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Private equity could be set for rocket recovery

Karsten Langer Riverside Europe Partners private equityKarsten Langer of Riverside Europe Partners in Luxembourg, says private equity-backed firms will likely emerge stronger and faster than others from the pandemic.

During 2020, as the pandemic took hold across Europe, private equity funds based in Luxembourg continued to raise funds from institutional investors, asset managers, family offices and HNWIs across the world. Some of this money has already been put to work in support of companies that are hurt by the pandemic, protecting jobs and past investment, and smoothing the way to recovery.

But by far the greater part of new funds raised will be invested in the high growth companies that are going to pull Europe out of the lockdown-induced recession.

These two roles, shoring up good companies with temporary troubles and accelerating the growth of those that innovate and modernise, are central to private equity.The first group includes companies in hospitality, entertainment, travel and tourism, and the latter includes fast growing companies in technology, e-commerce and healthcare.

Following the last major recession in 2010-11, companies owned by private equity emerged stronger and grew faster than others. This story is likely to repeat itself in 2021-22. Private equity’s strong focus on investment in growth and performance will make sure of that.

With the growth in institutional allocations to private equity during the past decade, even more European workers, savers and pensioners are bound to participate in the wealth created by one of Europe’s most dynamic and resilient industries. Luxembourg is an attractive domicile for private equity funds in Europe, placing Luxembourg at the heart of this economic recovery and growth over the next few years.

*Karsten Langer is the managing partner of Riverside Europe Partners and a former chairman of Invest Europe.

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