Private equity fundraising grows by 40%, says Acanthus

Private equity fundraising in the European mid-market saw a big rise in 2011, despite the return of serious macroeconomic concerns in the second half of the year.

A study from Acanthus Advisers, an independent advisory firm focused on private equity fund placement, showed that mid-market private equity fundraising reached €14.9bn in 2011, up from €10.5bn in the previous year, an increase of around 40%.

This was further boosted by performance at the large cap end of the market, where €18bn was raised, up from just €1bn in 2010 and €9bn in 2009. In the boom year of 2007, fundraising reached €43bn.

The top performing regions last year were Benelux, France and Scandinavia. The UK fell from top spot last year to fourth, in terms of aggregate fundraising performance.

The Acanthus study found a lower than average fund size in the mid-market: €281m, down from €369m in 2007. This indicates that, despite the record number of funds in the market, success levels are falling.

Turnaround funds beat their 2007 record year of €1.4bn, raising a total of €1.6bn.

Fundraising expectations depends to an extent on the ranking of GPs, the so-called ‘stratification’. Just 4% of capital was raised by those GPs ranked lowest on strategy, track record, team and LP base.

Capital overhang has fallen from €119bn to €94bn – 32% of all funds committed since 2004. This figure is expected to fall further as 2007 and 2008 funds reach investment period expiry.

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