Key Takeaways
- • European private equity has outperformed North American private equity over the past 5, 10, and 15-year periods, reversing a historical trend and marking the first sustained outperformance in years, according to multiple sources analyzing long-term PE performance data.
- • European PE fundraising increased 15% compared to the US market, demonstrating stronger capital mobilization despite the broader PE industry facing headwinds; however, global PE fundraising remains severely depressed at less than $600 billion expected for 2025 versus $734.5 billion in 2019.
- • The private equity industry's total assets declined for the first time in decades in the past year, with fundraising plunging 23% as investors pull back from the asset class amid macroeconomic uncertainty.
- • European PE valuations remain more attractive than US counterparts due to the region's relatively uncompetitive market landscape—European PE firms raised €122 billion in 2023—suggesting untapped opportunity for sophisticated allocators seeking valuation arbitrage and return potential.
- • Over a 20-year period, European private equity funds generated 15% annualized returns compared to 16.4% for North American funds, demonstrating near-parity in performance despite North American public equities substantially outperforming European public markets (9.1% versus 5.0% annualized returns respectively).
Summary
European private equity is experiencing a relative renaissance compared to its US counterpart, marking a significant inflection point in regional PE performance dynamics. Data shows that European venture capital and private equity vehicles have outperformed their US equivalents over 5-, 10-, and 15-year periods—a departure from historical patterns dominated by North American dominance. This outperformance extends beyond venture capital to broader private equity allocations, suggesting structural shifts in deal sourcing, management quality, and valuation opportunities within European markets.
The performance contrast is particularly noteworthy when examined against public market dynamics. While North American public equities have substantially outpaced European public markets over the past 20 years (MSCI North America Index: 9.1% annualized return versus MSCI Europe Index: 5.0%), private equity performance in both regions has converged around 15-16% annualized returns. This divergence between public and private market outcomes suggests that European PE investors have successfully captured value through operational improvements and multiple expansion that public market investors have failed to access.
Simultaneously, the global private equity industry faces a contraction in capital flows. According to Bain & Company, PE industry assets declined for the first time in decades, with fundraising plunging 23% in the past year. The sector is expected to raise less than $600 billion in 2025—with only $502.1 billion raised through Q3 2025—compared to the 2019 peak of $734.5 billion. Despite this broader headwind, European PE demonstrated relative resilience, posting a 15% increase in fundraising compared to flat or negative performance in US markets.
The European PE market remains significantly smaller and less competitive than North America. European PE firms raised €122 billion in 2023, a fraction of North American capital deployment. This relative immaturity and lower competitive intensity may partially explain the outperformance, as valuations remain more attractive and consolidation opportunities remain abundant. For institutional investors and family offices, the data suggests a case for more aggressive allocation to European private equity—a reversal of the historical preference for North American deployment that has characterized institutional capital allocation for the past two decades.
The performance contrast is particularly noteworthy when examined against public market dynamics. While North American public equities have substantially outpaced European public markets over the past 20 years (MSCI North America Index: 9.1% annualized return versus MSCI Europe Index: 5.0%), private equity performance in both regions has converged around 15-16% annualized returns. This divergence between public and private market outcomes suggests that European PE investors have successfully captured value through operational improvements and multiple expansion that public market investors have failed to access.
Simultaneously, the global private equity industry faces a contraction in capital flows. According to Bain & Company, PE industry assets declined for the first time in decades, with fundraising plunging 23% in the past year. The sector is expected to raise less than $600 billion in 2025—with only $502.1 billion raised through Q3 2025—compared to the 2019 peak of $734.5 billion. Despite this broader headwind, European PE demonstrated relative resilience, posting a 15% increase in fundraising compared to flat or negative performance in US markets.
The European PE market remains significantly smaller and less competitive than North America. European PE firms raised €122 billion in 2023, a fraction of North American capital deployment. This relative immaturity and lower competitive intensity may partially explain the outperformance, as valuations remain more attractive and consolidation opportunities remain abundant. For institutional investors and family offices, the data suggests a case for more aggressive allocation to European private equity—a reversal of the historical preference for North American deployment that has characterized institutional capital allocation for the past two decades.
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