Weekend Update: Key Fundraising Developments in Private Equity Sector

European Private Equity Market Adapts to Liquidity Demand

The European private equity landscape is undergoing a significant shift, as institutional investors seek more liquidity in their investments. This trend is driven by a sluggish exit environment and extended hold periods for investments, leading to an increased demand for cash distributions from Limited Partners (LPs).

In response to this demand, private equity managers are turning to innovative strategies and launching new funds focused on liquidity solutions. One such strategy is the rise of continuation funds, which allow existing investors to maintain their stakes in mature companies while offering optional liquidity.

Continuation Funds on the Rise

Continuation funds have surged in popularity, with Preqin data reporting 77 continuation funds raising $39 billion in 2024 and 54 funds raising $25 billion in H1 2025. Notable examples include the Corsair continuation fund, which was fully capitalised by a group of new and existing LPs, and the North Haven Private Assets Fund, led by secondaries specialist Coller Capital.

The Corsair continuation fund will anchor high-performing European financial services assets from multiple Corsair funds, while the North Haven Private Assets Fund focuses on co-investments and secondaries in the lower middle market, offering enhanced liquidity compared to the more traditional closed-end model.

Other Innovative Strategies

Besides continuation funds, other strategies aimed at addressing the liquidity demand include carve-outs, take-private transactions, secondary sales, dividend recapitalizations, and net asset value (NAV) financings. The secondary market is also evolving to meet these needs, with dedicated GP stake funds like those launched by Three Hills, Synova, Hayfin, and Armen providing capital to private equity managers and underpinning future fundraising.

Focus on Specific Sectors

While the demand for liquidity is driving changes across the private equity market, there is also a focus on specific sectors. Large infrastructure and energy private equity funds have raised significant capital, with European infrastructure funds raising about 75% of capital in Q1 2025 and energy-focused investments rebounding with mid-teens cash yields on acquisitions.

Meanwhile, the Provectus SEE Fund II, a €200m private equity vehicle managed by Croatian firm Provectus Capital Partners (PCP), focuses on providing equity and equity-related capital to small and medium-sized enterprises across Southeast Europe. The fund's focus areas include Croatia, Slovenia, Romania, and Bulgaria, with potential investments in other countries like Albania, Bosnia and Herzegovina, Greece, Hungary, Kosovo, Montenegro, North Macedonia, and Serbia.

First Deployment and Future Investments

The first deployment for Provectus SEE Fund II is a €6m investment in Spanish diagnostics firm deepull. The fund aims to back around 15 EU-based ventures, focusing on scalable platform technologies.

Another fund, Mérieux Innovation 2 (MI2), continues MxEP's strategy of investing in early-stage healthcare companies. MI2 has secured nearly 50% of its €150m fund and aims to back around 15 EU-based ventures, focusing on scalable platform technologies.

Market Outlook

Despite these challenges, demand for private equity remains strong, with an expected increase in PE’s share of alternatives assets under management (AUM) from 35% in 2023 to 41% by 2029, suggesting institutional investor appetite is robust but increasingly focused on liquidity and access.

In conclusion, the institutional demand for liquidity in private equity is driving a rise in continuation funds, secondary transactions, and innovative liquidity structures amid a tough exit climate. The private equity market is seeing new fund launches addressing these themes and increased investment in infrastructure and energy sectors as part of this evolving liquidity focus.

In the European private equity market, private equity managers are implementing innovative strategies, with continuation funds being a popular response to the increased demand for liquidity.
Preqin data indicates the surge in continuation funds, with 77 continuation funds raising $39 billion in 2024 and 54 funds raising $25 billion in H1 2025.
The Corsair continuation fund, fully capitalised by a group of new and existing LPs, focuses on anchoring high-performing European financial services assets from multiple Corsair funds, offering optional liquidity.
Concurrently, other strategies, such as carve-outs, take-private transactions, secondary sales, dividend recapitalizations, net asset value (NAV) financings, and GP stake funds, are also being employed to address the liquidity demand.
The private equity sector is also attentive to particular industries, notably large infrastructure and energy funds that have raised significant capital, with European infrastructure funds accounting for about 75% of capital raised in Q1 2025.
The Provectus SEE Fund II, a €200m private equity vehicle, focuses on providing equity and equity-related capital to small and medium-sized enterprises across Southeast Europe, with potential investments in Croatia, Slovenia, Romania, Bulgaria, and other Balkan countries.
Despite market challenges, the demand for private equity remains strong, with an expected increase in private equity’s share of alternatives assets under management (AUM) from 35% in 2023 to 41% by 2029, highlighting institutional investor appetite for liquidity and access.