“The confidence of champions
and a competitive year ahead”

Focus by regions :

FRANCE

SPAIN

ITALY

UK

BENELUX

Survey conducted with the support of:

Key findings:

  • PE professionals are newly sensitive to macro-economic risks with inflation, interest rates and climate risks at the top of the list, but topics such as Brexit and populism easing.
  • A crowded fundraising pipeline and stretched valuations are at the forefront of industry participants’ minds.
  • The positive environment especially for deals is expected to continue in 2022 with more cross-border transactions and more exits expected.
  • The two top To-Do’s for the industry are ESG against the backdrop of higher LP expectations and finding new talent in a crowded market.

The results of IPEM’s 4TH ANNUAL PAN-EUROPEAN PRIVATE EQUITY SURVEY reflects the 2022 prospects, goals and fears for the European GPs.

The overall picture for the industry remains very positive despite the environment for inflation, interest rates, valuations and ESG requirements changing rapidly and political uncertainties on the rise. The survey was conducted with the support of 14 national private equity associations from across Europe. In total, 190 interviews were completed online between the 9th of November 2021 and 31st of January 2022 by the CSA institute

Antoine Colson, IPEM CEO and Managing Partner commented: “From the findings it clear, that Europe’s GPs are not expecting to rest on their laurels. They came through the pandemic with often very impressive returns, but the macro environment and the much higher demand for accountability and actions on the ESG front will mean new challenges. Even if the pandemic is on the way out, finding investment opportunities at solid valuations could get a lot more challenging. For fundraising, a record number of GPs are looking to raise funds and many new funds are being launched against the backdrop of a not significantly larger pot of investable LP money. 2022 will be another exciting year for all.

For the first time in a while: macro-risks are back!

  • Inflation (mentioned by 64%) and the rising interest rates (42%) are the top concerns for European GPs this year…
  • Climate change related risks are increasingly watched by respondents (mentioned by 35%) which is an accelerating trend continuing since our first survey in 2019.
  • On the plus side worries over Brexit, trade wars, populism are receding.

Despite this cloudy / uncertain situation do participants expect the business environment for 2022 to be rather positive:

  • Only 21% of respondents expect another economic correction this year, while many expect that the post-covid recovery is already ‘baked-in’.

The fundraising landscape is very hot and crowded!

  • Never have so many European GPs been in the market to raise funds with 67% looking to raise a new fund and 54% looking to raise a larger than the previous ones.
  • 46% of GPs expect to launch new strategies.
  • On top of that, 67% of European fund managers expect the number of GPs to increase in 2022.
  • There is a lot of choice for LPs and competition is expected to be stiff especially as the amount of capital expected to be deployed in most categories by LPs is not expected to significantly increase! Not all funds may be able to complete at their set targets on within the planned time frame.

Valuations are stretched, and the industry is worried about them

  • 91% of European GPs mention high valuations as a top risk for the industry. This is a record level and a sharp jump from 2021 and the years before. And the expectation is that the valuations of target companies will increase further for 60% of respondents…
  • It is therefore no surprise that 42% of GPs believe that it will be harder to find attractive investment opportunities with an unsurprising explanation believed to be behind this trend: the appetite for acquisitions is concentrated in some sectors.

Deal activity continues apace! Expect more exits and cross-border deals…

  • 62% of European GPs expect to invest more in 2022 than in 2021; and 86% see 2022 as a good year for deal making (which is a record percentage), with a similar 83% of respondents (vs 67% in 2021) for exits.

ESG now is the industry’s top priority and voicing positive contribution remains paramount

  • ESG is mentioned as GPs’ top priority by 72% (a dramatic increase from 2019, when it was only mentioned by 36%) … and is also viewed to be the area facing most scrutiny from LPs at 79%.
  • Interestingly, against this backdrop, there is a sense that the impact investing craze is fading a little (only 16% of respondents plan to launch an impact strategy in 2022)

Talent attraction and diversity representation are important challenges for European GPs and PE overall…

  • HR and Talent management is the PE sector’s #2 priority this year
  • 82% of European GPs plan to recruit while 75% find it generally difficult to hire new talent. 80% will try and recruit at junior/intermediate and 66% at mid- and senior level.

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10 May 2022

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Survey conducted with the support of:

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