European private equity had another slow quarter for dealmaking in Q3, but some green shoots of recovery are starting to emerge.

Exit value picked up, certain sectors saw a wave of activity, and there was a record-breaking fund close. Here are four key trends from PitchBook's Q3 2023 European PE Breakdown.  

European PE deal value fell 4.7% quarter-over-quarter and 2.8% when compared to Q3 2022. However, these figures are not as disappointing as they may first appear: Total deal value for 2023 is still on course to top 2019's full-year total, the previous high before 2021.

Mega-deals of over €1 billion have fallen away in Europe since the 2021 market peak. There were just 28 in the first nine months of this year. However, median deal value increased from €124.1 million in Q1 to €289.6 million in Q3 thanks to a rush of deals worth between €100 million and €500 million, which accounted for 56.8% of activity.  

It was a record quarter for European financial services deals, with €29.4 billion worth of PE transactions. This represents an increase of 83.8% QoQ and 244.4% compared to the same period last year.

Worldpay's €11.7 billion (roughly $12.4 billion) LBO, announced in July, accounts for a significant share of that total. But financial services sector consolidation has also driven a wave of other deals, particularly within the asset management and brokerage sectors. This has included deals like CA Indosuez Wealth Management's purchase of Belgian private bank and asset manager Degroof Petercam for €1.6 billion in August.

PE deal activity in the capital markets/institutions industry group, which includes asset managers, brokerages and others, increased 21.5% year-over-year. There were €12 billion worth of transactions in the first nine months of 2023 putting the subcategory on course for a record year.  

PE exits continued to pick up in Europe for the second consecutive quarter, increasing 18.4% QoQ. There were eight mega-exits of over €1 billion contributing to this total. This included Arm's €43.9 billion IPO—the largest PE exit for a decade.

Public listings account for one-fifth of total PE exit value through the end of September, however the IPO markets—particularly within Europe—are yet to meaningfully recover. The mammoth size of the Arm listing heavily skewed the data, and it is also worth noting this deal took place on the Nasdaq rather than a European exchange.  

Q3 saw CVC Capital Partners close its Fund IX on €26 billion—the world's largest-ever buyout fund. This continues a trend that has been present throughout this year of experienced buyout funds being able to defy challenging economic conditions to close huge funds.

Fundraising has become especially concentrated this year, with the top three funds closed representing 57.7% of funds raised so far in 2023, compared to 35.9% in 2022.