Distressed Private Equity Firms Investing in Europe as part of a Wider Strategy – October 2013

by Christopher Hardy

  • 23 Oct 2013
  • PE
  • PD

According to Preqin’s Fund Manager Profiles, there are currently 281 private equity firms investing in distressed companies in Europe as part of a wider strategy. These firms’ mandates within distressed private equity comprise of special situations, distressed debt and turnaround opportunities. The industry is small compared to firms investing in distressed opportunities in the North American market as part of a wider strategy, which stands at 424. However, it is slightly larger than the 230 firms whose investment strategy includes targeting Asia and the Rest of the World for distressed private equity opportunities.

The sum of total capital raised in the last ten years for private equity firms considering distressed investments in European firms stands at just over $820bn and these firms currently command an estimated $212bn in dry powder. The increase in appetite for distressed private equity as part of the investment strategy among fund managers has been particularly strengthened since the financial crisis, especially in Europe and particularly in the periphery economies of the eurozone. Interestingly, this has not only been felt among European fund managers, but also to a great extent in the US. Out of the 281 private equity firms considering investment in distressed opportunities in Europe, 31% of them are based in the US. The next largest proportion of firms is based in the UK, making up 25% of the total. Other regions such as Germany, France, Italy and Switzerland together contribute to 20% of the industry.

The largest firm by total funds raised in the last ten years that includes European distressed private equity investments as part of a wider strategy is Kohlberg Kravis Roberts, which lists special situation opportunities among its investment criteria. The next largest firm is TPG, a Texas, US-based private equity firm whose main investment philosophy is to invest in change, created by industry trends, economic cycles or special company situations. The largest, non-US firm investing in European distressed assets as part of a wider focus is Permira. The London-based firm has garnered just under $23bn in funds raised in the last ten years, which means it ranks as the 12th largest firm in terms of capital commitments over the last decade, showing the dominance of US-based distressed investing firms in Europe.

Continue browsing industry reports, publications, conferences, blogs and more on Preqin Insights