European private equity activity registers resilient fundraising and investment in H1 2020 amid Covid-19 disruption

A new report from Invest Europe, an association representing Europe’s private equity, venture capital and infrastructure sectors, has revealed a resilient private equity investment and fundraising environment, as investors and fund managers continue to actively invest in European businesses despite the disruption caused by Covid-19.

According to ‘Investing in Europe: Private Equity Activity H1 2020’, a comprehensive report on private equity activity in Europe during the first half of the year, private equity funds raised EUR49 billion in the first half of 2020, in line with last year’s first half figure, putting the industry on track to raise a full-year total on a par with average fundraising level achieved over the last three years.

Over the same six month period, private equity funds invested EUR36 billion and backed 3,401 companies, with about 60 per cent of investment value going into follow-on investments, as the industry supported its businesses through the intense liquidity crisis caused by the introduction of economic lockdown measures across Europe.

The figures also highlighted the industry’s continued focus on innovation as investments in ICT and biotech & healthcare accounted for over half of capital invested. In addition, venture capital investment achieved a new half-year record with EUR5.6 billion invested into innovative start-ups and scale-ups. Overall private equity investment was 17 per cent lower in value as tougher trading conditions and worsening outlooks impacted investment.

“European private equity has demonstrated its adaptability through the crisis caused by ongoing pandemic, supporting existing portfolio companies as and when needed, while continuing to invest in new businesses that require capital and operational expertise to grow,” says Eric de Montgolfier, CEO, Invest Europe. “While the outlook remains uncertain as governments tighten restrictions on people and businesses, private equity is well placed to help Europe weather the tough conditions and emerge stronger. Indeed, Europe’s private equity managers have shown a clear focus on steering their businesses through the crisis and have the support of pension funds and other long-term investors that are clearly committed to the asset class.”

Following on from its first half activity data report, Invest Europe in collaboration with Arthur D. Little, the international management consulting firm, is preparing to launch the first edition of a report based on a pan-European, forward-looking survey, that captures views from private equity managers and investors on the future of the industry in the context of the Covid-19 pandemic.

The report, which will be released during a webinar hosted by Invest Europe and Arthur D Little later this month, assesses the impact of Covid-19 on private equity and venture capital but also finds that about 60 per cent of managers and investors expect capital allocations to private equity to rise over the next three years. In addition, a majority expect stronger investment opportunities over the coming 12 months compared to 2019 and believe that ICT, biotech & healthcare and business services will be important areas for investment in the future.