>>> Europe : Brokers Upgrades & Downgrades - 18th of December 2023 V2(+)

>>> Up
* Entain Raised to Buy at Jefferies; PT 1,215 pence
* Paragon Raised to Market Perform at KBW; PT 660 pence
* Porsche SE Raised to Buy at AlphaValue/Baader (+)
* Rexel PT Raised to 33 euros from 27 euros at Berenberg
* Sectra Raised to Hold at Carnegie
* Sunnova Energy Raised to Buy at Goldman; PT $17

>>> Down
* Alpha Mos Cut to Neutral at Euroland Corporate; PT 1.20 euros (+)
* ARM Holdings PLC ADRs Cut to Hold at Deutsche Bank; PT $70
* Getlink Cut to Reduce at AlphaValue/Baader
* Lagercrantz Cut to Hold at SEB Equities; PT 124 kronor
* Lamor Cut to Reduce at Inderes; PT 2.70 euros
* Landi Renzo Cut to Neutral at Banca Akros (+)
* Nokia Cut to Neutral at Goldman; PT 3.10 euros
* Nokia ADRs Cut to Neutral at Goldman; PT $3.40
* Nordnet Cut to Underweight at Barclays; PT 170 kronor
* Panostaja Cut to Reduce at Inderes; PT 50 euro cents
* Roku Cut to Sell at Seaport Global Securities; PT $75
* SolarEdge Cut to Sell at Goldman; PT $77
* SunPower Cut to Sell at Goldman; PT $4

>>> Initiation
* ABL Group ASA Rated New Buy at Pareto Securities; PT 17 kroner (+)
* Datrix Rated New Neutral at Mediobanca SpA; PT 2.40 euros (+)
* Kid ASA Rated New Buy at Kepler Cheuvreux; PT 132 kroner (+)
* Presto Automation Rated New Hold at Jefferies; PT 62 cents
* Windward Rated New Buy at Panmure Gordon; PT 123 pence

>>> Call
* Goldman’s Kostin Hikes S&P 500 Target for 2024 Amid Dovish Fed
* Morgan Stanley’s Wilson Sees Positive Stock Signals on Fed Pivot
* Centrica Cut at Jefferies With Normalized Earnings Year Ahead
* Entain Raised to Buy at Jefferies on Valuation, M&A Outlook
* Fresnillo Cost Pressures See Morgan Stanley Cut to Underweight
* Nordnet Downgraded by Barclays; Citi Sees Risk to Estimates (1)
* Novo Nordisk Is Intron’s 2024 Pharma Pick, Sanofi Raised to Buy

FT : European buyout firms increase salaries despite downturn

European buyout firms increase salaries despite downturn
Private equity groups operating in Europe paid staff more even as industry faced grim conditions

European private equity firms increased pay for staff this year, underlining the resilience of the industry’s lucrative business model in the face of the toughest market conditions in more than a decade.

Salaries rose by at least 6 per cent across the ranks of employees, according to an annual survey by headhunter Heidrick & Struggles.

Associates, the most junior level of employee surveyed, had the biggest pay bump, with salaries rising 12 per cent on average to €109,000 from a year ago, as the battle for younger staff intensified. Base pay for partners climbed from €307,000 to more than €325,000.

Buyout firms operating in Europe handed out bigger rewards even as higher interest rates ended the industry’s boom. A slump in dealmaking and a lacklustre market for initial public offerings has left buyout groups facing the worst year in a decade for selling their portfolio companies.

In the first nine months of the year, buyout groups generated $584bn from selling their investments, according to the latest data from PitchBook, over $100bn less than in the same period in 2022.

Many of the industry’s biggest names including Blackstone, Apollo Global Management and Carlyle Group have all had to cut targets for their flagship buyout funds this year.

However, the increase in salaries underscores how financially rewarding the industry’s business model can be given firms lock up investors’ cash for at least a decade and earn money from management fees even if performance is mediocre. Private equity executives typically get paid be 1-2 per cent of the assets they manage as well as 20 per cent of the profits from successful deals.

“PE compensation is predominantly derived from the P&L of the firm — which is based on the management fee of the fund, and this is locked in for the life of the fund,” said Tom Thackeray, a partner at Heidrick & Struggles, which surveyed 212 European private equity professionals. 

“If a firm continues to deploy capital, all things being equal, compensation levels will be maintained,” said Thackeray.

The most senior dealmakers at the biggest buyout groups — those managing individual funds of more than €10bn — are predicted to eventually earn significant sums through carried interest, or the slice of profits they take from successful deals. 

The report estimates that executives at such firms are sitting on more than €32mn of carried interest from all the funds they manage, assuming the funds ultimately generate returns that are typical for the industry. 

However, this number may fall if their portfolio companies perform poorly or the buyout groups struggle to sell them.

Carried interest is an important part of remuneration for buyout executives, frequently dwarfing the size of their salaries if they strike successful deals.

Although private equity executives are among the best paid in finance, women in senior roles earn considerably less than their male counterparts. 

In 2023, women who held a managing partner or partner role, earned €377,000 in salary and bonus combined, according to the report. Men in the same position made almost double this, taking home €631,000.

At a more junior level, women earned more than their male counterparts for the second consecutive year.

The percentage of women in senior investment roles at firms with more than £100mn in assets under management stands at just 11 per cent, according to a June report published by Level20 and industry group the British Private Equity and Venture Capital Association.