Alternative assets under management in Europe reached €2.95 trillion ($2.87 trillion) as of Sept. 30, 2022 as fundraising slowed, particularly in the U.K., according to a Preqin report Wednesday.
Both the U.K. and Western Europe managed more than €1 trillion of private capital in 2022. For U.K. alternatives managers, that represented a new low of 44% of the total. The U.K. share of European private debt assets remained steady in 2022, but the U.K. share of European private equity dropped to 44% by the end of Q3 2022 from 55% in 2017, Preqin said.
The report also predicted that the growth rate for Europe-focused assets in private capital would fall to 10.9% by 2027. That compares to a 17.3% growth rate between 2018 and 2021 but is higher than the post-financial crisis, it said.
Private debt provided some positive news in 2022, with an 8.5% overall return, and U.K. managers continued to dominate, the report said. Fundraising as of early June 2023 by private debt Europe-based fund managers reached €9.6 billion, with U.K.-based funds that represent 53% of the 15 funds closed so far securing 90% of the capital.
Assets for hedge fund managers in Europe declined 9% in the third quarter of 2022, the lowest level since 2015, and Preqin analyst expects a further decline in hedge fund assets under management for now. Hedge fund managers in Europe "have failed to produce statistically significant alpha in aggregate," the report said.
Alex Murray, vice president and head of real assets for Preqin Research Insights, said in a release on the report that European alternatives managers have embraced and adapted practices from the North America market to suit European economies and institutional investors' needs. "The adaptability of alternatives will be no less crucial in the coming years, as risks emerge for Europe's continued economic prosperity," said Mr. Murray.