2013 European private equity activity7 May 2014
Europe private equity’s most detailed data review shows uplift in funds raised, overseas investor interest and jump in exits, IPOs
- Pension funds remain biggest investor in private equity
- Investor commitments to venture capital edging up
- 40% of companies backed by private equity for the first time
Brussels, Belgium – 7 May 2014 - The European Private Equity and Venture Capital Association (EVCA) today launches its European Private Equity Activity report, the industry’s most authoritative source on private equity fundraising and investment activity across Europe. With data on more than 1,200 European private equity firms, the 2013 statistics cover 90% of the €555 billion (bn) in capital under management in the European market.
Fundraising more than doubled from 2012 to €53.6bn. This was driven by a change in the profile of the funds raised, with 12 buyout funds each raising in excess of €1bn, representing 66% of total fundraising.
The industry attracted significant levels of overseas capital into Europe accounting for around half of the funds raised (€26.2bn). The contribution from North American investors increased from 24% in 2012 to 36%.
Pension funds and fund of funds accounted for more than half of the €53.6bn total funds raised. Pension funds were the source of almost 40% of funds. Other major sources include fund of funds (16%), sovereign wealth funds (11%) and insurance companies (11%).
Venture capital accounted for 8% of total fundraising. The €4bn raised represents an increase of 4% on 2012. Government agencies’ contribution remained stable at 38%. Family offices and private individuals contributed 23% and fund of funds 12%.
Overall investment by private equity into European companies remained stable in 2013 at €35.7bn in more than 5,000 European businesses. Of these, more than 40% were backed for the first time.
Of the total €35.7bn, venture capital investment accounted for €3.4bn, in more than 3,000 companies. The amount invested increased by 5% and the number of venture-backed companies remained stable since the previous year.
A total of 2,290 European companies were divested or sold (exited) by private equity fund managers in 2013, representing former equity investments of €33.2bn. The number of companies exited increased by almost 10% and the amount divested at cost increased by 54%. The most prominent exit routes were trade sales (27%), sale to another private equity firm (26%) and sale of quoted equity (14%). Almost 40% of the divested companies followed these exit routes.
The strength of public markets in 2013 was reflected by the steep increase in divestments by flotation (IPO). This exit route increased more than seven times by amount (€2.2bn) and almost four times by number of companies (23). EVCA Chief Executive Dörte Höppner said: “Private equity has confirmed its place at the heart of the European growth story, supporting over 5,000 companies and bringing life back to the IPO market.
“Private equity plays a crucial role in identifying tomorrow’s success stories, providing businesses with both access to capital and essential operational and strategic expertise. I am particularly pleased to witness foreign investors’ enthusiasm for European private equity – a sure sign that the world’s largest trading bloc has regained its rightful place at the centre of the investment map.”
EVCA European Private Equity Activity Report
The EVCA European Private Equity Activity report is the most robust source of data for European private and venture capital activity. It is based on independently collected data, data from private equity fund managers (General Partners) across Europe and from national private equity and venture capital associations. The 2013 activity survey by PEREP_Analytics covered 90% of the €555bn capital under management. EVCA data is used routinely by the European Commission, OECD, EUROSTAT, major think tanks, academics and journalists.
Frequently Asked Questions
1. How much money was raised?
Overall fundraising more than doubled to €53.6bn in 2013 from €24.6bn in 2012.
2. Why the increase?
The number of funds involved in fundraising decreased from 266 to 253. The increase in funds raised was driven by buyout funds of which 12 individually raised more than €1bn each, representing in aggregate 66% of total fundraising.
3. Where did the money come from?
Pension funds provided almost 40% of sources of funds. Fund of funds contributed 16%, followed by sovereign wealth funds (11%) and insurance companies (11%). Around half of the amount (€26.2bn) was raised from institutional investors outside Europe. In 2013, the share from North American institutional investors increased to 36% from 24% in 2012.
4. What about investment?
- Overall investment in European companies remained stable. More than 5,000 companies were backed in 2013, as was the case in 2012. Equity investment decreased by 3% to €35.7bn.
- More than 40% of the companies that received investment in 2013 were backed for the first time by private equity as in 2012.
- The total amount of venture capital invested increased by 5% to €3.4bn. More than 3,000 companies were venture-backed. Start-up stage investments were accountable for the majority of venture capital activity by amount (55%) and number of companies (59%). The life sciences, computer & consumer electronics, communications and energy & environment sectors accounted for over 70% of venture capital investment.
- More than 800 companies received buyout investment. The related equity amount invested reduced by 2% and the number of companies by 9% compared to 2012. More than half of buyout investment concentrated on companies active in business & industrial products, consumer goods & retail, business & industrial services and life sciences.
- As in 2012, more than 1,000 companies attracted growth investment. This represented an increase of 6% by number of companies and a 10% decrease in the amount of equity invested. About 50% concentrated on companies active in business & industrial services, business & industrial products, computer & consumer electronics and communications.
5. How many companies were exited?
- A total of 2,290 European companies were exited representing former equity investment of €33.2bn. The number of companies increased by almost 10% while the amount divested at cost increased by 54%. The most prominent exit routes by amount were trade sale (27%), sale to another private equity firm (26%) and sale of quoted equity (14%) representing almost 40% of the divested companies.
- The strength of public markets in 2013 was reflected by the steep increase in divestments by flotation (IPO). This exit route increased more than seven times by amount at cost (€2.2bn) and almost four times by number of companies (23).
- Divestments from venture capital investment represented 43% of all exited companies. They accounted for 7% of the amount divested at cost. The equity amount divested increased by 21% to €2.2 bn. The number of exited venture-backed companies decreased slightly by 2% to 994. Trade sale, write-off and sale of quoted equity were the most prominent exits routes.
- Buyout divestments represented 85% of the equity amount at cost and 30% by the number of companies. The amount divested increased by 53% to €28bn. By the number of companies, divestments increased by 19% to 688. Sale to another private equity firm, trade sale and sale of quoted equity were the most prominent exit routes.
- Growth divestments represented 5% of equity amount at cost and 25% by number of companies. The amount divested increased by 54% to €1.8bn. The number of companies divested increased by 21% to 574. Trade sale, sale to another private equity firm, write-off and sale to management were the main exit routes.
6. What does the data indicate about fund profitability?
Divestment statistics at cost are not an indicator of performance because they measure how much equity was originally invested. For example, in 2007, a company received an equity investment of EUR 50 million. In 2010, this company is fully exited via trade-sale. We then report a trade-sale of EUR 50m. See next question for more information.
7. What about returns data?
Information on European private equity fund performance can be found in the EVCA Thomson Reuters Performance Report. The EVCA reports returns at fund but not portfolio company level. Studies such as EY’s ‘Myths and Challenges’ (2013) provide insights on and the drivers of returns on a portfolio company basis.
8. Can you provide a breakdown of individual funds and countries?
Confidentiality rules do not allow reporting of disaggregated data that would reveal the identity of individual private equity firms and their portfolio companies. The EVCA does provide aggregate figures on a country by country basis (on request)
9. Can you put this into context?
- €307bn in equity was invested in 24,524 European companies that received private equity investment between 2007 and 2013.
- Approximately 20,000 European companies that received private equity investment between 2007 and 2013 remain actively private equity backed.
- Frontier Economics’ 2013 report examines research evidence produced over the last ten years in order to identify links between private equity and economic growth.
10. How much data was collected, from how many firms and how many countries?
1,917 private equity firms with, in aggregate, €555bn capital under management are monitored by the PEREP_Analytics database. The 2013 activity survey by PEREP_Analytics covered 90% of the €555bn capital under management. Information on activity (fundraising, investment and divestment) was recorded for more than 1,200 firms.
Data is collected for the whole of Europe, including for example Switzerland, Norway and the Ukraine, and not just the European Union.
- Only direct private equity investment funds that primarily focus on investments in Europe are monitored.
- Funds raised are recorded in the country of the advisory team that is raising/managing the fund
- Investment and divestment figures only refer to portfolio companies located in Europe
- The funds included in the statistics are: private equity funds making direct private equity investments, mezzanine private equity funds, co-investment funds and rescue/turnaround funds.
- The following funds are excluded from the statistics: infrastructure funds, real estate funds, distress debt funds, primary funds-of-funds, and secondary funds-of-funds.
- All data is collected under full-confidentiality for private equity firms and portfolio companies. No commercial objective is pursued.
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