Schroders Capital, the $99.3 billion private markets business of Schroders, has achieved €1bn in distributions from private equity investments in European buyout and growth over the course of 2024. This achievement represents a distribution rate[1] of 17% relative to the net asset value (NAV) of European investments as of 1 January 2024.
In a challenging exit environment, this milestone underscores the strength and robustness of Schroders Capital's European Buyout and Growth investment strategy. While the distribution rates across private equity generally hover around 10%[2], Schroders Capital has surpassed this benchmark, showcasing the effectiveness of its private equity investment approach and the benefits of its strategic focus on the lower mid-market.
European private equity has the potential for highly attractive returns, driven by a fragmented market that enables consolidation opportunities and access to some of the fastest-growing segments of the EU economy - opportunities not typically available through listed equities. Focusing on the lower mid-market, Schroders Capital seeks opportunities in companies that are typically founder-owned, have conservative leverage, and present attractive entry valuations. These investments often represent the first instance of private equity ownership for such firms, bringing new capital to support growth and operational improvements.
Schroders Capital has continued its strategic focus on the European lower mid-market. A notable investment includes supporting Sabseg Group, a leading independent insurance broker in Iberia, with the backing of Miura Partners. This collaboration enables Sabseg Group to acquire similar brokers within its niche and geographic focus with a specialisation in corporate and SME insurance. By leveraging its resources, expertise, and product knowledge, Sabseg Group is driving robust business growth. This successful expansion has already resulted in a significant upvaluation for investors.
Furthermore, exit opportunities remain robust with strategic acquirers and large buyout funds providing alternative strategies beyond the constraints of the IPO market. This point is evidenced by the top 10 exits from Schroders Capital’s European portfolio in 2024, which produced an average multiple of invested capital of 9.1x.[3]
Operating with diversified teams across strategic locations, Schroders Capital benefits from a global reach. Its extensive portfolio, rich in diverse investment opportunities, spans multiple regions, enhancing its appeal to investors[4].
Richard Damming, Head of European Private Equity Investments at Schroders Capital, said:
"I am immensely proud of our team's achievements in the past year. Our strategic focus on the lower mid-market has enabled us to not only achieve robust financial returns but also make significant distributions to our investors. We remain committed to leveraging our expertise and global reach to identify and capitalise on new opportunities for our investors and stakeholders, including investments in access restricted buyout and growth opportunities within Europe."
A recent study by Schroders Capital highlighted the proven track record of private equity to outperform during downturns: the lower mid-market segment in particular. The analysis highlighted that private equity has historically demonstrated resilience and superior performance during the greatest market disruptions of the last 25 years, presenting the sector’s potential as a robust component of investment portfolios, especially during periods of economic uncertainty.
[1] The ratio of distributions from investments over 2024 divided by the valuation of investments as of 01.01.2024
[2] As of Q2 2024 (latest data available for the market)
[3] Past performance is not a guide to future performance and may not be repeated.[3]
[4] Diversification cannot ensure profits or protect against the loss of principal.
