European private equity fundraising more than doubled in 2013 to EUR53.6bn, according to the European Private Equity and Venture Capital Association’s (EVCA) European Private Equity Activity report.
The increase was driven by a change in the profile of the funds raised, with 12 buyout funds each raising in excess of EUR1bn, representing 66 per cent of total fundraising.
The industry attracted significant levels of overseas capital into Europe accounting for around half of the funds raised (EUR26.2bn). The contribution from North American investors increased from 24 per cent in 2012 to 36 per cent.
Pension funds and fund of funds accounted for more than half of the EUR53.6bn total funds raised. Pension funds were the source of almost 40 per cent of funds. Other major sources include fund of funds (16 per cent), sovereign wealth funds (11 per cent) and insurance companies (11 per cent).
Venture capital accounted for eight per cent of total fundraising. The EUR4bn raised represents an increase of four per cent on 2012. Government agencies’ contribution remained stable at 38 per cent. Family offices and private individuals contributed 23 per cent and fund of funds 12 per cent.
Overall investment by private equity into European companies remained stable in 2013 at EUR35.7bn in more than 5,000 European businesses. Of these, more than 40 per cent were backed for the first time.
Of the total EUR35.7bn, venture capital investment accounted for EUR3.4bn, in more than 3,000 companies. The amount invested increased by five per cent 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 EUR33.2bn. The number of companies exited increased by almost 10 per cent and the amount divested at cost increased by 54 per cent. The most prominent exit routes were trade sales (27 per cent), sale to another private equity firm (26 per cent) and sale of quoted equity (14 per cent). Almost 40 per cent 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 (EUR2.2bn) and almost four times by number of companies (23).
EVCA chief executive Dörte Höppner says: “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.”
