Private equity targets Europe for big buyout deals

Stay informed with free updates

Just sign up Financial: myFT Digest – delivered straight to your inbox.

Private equity groups have ramped up activity in Europe in the past year, taking advantage of the continent’s economic woes to snap up large companies with depressed valuations.

At more than $1 billion, the total value of European buyout deals grew more than twice that of the rest of the world, a Financial Times analysis of Dealogic data shows.

About $133 billion in major deals were made in the continent in 2024, up 78 percent from last year, compared with a 29 percent increase in the rest of the world to $242 billion.

The data is the latest evidence that private equity firms are basking in Europe’s wealth cheap companies.

Major transactions include a $6.9 billion Consortium Agreement for Investment Platform Hargreaves Lansdown et al A $5.5 billion deal By Thomas Bravo UK-based private cyber security firm Darktrace and firms including Brookfield agree to take a $3.8 billion stake in French renewable energy developer Neoen.

A tough 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 certain countries in Europe, said Neil Barlow, partner at law firm Clifford Chance.

“In Europe, some of the more stable economies like the UK, the Nordics and Germany [have become] a focal point for private equity providers,” he said.

European stock exchanges, including the London Stock Exchange, are grappling with outflows as companies move their listings to the U.S. or with the support of private buyout firms.

The value of European so-called take-private deals, which involved majority stakes of more than $1 billion, rose 44 percent to $52 billion last year, Dealogic data showed, with 15 such deals, up from 10 last year. compared to

European stocks have traded at lower valuations than those listed in the U.S. But the gap is widening, with the Stoxx Europe 600 now trading at a record discount to the U.S. S&P 500.

However, take-privates accounted for a smaller share of the total value of large buyout deals in 2024 than the year before.

There have been a number of large transactions where ownership has changed between different private equity firms, or where the composition of the consortium of private equity owners has changed.

investment arm in December Goldman Sachs Asset Management has agreed to a deal worth more than 2 billion euros to acquire the Dutch drug maker Synthon from the British company BC Partners.

Earlier, in 2024 Swedish buyout group EQT has agreed to sell A stake in Nord Anglia’s schools business to a consortium of investors who valued the business at $14.5bn, while EQT retained control.

However, smaller deals grew faster in the rest of the world than in Europe.Buying, where most stocks were 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 had seen slower growth than the rest of the world for smaller deals.

“Europe’s volume market is a sub-€1 billion area,” he said, adding that the lower end of the market was suffering from “macro headwinds in the region.”

Alexis Maskell of private equity firm BC Partners said the buyout market in Europe is “both fragmented and very diverse, but . . . You can acquire market-leading, but relatively under-the-radar, over $1 billion companies,” usually “at a discount to their US peers.”

Additional reporting by George Ster