According to Preqin's Alternatives in Europe 2024 report, European private equity funds raised €118 bn in the first half of 2024, potentially setting a new annual record. However, there are signs of a slowdown in the second half of the year.
While Europe may lag behind North America in terms of overall asset under management growth from 2023 to 2029, Preqin suggests that its investment landscape offers a more stable and less risky environment due to its greater exposure to private debt and infrastructure.
As the European Central Bank begins to ease its monetary policy, the report underscores the potential impact on fundraising for both private equity and private debt.
Europe-based private equity fund managers have raised €118 bn in the first half of 2024. If this pace continues, the total fundraising for the year could surpass the previous record of €181 bn set in 2018 by 30% to €236 bn.
Nordic-based managers have played a pivotal role, securing more capital in the first half of 2024 than in any entire previous year. However, a decline in private equity funds has led to a decrease in capital targeted by Europe-based private capital funds from €812 bn to €760 bn. As the number of large-scale funds being raised diminishes, the fundraising pace may slow down in the second half of the year.
Fundraising for European private debt funds has experienced a significant slowdown, with only €14 bn raised in the first half of 2024, compared to the €103 bn raised cumulatively in 2022 and 2023. UK-based private debt funds secured €6.9 bn, while West European and Nordic-based managers raised €5.3 bn and €1.7 bn, respectively.
According to Preqin, Europe's share of global alternative assets under management decreased from 20.9% (€3.3 tn) at the end of 2023 to 20% (€5.5 tn) by 2029. This decline is attributed to lower projected performance and a slower fundraising pace compared to the dominant region, North America.
Although Europe's growth in AUM may be slower than North America, it offers a less risky investment environment. This is reflected in its higher allocations to private debt (15.3%) and infrastructure (18.9%) compared to North America's 12.4% and 7.5%, respectively.
Alex Murray, VP, head of Real Assets, Research Insights at Preqin, commented: ‘The anticipated reduction in interest rates is a driver of both the acceleration of private equity and deceleration of private debt given their contrasting prospects in a looser monetary policy environment. The fervor for private debt seen over recent years may be showing signs of slowing down in Europe, in line with market expectations for prompter rate cuts compared with North America.’
