European private equity fundraising remains subdued, with volumes raised over the last four years (2009-2012) being only 40 per cent of those raised in the four year period prior to that (2005-2008), according to research carried out by Acanthus Advisers.
However, for funds with well differentiated strategies and solid track records, the market remains very much open, with some notable fund raising successes.
Acanthus Advisers’ European Mid-Market Fundraising Review 2013 provides detailed data on European fundraising statistics, year by year, country by country, as well as commentary on the various structural challenges that private equity faces.
According to the review mid-market fundraising for 2012 remained flat, shrinking slightly to EUR13.2bn from EUR14.7bn in 2011, while cash back to investors remains extremely low, with only 27 per cent of all amounts committed since 2004 being returned as cash to investors and only 23 per cent for amounts committed in the years 2006-2008.
Accathus believes that major structural challenges remain, including the effect of increasing solvency regulations; the contraction of funds of funds; the continued competition from secondary opportunities; and increasing competition from emerging markets, where GP landscapes continue to mature, offering credible institutional alternatives.
Emerging Europe (in particular Russia and Turkey) raised record amounts for their markets, however they were both dominated by a handful of leading established names.
Capital overhang continues to normalise from the highs of 2008 and 2009, resulting in a welcome reduction in competition for quality assets.
With increasing LP selectivity, strategy differentiation, team stability and depth, and a highly supportive LP base are increasingly critical to fundraising success.
