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Dutch private equity M&A sector rebounded in second quarter
Dutch private equity deal activity has rebounded in the second quarter of 2024, driven by an improved overall economic outlook, a more active M&A market, and growing positivity around deal multiples. That is according to research from Oaklins. Tijn Bastiaans, partner and private equity expert at Oaklins, walks through the latest developments.
After the least active quarter for private equity funds over the past three years, the Dutch financial sponsor market rebounded in the second quarter. Dutch private equity groups have shown improved deal appetite, recording 58 deals in Q2 2024 compared to 38 in Q1 2024 (a quarter-over-quarter increase of over 50%).
Overall, private equity deals represented a larger relative share of deals in Q2 2024, rising by 4 percentage points in comparison to Q1 2024, still below historical levels of 26% during 2023 but outperforming 2022.
Interestingly, Q2 2024 proved to be a solid quarter for private equity acquisitions with deals nearly doubling from 31 to 47 in Q2 2024. We see the increase in private equity’s acquiring activity as a sign that overall outlook and confidence has become more positive and an indicator that private equity is beating strategic buyers linked to the relatively high multiples that they are paying.
However, private equity exit activity has been relatively limited with only 17 exits in Q2 2024.
For the remainder of 2024, we expect continued private equity activity on the buy-side complemented by a strong rebound in private equity exits. Exits are expected to be fuelled by funds having portfolios filled with “legacy” assets that need to be sold and funds that postponed exits end of 2023 and early 2024 in the anticipation of more favorable market conditions.
This comes together with Limited Partners seeking liquidity and private equity funds needing to realize exits to demonstrate their track record in light of upcoming fundraises. Indeed, at Oaklins, we’re currently observing increased pitching activity across the board.
Meet the most active funds
Over the last twelve months, Main Capital has established itself as the most active private equity fund in the Netherlands, together with Holland Capital and Capital A, all completing 7 deals. Notably, Main Capital successfully exited four sizable portfolio companies, including Main’s largest strategic exit to date of Enovation to Legrand.
Notably, we observe an increasing trend of multi-fold acquisitions taking place. For example, Holland Capital executed a double deal with Top Systems and Hybrid Power Units, whereas Capital A completed a triple deal with the acquisition of three accountancy firms at once.
Fundraising by private equity
Despite prevailing macroeconomic challenges, private equity fundraising activity shows strong momentum. In general, the first half of 2024 has presented challenging conditions for raising new funds in the Netherlands, also due to limited private equity exit activity. Despite turbulent market conditions, Dutch private equity fundraising activity continued with smaller funds successfully raising fresh capital.
Notably, we observe more new specialized funds being raised with a specific industry or niche focus, following the significant fundraise by software specialist Main Capital Partners of €2.4bn in Q1 2024. For example, Mentha Capital successfully secured €140 million for its first impact buy-out fund targeting companies achieving climate and environmental goals in the Benelux.
Vortex Capital Partners meanwhile successfully secured €145 million, focusing solely on high-growth software and technology companies.
For the second half of 2024 we anticipate a notably active fundraising season as we have been notified through our extensive network within the Dutch private equity market. Generally speaking, fundraising seems to be tougher and more time consuming than previous years.
Taking an international view, we observe continued strong activity in the private equity landscape, with notable funds being raised by major players such as SilverLake and Partners Group, raising €18.9 billion and €14.2 billion, respectively. Other sizable new funds were raised by Ardian Growth (€530 million) and KLAR Partners (€870 million), both keen to deploy capital in the Dutch market.
In total, international private equity raised a total of €111 billion in H1 2024, up by 17% in comparison to H1 2023. Nevertheless, the timelines for fundraising have lengthened, with the median duration extending from 12.1 months in 2022 to 18.4 months by the end of H1 2024.
As of mid-2024, private equity fundraising outlook remains cautiously optimistic despite increasing competition. Larger funds dominate fundraising, while mid-sized and smaller funds face more challenges. There is a notable trend towards specialized funds focusing on sectors, reflecting investor preferences for targeted strategies. Looking ahead to H2 2024, while challenges exist, opportunities remain for funds that can effectively navigate market trends and meet evolving investor expectations.
