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Private equity investment into European companies hits ten-year high

  • European private equity invested €71.7 billion in 2017, up 29% from 2016
  • Fundraising reaches €91.9 billion, up 12% year-on-year
  • Company exits robust, valued at €42.7 billion divested at cost

Private equity investment in European companies hit a ten-year high in 2017 at €71.7 billion, a 29% year-on-year increase, according to new data released today by Invest Europe. Almost 7,000 companies received investment, of which 87% were small and medium-sized enterprises (SMEs).

Invest Europe’s 2017 European Private Equity Activity report is the industry’s most comprehensive and authoritative source of activity data. It reveals that private equity fundraising reached €91.9 billion in 2017, surpassing the previous year by 12% for the highest amount since 2008. European private equity managers put their investment capital to work at an increasing volume across all fund sizes, delivering decade high investment levels. Divestments (measured at cost) increased by 7% to €42.7 billion. This is the third highest level of the past decade, as around 3,800 European companies were exited in 2017.

This 2017 European private equity report comes as the European Union enjoys its highest growth in a decade. The EU economy grew by 2.4% last year, according to figures from the European Commission. Globally, demand for private equity has risen, as investors increasingly look to the asset class for returns during this extended period of low interest rates.

“European private equity saw highs in both fundraising and investments in 2017, demonstrating that private capital markets are deepening as European economies are growing,” said Michael Collins, Invest Europe’s CEO. “This investment capital is supporting European companies of all sizes — helping start-ups to achieve scale, expanding SMEs and transforming large corporates.”

Companies focused on consumer goods and services in Europe increased their share of private equity investment last year at 24.4% of the total. Almost equalling this were business-to-business products and services, increasing by 51% to account for 23.5% of the total. The technology sector (ICT) reached a ten-year investment high, with 17% of the total, a year-on-year increase of 6%.

France and Benelux-based companies received 27% of private equity investments in 2017. Close behind was the UK & Ireland with 26%, followed by DACH-based companies (20%), Southern Europe (13%), the Nordics (9%) and CEE (5%).

Pension funds provided 29% of all capital raised, followed by funds of funds (20%), family offices & private individuals (15%), sovereign wealth funds (9%) and insurance companies (8%).

“In 2017, European private equity continued to be attractive to global investors. Asian investors contributed their highest ever share of investment, “while North American investors continue to represent the highest share of non-European capital being put to work here,” said Collins. “Global investors are valuing the proven ability of European private equity managers to identify attractive investments across sectors and geographies.”

The 2017 European Private Equity Activity report covers activity on over 1,250 firms, directly verified by the fund managers via the European Data Cooperative (EDC). Working together with national private equity associations from across Europe to collate robust and comparable statistics, Invest Europe has developed the industry’s most comprehensive database. The EDC holds data from over 3,000 European private equity firms on 8,000 funds, 64,000 portfolio companies and 250,000 transactions since 2007.

Invest Europe is the association representing European private equity and venture capital, and their global investors. The full report is free to download from its website, investeurope.eu.