Q1��25 Pulse of Private Equity �� Europe, the Middle East and Africa insights

Slower start to the year for PE investment in EMA region

During Q1��25, the EMA region announced $109.2 billion in private equity investment across 1,555 deals —both figures falling well short of the pace set in early 2024. The slowdown likely reflects a combination of macroeconomic and political headwinds, including general elections in Germany in February 2025 and France in the second half of 2024, sluggish economic conditions in the UK, and growing uncertainty surrounding US trade policy, which weighed on investor sentiment toward the end of the quarter.

PE investors in UK show more caution in Q1��25 compared to 2024

During the second half of 2024, PE activity in the UK was reasonably strong, driven in part by the Bank of England’s transparency around cuts to interest rates, in addition to PE interest rising in both business services and IT services �� two sectors where the UK has long been seen as a regional leader. Q1��25 saw the tide turn as PE investors grew more cautious because of weakening economic conditions in the UK and growing concerns over US trade policies. During the quarter, the UK saw just $23.2 billion invested across 324 deals, marking a significant decline from the previous year. Despite the decline, the UK saw a number of good-sized PE deals, including the buyout of Metaphysic by Brahma for $1.4 billion��^��and a $750 million investment in Bute Energy by Copenhagen Infrastructure Partners.¹��

PE investment in Germany drops after stellar Q4��24

After reaching a significant high of $39.9 billion of investment across 278 deals in Q4��24, announced PE investment in Germany fell to $18.5 billion across 184 deals in Q1��25. Highlights of Q1��25 deal activity included Bain Capital’s $4.2 billion acquisition of Apleona from PAI Partners¹¹ and PAI’s $2.9 billion acquisition of a majority stake in Motel One.¹²

Deal activity was starting to pick up late in Q1��25 following the country’s federal election in February and subsequent passing of a law loosening the country’s debt brakes related to security and defense spending and creating a $547 billion infrastructure fund.¹³

The new funding is expected to catalyze improvements in infrastructure, defense, healthcare and a number of other critical sectors. Given the substantial level of funding, it will likely spur deals in a number of sectors over time; as Germany begins to recover and gain stability, the country could also attract additional interest from foreign PE investors.

Within Germany, mid-market owners and family businesses used to be quite opposed to PE; this sentiment has shifted, with PE firms increasingly seen as reliable partners and highly professional problem solvers by both family businesses and large corporates. This is leading more mid-market owners to sell to PE than has been seen historically.

India gaining attention as investors shift focus from China

In India, the rapid growth of the middle class has driven a major uptick in demand in sectors well-aligned with PE investment, including consumer products, e-commerce, healthcare, education, and banking. As China has lost traction with global PE investors, India has gained ground �� with more PE firms looking at the country for investment opportunities. Over time, PE investment in India is expected to grow.

Increasing focus on tech-driven opportunities

At a sector level, PE investors across the EMA region showed an increasing focus on tech-driven opportunities, including in areas like software, industrial-tech, health-tech, med-tech and fintech during Q1��25.

At a jurisdictional level, the professional and IT services space in the UK saw a significant amount of PE deal activity �� even more so than tech-driven deals. In Germany and France, the industrials space continued to see solid activity; as large industrial players have embraced transformation and modernization, a number have looked to separate out some of their non-core and underperforming assets.

Trends to watch for in Q2��25

Looking ahead to Q2��25, private equity investment across the EMA region is expected to remain somewhat subdued as geopolitical tensions and concerns surrounding US tariffs continue to cloud investor sentiment. In the near term, PE activity is likely to center on domestic-oriented businesses �� particularly in resilient sectors such as business services, tech, and healthcare.

However, if trade-related uncertainties begin to ease, the longer-term outlook is more optimistic. A combination of improving interest rate environments, government funding commitments to strategic sectors, and a robust pipeline of transformative corporate restructuring efforts could help reignite deal flow in the second half of the year.

Exits are also expected to take on greater importance in Q2��25. While IPO activity will likely remain muted due to persistent market volatility, private sales may pick up as funds seek liquidity. Pressure from LPs to return capital could further drive this trend.

On the investment side, sectors such as energy, health-tech and med-tech, and AI infrastructure �� particularly data centers �� are likely to continue drawing strong interest. Platform deals could also stage a comeback as firms look to build scalable growth strategies in more stable verticals. Meanwhile, defense-tech is emerging as a sector to watch, with PE investors increasingly viewing it as a strategic opportunity rather than a risk �� reflecting the shifting nature of global security and government procurement priorities.