Investors will plough more than EUR5 trillion of assets into European private markets by the end of 2030 with infrastructure set to capture EUR1.1 trillion of assets.
The astonishing growth figures come from BlackRock Asset Management, the world’s largest asset manager which has been an aggressive acquisitor in the private markets space, recently adding Global Infrastructure Partners (GIP) and HPS Investment Partners, into its USD663 billion AUM.
After a more muted environment in private equity and private credit, BlackRock says Europe’s private markets have “bounced back strongly” as declining interest rates, falling inflation and restated government growth targets have strengthened economic activity in the region.
With conditions to deploy capital continuing to improve steadily, sentiment towards Europe’s private markets has risen sharply, and Western Europe has seen the largest increase in the proportion of investors viewing the market as offering the best opportunities, according to Preqin research.
Philipp Hildebrand, Vice Chairman of BlackRock, says:“We are in the midst of a generational reconfiguration of global capital markets that is being driven by structural mega forces like AI and the transition to low carbon economies. With the majority of Europe’s small-to-medium enterprises owned privately, it is essential that these companies can turn to deep pools of capital to fund their future growth. As investor appetite to deploy capital into private assets accelerates, Europe’s capital markets can provide a powerful mechanism for financing a wide range of companies and transformational projects across the region.”
The asset manager says Europe has become “one of the premier destinations” for infrastructure investment, noting the asset class has grown faster on the continent than in any other region globally over the last five years and is forecast to approximately double to surpass EUR1.1 trillion by the end of 2030.
Gonzalo Garcia, Partner at the newly acquired GIP, says: “The attractiveness of Europe is underpinned by the structural tailwinds of the once-in-a-generation transformation of the energy ecosystem, the digital transformation, the rewiring of global supply chains and the need to retool aging infrastructure assets.”
Garcia says that looking beyond Europe, these tailwinds are creating a USD95 trillion generational opportunity for infrastructure globally which is driving demand for private capital to finance critical infrastructure projects around the world.
Meanwhile private credit, which has built up record levels of dry powder and become something of a borrowers’ market, is also set for a return to investors’ favour.
According to data from S&P Capital IQ15, across the EU and UK more than 90 per cent of companies with annual revenue of over USD100 million held are privately, highlighting the wider opportunity in financing private companies.
By the end of 2025, BlackRock forecasts that Europe-focused private credit AUM will expand to over EUR450 billion and almost double to over EUR800 billion by the end of the decade.
Matthieu Boulanger, Head of Europe for Private Financing Solutions at HPS – another recent BlackRock acquisition – says: “Private credit is increasingly pivotal to the European economy, providing essential financing for innovative and rapidly growing businesses, as well as small-to-medium sized enterprises. As the market continues to evolve, we expect the sector to broaden out to include new borrowers previously served only by public markets. By including private credit in portfolios, investors can add the potential to achieve greater diversification, enjoy enhanced income and inflation protection, and access a powerful engine of economic growth.”
