UK private equity deals crash to pandemic lows
UK private equity deals crashed to their lowest level since 2020 in the first quarter of this year, as a tepid IPO market and geopolitical uncertainty continued to hamper dealmaking.
There were only 320 private equity deals in the first quarter of 2025, totalling £18bn, compared to 534 deals totalling £28.2bn in the quarter before, according to data from Pitchbook.
Meanwhile, UK deals as a share of Europe’s deal activity fell to a record low, making up just 21.9 per cent of deals on the continent and 21.8 per cent of deal value.
This compared to a 10-year average of 25.2 per cent and 28.7 per cent, respectively.
“After a blockbuster 2024, European private kicked off 2025 with a sharp cooldown,” said Pitchbook analysts.
Geopolitical tensions pushed down the value of deal values across the continent by 25 per cent compared to the previous quarter, as uncertainty around tariffs from the US increased persistent hesitation toward dealmaking and capital deployment.
“Exit activity also dipped, though healthcare exits surged, offering rare bright spots in a cautious quarter,” added the analysts.
In total, there were only five private equity backed public listings in Europe during the quarter, as markets continue to wait for a surge in IPOs that has so far failed to come.
However, the quarter began with a rotation away from US markets in favour of European and UK markets, spurred on by the high valuation of US stocks and a boom in the defence industry across the Atlantic.
“If this rotation persists, we could see this spill over into private markets in 2025, further decreasing the valuation gap between the US and Europe,” the Pitchbook analysts said.
Markets had been hoping for a return to certainty following last year’s Autumn Budget and election of Trump as US president, as tax policy was finally set for the UK.
However, rumours about further tax rises have swirled as Chancellor Rachel Reeves struggles to meet her fiscal rules, while Trump’s tariff policy has only brought greater uncertainty to stock exchanges.