PE, VC Investments Expand into Cheaper European Deep Tech

Global investors are pouring private equity (PE) and venture capital (VC) funds into European tech companies, which are relatively less expensive than their US counterparts. According to global investment banking (IB) industry sources on the 8th, global capital is shifting to European mergers and acquisitions (M&A) and growth capital markets due to lower valuations compared to the US. Data from asset manager Schroders shows that the median Enterprise Value to EBITDA (EV/EBITDA) for PE-led transactions in Europe is approximately 11.2x, lower than the 12.8x in the US. Carve-out transactions, which involve spinning off and selling specific divisions from large corporations, allow for acquisitions at levels around 7x EBITDA, though entry price varies significantly depending on the transaction type and sourcing capabilities. European consulting firm Roland Berger analyzed that improved debt financing conditions, price visibility, and the normalization of the pending exit pipeline are key drivers driving the resumption of European PE market transactions this year.

European deep tech companies with foundations in strategic industries such as artificial intelligence (AI), semiconductors, energy, and defense are being evaluated as alternative investment destinations. European companies with core technologies are seeking partners for manufacturing, mass production, and commercialization. The official cooperation between South Korea and the European Union (EU), centered on advanced strategic industries, is also supporting the expansion of cross-border transactions. At a recent Korea-EU summit, joint research combining Korea's semiconductor manufacturing capabilities with Europe's strengths in equipment and research and development (R&D) was emphasized. Institutional cooperation at the government level is continuing, such as upgrading cooperation with France to a strategic partnership to expand exchanges in advanced industries.

According to the IB industry, cross-border M&A transactions, such as strategic alliances and joint ventures connecting European deep tech firms with Korean manufacturing capabilities, are taking shape. It has been confirmed that networking events involving capital market officials from both countries are being planned to commemorate the 140th anniversary of diplomatic relations between Korea and France.