TheChek News Flow

Top private equity groups capture largest fundraising share in a decade

The 10 biggest funds took nearly half of investment capital as concentration increases for established managers

The top-10 private equity funds have taken their largest share of US fundraising in more than a decade last year, as institutional investors rein in commitments and back larger managers amid lacklustre distributions.

These funds accounted for 46 per cent of all US private equity capital raised through September 30 — the highest share since 2014 — up from 34.5 per cent in 2024, according to PitchBook data.

The concentration has coincided with a 17 per cent increase in fundraising by the top-10 funds in North America through December 17 compared with 2024, while fundraising by the rest of the market fell 12 per cent over the same period, according to Preqin, another financial information provider.

Private equity groups, including Advent International, KKR, Thoma Bravo, Blackstone and Bain Capital, have each raised more than $10bn last year for new buyout funds, according to public filings.

The bifurcation underscores how a broader slowdown in private equity has reshaped investor behaviour. Institutional investors, led by pension funds and sovereign wealth funds, have focused their PE allocations on large managers with stable performance.

Hugh MacArthur, global private equity practice chair at Bain, said: “Investors really are feeling like they only can commit to those funds where they have to put money to work and those tend to be the larger funds that represent a safe pair of hands.”

The growing dominance of large funds in PE capital raising has come as the industry has struggled to return cash to investors amid a slowdown in initial public offerings and dealmaking. The distribution rate of buyout funds globally fell to 11 per cent in the second quarter of last year, down from 28 per cent in 2021, according to MSCI.

The underperformance has prompted many asset managers to slow or scale back their allocations to private equity.

The chief investment officer of a public pension plan with more than $20bn in assets said the fund had reduced its exposure to smaller private equity managers after struggling to “get money back” from earlier investments.

“We need some run-off from our existing portfolio,” he said. 

Bain’s MacArthur said a lack of differentiation and resources was putting many PE funds at a further disadvantage in raising capital.

“If you’re in a good relationship with investors and you’ve been around for a long time, but I don’t see anything special in terms of your ability to generate excess returns, those are the folks that are in the most trouble,” he said.

By contrast, leading private equity firms are having less difficulty raising capital, even as the industry grapples with weak distributions. Scott Nuttall, co-chief executive of KKR, said the group was having “a record fundraising year”, adding that it was raising large private equity funds amid “quite a bit of demand around the world”.

Asset managers, particularly larger ones, have traditionally worked with private equity firms able to accommodate sizeable investment commitments.

Bruce MacDonald, chief investment officer of VCU Investment Management, said: “If you need to write a $1bn cheque, there are only a handful of fund groups that can actually handle that size.”

The trend has intensified as many institutional investors have begun severing ties with underperforming private equity managers and concentrating their resources on well-established groups they believe are better positioned to weather the downturn.

“We believe our private equity managers have staying power and are not going away, given their diversified asset bases and global footprints,” said an executive at a second pension plan that invested in several large PE funds last year. “If there are problems, they can be fixed.”

The executive added large PE funds tended to invest in more mature companies that can be “more stable in a challenging world”.

Yet some asset managers warned the shift towards large private equity groups could come at the expense of returns, as the sheer scale of capital makes it harder to generate excess performance.

MacDonald said while VCU did not invest heavily in private equity, it would favour small and mid-sized managers if it did, arguing returns in that segment were more dispersed and that the strongest funds there could outperform the best large-cap managers.

“There’s plenty of bad funds in the lower middle markets,” he said, referring to smaller PE managers. “But if you find a good fund, your upside is going to be a lot greater.”

Brussels plans special rule book for corporates outside national law

Proposal would create a voluntary ‘28th regime’ for companies to operate across EU

Brussels is pressing ahead with plans for a supranational legal regime for EU companies, defying critics who fear creating businesses with a special rule book outside national law will dilute worker rights and disempower regulators.

Michael McGrath, the EU’s justice commissioner, told the Financial Times that he was drawing up a proposal for a new voluntary regulatory regime, not tied to a member state, that would be a viable option for as many European companies as possible.

His decision to push ahead with the plan comes in the wake of almost four decades of on-off attempts in Brussels to create an attractive structure — alongside national company laws — that allows businesses and entrepreneurs to operate more easily across the continent.

“If we are serious about deepening the integration of the single market and removing the barriers to companies being founded and having the potential to grow to a global scale with Europe as their base, this is a crucial instrument and a step that we must take,” said McGrath.

Entrepreneurs in Europe struggle with a fragmented tax and regulatory landscape, and face difficulties accessing capital and attracting talent beyond their home country.

Given the challenge of harmonising all 27 national systems, landmark reports by Mario Draghi, former European Central Bank president, and former Italian premier Enrico Letta both called for an innovative “28th” regime offering an innovative alternative on basic tax, insolvency and labour rules.

McGrath is planning to unveil the proposal, addressing specific barriers for companies in those areas, in late March.

The aim, he said, was for businesses to be able to opt into a legal entity with low or no minimum capital requirements and online incorporation within 48 hours.

The regime would offer clear rules on governance, creditor safeguards, share issuance and transfer, liquidation, as well as digital procedures for capital increase and unified tax treatment of employee stock options.

The measures, which the start-up community has long called for, would also likely be proposed as a regulation rather than a directive — meaning the regime would have full force without needing to be transposed into national law in every member state.

“My instinct is to prefer a regulation rather than a directive,” McGrath said, adding that there was otherwise “a real risk of ending up with 27 versions of the 28th regime”.

Attempts to create an EU-wide company statute have long faced resistance from trade unions. Ambitious plans have also fallen foul of European capitals that are wary of creating an attractive alternative legal home for companies in their country.

The existing “Societas Europaea” statute, a legal form of public company designed to work across the EU, was first proposed in 1988 and took effect in 2004 following years of hard negotiations.

“The SE is a bit like a Frankenstein monster, where you have tied a lot of different body parts. You have a core that is European but then there are 27 different regimes attached to it,” said Anne Sanders, chair of the law faculty at Bielefeld University in Germany.

It has since been adopted by more than 3,000 companies, including Airbus, Allianz, Dior, Porsche and TotalEnergies, but it has been criticised for undermining workers’ rights in jurisdictions such as Germany, which have strong employees’ representation rules.

Objections from member states killed past reform initiatives, including a 2008 push for simpler cross-border rules for small and medium-sized companies, and a 2014 proposal for one-person businesses.

McGrath has pledged that the 28th regime “will not in any way be a vehicle for the diminution of labour rights across the EU” but trade unions remain fearful it would undermine workers’ rights.

“The need for companies to be able to operate around the EU would be very welcome . . . only if it isn’t to the detriment of working people, their pay rights and entitlements,” said Esther Lynch, general secretary of ETUC, representing European trade unions.

“I hope that those lessons have been learnt and the problems aren’t amplified by the 28th company regime,” she added.

Another issue is whether the regime will be limited to a narrow range of companies, such as start-ups, or be available to existing corporates, regardless of size.

McGrath said his aim was to make eligibility as wide as possible. “I want as many companies as possible in the EU to have the opportunity to avail [themselves] of this 28th regime,” he said.

Proposing a broad scope risked member states balking at the reforms, fearing companies could pick their legal seat to lower workers’ rights or pay less taxes, said Claudia-Dominique Geiser, senior expert on EU economic policy at Bertelsmann Foundation.

McGrath prefers the reforms to be introduced as a regulation, which would be directly applicable across the EU. But such an approach may require member states to agree to the reforms by unanimity, rather than a qualified majority.

René Repasi, an MEP responsible for shepherding the 28th regime through the European parliament, said seeking unanimity could result in never-ending negotiations and unworkable compromises.

“The risk of creating Frankenstein’s monster is higher than creating something that will fly on the market,” he said.

Repasi would prefer a directive that could be more quickly implemented. He has also floated the idea of a harmonised debt instrument for the 28th regime that would give investors more clarity on risks and repayment terms.

Sanders of Bielefeld University recommended policymakers go for what is safe, quick and pragmatic so it would “get us somewhere”. “We need something that really makes life easier for companies,” she said. “If we don’t achieve that goal and if we end up somewhere in confusion, then better not do it at all.”

German life sciences giant says looser regulations could reshape Europe’s €6bn seed market

German life sciences giant Bayer believes a change to EU policy on gene-edited crops has the potential to reshape Europe’s €6bn seed market and vindicate its troubled acquisition of US rival Monsanto.

After several years of negotiation, EU institutions have agreed to relax rules that in effect banned gene-edited crops in Europe. The new policy, which requires final approval from governments and the EU parliament, divides plants into two groups.

Those with edits to the plant’s own genome, rather than with DNA inserted from another species, will be exempt from strict genetically modified organism rules. Plants of this type are already widely used in countries such as the US, Brazil and Japan. Crops with more extensive modifications remain subject to GMO rules.

The new policy, which is expected to come into force in 2026, is the first major loosening of European rules on genetic modifications in agriculture. “We’ve effectively had a 30-year conflict over agricultural biotechnology in Europe — and it is finally on the way to being settled,” said Matthias Berninger, Bayer’s head of public affairs and sustainability.

In 2024, the group’s crop science division accounted for about half of its €46.6bn of sales. In 2018, it acquired Monsanto in a $63bn deal that aimed to turn the group into a global leader in seeds and crop science.

But the merger has been overshadowed by billions of dollars of US legal claims linked to Monsanto’s Roundup weedkiller and by European resistance to genetically modified crops. 

Bayer’s market value has more than halved since the deal, forcing it to sell businesses and cut costs.

If approved, the EU policy change will not deliver an immediate financial boost. Bayer has so far avoided applying for EU field trials for gene-edited crops and Europe-grown products are unlikely to reach supermarkets before the next decade.

Executives argue, however, that the change is strategically important for a group that owns among the largest plant genetic data sets in the world following the Monsanto acquisition. “Likely no other company . . . knows more about the genome of individual plants than Bayer,” Berninger said.

Bayer has recently sought to protect the value of its scientific patents, launching US lawsuits against several Covid-19 vaccine makers over the alleged misuse of decades-old genetic technology developed by Monsanto.

Rivals including Corteva, BASF and Syngenta have also invested heavily in gene editing, while smaller European seed breeders say the rule changes could help them compete globally.

Bayer has identified particular opportunities in modified wheat and crops edited to require less nitrogen fertiliser, which would reduce costs for farmers and European reliance on Russian supplies.

Beyond Europe, Bayer views Africa as a key long-term market. “If Europe and the US align on this technology, we can bring it to Africa far faster than before,” Berninger said.

The current EU GMO regulations have been criticised as slow, costly and ill-suited to technological advances. Only a handful of GMOs have been authorised, mainly for animal feed, amid persistent public and political opposition.

The shift comes as farmers around the world grapple with the effects of climate change. Drought, extreme weather and crop diseases have hit yields, while Brussels has limited the use of fertilisers and pesticides.

Arson that left parts of German capital without electricity for days highlights poor energy infrastructure

An arson attack that left parts of Berlin without power for days in freezing temperatures has shaken residents and sparked a debate about the resilience of Germany’s energy infrastructure.

Last Saturday, 45,000 households and 2,200 businesses in affluent south-western districts of the German capital — as well as several hospitals and nursing homes — woke up without electricity, heating or mobile phone service.

Investigators are still working to establish who was responsible for the deliberate fire, which damaged several high-voltage cables running over a canal near a power plant.

Activists purporting to be from a leftwing anti capitalist organisation called Volcano group initially claimed responsibility. But subsequently others who said they were the authentic Volcano group denied involvement.

Germans have grown accustomed to increased sabotage in recent years — which Chancellor Friedrich Merz has mostly attributed to Russian hybrid warfare — but Saturday’s incident caused unprecedented disruption.

As night fell, plunging homes and snow-blanketed streets into darkness, authorities said it would take six days to fully restore power, confronting Germany with its longest outage since the second world war — and a sudden sense of fragility.

By Wednesday, power was finally restored. The country’s ageing energy infrastructure is set to be upgraded after two decades of under-investment, but the blackout has exposed the country’s lack of readiness for such an attack.

“If a group of German anarchists can be that disruptive, imagine what foreign secret services can do,” said Alexandra Prokopenko, a Berlin-based research fellow at US think-tank Carnegie Endowment for International Peace, who was among those affected.

It has also highlighted a degree of bureaucratic inertia and unpreparedness. Berlin’s Christian Democrat Union mayor Kai Wegner, who leads a coalition with the Social Democrats, only visited the affected areas 24 hours after the attack. Wegner, who hails from Merz’s party, later admitted he played tennis on the first day of the outage.

The city waited until Sunday to declare a state of emergency, while some residents in unaffected areas received an “extreme danger” alert on their phone on Wednesday.

The electricity network operator said on Saturday that it was searching for specialist staff to carry out “a complex operation”.

Manuel Atug, an expert in cyber security and critical infrastructure, said the handling of the crisis was “catastrophic”, adding that politicians were seeking to divert attention by focusing on the perpetrators.

“Obviously not all German municipalities take emergency management, crisis management and civil protection seriously and don’t learn from previous incidents,” he added.

Berlin’s grid lacks backup lines to reroute power, a well-known weakness that authorities failed to address, he said. Some cables laid out three or four decades ago need modernising and spare parts for them are no longer available, he added.

Berlin’s interior minister, Iris Spranger, defended the city’s management, saying that it acted quickly and that it had addressed some of the network’s shortcomings.

The Volcano group has allegedly targeted Germany’s grid, radio masts and railway lines since 2011. In 2024, the group was linked to an arson on a pylon near Tesla’s plant outside Berlin, forcing the US carmaker to suspend production for several days.

Anonymous people claiming to be the authentic Volcano group on Wednesday denied involvement in the latest arson attack, saying the organisation had halted such actions after Russia’s 2014 annexation of Crimea.

German intelligence services are still investigating whether the group was behind the arson and have not ruled out a foreign power’s involvement, according to a government insider.

Merz’s interior minister Alexander Dobrindt was quick to declare that “leftwing terrorism is back in Germany with increasing intensity”.

Peter Neumann, a security professor at King's College London, said that the ideology of groups like Volcano is rooted in “various crisis narratives — climate crisis, capitalism critique, technology scepticism and rejection of the state”.

This means they see sabotage ‘‘as a politically legitimate means to accelerate the supposed decline of the existing system”, he added.

In affected areas, the outage exposed social divides as the better off living in villas near some of the prettiest lakes surrounding the capital decamped to hotels and temporary apartments.

Well-known figures in Berlin society were hit, including former ambassador to the US Wolfgang Ischinger. Now chair of the Munich Security Conference, Ischinger complained on X that “instead of planting trees”, the city and federal government should use state infrastructure funds to prevent “one sabotage team” from “shutting down the entire capital’’.

A senior executive at a US company told the Financial Times he dusted off an old radio to keep up with the news. He admitted he was glad he still owned a diesel car: his electric vehicle was trapped in the garage behind an electrically operated door. On Wednesday, he was relieved to see his heat pump restarted without issue.

Others struggled more. Prokopenko found friends willing to host her, and on Tuesday took her cats with her as temperatures descended below 11 degrees in her flat. Contacted by phone, she laughed about the alerts she received on her phone the first day, which included links to websites that were impossible to access without the internet. “But nothing on my mailbox,” she noted.

At Zehlendorf town hall, which was turned into an emergency shelter with makeshift beds, hot meals and charging points for phones, residents of the borough with nowhere else to go were in disbelief.

Joachim Schönleiter, a 98-year-old pensioner who lives alone, recalled being captured by Soviet troops during the second world war. “There are extremists everywhere,” he said on Monday.

Sabine, a 65-year-old office worker on sick leave and walking on crutches, said she suspected Russia might be responsible. “I was afraid even to drink tap water,” she said. “I am not the only one thinking this.”

Natalia Stepanenko, a 55-year old Ukrainian accountant working from home with her son, said the outage brought back memories of her war-stricken hometown of Dnipro.

Meanwhile Emilia von Fumetti, 23, and Trille Schünke, 37 — both volunteers and members of the leftwing Die Linke party — said the attackers gave their ideology a bad name.

This type of attack “affects vulnerable groups the most”, von Fumetti said. “The wealthy this is supposed to target are well provided for. They have cars, they can stay in hotels, they can buy supplies. It’s hitting the wrong people — full stop.”

Stablecoins could shake up global payments — but not with technology

Fintechs have touted stablecoins as a way to revolutionise international transfers

Stablecoins, like the broader cryptocurrency industry, have often been dismissed as a solution in search of a problem. That’s a bit unfair, though. When it comes to high-cost cross-border payments, crypto fans have actually identified a problem where stablecoins could be helpful — just not for the reasons some cheerleaders think.

Stablecoins are a type of digital currency that runs on a blockchain, as bitcoin does, but whose value is pegged against a regular currency. Fintechs and mainstream banks have touted them as a way to revolutionise international transfers, particularly in the US. Stripe and PayPal are enthusiasts; so are Bank of America and JPMorgan, participants in the Zelle bank-to-bank payments network.

Globally, the average price of sending a $200 remittance is more than 6 per cent of the transaction value, according to the World Bank. Businesses too get saddled with high fees. Stablecoin evangelists reckon they can slash those rates by using better technology and cutting out intermediaries.

The market is so huge that even taking a small fee for facilitating transfers quickly adds up. Estimates of the annual value of cross-border payments range from the extremely large — about $200tn, according to FXC Intelligence — to the mind-boggling — one quadrillion dollars, according to a recent IMF paper. That’s 15 zeros, for anyone unfamiliar.

Yet several fintechs have already proven it is possible to slash payment costs without inventing a whole new — energy-intensive — technology. London-listed Wise, for example, moved £85bn across borders in the six months to September, charging an average rate of just over 0.5 per cent.

Wise says it’s agnostic about the type of technology it uses, and would happily use stablecoins if they made transfers cheaper. So far, it remains unconvinced. Its costs are driven as much by keeping up with anti-money laundering rules and other regulations as they are by challenges relating to software and systems.

This is probably the biggest challenge for stablecoins. By rights, they should face at least some of the regulatory costs currently borne by the companies and platforms they are trying to usurp, which would limit their ability to beat their predecessors when it comes to conversion spreads and other fees.

Users of Coinbase’s “advanced” service, for example, could buy and transfer Circle’s USDC coin very cheaply, at least in developed-market currencies. But a newly signed-up user of its default service would pay a 0.5 per cent foreign exchange spread, plus a transfer fee to send the money to another account. The recipient may pay again to convert it back into fiat currency.

That’s not to say stablecoins don’t have a role in upgrading the financial system. One reason international payments have historically been so expensive is that customers are confronted with an oligopoly. While choice was limited to a few large banks and specialists like Western Union, providers could get away with charging high opaque fees.

Entrants like Wise and Revolut in the UK have already forced mainstream banks to respond by lowering their own charges. A flood of new players in the US and elsewhere could do the same. The technology underpinning stablecoins is clever, for sure, but the real game-changer could simply be good old-fashioned competition.