European Private Equity Investment: Out of the Quagmire?

Written by | Tuesday, May 19th, 2015

According to the recently published annual report of the European Private Equity & Venture Capital Association (EVCA), European private equity investment including venture capital went up to €41.5 billion marking an increase by 14 percent compared to 2013. It is the highest amount of funding that companies have received in the past five years.

EVCA’s CEO, Dörte Höppner, commented that “private equity and venture capital play an ever increasing role in Europe’s capital markets” as demonstrated by “a clear pickup of investment activity across Europe supported by robust fundraising”. Mr Höppner added that private equity industry showed no signs of overheating, which is why it will “continue to play a central role in the European economy.”

EVCA says that the report is the “most comprehensive and authoritative source of private equity fundraising, investment and divestment data for Europe” providing data for more than 1,200 European private equity firms covering 91 percent of the capital managed in Europe. In 2014, more than 5,500 firms raised venture capital and private equity out of which 80 percent were small and medium-sized enterprises (SMEs). Roughly one half of those firms raised funding for the first time.

As to private equity divestments, they also reached their record high with €37.8 billion in 2014. Last year marked the highest amount of divestments to date in Europe representing a 10 percent increase compared to 2013. At the same time, the amount divested at cost increased by more than 50 percent to €3.3 billion. Last year, private equity fundraising also performed extraordinarily with €44.6 billion, which is the second highest level in the past five years. Moreover, the number of new funds raised is the highest since 2011 with outstanding performance in all private equity segments such as buyouts, growth, mezzanine and venture capital.

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