European private equity deal value declined 4.7% quarter-on-quarter and 2.8% year-on-year in Q3 2023, the data and research outfit Pitchbook stated in a new report on European private equity, published on 18 October (and which features Luxembourg’s Spuerkeess on the front cover). Exit value, however, continued to pick up, increasing 18.4% quarter-on-quarter.
Looking more closely at the grand duchy, “Luxembourg PE deal activity has already surpassed last year’s figure in terms of deal value,” said Nicolas Moura, EMEA private capital analyst at Pitchbook. “In terms of deal count, we could still have a record year depending on Q4. The biggest news in Q3 came from CVC which closed the largest ever buyout fund globally with Fund IX raising €26.0bn.” CVC Capital Partners in July 2023 raised €26bn for its new private equity fund.
Here are a few takeaways from the report.
Dealmaking down in Europe in Q3
European private equity deal value dropped in the third quarter of 2023 to reach €155.3bn. This figure is down 4.7% compared to Q2 2023 (€163bn) and down 2.8% when compared to Q3 of 2022 (€159.8bn), but it was still higher than pre-2020 figures, “indicating that there is some appetite for dealmaking, but it might be too soon to call it a recovery,” said Pitchbook in its PE report.
One of the largest quarterly declines was seen in France and the Benelux region, noted Pitchbook. The region saw deal value drop 30.1% quarter-on-quarter and 18.2% year-on-year. The UK and Ireland, on the other hand, re-took the top dealmaking spot.
But Luxembourg deal value could be on track for record
In Luxembourg specifically, private equity deal value dropped from €0.9bn in the second quarter of 2023 to €0.3bn in the third quarter.
However, comparing when comparing deal value in 2022 and 2023 to date, Luxembourg’s private equity deal activity has already surpassed last year’s figure with regard to deal value. Deal value stood at €1.5bn in 2022; as of 30 September 2023, that figure is €1.9bn. There were 21 deals in 2022, and there have been 19 deals as of 30 September 2023, noted Pitchbook.
More dealmaking in financial services
There was, moreover, higher dealmaking in the financial services sector, noted Pitchbook. The sector had a “record quarter with €29.4bn worth of deals, up 83.8% from a strong Q2 and up 244.4% y-on-y,” said the report. Deal value in the financial services sector stood at €50.4bn in 2022; as of 30 September 2023, that figure stands at €60.1bn.
“Roughly half of the deal value was accounted for by the top three deals, which included the partial sale of Worldpay in the UK, the acquisition of Degroof Petercam in Belgium, and sale of Prelios in Italy.” The report also noted that the acquisition of Degroof Petercam by Indosuez, a subsidiary of Crédit Agricole, in Q3 was for the amount of €1.6bn.
Exit value at European level is up
Exits continued to rise for the second consecutive quarter, noted Pitchbook, reaching €97bn in Q3 2023, and was driven by eight “mega-exits” of over €1bn. This is up 18.4% quarter-on-quarter (the figure for Q2 stood at €81.9bn).
“However, we remain cautious in calling the rebound because the data remains heavily skewed towards some very large exits, most notably the Arm IPO,” said Pitchbook in its PE report. “We also note that many European PE-backed companies, such as Planisware and DKV Mobility, have delayed plans to go public until 2024 given the current market conditions.”
The UK and Ireland have also regained the top spot in terms of exits--the region accounts for 37.7% of exit value year-to-date compared to 32.2% for France and Benelux year-to-date.
PE fund count, funds raised by region
As of 30 September 2023, the France and Benelux region count 21 PE funds (compared to 31 for 2022), but it had raised €42.7bn in 2023 so far (compared to €7bn in 2022).
Find Pitchbook’s Q3 2023 European Private Equity Breakdown report here.