European private equity firms CVC, EQT, and Partners Group Holdings are profitable but overvalued

From Morningstar: 2024-09-02 06:41:00

European private market firms CVC, EQT, and Partners Group Holdings are rated with narrow moats. Despite high profitability, current high EV/EBITDA multiples suggest the market may overvalue them. Deal-making may slow due to interest rate increases, but the firms have strong intangible assets and significant reinvestment from clients.

CVC has seen a 15% increase since its IPO in April. These firms have excellent long-term track records and high excess returns, attributing to their narrow moat ratings. The private market industry faces challenges in maintaining high fees, with regulators scrutinizing fee structures as the sector opens up to more retail investors.

Higher interest rates have dampened deal-making, but long-term growth prospects remain strong for the industry. Private market firms like CVC, EQT, and Partners Group are positioned to benefit from industry consolidation as limited partners reduce the number of managers. This sector is gradually attracting individual investors, presenting new capital opportunities.



Read more at Morningstar: European PE Firms: Moaty and Profitable, But Expensive