NCG
Dec 20, 2024
Executive Summary
European private markets demonstrated robust recovery in Q4 2024, buoyed by declining interest rates, improved investor sentiment, and a resurgence in dealmaking. Private equity and venture capital activity surged, with notable growth in investments, exits, and fundraising. While challenges persist in certain sectors and regions, the asset class continues to outperform public markets, underscoring its role as a cornerstone of Europe’s economic growth.
Key Market Highlights
Private equity and venture capital firms invested €126 billion in Europe in 2024, a 24% year-on-year increase and the third-highest annual total on record. Buyout activity drove this growth, rising 42% to €87 billion—just shy of 2021’s record levels.
Exit values jumped 45% to €46 billion, with sponsor-to-sponsor deals dominating (44% of total exit value). Larger exits returned in Q4, averaging €222 million per transaction—surpassing both 2024’s annual average and the five-year benchmark.
Funds raised €120 billion in 2024, marking the eighth consecutive year above €100 billion. Venture capital fundraising surged 43% to €22 billion, reflecting strong appetite for high-growth sectors.
Private debt issuance for leveraged buyouts (LBOs) grew in Europe, with direct lending spreads compressing to 550 basis points over base rates. Over €620 billion in high-yield bonds and loans maturing in 2026–2027 signals future refinancing opportunities.
Sector Trends:
Information and communications technology (ICT) accounted for 32% of total investments, while biotech and healthcare represented 14% of capital deployed. Venture capital investment in these sectors rose 26% to €18 billion.
Undervalued public companies drove a wave of take-private transactions, particularly in the UK. Notable deals included Thoma Bravo’s £4.2 billion acquisition of Darktrace and Hargreaves Lansdown’s £5.4 billion buyout.
Managers increasingly targeted special situations and distressed assets, leveraging refinancing needs and geopolitical uncertainties to identify credit opportunities.
Regional Trends
Region | Key Developments |
UK & Ireland | Led Europe with a 23% YoY deal increase, driven by take-privates and LBOs. Exit activity rose 34%. |
France & Benelux | Accounted for 30% of European fundraising, though deal volumes dipped post-2021 peaks. |
DACH & Nordics | Sustained growth in mid-market buyouts, with private credit filling financing gaps left by traditional lenders. |
Macroeconomic Drivers
Monetary Policy Shifts: ECB rate cuts and softer inflation (1.8% in Q4) improved financing conditions, though sticky services inflation and wage growth posed risks.
Public Market Contrast: European private companies outperformed public counterparts, with the Lincoln Private Market Index delivering an 11.1% CAGR since 2020 vs. 3.4% for the STOXX 600.
PO Market Revival: European IPOs increased to 211 in 2024 (up from 154 in 2022), though activity remained concentrated in high-growth sectors like tech and healthcare.
Outlook:
Continued Momentum: Interest rate cuts and ample dry powder (~€156 billion raised in 2024) are expected to sustain deal flow into 2025, particularly in mid-market buyouts and venture capital.
Risks Ahead: Refinancing pressures (2026–2027 maturities), geopolitical volatility, and valuation mismatches in hot sectors like AI and biotech could temper growth.
Opportunities: Private credit solutions, secondary transactions, and cross-border partnerships will likely dominate strategies as managers seek to deploy capital efficiently.
Norden Capital Group remains at the forefront of European private markets, delivering actionable insights and strategic guidance to navigate this dynamic landscape.
Disclaimer:
This analysis reflects the opinions of our firm and is not intended as investment advice. We focus solely on providing insights based on current market conditions and do not manage assets or offer investment advice. Investors should conduct their own research and consider their financial situation before making any investment decisions.
Sources: Invest Europe, McKinsey, EY, Preqin, Lincoln International