Despite the return of serious macroeconomic concerns in the second half of the year, private equity fundraising in the European mid-market saw a big rise in 2011, according to the latest research from Acanthus Advisers.


The firm’s’ European Mid-Market Fundraising Review 2012 shows that private equity fundraising in the mid-market reached EUR14.9bn in 2011 – an increase of around 40% on the previous year, when just EUR10.5bn. This was further boosted by performance at the larger end of the market, where EUR18bn was raised – up from just EUR1bn in 2010 and EUR9bn in 2009. The top performing regions were Benelux, France and Scandinavia.
There are still a record number of funds in the market, but success levels are falling, evidenced by a lower average fund size in the mid-market: EUR281m, down from EUR369m in 2007
Turnaround funds beat their 2007 record year of EUR1.4bn, raising a total of EUR1.6bn
Benelux, France and Scandinavia were the strongest performers, with the UK falling from top spot to fourth place in terms of aggregate fundraising performance
There was further evidence of stratification of fundraising expectations: just 4% of capital was raised by those GPs ranked lowest on strategy, track record, team and LP base
Capital overhang has fallen from EUR119bn to EUR94bn – 32% of all funds committed since 2004. This figure is expected to fall further as 2007 and 2008 funds reach investment period expiry.
“The year has seen a reasonable amount of success, with over EUR14bn raised across 50 funds,” says Acanthus Managing Partner Armando D’Amico. “Despite the recent deterioration of fundraising conditions, the number of funds currently raising or looking to raise imminently is as high as it has ever been. The result has been funds continuing to take longer to raise, making numerous interim closes significantly under target.”


“While macro-economic gloom continues into the start of 2012, there are reasons to remain cautiously optimistic. European firms that have survived and raised again are strongly positioned in an environment with less capital overhang than the previous years and, consequently, with less over-heated deal valuations, at a cyclically attractive point in time. One theme for LPs in 2012 will be portfolio rationalisation and, related to this, the treatment of ‘zombie’ funds whose performance will prevent them from raising again.”
