For data and research company Pitchbook, the best word to describe the trends in private equity in 2023 would be “resilience.” Deal value went down by 26.5% year-on-year, noted the firm’s 2023 European Private Equity Breakdown , but deal count increased 4.4%.
Deal value, moreover, was still “10 to 20% higher” than pre-2021 levels, showing the resilience of the asset class, said Pitchbook. Here are a few takeaways from the report.
27 deals, €1.7bn for Luxembourg
In the grand duchy, private equity saw a record year. “Luxembourg saw a record amount of deals in 2023, with 27 deals worth some €1.7bn, up from 23 deals worth €1.0bn in 2022,” said Nicolas Moura, EMEA private capital analyst at Pitchbook.
France, Germany and the UK did not see an increase in deal count, as Luxembourg did. However, Europe as a whole did see more PE deals in 2023 than in 2022, said Pitchbook data, with an estimated deal count for last year coming to 7,590.
The number and amount of mega-deals in Europe decreased last year and was at its lowest since 2014, said the report. In 2023, there were 42 mega-deals for a deal value of €105.1bn.
A closer look at deal value
“Although we saw a record figure in deal count, this was not the case for deal value, which was still well off the €8.5bn seen in 2018 (when AccorHotels sold 55% of AccorInvest to a consortium of investors for €4.6bn),” commented Moura. “In 2023, the largest PE deal in Luxembourg saw RM2, a pallet pooling and logistics company, receive $150m in funding from US-based Orion Infrastructure Capital.”
Looking at some neighbours and competitors, however, Luxembourg does remain behind France, Germany and the United Kingdom in terms of deal value. “The UK and Ireland continued to dominate dealmaking in 2023, accounting for 30.1% of deal value, followed by France and Benelux with 22.7% of deal value,” said Pitchbook in its report.
In Europe overall, deal value dropped from €572.1bn in 2022 to €420.5bn in 2023. It remained higher, however, than the deal value in 2020 (€341.8bn), 2019 (€405.7bn) and 2018 (€370.5bn).
€46.7bn of deal value for financial services
The financial services sector is the only sector in Europe that grew in terms of deal value last year, noted Pitchbook. Deal value in the sector increased from €38.1bn in 2022 to €46.7bn in 2023--that’s year-on-year growth of 22.7%. Notable events in the banking sector include the (later in the US and HSBC in the UK) and the collapse of Credit Suisse (later ), said the report.
In the asset management sector, , CRUX Asset Management, Gresham House, and IO Asset Management were all acquired, and Pitchbook’s report said they expected to see this trend of buyouts to continue into 2024.
In addition, higher interest rates can contribute to lower valuations, and many companies whose share prices fell in 2022 (such as Software AG or Kahoot!) were taken private, said Pitchbook. 2023 saw a number of take-privates in Europe--51, up from 41 in 2022. The information technology sector had with the most take-privates in 2023--15, an increase from 12 the year before, noted the report.
Fundraising outlook
Nearly €120bn in new capital was raised last year, said Pitchbook, which expected 2023 to be a record year for fundraising in Europe. However, it also said that it expects fundraising to slow in 2024 and for the concentration in megafunds to increase. “The current macroeconomic climate makes it difficult for first-time managers to raise funds, and we expect this to continue being the case in 2024,” said the report.
Find Pitchbook’s full 2023 European Private Equity Breakdown report .