Private equity in Iberia has undergone profound change over the past decade, maturing from a peripheral market into a recognised engine of deal flow and capital deployment.

At the Private Equity Insights Iberia Conference, leaders from Alantra, Generali, PAI Partners, and Draycott highlighted how the region’s distinct economic profile, its base of family-owned businesses, and a sharpened fundraising environment are setting the stage for the next phase of growth.

Succession as the defining driver

One of the most powerful forces shaping Iberian deal flow is generational transition. Thousands of family-owned businesses across Spain and Portugal are preparing for ownership changes, creating fertile ground for private equity partnerships and acquisitions. This shift is not only unlocking transactions but also changing the way funds approach value creation. Instead of relying on traditional financial engineering, managers are building businesses through buy-and-build strategies, professionalisation, and internationalisation. This approach is positioning Iberian funds to create “local champions” that can compete globally, even in more volatile macroeconomic conditions.

Structural advantages in Iberia

Alantra CEO Gonzalo de Rivera underlined how Iberia’s fundamentals provide an edge within Europe. The region has consistently outpaced Eurozone GDP growth, with Spain forecast at 2.5–2.7% compared to roughly 1% across the bloc. Energy costs are substantially lower than the EU average, electricity prices around 26% lower and gas about 16%, while fibre-optic penetration is among the highest in Europe. These factors, combined with labour costs that remain below most European peers, have bolstered competitiveness. Crucially, Iberia’s economy is dominated by SMEs and family businesses, which account for 70% of GDP. With 75% of transactions involving equity cheques below €50m, the region offers deal sizes that favour local teams with deep networks over pan-European giants.

Resilient sectors and new themes

Sector resilience has so far been uneven but instructive. Consumer staples, healthcare, and industrials continue to provide dependable opportunities, with non-discretionary consumer goods such as food and healthcare showing particular stability. Infrastructure-linked investments are also expanding as Europe pours capital into energy transition and digital capacity. Defence, once peripheral, has moved into sharper focus as governments boost spending. While many investors face restrictions on direct exposure to arms manufacturers, opportunities are proliferating in adjacent sectors such as services, technology, and cybersecurity. As Generali’s Diego Alaimo noted, the preference is for “companies that provide services to such kind of businesses,” avoiding direct exposure while still tapping the sector’s growth.

Fundraising discipline tightens

If deal flow is strengthening, fundraising has become markedly more demanding. The balance of power has shifted decisively to LPs, who now expect managers to demonstrate real distributions before securing new commitments. NAV valuations alone are no longer persuasive; DPI has become the critical benchmark. Co-investments have moved from being optional to expected, and LPs increasingly prefer funds that already hold assets rather than blind pools. This has forced GPs to extend fundraising timelines, put more of their own capital at risk, and show stronger alignment. Alantra, for instance, increased its GP commitment above 10% of its most recent fund, fully underwritten from day one, to reassure investors and accelerate initial closings.

Europe through a different lens

While global investors have often seen Europe as a low-growth, defensive allocation, the panel suggested sentiment is shifting. Mateo Pániker of PAI Partners argued that Europe is now benefiting from several structural advantages compared with the US: lower consumer indebtedness, more controlled inflation, and stock markets that look undervalued relative to their American counterparts. Europe’s political challenges remain, but the continent is being recast as a more stable and even attractive long-term environment for private equity deployment, particularly in infrastructure and energy transition.

Defining success in the next decade

Looking ahead, the panelists converged on a few markers of future success: consistent cash distributions through cycles, alpha generation rooted in operational improvement rather than leverage, and sharper differentiation in sourcing. LPs are scrutinising track records across crises, from 2008 to 2020 to the recent slowdown, and are rewarding those who can demonstrate resilience across vintages. The rise of the secondary market as a liquidity channel is also expected to play a larger role in the decade ahead.

The Iberian private equity market has reached a point of maturity where its distinctive features, family succession, a dense SME landscape, and competitive structural advantages, set it apart from other European regions. But as fundraising standards tighten and investors become more selective, only those managers who combine local depth with disciplined execution will be able to capture the full potential of Iberia’s next growth chapter.

by Andreea Melinti

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