Private equity investing sustained year-on-year in Europe

European private equity firms invested €36.5 billion in nearly 5,000 European businesses in 2012, a similar number of companies to last year and nearly half of all the companies receiving investment were private equity backed for the first time, according to data from the latest European Venture Capital Association annual handbook.

The EVCA covers private equity activity from early-stage venture capital to the largest private equity firms, investors such as pension funds, insurance companies, fund-of-funds and family offices and associate members from related professions. It represents 650 member firms and 500 affiliate members.

Of the total €36.5bn invested in 2012, €3.2bn were venture capital investments in about 2,900 companies. Although the amount invested reduced year on year by 14%, the number of venture backed companies remained stable.

Overall fundraising dropped by 43% compared to 2011, to €23.6bn. This was driven by a change in the profile of funds raising capital in 2012.

Thirteen funds raised more than €250m last year, in comparison to double that number (26 funds) in 2011. Funds larger than €250m raised 51% less in total compared to 2011. In comparison, funds smaller than €250m raised 25% less over the same period.

The industry attracted significant levels of overseas capital into Europe. Investors from outside Europe contributed about 40% (€8.6bn) of the funds raised.

Pension funds and fund of funds accounted for almost half of the €23.6 bn total, raising more than 20% each. Family offices and private individuals, government agencies and sovereign wealth funds raised between 10-12% each.

EVCA Secretary-General Dörte Höppner said: “Private equity has supported thousands of European companies in 2012, while attracting significant levels of overseas capital into Europe. Despite the challenging macro-economic environment, private equity continues to play a crucial role in identifying those European businesses with the potential to become tomorrow’s success stories, providing essential financing and guidance.

“The drop in overall fundraising reflects the fact that fewer large funds were seeking capital last year. Private equity funds have a long-term investment horizon and investors such as pension funds and insurers, against the background of a low-yield environment, will continue to turn to them to deliver stable returns.”

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