Europe’s Time to Shine in Private Equity
Over the past decade, European secondaries funds have consistently delivered net returns in the 12–17 percent range, often outperforming their U.S. peers as shown below. But what matters even more than the figures are how those returns have been generated — driven by fundamentals such as topline growth and margin expansion.
European Private Equity’s strong returns and fundamentals vs. its US counterparts
1Source: Q4 2024 Pitchbook Benchmarks report (with preliminary Q1 2025 data) as of October 2025. 2Source: TESS (Tech-Enabled Secondaries System), as at September 2025. Past performance is not a reliable indicator of future results. TESS is an investment and monitoring tool that leverages data science to improve deal analysis, risk management and portfolio construction within secondary markets.
In today’s environment where liquidity is no longer abundant and interest rates have firmly returned in positive territory, Europe’s private equity market has demonstrated that alpha built on fundamentals endures far longer than alpha built on leverage. The region’s diversity of economies, regulations, and cultures pushes investors to specialise and truly understand their markets. Europe is a mosaic of mid-market opportunities rather than a battlefield of mega-deals. What was once seen as fragmentation now appears to be a hidden advantage: it fosters genuine local insight and creates possible synergies via consolidation. And as the cost of capital resets higher, many European private companies are entering this cycle with notably healthier balance sheets3.
At the macro level, Europe’s resilience also reflects, in our view, its industrial and policy foundations. While US has been driven by resilient consumer spending and a highly dynamic technology sector, Europe’s future growth is expected to centre on the productive core of its economy including manufacturing, healthcare, infrastructure and the energy transition. These sectors have returned to global focus as governments push for strategic autonomy, decarbonisation, and reindustrialisation, as recently illustrated by Germany’s new fiscal plan.
Private equity sits at the centre of this shift — and policymakers are increasingly aware of it. With public markets still volatile and bank lending cautious, private capital is becoming one of the key engines of Europe’s economic renewal.
Meanwhile, Europe’s private market ecosystem has reached a new level of sophistication. The secondary market is thriving, accounting circa 42 percent of secondaries capital raised on average over the last five years (2020-2025)4, supported by lower entry valuations, stable corporate governance frameworks, and a growing pipeline of high-quality assets.
Dry powder remains plentiful, yet relative to GDP, Europe remains under-allocated, as only 2 percent of institutional capital is directed into Private Equity, compared with nearly 10 percent in the US5, leaving meaningful room for expansion without the speculative excesses observed elsewhere.
As the era of easy money ends, global investors are rediscovering the value of fundamentals. That is precisely where Europe excels. European private equity doesn’t need to reinvent its narrative; it simply needs to be recognised for what it is: a market built on fundamentals, ready for a world where capital once again carries a cost. In a decade likely to be defined by selectivity and discipline, European private equity is well positioned to lead.
At Carmignac, we see this transformation as an opportunity to deepen our engagement with European private markets. Through our ongoing private market initiatives and product innovation, we aim to connect private capital with investor aspirations, unlocking Europe’s long-term growth potential for decades to come.
3ECB Financial Stability Review, November 2025: «On aggregate, euro area corporate and household balance sheets have improved markedly in recent years, with indebtedness falling below the levels observed prior to the global financial crisis.»
4Source: Pitchbook Q3 2025 Global Private Market Fundraising Report.
5Source: Preqin, data as of March 2025.
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