European alternatives on track for record fundraising year, says Preqin
Europe-based alternative asset fund managers now hold EUR2.06 trillion in assets under management (AUM) as of December 2020, up from EUR1.81 trillion a year ago – an increase of over 13 per cent – and are on track to make 2021 a record year for fundraising, according to Preqin's 2021 Alternative Assets in Europe Report, which has been produced with leading European asset manager Amundi for the fourth year in a row.
AUM had grown by 59 per cent over the five years from December 2016 to December 2020, and Europe now accounts for 24 per cent of the global alternative assets industry.
Fundraising, investment, and performance have accelerated in H1 2021. Fundraising by Europe-based private capital GPs in H1 2021 reached 59 per cent of 2020’s full-year total, which, despite the practical challenges caused by travel and meeting restrictions, was the second-highest on record. Investment teams have been busy, with the value of private capital transactions closed in H1 2021 already at 83 per cent of 2020’s full-year total, with venture capital, infrastructure, and private equity the most active sectors.
Strong equity and debt capital markets since Q2 2020 have translated into a buoyant exit market, not just for IPOs, but also for trade sales and refinancing. While return data in the early years of limited partnership funds is only an indicator of future performance, median net IRRs for 2018 vintage private equity and venture capital (PEVC) funds stand at 22.0 per cent, while vintages 2011-2017 have been lifted to between 14.0 per cent and 19.4 per cent. Those appealing performance prospects should attract even more investor capital into European alternative assets going forward.
Dominique Carrel-Billiard, Global Head of Real Assets at Amundi, adds: “Real assets will be the winning bet for a post-Covid world. Most notably, a new post-Covid cycle could see a resurgence of inflation and continue to drive capital towards these asset classes which offer protection against inflation and the prospect of higher returns. Real assets can help to meet the economic challenges posed by the Covid recovery and fulfil investor expectations on both performance and impact, notably by helping allocate capital towards the energy transition. As such it is crucial to make real assets accessible to a wider range of savers.”