The Insight: State of the European Private Equity Industry 2023 (Invest Europe)

Summary

• Invest Europe's preliminary data shows European private equity funds raised €33 billion in the first half of 2023, representing a 63% decline compared to the prior six months.p.6
• European capital under management reached a record level of more than €1 trillion, including dry powder of €348 billion.p.11
• 74% of surveyed GPs believe that a strong approach to ESG will be critical for private equity firms to differentiate themselves in attracting capital over the next two to three years.p.8
• Digitalization was ranked by 65.0% of GPs as the most important operational improvement initiative for portfolio companies.p.21

Key insights

1. European PE fundraising fell 63% half-on-half to €33 billion in H1 2023 due to high inflation, rising interest rates, and reduced exit distributions.p.6
2. LP allocation sentiment remains resilient, with almost nine out of 10 LPs expecting their private equity commitments to stay the same or increase over the next three years.p.7
3. 85% of fund managers are interested in raising capital from ultra-high-net-worth individuals, while 51% are targeting mass-affluent investors.p.7
4. European private equity holds €348 billion in dry powder out of a total record €1,004 billion in capital under management.p.11
5. Renewable energy tops sector attractiveness for future deployment, with 60.2% of GPs expecting higher activity levels.p.12
6. Over 60% of GPs and LPs identify higher inflation as the single most negative factor affecting business operations and performance.p.16
7. Implementation of the Sustainable Finance Disclosures Regulation is driving LP expectations, with 58.7% of GPs reporting pressure to register funds under Article 8 or Article 9.p.18