About private equity
How private equity invests in privately-owned businesses, supports jobs and creates prosperity.
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Private equity's contribution
Private equity investment helps create more successful businesses with stronger, more sustainable futures.
By significantly improving the financial performance of the companies it invests in, private equity plays an important role in Europe's prosperity. Healthier companies invest more in innovation, create more jobs and contribute more to economic growth.
When the time is right, private equity managers sell their investment portfolios. This generates attractive returns for the professional investors that ultimately back private equity funds, such as pension funds and insurers that use the proceeds to pay for the retirements of millions of European citizens.
Impact in numbers
Over the past few years, since the financial crisis, private equity has become an increasingly important source of investment for European businesses, and SMEs in particular. It is critical part of a more resilient and sustainable financing ecosystem across the continent.
invested by private equity in companies located in the EU from 2014 to 2018
companies backed by private equity in the EU
of which are SMEs
Impact for businesses
Helping companies grow
Private equity supports the ambitions of privately-held companies by providing them with:
- Capital that they often can’t get elsewhere or is too expensive
- Business expertise that has a track record of building successful companies
- Active hands-on support from investors whose interests are aligned with management
- The expertise, affiliations and contacts they need to expand (for example overseas or through acquisition)
- Help for management seeking to buy themselves out or owners looking to exit
This support helps businesses become more successful and provides them with brighter, more sustainable futures. And when companies grow to the next level, they contribute to economic growth and create employment.
Ron Kalifa
Deputy Chairman
Worldpay
Impact for investors
Creating investment growth
There are a wide range of investors in private equity, but pension funds and insurance companies are among the largest and most important. They invest in private equity because:
- They want access to privately-owned companies that are often more entrepreneurial and successful
- Private equity has consistently been one of the best performing parts of their investment portfolios
- Private equity helps them to diversify their portfolios and have a spread of investment types that deliver strong risk-adjusted returns
For most pension funds and insurers, private equity is part of an extensive investment portfolio. They are looking for strong investment returns for their beneficiaries – the people on the street with pensions or life assurance policies.
Swedish public pension fund executive
Impact for society
Creating prosperity and growth
By helping create better businesses, private equity has a profound impact on the social and economic fabric of Europe. The benefits include:
- Actively encouraging innovation and entrepreneurship, helping people deliver their personal ambitions
- Investment in privately-held companies at the forefront of innovation, creating services and products that enhance people’s lives
- Helping to create and preserve jobs, and enabling people to develop skills in new areas and technologies
- Driving significant economic growth
- Creating tangible value – through real investment in real businesses, not artificial financial engineering
- Helping companies overcome challenges and secure a more sustainable future, preserving businesses and the jobs and communities that depend on them
Private equity is an essential driver of European growth, employment, innovation, and economic and social prosperity.
Private equity in action
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Euromed
Nurturing a Spanish leader in herbal extracts
02 Jul 2019 -
Lily O'Brien's
Irish-based manufacturer of premium branded chocolates and desserts
10 Jul 2018 -
Bike24
Transforming a German cycling retailer into a global e-commerce player
26 Jun 2018 -
Vivalto Santé
Building a network of premier private hospitals throughout France
09 Oct 2014 -
Xtraice
Creating a world-leading, energy-efficient ice rink producer
09 Oct 2014 -
Worldpay
Building a global payments business from a former bank division
30 May 2014
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Creating a music revolution
Private equity helped the leading streaming service change the world of music forever.
25 May 2018 -
Promoting 'good business'
Private equity drives improvement in the operations, conduct and performance of businesses, enabling them to make a more valuable and sustainable contribution to society.
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Delivering better pensions
Private equity outperforms publicly listed markets, and provides better returns for its investors, many of whom are the millions of pensioners across Europe.
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Investing €54bn a year in European growth
European private equity has a total of around €640 billion in assets under management, and invests an average of €54bn each year in growth.
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The world's most innovative region
Private equity has helped Europe become the world's most innovative region, with EU nations taking six of the top ten places in a survey of the world's most innovative countries.
In this section
How does private equity work?
What does private equity offer to investors?
