PE Deals on Rise in Europe’s Financial Services

Private Equity (PE) deal value for Europe’s financial services sector grew more than 20% y-o-y in the first quarter of this year, with the past 12 months seeing a surge of investment in the industry, according to PitchBook, the leading resource for comprehensive data, research, and insights spanning the global capital markets.

In the first three months of 2025, around $8.4 billion was invested in financial services in Europe, compared with $7.25 billion during the same period a year ago. However, this was across just 101 deals, the lowest deal count since Q3 of 2021.

Much of the investment was in the asset management industry, with four out of the ten largest deals in Q1-2025 happening in the sector.

The Canadian pension fund British Columbia Investment Management‘s $1.4 billion take-private of infrastructure investor BBGI Global Infrastructure in February was the largest deal both in asset management and financial services.

Africa-focused investor AgDevCo also received $85 million in development capital from Norfund, Swedfund International and British International Investment in February, PitchBook said.

Asset manager deals also took up almost half of the ten largest deals in financial services last year. The biggest transaction was the $7.16 billion take-private of UK-listed Hargreaves Lansdown in August last year by a consortium including CVC Capital Partners, Nordic Capital and Abu Dhabi Investment Authority.

It will take longer to ascertain how the recent market turmoil will impact PE deals in European financial services, for example, having a weak dollar for a long period can lower US investors’ appetite in European assets, PitchBook said.

China’s PE Market

After two consecutive years of decline, the private equity (PE) market in Greater China showed tentative signs of recovery in 2024, according to Bain & Company’s latest Greater China Private Equity Report.

Overall deal value experienced a modest rebound of 7% to $47 billion in 2024 compared to the previous year, supported by a rise in mega transactions exceeding $1 billion.

The uptick in deal value is largely attributed to the resilience of buyout deals, whose average sizes increased significantly, as investors navigated a market reshaped by geopolitical uncertainty and persistent macroeconomic headwinds.

Growth deals still dominated the market by volume, but buyouts emerged as a more influential driver of value creation, accounting for 29% of total deal value, the highest ever recorded.

Hao Zhou, head of Bain’s Greater China PE Practice, said that the strategic pivot by general partners (GPs) from traditional growth capital plays towards buyouts was driven by several factors.

They included slower economic growth, increasing installed base of PE owned companies leading to more buyout opportunities, and founders prioritizing professional management and scalability, leading to a more open attitude towards buyouts and moving forward, this would be an interesting trend to watch, he said.

Investment activity showed a clear difference in strategy between USD-denominated and RMB-denominated funds. USD GPs focused on defensive, traditional sectors such as healthcare, services, and retail.

In contrast, RMB GPs doubled down on national-priority industries such as semiconductors and electric vehicles. The report found that government affiliates have doubled their deal activities last year compared to the previous five-year (2018-2023) average.

Global GPs, on the other hand, saw a sharp decline in deal activity representing just 6% of total deal value in 2024 compared to 24% in the previous five-year average. Domestic GPs’ contribution to total deal value also dropped slightly, mostly due to decreased investment in USD-denominated funds, while they remain stable in RMB deployment.

Deal exits plunged further in 2024 driven by a lackluster IPO market. Shrinking exit channels and inconsistent returns added challenges to the market. Fundraising in Greater China-focused funds remained muted and concentrated towards top funds.

The top 10 GPs accounted for about 70% of fundraising in 2024 compared to 30% in 2020. Large GPs’ proven track record and operational expertise make them more attractive in the selection.