European Mid-Market Private Equity supports SMEs and investors with growth and returns outperformance

• European mid-market private equity delivers 17% annualised net return to end-2020

• €34bn invested into 841 companies in 2020, supporting companies through the pandemic

• €137bn raised by the mid-market from 2016-2020, up 65% on previous five-year period

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, has today published a new report entitled ‘Europe’s Engine for Growth’, highlighting mid-market private equity’s contribution to mid-sized firms that are the backbone of the European economy, as well as its strong returns for pension funds and long-term investors that support pensions and savings.

The research digs deep into the performance and investment profiles of the European mid-market to give new insights into this critical segment of the private equity industry. It shows that mid-market funds delivered a net IRR of 17% since inception to the end of 2020.

Europe’s Engine for Growth shows the mid-market’s financial commitment to the economy with €34 billion invested across 841 companies in 2020, the seventh consecutive year of investment value growth, as firms continued their strong support of businesses throughout the pandemic. Over the five years from 2016-2020, mid-market private equity raised a total of €137 billion to invest in mid-sized companies, up from €83 billion over the period from 2011-2015, providing significant capital to further aid Europe’s recovery.

Europe’s mid-market plays an essential role in European society through employment across the continent. In 2020, companies backed by mid-market firms employed some 3 million workers – more than the entire population of Lithuania – and created jobs at a rate of 6.4%, outperforming the 0.9% seen in Europe as a whole.

Eric de Montgolfier, CEO of Invest Europe, said:

“The European mid-market is where the rubber meets the road in European private equity’s value creation chain: funds take entrepreneurial companies and set them on the path to being European and global success stories. Across Europe, mid-market private equity funds are creating jobs, driving innovation, and championing sustainability. Mid-market funds are delivering superior returns that support European pensioners and savers.”

The report draws on real-life case studies to showcase how private equity improves business performance and applies higher ESG standards to deliver social and environmental benefits.

The segment is also an important supporter of innovation and digitalisation trends – creating a more competitive Europe. For instance, investment in ICT (information and communications technology) rose from 18% of all mid-market capital invested in 2016 to 37% in 2020.