PitchBook, the premier data provider for the private and public equity markets, today released its 2020 Annual European PE Breakdown Report, which found European private equity (PE) dealmaking rebounded from COVID-19 pressures to record its third-highest annual value in over a decade.

After an initial pullback in Q2 2020, demand for new debt issuance and lofty dry powder levels encouraged sponsors to pursue acquisitions of discounted assets that were cyclically but not secularly under pressure. Managers moved quickly to close on assets that benefitted from the transition to a virtual workforce, leading to record deal volume in the information technology (IT) sector.

Fundraising also experienced a strong year, with capital raised hitting its second-highest value despite lower fund counts. Large, brand-name managers with long-standing LP relationships generally benefitted from the remote fundraising environment as allocators reupped with existing GPs. Unlike deal and fundraising numbers, exit activity was lethargic in 2020 as sponsors waited for a more sanguine environment to offload assets and managers opted to invest more into portfolio companies. However, exits are likely to bounce back later in 2021 as governments begin to loosen restrictions and SPACs become a meaningful liquidity path for European PE-backed companies.

“European private equity dealmaking proved to be incredibly robust and resilient, notching its fourth highest deal volume figure in 2020 after slumping over 30% year-over-year in Q2 when Europe was confronted with its worst economic outlook since the Great Depression,” said Dominick Mondesir, PitchBook EMEA Private Capital Analyst. “Looking to 2021, we expect the risk-on atmosphere paired with the record €294.0 billion in European PE dry powder will propel deal activity to a new high, epitomized by tight credit spreads, pent up demand, willing sellers and low interest rates. When analyzing previous downturns, it took managers around one year post-crisis to deploy capital at scale, and we expect outsized figures in 2021 to reflect that trend.”

Investment Activity

Exit Activity

Fundraising Activity

Source: Yahoo Finance