European companies raised a record-breaking EUR10.6 billion of venture capital during the first six months of 2019 according to analysis by Refinitiv.
The total raised, during the first six months of 2019 (H1 2019), marked an increase of 61 per cent year on year. Despite the record-breaking deal values in the period, deal volumes continued to decline as only 683 rounds were completed in the first half. This is down 7 per cent from H1 2018 and marked the slowest start to a year since 2009.
Greg Bauman, Manager, Private Equity Contributions at Refinitiv, says: “We’re seeing firms raising more money than ever from investors but at the same time, firms are becoming more selective and are preferring to invest in more established businesses.”
Late-stage companies accounted for 26 per cent of total rounds in H1 2019, larger than any documented annual share. Information Technology (IT) remained the main recipient of VC investing in the first quarter by a wide margin, securing EUR8.4 billion, or 80 per cent. This was followed by Life Sciences with EUR1.1 billion and other sectors made up EUR1.0 billion.
Outside investment continued to be one of the main driving forces behind the increase in expenditure, particularly from investors overseas, as funds based in the Americas supplied 31 per cent of all equity from disclosed sources during the half, a share not seen since 2001.
Top European VC deals in H1 2019 were the EUR1.1 billion funding round into OneWeb, followed by Deliveroo’s EUR515 million investment and GetYourGuide, which secured a EUR433 million investment.
European companies saw buyout and related deal values of EUR41.6 billion in H1 2019, down 19 per cent from the same period last year but was still the third strongest first half in the previous decade.
A total of 624 buyout and related private equity deals were completed during the first six months of 2019. Despite a drop in values, these volumes were up 13 per cent from the same period last year.
As volumes increased, so too did PE’s share of all M&A activity, climbing to 8 per cent in H1 2019, a level not seen since the first half of 2014.
The top three sectors for investments were: Industrial/Energy with EUR9.5 billion (23 per cent), Consumer Related with EUR8.1 billion (20 per cent), and Computer Software with EUR7.1 billion (17 per cent).
Top European deals for the half was led by Merlin Entertainments, which received a recommended offer of EUR6.6 billion announced at the end of June. This was followed by the EUR4.3 billion, Cepsa, and EUR4.0 billion acquisition of Travelport Worldwide.
The global deal-making by European PE funds sustained a rapid pace in H1 2019, as investors joined 84 transactions valued at EUR21.9 billion, the strongest first-half since 2008.
Bauman says: “Venture Capital activity looks to be continuing at pace and looks likely to surpass the full year 2018 investment total by the end of September. This year is therefore likely to see the largest year since the dot-com era barring an unforeseen downturn.
On Private Equity, we are also seeing a strong deal outlook for the rest of the year which should make reaching or surpassing the 2018 tally is a real possibility.”
