- 10% annual rise to record high of €94 billion in equity invested in European firms
- Over 2015-2019, more than 22,000 SMEs in Europe backed by private equity and venture capital funds – almost 85% of portfolio companies
Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published its ‘Investing in Europe: Private Equity activity 2019’ – the most comprehensive and authoritative source of fundraising and investment data available, covering over 1,400 firms. The report reveals record levels of private equity fundraising and investment in 2019, underscoring Europe’s attractiveness and unique positioning for the private equity sector.
Total fundraising in Europe in 2019 climbed to €109bn, up 6% from 2018 and the highest total over the past decade. In parallel, the total equity amount invested in European companies increased 10% year-on-year to €94bn in 2019 – the highest level of investment ever recorded – with continued concentration across three sectors: ICT (27%), consumer goods & services (23%) and business products & services (19%).
Small and medium-sized enterprises (SMEs) are the backbone of the European economy and private equity’s overwhelming focus on, and funding of, SMEs reaffirms the sector’s commitment to Europe’s economic engine.
Over the 2015-2019 period, over 22,000 SMEs across Europe have been backed by private equity and venture capital funds, making up almost 85% of the portfolio companies. And the amount committed to private equity funds raising under €1bn over the 2015-2019 period increased by a dramatic 50% – noteworthy given their focus on SMEs and start-ups.
“In the midst of an unprecedented and unparalleled crisis, the private equity sector is uniquely positioned to help jump-start Europe’s economic and societal recovery, given appropriate recognition and support where required,” stated Eric de Montgolfier, CEO, Invest Europe.
“Identifying and nurturing start-ups today is essential for continued innovation in Europe, as well as laying the groundwork for a better tomorrow,” added de Montgolfier, pointing to the €15 billion in venture capital fundraising in 2019 – a 17% increase over 2018 that also marks the 7th consecutive year of growth.
Venture capital investments more than doubled between 2016 and 2019, with backing for almost 4,700 companies in 2019 alone; examples of innovative sectors backed by venture capital include Biotech/Healthcare and ICT, both of which contribute significantly to the battle against the COVID-19 pandemic. And thanks to an increase in average venture capital fund size since the 2008 financial crisis, venture capital-backed businesses and their investors are better equipped to handle crises.
Pension funds and insurance companies, including Europe’s largest institutional investors, make up some 40% of the private equity funding raised in Europe in the 2015-2019 period, a clear indication of confidence in an asset class that directly contributes to better pensions and returns for Europe’s citizens. Over the same period, pension funds have invested €114bn in European private equity/venture capital funds – a clear endorsement of their long-term contribution and Europe’s leadership position on Environment, Social and Corporate Governance (ESG).
More than 45% of the private equity capital raised across the continent in 2019 came from non-European investors, led by investors from North America (28%). Ensuring private equity’s contribution to the European economic recovery is supported by private equity and venture capital’s focus on the region, with 63% invested domestically, 29% in another European country and a mere 8% from outside Europe.
By its very nature, private equity has always sought to unlock potential through patient capital and vibrant, active ownership resulting in growth and jobs. These qualities, if supported by adequate liquidity and employment-support measures provided by state aid programmes, will ensure the private equity sector and the 26,000 companies (since 2015) it backs, stand ready to jump-start the European economy. And it will do so in solidarity with the entire coalition of European stakeholders required to overcome the current pandemic.
Download the full report here.