Private Equity Articles

Article 1 : What Forces will shape European Private Equity

in 2024?

Published in: January 2024

Article Link:
https://www.nortonrosefulbright.com/en-us/knowledge/publications/836f73f9/what-forces-will-shape-e
uropean-private-equity-in-2024
The article discusses the challenging year experienced by the private equity industry in
2023 due to macro-economic uncertainties and geopolitical instabilities. It highlights a
decline in deal activity globally and in Europe, with large-cap segments being more affected
than mid-cap segments.

I believe that the following points should be carefully considered:

● Cautious Optimism Amidst Uncertainty: Despite continued uncertainty in the

M&A landscape, there is a sense of cautious optimism for 2024, with signs of a
rebound in deal activity.
● Alternative Financing Trends: Cash reserves and private debt are expected to be
the most commonly used forms of financing for M&A deals in 2024. Private debt, in
particular, is anticipated to play a significant role in M&A financing.
● Technology Sector Growth: Technology, especially Artificial Intelligence (AI), is
projected to experience substantial growth in inbound cross-border M&A activity in
2024. AI has emerged as a prominent topic in the tech industry, with a notable
interest from both businesses and private equity funds.
● Regulatory Impact: Environmental, Social, and Governance (ESG) regulations are
identified as both an obstacle and a driver for M&A activity. While ESG regulations
pose challenges, they also present opportunities and are considered a key factor
influencing M&A deals.

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 ● Market Sentiment Shift: With the new year, market sentiment has become more
optimistic due to factors like pent-up demand, significant private equity dry powder,
increased availability of private debt, and decreasing inflation levels. These factors
contribute to a more positive outlook for M&A activity in 2024.

Article 2 : Asia-Pacific Private Equity Report 2023

Published on: 28 March 2023

Article Link: https://www.bain.com/insights/asia-pacific-private-equity-report-2023/
The report highlights a significant downturn in the private equity market in 2022 after a
decade of growth and resilience during the early years of the Covid-19 pandemic. The
region faced challenges such as deteriorating consumer confidence, manufacturing
slumps, tightened credit, and rising public debt. Notably, China experienced a sharp decline
in GDP growth to 3% in 2022, the largest slowdown in the region. Despite these challenges,
private equity outperformed public markets across various time periods. The report
emphasizes the need for private equity investors to adapt to a less stable and certain
environment in the coming years, which will bring new opportunities amidst ongoing
macroeconomic storms and geopolitical tensions.

I particularly found the following points fascinating :

● Exit Value Decline: The average exit value declined by 14% to $256 million in 2022,
marking an 8% decrease from the previous five-year average.
● Challenging Exit Environment: Nearly 50% of General Partners (GPs) surveyed
described the 2022 Asia-Pacific exit environment as "far more challenging," with 82%
applying this label specifically to Greater China's exit market.
● Reasons for Suboptimal Exits: The top three reasons cited by GPs for suboptimal
exit opportunities were IPO market underperformance (73%), macroeconomic
softness (60%), and multiple compression (50%).
● Asia-Pacific Exit Value: The exit value in Asia-Pacific dropped by one-third in 2022,
reflecting the challenging environment faced by private equity investors in the
region

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