PE firms feasted on Europe’s depressed company valuations in 2024

Private equity giants are capitalizing on Europe’s economic challenges, scooping up major companies at lower valuations, according to data from Dealogic cited by the Financial Times. Large European buyouts worth more than USD 1 bn surged 78% y-o-y to USD 133 bn in 2024 — far outpacing the 29% growth rate across the rest of the world, where total large buyouts hit USD 242 bn. In contrast, smaller European transactions grew just 1% y-o-y, lagging behind the rest of the world’s 16% growth in this segment.

Why the boom? The combination of the greenback's strength and Europe’s depressed equity valuations has made the region a prime target for private capital. Despite Europe being “both fragmented and very diverse,” private equity firms can source “market-leading, but relatively under-the-radar, companies larger than USD 1 bn at a [markdown] to their peers in the US,” according to Alexis Maskell, IR Partner and Global Head at BC Partners.

Some of the heftiest buys of the year: Key transactions included a USD 6.9 bn takeover of UK trading platform Hargreaves Lansdown by an Abu Dhabi Investment Authority-led consortium, along with Thoma Bravo’s USD 5.5 bn acquisition of UK cybersecurity firm Darktrace and Brookfield’s USD 3.8 bn stake in French renewable energy player Neoen.

Where the action is: The UK and Nordic economies, along with Germany, have emerged as hotspots for private equity activity, particularly as other parts of the region grapple with weak growth forecasts, political turmoil and geopolitical threats, Neil Barlow, a partner at Clifford Chance told the salmon-colored paper.

Take-privates are on the up: European take-private transactions jumped 44% y-o-y to USD 52 bn last year, driven by stock market exits and private equity-led transactions. Many businesses are opting to delist in Europe and shift to the US or transition into private ownership.

MARKETS THIS MORNING-

Dampened expectations of the US Federal Reserve pushing ahead with further rate cuts are weighing on Asian markets this morning, with all major indexes trading lower this morning. Japan’s Nikkei is down more than 1% in early trading, while the Hang Seng Index is down 1.6%, Shanghai is down 0.3%, and Kospi is down 0.9%.

It’s similarly expected to be a sea of red once markets open in the US, with futures indicating that the Dow Jones, S&P 500, and Nasdaq will all come under some selling pressure.

THE CLOSING BELL-

The DFM fell 0.02% yesterday on turnover of AED 524.3 mn. The index is up 1.4% YTD.

In the green: Emirates Reem Investments Company (+4.1%), Al Mazaya Holding Company (+3.8%) and Aramex (+2.7%).

In the red: Taaleem Holdings (-2.4%), National International Holding Company (-2.3%) and Spinneys (-1.7%).

Over on the ADX, the index rose 0.4% on turnover of AED 951.3 mn. Meanwhile, Nasdaq Dubai rose 0.6%.