Fund-raising pulling back only slightly from the record numbers of 2006, and still achieving a level 10 per cent higher than in 2005. Of the €79bn raised, €60bn was allocated to buyouts and €10.4bn to venture and growth capital. Around half of the total funds raised went into 14 funds that closed above €1bn.
In terms of investments, buyouts rose substantially on the back of successful deals in the first half of the year, from €50.3bn to €58.3bn, while venture and growth dropped from €17.3bn to €12bn – although buyouts accounted for only 23.7 per cent of the number of individual deals. Divestments dropped by 18 per cent to €27.1bn.
Pension funds were the largest sources of capital at 18 per cent, followed by banks and funds of funds. Geographically, the US continued to be the biggest investor in European funds at 19.5 per cent, followed by the UK at 16.9 per cent. Greece and Germany were the biggest Continental European buyers.
Average returns across the industry stood at 11.8 per cent at the end of the year, with the buyout funds performing best with an average return of 16.3 per cent since inception and venture lagging with an average return of 4.5 per cent. Buyout funds therefore outperformed the Morgan Stanley Euro Index and the JP Morgan Euro Bonds Index, but lagged the HSBC Small Company Index’s return of 12.4 per cent. Top-quartile funds returned 23.5 per cent – 34.2 per cent among buyout and 14.9 per cent among venture funds. Longer-term performance also looks good, with five-year returns going up for the third consecutive year to 11.6 per cent; at 10 years, buyout funds have posted 16.7 per cent, but venture has suffered, returning just 1.7 per cent.
“Although funding issues associated with the credit crunch have affected investment activity, private equity firms continue to demonstrate strong returns so far,” said Leon Saunders-Calvert, Director of private equity and investment banking at Thomson Reuters.
FUNDRAISERS THAT RAISED ABOVE €1 BILLION IN 2007:
| FIRM NAME | COUNTRY OF MANAGEMENT |
| AAC Capital | Netherlands |
| Apax Partners | United Kingdom |
| Axa Private Equity | France |
Barclays Private Equity Partners | United Kingdom |
| Carlyle Group | United Kingdom |
CVC Capital Partners | United Kingdom |
| Doughty Hanson | United Kingdom |
| Duke Street Capital | Sweden |
| Industri Kapital | United Kingdom |
| Intermediate Capital Group | United Kingdom |
| Pamplona Capital Management | United Kingdom |
| Terra Firma Capital Partners | United Kingdom |
| Marfin Investment Group (MIG) | xxx |
| MidEuropa Partners | United Kingdom |
Source: PEREP_Analytics
