Private equity funds raised 25%* less than in 2007
Private Equity for 2008 in the Main Centres of Activity
in Europe
For the first time, Grant Thornton France has gathered the 5
most important European countries together to perform the study
"Private Equity for 2008 in the Main Centres of Activity in Europe"
and has presented it at Grant Thornton’s London office the 9 June
2009. It is the first time these major national associations which
represent their respective Private Equity and Venture Capital
industries, have collaborated to produce a common statistics
study.
The study shows that in the context of the credit crunch the
activity remains resilient in 2008 and shows a positive trend in
terms of numbers of investments in each country, except for United
Kingdom which declined by 9%.
PRIVATE EQUITY FUNDS RAISED 25%* LESS THAN IN 2007
European private equity funds raised an aggregate of €48.9
billion(*) in 2008, representing a 25% decline versus 2007.
This study shows that only France bucked the downward trend,
with fundraising increasing to €12.7 billion, a 27% increase from
2007 when €10 billion was committed to private equity funds due to
fewer significant fundraisings.
By contrast, the amount of private equity funds raised in the
United Kingdom (UK) dropped by 21% from €36.9 billion in 2007 to
€29.1 billion in 2008 - a far cry from the record €43.2 billion
raised in 2006.
Banks, Insurance companies pension funds and funds of funds are
the four main subscribers which represent nearly 60% of funds
collected.
Domestic funding accounted for 77% of the private equity funds
raised in Germany while by contrast in United Kingdom private
equity funds received 76 % of their 2008 funds from non-domestic
sources.
INVESTMENTS IN TERM OF NUMBER OF COMPANIES INCREASED (+1% to
+18%) ALTHOUGH IN THE UK THE NUMBER OF DEALS FELL BY 8% COMPARED TO
2007.
Italy saw an exceptional surge in amount invested last year
compared to all other countries in the study which saw declining
amounts invested - United Kingdom: -38% to about €24.6 billion,
France: -20% to about €10 billion, Germany: -14% to about €7.1
billion and Spain -32% to about €3 billion.
In France Germany and Italy, buyout remains the largest stage of
investments by value (from 53% to 76%). Whereas early stage and
capital expansion remain significant in terms of number of
investment made (from 60% in Italy to 96% in Spain).
In most countries the majority of deals (in excess of 75%) are
done in domestic markets. The exception is the UK, where only 43%
are UK companies. However, the average size of non-domestic deals
tends to be higher (€37 million compare to €8 millions).
The value of private equity divestments dropped sharply
across Europe by value (-20% to -56%) and by number of divestments
(-9% to -34%)
The UK recorded a 20% decline to €13.7 billion, while France saw
a 44% drop to €3.2 billion, Germany a 39% drop to €1.8 billion and
Italy a 55% drop to €1.2 billion and the most important drop is
seen in Spain by 56% to €0.7 billion.
The collapse of initial public offerings (IPOs) and falling
appetite for secondary buyouts dramatically curbed the exit
opportunities for private equity firms. They will continue to focus
on portfolio management for the foreseeable future.
Write offs were a relatively more important means of divestment
in 2008 in all countries: France with 6%, Germany with 8%, Italy
with 13% UK with 16%, and an exceptional increase for Spain with
22%.
(*) aggregated figures. These totals may include some
double-counting. The statistics were compiled by the national
venture capital associations comprising: BVCA, AFIC, BVK, AIFI and
ASCRI.