Mergermarket | Dealspeak EMEA – Slice of Pie: New Entrants Gobble Up GP Stakes in Europe

May 2023

Originally posted by Mergermarket on April 24, 2023.

Historically, North American investors were the main players that acquire stakes in private equity (PE), credit and infrastructure general partners (GPs) in Europe; however, recently European investors have been increasingly participating in deals and taking small GP stakes.

In a GP stake, an investor typically takes a 10-30% passive or active stake in a sponsor which gives it access to lucrative management fees and future carry. At the same time, the vendor benefits as it achieves some valuation objectives; such as partial monetization, funding growth, planning for succession, or increasing co-investment requirements; and gets liquidity on its balance sheet.

Antoine Dupont-Madinier, Managing Director in Lincoln’s Financial Institutions Group, commented, “GPs are increasingly trying to solve multiple objectives at the same time.”

In the current macroeconomic environment with fewer PE exits, extra liquidity is very attractive as there has been much less capital returned to vendors and limited partners. Liquidity also helps GPs raise commitments to their own funds in a difficult fundraising environment.

Additional insights can be found in the original article.

Summary

  • Lincoln International’s Antoine Dupont-Madinier shares with Mergermarket how general partners are trying to solve multiple objectives while dealmaking in today’s macro environment.

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