Fund activity last year was on the upswing, resulting in a recovery of capital repayments to investors. However, this is still not enough. Hence the success of continuation funds, Stefania Peveraro, BeBeez Editor in Chief, highlights.
Lone Star, one of the longest established US private equity firms, is going to pay 3.5 billion US Dollars to its investors, Bloomberg said. The fund fetched 4.5 billion out of the sale of chemical company AOC to Japan competitor Nippon Paint Holdings while the dividends and the June-September 2025 IPO of Portuguese Novo Banco (see here a previous post by BeBeez) could provide further resources.
However, Financial Times quoted Egyptian billionaire Nassef Sawiris as saying that in the last years the majority of buyout funds could not sell portfolio assets and repay investors. “Private equity firms spend 90% of their time in fundraising and 10% in managing the companies they buy. Continuation funds are the biggest scam ever, as they take over assets they cannot sell, with another vehicle which fetched capital from old and new investors”.
This trend consolidated hand in hand with the current struggle of funds for divestments (Continuation fund report of BeBeez Magazine March 2025). In 2024, 65 continuation funds completed their fundraising 36 billion US Dollars worth aggregate (57 billion in 2023, 38 billion peak in 2021), Preqin said (see here a previous post by BeBeez). In 1Q25, Gyrus Capital attracted 100 million euros in commitments and announced its final closing of 700 million euros for a continuation fund that will focus on Swiss portfolio company Essential Pharma, (see here a previous post by BeBeez). In December 2024, the Gyrus raised 600 million from lead investor AlpInvest (a Carlyle portfolio company), StepStone Group, Essential Pharma’s management and others.
In 2022 and 2023, international private equity funds struggled for selling their portfolio companies while a positive trend for sales auction started again in 2024 and helped to even the ratio of buyout vehicles’ distributions and contributions. However, the investors relation between distributions and NAV is still disappointing for investors.
Let the numbers speak
A Bain&Co report said that in 2024 global buyout funds carried on 1470 (+22% from 2023) divestures worth a total of 468 billion US Dollars (+34%) (see here a previous post by BeBeez). McKinsey said that 2024 disposals value amounted to 813 billion (+7.6%) (see here a previous post by BeBeez). Both the strategic consultants relied on PitchBook data which point out an inversion of previous years negative trend as the interest rates hikes impacted on dealmaking. AIFI-PwC said that that the 2024 exits of Italian market participants have gone up 231% for a 5.7 billion euros aggregated value (1.73 billion) (see here a previous post by BeBeez).
However, this trend’s inversion is not yet enough for investors who expect higher returns. Average holding times of companies in buyout portfolios are still above the long-term average (6.7 years compared to 5.7 years in the last two decades): the firms (without the add-ons) that private equity have been keeping for more than four years make 61% of all buyout funds asset (+55% from 2023 and +53% compared to the 10-year average). Global m&a is slowing down, a KPMG report says while pointing out that fund investments, including announced, closed and completed deals, lowered from 464 billion US Dollars in 4Q24 to 445 billion in 1Q25 (-4.1%) and transaction diminished from 4960 to 3760 in the same time range (-24.2%).
The surge in volatility that Donald Trump’s Administration international trade policy boosted generated a strong impact on the EMA (Europe, Middle East, Asia) region which marked the most relevant drop with 1555 deals worth 109.2 billion in 1Q25 from 2184 transactions with a 170 billion value in 4Q24. Il tutto per colpa della elevata volatilità macroeconomica e geopolitica attivata dalle politiche della nuova amministrazione Trump negli Usa (see here a previous post by BeBeez).
Distributions to paid-in capital
The amount of distributions grew and brought disbursements and redemptions back into balance during the year, with DPI (distributions to paid-in capital, i.e. the ratio of cash generated to total invested) returning to 1. However, the ratio of DPI to NAV of funds fell to 11%, the lowest rate in more than a decade, Bain&Co says. Since this is a disappointing value for investors, Private equity managers are carrying on sales of minority stakes, refinancing deals for paying extraordinary dividends or launching continuation funds for moving one or more assets from an old fund and allowing it to repay its investors.
In 2021, Hellman&Friedman switched part of its stake in Italian B2B software house Teamsystem from the portfolio of Hellman & Friedman Capital Partners VIII to Hellman & Friedman Capital Partners IX (see here a previous story of BeBeez Magazine and here a previous post by BeBeez). In November 2021, Investcorp allocated Dainese, an Italian manufacturer of high-quality technical clothing for motorcycling and dynamic sports, in a multi-asset continuation fund that secondary market player Coller Capital launched (see here a previous post by BeBeez) ahead of a sale to Carlyle in 2022 (see here a previous post by BeBeez). In 2023, Investindustrial switched its stake in pharma company Procemsa to Ourvita (fka Ourvita Continuation Fund), the owner of the whole business (see hare a previous post by BeBeez) and also of Laboratoria Natury, Aakamp, Masterpharm, and Officina Farmaceutica Italiana (Ofi). In April 2024, CVC Capital Partners moved its investment Multiversity, an e-learning firm, from CVC Capital Partners VII to a single-asset continuation fund (see here a previous post by BeBeez). In 2024, Ambienta sold to Ambienta Water Pumps and Ambienta IV its stake in Wateralia, a platform company for the consolidation in the water sector that Ambienta III created in 2021 (see here a previous post by BeBeez).
A continuation fund allowed 21 Invest France V, part of Alessandro Benetton’s 21 Invest, to move 75% of ProductLife Group (PLG), a French provider of regulatory services to major pharmaceutical companies, from its portfolio to joint controlling shareholders 21 Invest France and Oakley Capital, and the managers with a minority. The previous owner 21 Invest France poured resources in the business on the ground of a 500 million euros enterprise value through Fund VI and a continuation fund that has the resources of Eurazeo, Hayfin (lead investors), Vintage Strategies at Goldman Sachs Alternatives, CA Indosuez Wealth Management and Spain’s Arcano (see here a previous post by BeBeez).
A continuation fund allowed 21 Invest France V, part of Alessandro Benetton’s 21 Invest, to move 75% of ProductLife Group (PLG), a French provider of regulatory services to major pharmaceutical companies, from its portfolio to joint controlling shareholders 21 Invest France and Oakley Capital, and the managers with a minority. The previous owner 21 Invest France poured resources in the business on the ground of a 500 million euros enterprise value through Fund VI and a continuation fund that has the resources of Eurazeo, Hayfin (lead investors), Vintage Strategies at Goldman Sachs Alternatives, CA Indosuez Wealth Management and Spain’s Arcano (see here a previous post by BeBeez).
