Schroders Capital to distribute 1 billion in 2024 under European private equity programme

Schroders Capital has allocated €1 billion from its European Buyout and Growth strategy in 2024.

Schroders' private markets investment management business, with $99.3 billion in assets under management, made distributions of that amount under the European private equity programme throughout 2024. This represents a distribution rate of 17% relative to the net asset value (NAV) of European holdings as at 1 January 2024.

“In a challenging investment environment, this milestone underlines the strength and solidity of Schroders Capital’s European Buyout and Growth strategy,” said the asset manager.

“While distribution rates in the private equity universe are generally around 10%, Schroders Capital has surpassed this level, demonstrating the effectiveness of its private equity investment model and the benefits of its strategic orientation towards the mid-to-low capitalization segment,” he adds.

Schroders argues that European private equity “offers very attractive profitability potential, driven by a fragmented market that provides opportunities for consolidation and access to some of the fastest-growing segments of the EU economy. Furthermore, these opportunities are rarely available through listed equity markets.”

By focusing on the mid-to-low cap segment, Schroders Capital “seeks opportunities in companies that, in most cases, are still owned by their founders, have conservative debt levels and attractive entry valuations”, says the manager, adding that “these stakes often represent the first private equity investment in these companies, bringing new capital to support growth and promote operational improvements”.

“A prime example of this type of investment was the support of Sabseg Group, one of the leading independent insurance brokers in the Iberian Peninsula, with the involvement of Miura Partners,” said Schroders. “This collaboration allows Sabseg Group to acquire similar brokers within its niche and geographic area, specialising in corporate and SME insurance. By leveraging its resources, experience and product knowledge, Sabseg Group is driving solid business growth. This successful expansion has already translated into significant value for investors,” it added.

The asset manager also believes that “exit opportunities continue to be attractive, as strategic buyers and large buyout funds offer alternatives to the limitations of the public IPO market. Proof of this are the top 10 exits from Schroders Capital's portfolio in 2024, which generated an average multiple of invested capital of 9.1x”.

A recent study by Schroders Capital has highlighted the proven ability of private equity funds to deliver better results in times of crisis, particularly in the lower-middle market segment. The analysis highlights that private equity has “consistently” demonstrated resilience and superior returns during the biggest market disruptions of the past 25 years, positioning the sector as a solid component of investment portfolios, especially in contexts of economic uncertainty.