European private equity fundraising is poised to set a new record in 2024, with €118bn raised in the first half of the year, according to a report by alternative assets data provider Preqin. If this momentum continues, the annual total could reach €236bn, a 30% increase from the previous high of €181bn in 2018. However, signs of a potential slowdown in fundraising have emerged, casting doubt on whether the current pace can be sustained into the second half of the year.
The report, titled Alternatives in Europe 2024, highlights that European private equity’s growth has been partly driven by Nordic fund managers, who secured more capital in the first half of 2024 than in any previous full year. Yet, despite this positive start, the overall amount of capital targeted by Europe-based private funds dropped from €812bn at the start of 2024 to €760bn by mid-year, largely due to a slowdown in private equity funds. With fewer large funds seeking capital, there are concerns that the second half of 2024 may not match the record-breaking figures of the first six months.
Preqin’s report also explores the broader outlook for Europe’s alternative assets, predicting that capital targeting the region will see slower growth compared with North America through 2029. While Europe may fall behind in terms of asset growth, the report suggests that the region’s emphasis on lower-risk asset classes—such as private debt and infrastructure—could provide greater stability in uncertain economic times. Private debt accounts for 15.3% of Europe’s private capital assets under management (AUM), while infrastructure represents 18.9%, both higher proportions than in North America.
Preqin’s VP and Head of Real Assets, Alex Murray, commented on the shifting dynamics in Europe’s private markets, noting that the expected reduction in interest rates by the European Central Bank could further benefit private equity. “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,” said Murray.
The report reveals that private debt fundraising has decelerated significantly in 2024, with only €14bn raised in the first half of the year, compared to a total of €103bn over 2022 and 2023. UK-based private debt funds raised €6.9bn, while managers in Western Europe secured €5.3bn, and Nordic managers raised €1.7bn.
Preqin’s forecast projects that Europe’s share of global alternative assets AUM, which stood at €3.3tn by the end of 2023, will decline to 20% by 2029, down from 20.9%. This contraction is expected as a result of slower fundraising and lower performance compared with North America.
The report also points out a growing trend of buyout discounts in Europe compared with North America. Between 2018 and 2023, European buyout deals consistently traded at an average discount of 9.8%, with even larger discounts seen in the information technology and industrial sectors.
Despite some of these challenges, Preqin notes that the launch of European Long-term Investment Funds (ELTIFs) and UK-specific Long-term Asset Funds (LTAFs) has helped expand access to alternatives for high-net-worth individuals. By August 2024, 125 ELTIFs had been launched, with the majority domiciled in Luxembourg, followed by France, Italy, Ireland, and Spain. For more information visit www.preqin.com.