating to the US or going private with the help of buyout firms.
The value of European take-private deals worth over $1bn surged by 44% to $52bn in 2024, with 15 such transactions compared to 10 in the previous year, according to Dealogic data.
For the past decade, European stocks have traded at lower valuations than those in the US, but the gap has widened, and the Stoxx Europe 600 now trades at a record discount to the US’s S&P 500.
However, take-private deals made up a smaller portion of the total value of large buyout transactions in 2024 compared to the previous year.
Several significant deals have involved changes in ownership among private equity firms or shifts in the composition of investment consortiums.
In December, Goldman Sachs Asset Management’s investment division agreed to acquire Dutch drugmaker Synthon for over €2bn from UK buyout firm BC Partners.
Earlier in 2024, Swedish buyout firm EQT sold a stake in Nord Anglia, a schools business, to a consortium of investors who valued the business at $14.5bn, while EQT retained control.
Smaller deals saw faster growth globally than in Europe. Buyouts involving a majority stake worth between $50m and $1bn grew by only 1% in Europe in 2024, compared to 16% in other regions.
Hamilton Lane’s Richard Hope 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”.
BC Partners’s Alexis Maskell 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”.
