A new PitchBook report on the outlook for private capital in the Europe, Middle East and Africa region focuses mostly on private equity and venture capital, highlighting some interesting trends in this area. It voices “cautious optimism” for the year ahead in private equity, driven by some solid successes in buyout fundraising, including the closure of Stockholm-headquartered EQT’s EQT X fund at US$24 billion and Partners Group Direct Equity V at $15.4 billion.
This should facilitate big-ticket dealmaking in the year ahead, further driven by easing interest rates, which should allow more favourable leverage terms. Corresponding deals already seen in 2024 include ADIA, CVC Capital Partners and Nordic Capital’s $6.57 billion acquisition of UK private investment provider Hargreaves Lansdown plc, and Apollo Global Management’s $4.05 billion acquisition of units of gaming equipment maker and content provider International Game Technology Plc.
However, PitchBook’s analysis indicates that such big-ticket deals will continue to face difficulties in finding exits, propelling a notable trend of general partner-led secondary sales to other funds in lieu of listings or trade sales.
Secondary buyouts have long attracted scepticism given the less obvious opportunities for value enhancement when one private equity fund sells to another, and this trend in exits will do little to reassure investors.
PitchBook points to some $44.7 billion of secondary exit value achieved in 2023, eclipsed by around $47.3 billion already achieved in 2024 as of end-October. According to the report, GP-led secondary exit value has more than doubled over the past five years.
That said, PitchBook’s analysis also emphasises that “IPOs are still regarded as the holy grail of exits by sponsors”, and with a continuing dearth of flotations and high-value trade sales, expectations around private equity’s ultimate capacity to return value to its institutional backers will continue to be disappointed.
Meanwhile, PitchBook highlights an interesting trend in fundraising for private markets across the Middle East. After a bumper 2023 which saw some $37.1 billion raised for the region’s private markets, the highest ever over the past ten years, the amount in 2024 dipped to just $14.3 billion as of end-November.
The report predicts fundraising will rebound to over $20 billion in 2025, driven by favourable government policies and gradual maturation of the region’s capital markets. The shift of more and more of the region’s considerable capital stocks into private markets will be an important trend to watch in the years ahead.
Note to readers: This blog has shifted from coverage of just private equity to private capital across sub-asset classes. This scope of coverage aims to highlight the impact of the parallel structures and characteristics of investor demand across private markets.
