European private equity has a long history of outperformance in challenging environments. Despite the current geopolitical and macroeconomic tumult, LPs should be prepared to maintain the momentum of their investment programmes, write Amy Carroll and Adam Le

Despite a record year for private equity fundraising in 2021, the European private equity sector is now facing a slowdown due to high inflation, rising interest rates, and geopolitical instability, particularly the war in Ukraine. While US and Asian investors are hesitant, European investors continue to invest, recognising Europe's historical resilience in low-growth environments. The mid-market remains relatively stable with financing availabile, though more expensive. High-net-worth individuals are showing increased interest in private equity as institutional investment wanes. The sector is also adapting to new sustainability regulations and focusing on diversity. Private equity is expected to find opportunities in adversity, leveraging market dislocation and lower valuations for strategic acquisitions.

Published in Private Equity International, December 22/Jan 23

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