Private equity H1 2022 fundraising and investment remain strong, as GPs and investors plan to commit to a “greener” industry

  • Funds raise €64bn in H1, in line with 2021 highs, while investment reaches €57bn
  • Majority of LPs expect the same or stronger commitments over three years, as three-quarters of GPs consider “green” funds

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published two reports highlighting robust industry activity in the first half of 2022, as well as continued medium-term confidence among institutional investors for private equity to deliver better pensions and a more sustainable future for Europe’s citizens.

Invest Europe’s ‘Investing in Europe: Private Equity Activity H1 2022’ provides a comprehensive look at first half data covering fundraising, investment, and divestment across Europe, as the industry contended with a more complex macro and geopolitical environment.

  • Private equity and venture capital funds raised €64 billion in the first half of 2022, in line with the record six-month fundraising total achieved in 2021. Over the same period, private equity funds invested €57 billion in European companies, the third-highest six-month industry investment total ever.

Across Venture Capital, Growth and Buyout in H1, ICT remains the leading sector for investments. ICT received 49% of the total Venture investment; 41% of the total Growth investments and 32% of Buyout investments.

The H1 activity data also highlights the continued strong performance of Europe’s venture capital industry. Venture capital funds raised a record €10 billion for new investments in the first half and deployed €10.5 billion into start-ups, underlining the step change in investment behind European innovation as the industry lays the groundwork for a better tomorrow.

At the same time as providing in-depth insight into first half activity, Invest Europe has teamed up with global management consultancy firm, Arthur D. Little, to gather investor and fund manager views for the third edition of the ‘Pan-European Market Sentiment Survey 2022 – Keeping an eye on the horizon – European private equity should stay on track despite the bumpy road ahead’. The findings acknowledge the short-term challenges affecting firms – including higher inflation, supply chain disruption, rising interest rates and geopolitical instability – while highlighting the ongoing shift to, and opportunities in, ESG.

Key findings from the report suggest:

  • Over 90% of LPs expect the same or higher allocations to private equity over the next three years, although over 70% of GPs see a weaker fundraising environment in the coming 12 months.
  • More than 90% of GPs expect to focus more on ESG over the next 12 months, and 80% see more attention on diversity & inclusion. Three-quarters of GPs see advantages in registering “green” funds, echoed by a similar proportion of LPs expecting greener funds as a result of new regulation.

Jonas Fagerlund, Partner at Arthur D. Little says:

  • Understanding, embracing, and delivering on ESG represents one of the greatest challenges for the private equity industry. It is one that GPs are addressing, with the vast majority placing greater attention on ESG factors, as well as issues surrounding diversity and inclusion. It is clear this is not a short-lived intention but rather a secular shift, with many GPs looking at the creation of “green” funds that would set a very clear direction for the industry for years and decades to come.”

The H1 Private Equity Activity data and the Private Equity Sentiment Survey take a wide-ranging look at activity across regions, sectors and investment types. While GPs expect a more challenging outlook for new investment over the next 12 months, a majority expect more investment in renewable energy, as well as life sciences & healthcare. Investment types are also evolving with more public-to-privates and corporate carve-outs expected than this time last year.

Eric de Montgolfier, CEO of Invest Europe, commented:

  • “European private equity has shown characteristic strength in traversing a volatile period already in 2022. Despite expectations for more short-term uncertainty, over the longer term, the industry is preparing for a greener and more inclusive future, incorporating ESG factors even more firmly at its core, with the full support and commitment of investors.”

To access both the H1 Private Equity data and the Private Equity Sentiment Survey please click here.

Invest Europe applauds ELTIF agreement

We at Invest Europe applauds the agreement found by EU policymakers on the revision of the European Long Term Investment Regulation (ELTIF).

The revision will make it easier for long-term fund managers to set up ELTIF structures and hence offer them a safe and credible marketing label to offer their products to non-professional clients across the EU. This will be at the benefit of both the retail investors looking to invest capital in long-term projects and the companies that need such capital to grow and contribute to the sustainable and digital transitions” says Eric de Montgolfier, CEO of Invest Europe “The agreement today is a momentous step towards the democratisation of all long-term asset classes, and of private equity in particular.”

Among the most fundamental changes introduced as part of the deal reached yesterday are the opening of ELTIF to fund-of-fund structures as well as the ability of ELTIFs to invest in fintechs. The final compromise also streamlines and simplifies the conditions under which retail investors can access these funds. It introduces a series of changes, on liquidity or borrowing, which will give additional flexibility for ELTIF managers to operate their funds. Thanks to a clarification of the conflict-of-interest rules, private equity, venture capital and infrastructure fund managers will also be able to co-invest alongside their funds.

Martin Bresson, Invest Europe Director of Public Affairs, adds “The ELTIF review is a testimony of how a, so far, underused voluntary passport can be improved thanks to collaboration between lawmakers and the industry. We’ve been extremely pleased with how constructive discussions have been with the European Commission, European Parliament’s Rapporteur Michiel Hoogeveen and the French and Czech Presidency of the Council and we are very impressed with the capacity for making the right compromises to improve the functioning of the passport while maintaining high standards of investor protection.

New Invest Europe report highlights venture capital’s role in supporting pioneering European life sciences start-ups

  • VC invested €13.5bn in over 2,600 Biotech & Healthcare start-ups in the last five years
  • Late-stage Life Sciences start-ups increased employment by 20% in 2021

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published VC Success Stories Across Life Sciences in Europe. The new study shines a light on investment and employment in the sector at the heart of public health in Europe, and presents a large library of case studies of Biotech start-ups breaking new ground in the fight against cancer and other life-threatening conditions.

  • Venture capital firms backed 2,634 start-ups with €13.5 billion of capital over five years to the end of 2021, accounting for almost 25% of all VC investment. VC investment in European Life Sciences increased for ten successive years from 2012, rising four-fold to €3.9 billion in 2021.
  • All private equity and venture capital backed Biotech & Healthcare companies in Europe employed almost 1.3 million people in 2020. The late-stage VC segment employed 56,867 people and was one of the fastest growing, increasing employment by 20% between 2019 and 2020.

The digital report combines comprehensive Invest Europe data with real-life studies into European start-ups past and present that are reshaping the Life Sciences sector across the continent. It presents a wide-ranging library of case studies, covering segments from Biotechnology Therapeutics and Medical Devices to Diagnostics and Digital Health, to demonstrate the power of venture capital investment and expertise in the fight to save lives and improve health outcomes for millions of people in Europe and across the globe.

The report highlights Europe’s long history in Biotech innovation, thanks to leading universities and research institutes, a strong focus on R&D, and world-beating talent. It includes Ablynx, the ground-breaking Belgian start-up pioneering treatments with nanobodies, acquired by Sanofi in 2018 for over €3.9 billion and which created over 450 jobs. It highlights BioNTech, the German champion that led the development of the first COVID-19 vaccine to be approved for use in Europe and the US, and which listed on the Nasdaq in 2019 at a valuation of €3.1 billion.

Young companies that are still developing life-changing treatments and technology are also included. Thanks to its late-stage VC backing, Denmark’s Ascendis Pharma, which produces improved patentable versions of existing drugs, almost tripled employee numbers in just three years. And SOPHiA GENETICS, headquartered in Switzerland, is using AI and machine learning to revolutionise how healthcare practitioners devise treatments for patients. The company now employs over 500 highly skilled staff.

Eric de Montgolfier, CEO of Invest Europe, commented:  

  • “The pandemic lifted the lid on the European Life Sciences sector. Yet despite the recent attention, this has always been a sector with a rich history of ground-breaking start-ups. Our latest study highlights the role venture capital has long provided in backing innovative European Biotech companies and creating high-skilled jobs across the continent.”

Rainer Strohmenger, Managing Partner at Wellington Partners, added:

  • “European biotech start-ups are devising new treatments for cancer, life-changing medical devices, and ground-breaking technology. Venture capital is essential to help these companies develop their products and become world leaders in their fields. European Life Sciences is a dynamic sector that is making a difference to millions of lives around the world.”

Invest Europe’s Life Sciences report joins an extensive library of research that highlights European private equity and venture capital’s cornerstone role in Europe’s economy and society. It was created thanks to the input of Invest Europe’s Venture Capital Platform Council, led by Rainer Strohmenger.

Click here to read VC Success Stories Across Life Sciences in Europe and browse our online case studies.

ESG reporting guidelines for the European private capital industry

Practical guidance, detailed insights and concrete ESG recommendations for practitioners of all sizes across Europe

  • Invest Europe’s landmark publication includes practical guidance, detailed insights and concrete ESG recommendations for practitioners of all sizes across Europe
  • Non-mandatory guidelines produced with the help of more than 50 industry practitioners and advisers from across Invest Europe’s membership in the EU and beyond

The comprehensive and unique guide helps the private capital industry navigate sustainability reporting. It was presented at a virtual launch event, providing much-needed clarity on a topic that’s critical to the private equity and venture capital industry.

With €846 billion of assets under management and private capital-backed firms totalling 10 million people employed in Europe, private equity and venture capital has the critical mass to help make a difference in the move towards net-zero.

To support these firms, regardless of where they are on their environmental, social and governance (ESG) journeys, the Invest Europe guidelines aim to create the most advanced and user-friendly guidance for private equity and venture capital firms across Europe.

They contain:

  • Direction for firms on how to integrate ESG into their reporting processes throughout the investment life cycle
  • Practical guidance on how to develop an ESG policy and how to assess materiality
  • Detailed mapping of the pan-European regulatory framework, as well as existing standards and frameworks
  • A voluntary reporting template for firms to use, including a list of ESG metrics in line with regulatory requirements and voluntary initiatives

The non-mandatory guidelines have been produced with the help of more than 50 industry practitioners and advisers from across Invest Europe’s membership in the EU and beyond. They are based on industry surveys to ensure that the reporting guidance and recommendations reflect not only current market practices and the realities facing fund managers, but also the expectations and needs of investors.

Eric de Montgolfier, CEO of Invest Europe, commented:

  • “By creating guidelines for ESG reporting, Invest Europe proudly provides transparency, clarity, and harmony to this space – benefiting European firms, their investors, and stakeholders more broadly.”
  • “Invest Europe’s ESG guidelines are designed to develop over time as the ESG landscape continues to evolve rapidly. They are exhaustive enough to be immediately useful to the industry while being sufficiently flexible to accommodate modifications that can ensure future-proof guidance.”

A copy of Invest Europe’s Members-only ESG guidelines can be accessed here. Please reach out to us for further details.

Proven performance: European private capital continues to outshine public markets in 2021 as economies recover from pandemic

  • European Buy-Outs IRR strengthens to 15.59%, beating MSCI Europe index return of 6.41%
  • European VC returns 35.51% and 24.77% over five- & ten-year horizons, eclipsing North America

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published ‘The Performance of European Private Equity Benchmark Report 2021’, its third annual transparent study of private equity and venture capital returns. The research shows that European private capital continued to strongly outperform listed equity benchmarks, delivering superior performance to long-term investors to support pensions and savings as markets rebounded from the effects of COVID-19.

  • European Buy-Outs delivered a IRR of 15.59%, over 900 basis points ahead of the 6.41% return for the MSCI Europe, since inception to the end of 2021.
  • European Growth Capital generated the strongest returns since inception of any private equity segment with an IRR of 16.03% to the end of 2021, ahead of both the MSCI Europe which returned 8.35% and the S&P Europe Small Cap Growth Index with returns of 12.68%.
  • Over the medium and shorter term, European Venture Capital performs particularly strongly, generating IRRs of 35.51% over five years and 24.77% over ten years, highlighting greater experience among managers and improved returns from later funds following the ICT bust era.

The Performance of European Private Equity Benchmark Report 2021 demonstrates the persistent performance of European private equity and venture capital, underlining the industry’s maturity and strong contribution to investors’ portfolios. It compares European funds with their international counterparts to show that European fund managers routinely deliver performance on a par with North American funds, while regularly beating funds from the Rest of the World.

Eric de Montgolfier, CEO of Invest Europe, commented:

  • “In periods of recovery and times of crisis, European private capital – whether it be buy-outs of mature companies, growth investment for dynamic, fast-growing businesses, or venture capital for innovative start-ups – significantly and consistently outperforms listed equity benchmarks.”
  • “European private equity and venture capital are a world-class investment ecosystem that supports companies with capital and expertise to grow, delivering superior returns to pension funds and other long-term investors, helping them secure pensions and savings for European citizens. As such, it’s a cornerstone of Europe’s economy and society.”

The performance benchmark data reflects the growing scale and influence of European private capital highlighted in Invest Europe’s recently published report ‘Investing in Europe: Private Equity Activity
2021’. Performance track records are helping drive record capital commitments with European private equity raised €118 billion in from investors in 2021. That capital is flowing into companies with ever-greater vigour, with €138 billion invested in start-ups, fast-growing SMEs and leading multinationals last year.

The Performance of European Private Equity Benchmark Report 2021 analyses data from some 720 Europe-focused private equity, growth capital and venture capital funds to generate deep insights into industry performance. European Buy-Out funds distribute capital faster than anywhere else in the world, returning cash to investors in under four years, compared with North American and Rest of the World funds that take almost five years. Mid-market Buy-Outs performed best in the segment, with IRRs of 17.13%, a full 950 basis points ahead of the MSCI Europe.

The research also finds that European Growth Capital funds have delivered consistent performance in benign market conditions, with IRRs ranging from 16.11% over a 25-year horizon to 19.04% over ten years. Meanwhile, European Venture Capital funds create the strongest multiple of invested capital returns to investors, returning investors 2.53x their money, compared with 2.39x for North American funds.

Read the Invest Europe member-only study: ‘The Performance of European Private Equity Benchmark Report 2021

Private equity invests in record 672 CEE companies in 2021

  • Capital invested more than doubles to record €4.15bn, while fundraising and exits strengthen
  • Record year for venture capital investment and fundraising

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published its 2021 Central and Eastern Europe Private Equity Statistics. The research shows that the number of companies receiving investment in the region increased by 11% from last year’s record to 672, underscoring the rapid step up in private equity and venture capital activity across the broad, varied and fast-growing CEE region.

  • Private equity and venture capital invested €4.15 billion in equity in CEE companies in 2021, a new record for the region and far ahead of the €1.8 billion invested in 2020, with 38.5% of capital flowing into the dynamic Information Communication Technology (ICT) segment.
  • Venture capital and growth investing drove the increase in investment levels, with a record 541 companies receiving €659 million in VC funding, and 90 businesses receiving €1.8 billion in growth investment, quadrupling 2020’s levels.

The 18th annual edition of the Central and Eastern Europe Private Equity Statistics, produced in partnership with Gide Loyrette Nouel, delves into countries across CEE to show the spread of private equity and venture capital activity, as well as development of regional powerhouses.

Investment in Poland climbed sharply on previous years to almost €1.2 billion in 2021, while 241 companies received investment in Hungary, reflecting the country’s leading position as a regional start-up hub. Estonia led investment as a percentage of GDP for all Europe with private equity investment representing 1.6% of its economic output.

Bill Watson, Chair of Invest Europe’s Central and Eastern Europe Taskforce, commented:

  • “Russia’s war against Ukraine has brought a renewed and very different focus on the Central and Eastern Europe region, creating catastrophic humanitarian, economic and geopolitical consequences. Yet, CEE remains a dynamic market, packed with entrepreneurial start-ups, maturing businesses with international ambitions, and highly educated and skilled individuals determined to make a positive mark.”

Eric de Montgolfier, CEO of Invest Europe, added:

  • Private equity and venture capital can be a strong catalyst for company transformation, economic growth and social development. The CEE region is only starting to tap into its huge potential. Our industry is playing an essential role in supporting businesses through a challenging period, while helping them take advantage of opportunities ahead.”

It was also a strong year for exits and fundraising, underlining the maturity of the private equity ecosystem in CEE. A record 173 CEE companies were divested in 2021, representing almost €1.5 billion at historical investment cost. Poland was the leading market for exits, both by value and number of companies, yet activity was more evenly spread than in previous years with four countries, including Lithuania, Czech Republic and Romania, recording exits in excess of €100 million at investment cost.

Fundraising enjoyed its second-best year since the financial crisis, increasing by 33% to €1.75 billion, driven by government agencies in the region, as well as local institutional and private investors predominantly in the Baltic states and Czech Republic. Venture capital fundraising hit a new record of €832 million, accounting for 47% of total CEE fundraising, feeding investment in innovation across the region.

To download a copy of the 2021 Central and Eastern Europe Private Equity Statistics, please click here.

Dr. Klaus Hommels of Lakestar: Invest Europe Chair

Board appointments from Argos Wityu, Forbion, Hadean Ventures and Hermes GPE

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, announced that Dr. Klaus Hommels, founder of Lakestar, has assumed the role of Chair for 2022-2023, taking over from Anne Fossemalle, Director, Equity Funds at the European Bank for Reconstruction and Development.

Invest Europe took the opportunity to offer its heartfelt thanks to Anne – on behalf of its members and broader network – for her tireless work to promote the industry, and its contributions to Europe’s economy and society ‘as a force for good.’

Klaus is one of Europe’s leading business angels and venture capitalists and was an early investor in European technology champions including Spotify, Klarna, Sumup and Revolut, as well as international leaders Airbnb and Facebook. He founded Lakestar in 2012 after previously running his own venture capital fund Hommels Holding.
As a passionate advocate on behalf of the European tech ecosystem Klaus is also a founding member of think-tank initiatives including the Internet Economy Foundation and the European Center for Digital Competitiveness in Berlin. Klaus holds a Master’s in Business Administration from the University of Fribourg in Switzerland and holds a PhD in Finance from the same university.

As Invest Europe Chair, Klaus will be supported by directors drawn from the association’s broad membership which represents venture capital, mid-market funds, large buyouts and limited partners. Appointments confirmed for a three-year period until June 2025 include Louis Godron (Argos Wityu), Sander Slootweg (Forbion), Ingrid Teigland Akay (Hadean Ventures) who is confirmed as board member for a year until June 2023, and Elias Korosis (Hermes GPE).

Klaus will also work closely with CEO Eric de Montgolfier and the association’s team to promote and increase understanding about private equity and venture capital’s cornerstone contribution to Europe’s economy and society.

His priorities for the year to June 2023 include:

1. Drawing on Invest Europe’s position as the voice of European private equity to propose and drive forward measures to strengthen Europe’s investment ecosystem for all participants, and the economy more broadly.

2. Promoting European sovereignty in financing and technology by advocating a step change in equity capital to bridge the funding gap for European industry, and helping identify core technologies to ensure Europe’s digital and technical sovereignty.

3. Supporting and encouraging European entrepreneurship through alignment with European policy and regulatory objectives, as well as the financial sector.

The private equity and venture capital industry provided strong support for European businesses and workers throughout the COVID-19 crisis and economic recovery. Almost 10 million people were employed at private equity and venture capital backed businesses across Europe in 2020, according to the third edition of Invest Europe’s groundbreaking Private Equity at Work report, with portfolio companies adding 2% more jobs during a challenging period when the overall European workforce contracted by 1.6%.

The industry participated fully in the subsequent economic rebound as firms invested €138 billion in companies throughout the continent, ranging from fledgling SMEs to mature multinationals, a new record and a 51% increase on the previous year. Within that total, investment to support innovation boomed as venture capital funding for start-ups reached €20 billion and growth investment hit €35 billion, both all-time highs.

Private equity’s ability to generate strong returns for pension funds and other long-term investors, that in turn support European citizens’ retirements and savings, is also drawing record levels of capital into the industry. Private equity funds attracted €118 billion in new capital in 2021, with record levels of fundraising also seen by venture capital and growth funds. Total fundraising for the last five years exceeds €525 billion, providing the industry with abundant capital to invest in new companies and support existing businesses through ongoing economic, social and geopolitical challenges.

Record capital under management for European PE

  • Capital under management more than doubles since 2016 to reach new heights
  • Dry powder of €348bn provides increased investment capacity to support European companies

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published Positioned for the Challenge: Capital Under Management & Dry Powder 2022, which shows the European private equity and venture capital industry’s step up in scale and investment capacity, achieving new records for both capital under management and dry powder.

  • Private equity and venture capital managed a record €1,004 billion in capital on behalf of investors at the end of 2022, up from €873 billion in 2021, the first time the European industry has broken through the €1 trillion threshold. Of the total, €656 billion represented portfolio value at original investment cost, held by 2,863 firms across 8,140 funds, underlining the expansion of the industry.
  • Private equity and venture capital dry powder reached €348 billion in 2022, equating to 94% of the total equity invested by the industry between 2020 and 2022, underscoring the balance between investment capacity and the opportunities. Buyout investment potential increased to €219 billion in 2022. European venture capital dry powder also rose to a record high of €53 billion, giving the industry increased capacity to support dynamic and innovative start-ups across the continent.

Now in its fourth year, Invest Europe’s Capital Under Management & Dry Powder tracks the strong and sustainable growth of the European private equity and venture capital industry, with capital under management more than doubling since 2016, as long-term investors allocate more capital to opportunities in world-leading European businesses, fast-growing scale-ups, and groundbreaking innovators.

Eric de Montgolfier, CEO of Invest Europe, commented:

  • “The European private equity and venture capital industry continues to scale new heights, demonstrating its growth potential and appeal to investors. The industry’s story is as straightforward as it is compelling. Capital committed to skilled and experienced European private equity managers helps build better businesses that can generate value and superior returns. This steady creation of capital and wealth fuels a virtuous circle that benefits Europe’s economy and society.”
  • “Ever since the outbreak of COVID, European businesses have weathered extreme challenges and uncertain markets. Private equity has demonstrated its ability to support companies through volatile conditions and the growth in dry powder – from large buyouts to venture capital – means the industry is well-equipped to help companies face the challenges of today and tomorrow.”

Invest Europe’s Capital Under Management & Dry Powder report finds that pension funds accounted for 27% of all uncalled commitments at the end of 2022, followed by fund of funds and other asset managers – often conduits for smaller pension funds – on 18%, a clear sign of the long-term investors’ confidence in the asset class and its potential to support better retirements for European citizens. Family offices and private individuals represented 13% of dry powder capital.

The report analyses data by region, funds size and fund type, and also investigates the relationship between successor funds from established managers and first-time funds from new managers. It shows that successor funds account for 89% of dry powder and 78% of portfolio at cost, while also highlighting the consistent growth of first-time funds, which achieved €182 billion of capital under management in 2022. Since 2013, 1,690 new first-time funds have entered the market.

To download a copy of Positioned for the Challenge: Capital Under Management & Dry Powder 2022 (members-only), please click here.

Invest Europe opens its ESG Reporting Guidelines

  • Invest Europe makes publicly available its ESG Reporting Guidelines and revised template
  • European Investment Fund, AP2, France Invest endorse guidance

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, is making its ESG Reporting Guidelines available to the entire private equity and venture capital community – previously only available to members – giving all firms best practice guidelines for reporting ESG aspects and metrics, policies and practices, enabling long-term investors to access sustainability information on their investments.

  • Invest Europe’s ESG Reporting Guidelines comprise a revised template for reporting to limited partners, including a list of recommended ESG metrics in line with regulatory requirements, voluntary initiatives, and investors’ needs. The Guidelines include direction for firms on integrating ESG into reporting processes throughout the investment lifecycle, and information on developing an ESG policy and assessing materiality. They also contain an extensive mapping of the pan-European regulatory environment, as well as existing standards and frameworks.
  • The Guidelines have already received broad industry recognition, with endorsement by the EIF, AP2 and France Invest. A range of general partners have already started using the template as their preferred format for sustainability reporting.

Invest Europe created the ESG Reporting Guidelines in 2022 with the support of more than 50 industry and ESG experts from Europe and beyond, initially making the template and guidance available to Invest Europe members to gather experiences and feedback. The aim of extending the Guidelines and template to the entire industry is to strengthen and accelerate momentum towards codification and harmonisation of ESG reporting, making the process easier for GPs, and the data more comparable and scalable for LPs.

The broad availability of the industry-leading Guidelines comes as the climate crisis reaches unprecedented levels, leaving no sector of activity unaffected and increasing pressure on businesses to step up efforts to tackle carbon emissions. Other topics, such as the participation of women in key roles and diversity in the workforce, are also generating attention from long-term investors and the public at large, driving greater action by private equity and venture capital firms.

Eric de Montgolfier, CEO of Invest Europe, commented:

  • “ESG and the climate crisis are among the biggest and most complex issues facing the industry today. Our ESG Reporting Guidelines provide much-needed clarity and practical guidance on incorporating and reporting on essential ESG topics. By extending availability of the Guidelines, we aim to increase harmonisation across the industry and create a new benchmark for ESG reporting, helping the industry to participate fully in the drive to a more sustainable future.”

When reporting according to recommended metrics, fund managers can leverage Invest Europe’s logo to signal that reporting is in line with industry norms. The revised ESG reporting template also includes additional metrics for those firms that wish to go further in their reporting to satisfy voluntary standards, investor demands, or to expand ESG data coverage.

Leading institutions, investors, fund managers, national associations and ESG solutions providers have given their support to the new Guidelines, paving the way for widespread adoption across the industry.

Marjut Falkstedt, Chief Executive Officer, European Investment Fund, commented:

  • “Tracking the performance of our investments is important for us. At the EIF, we want to contribute to the overall efforts of generating understandable and comparable metrics, so that ESG considerations can be leveraged towards achieving the policy goals of a more sustainable and inclusive Europe. We’re pleased about Invest Europe’s initiative for this ESG reporting template, helping to pave the way for a harmonised approach across the European venture capital and private equity industry.”

Anders Strömblad, Head of Alternative Investments, Andra AP-fonden/AP2, added:

  • “This guidance and the reporting template constitute a big leap forward for the entire private equity industry. Consolidation and harmonisation of reporting on ESG will save time and resources and – more importantly – facilitate data-driven ESG decisions for both GPs and LPs. By also securing coherence with international initiatives, the Invest Europe guidance and template also forms the most solid steppingstone for global consistency in ESG reporting.”    

Alexis Dupont, Managing Director, France Invest, said:

  • “Embracing sustainable investment and addressing climate change informed France Invest’s national pioneering work on ESG reporting harmonisation. A common approach at the EU-level is required, with Invest Europe’s ESG Reporting Guidelines now setting a new global ‘gold standard’ for ESG reporting to investors. France Invest is delighted to support the initiative, and promote these Invest Europe guidelines in France.”

The ESG Reporting Guidelines are part of an extensive library of ESG and sustainable investing resources created by Invest Europe to help managers and investors to understand and navigate this crucial topic. They include our Guide to ESG Due Diligence for Private Equity GPs and their Portfolio Companies, our Climate Change Guide, and the ESG KPI Report which tracks industry efforts across a range of ESG topics.

European PE returns widen lead over public markets in 2022

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published ‘The Performance of European Private Equity Benchmark Report 2022’, its fourth annual study of private equity returns. The research reveals that European private equity’s long-term outperformance over listed equity benchmarks widened in 2022, as the asset class continued to deliver superior returns to long-term investors in a period when global markets weakened under pressure from inflation and interest rate rises.
  • European Buy-Outs delivered a net IRR of 15.17%, over 950 basis points ahead of the 5.52% return for the MSCI Europe to the end of 2022. Mid-market Buy-Outs, European private equity’s engine room, generated the best performance of the segment with a net IRR of 16.55%, almost 10 percentage points ahead of the benchmark over the same period.
  • European Growth funds maintained the strongest returns since inception of any segment with a net IRR of 15.34% to the end of 2022, increasing its strong lead over the MSCI Europe which returned 6.03% over the same time frame. European Growth funds narrowed the gap on North American funds with strong net IRRs of 21.63% over three years and 20.39% over five years, underlining increasing industry maturity and strengthening performance from European scale-ups.
  • Over medium to long time horizons, European Venture Capital continued to perform strongly and eclipsed North America with net IRRs of 31.44% over five years and 23.07% over ten years. Returns for up to the 20-year mark are now ahead of the North American peer group, demonstrating the strength of Europe’s VC ecosystem and the growth trajectory of the continent’s start-ups.

While it focuses on the consistent long-term rewards available to investors, The Performance of European Private Equity Benchmark Report 2022 also highlights the short-term outperformance of the asset class in turbulent markets. European Buy-Outs delivered a modestly negative net return of -1.69% in 2022, with growth funds also only down by single digits, reflecting underlying portfolio companies’ resilience to market conditions and managers’ focus on operational excellence. The result helped underpin relative returns for investors including pension funds and insurers, offsetting public market volatility and a European equity benchmark which registered a double-digit decline.

Eric de Montgolfier, CEO of Invest Europe, commented:

  • “Whether it’s over the short-term or long time horizons, European Buy-Outs, Growth and Venture Capital significantly outperform listed equity benchmarks. That is why pension funds and insurers, as well as other long-term investors, rely on private capital investments for superior and consistent performance that can support citizens’ retirement funds and savings.”
  • “Not only does European private equity consistently beat public equity benchmarks, but it also compares favourably with returns from other private equity ecosystems around the world. The industry is creating and sustaining European champions, from dynamic start-ups to mature multinationals, and in doing so is supporting Europe’s economy and society with innovation, employment and growth.”

The strong performance to the end of 2022 reflects the growing support of institutional investors from around the world for European private equity, its experienced home-grown managers, and unique pool of world-class businesses. Invest Europe’s recently published Investing in Europe: Private Equity Activity 2022 tracked €170 billion of private equity fundraising last year, a new industry record, with almost half of all commitments coming from investors outside of Europe, including 25% from North America.

The Performance of European Private Equity Benchmark Report 2022 draws its findings from an ever-richer data set, analysing information on more than 750 European funds to deliver deep industry insight. The report presents European Buy-Outs, Growth and Venture Capital performance in terms of IRR, as well as multiple of invested capital to demonstrate net cash returns to investors. It also highlights the time to liquidity, showing that European Buy-Outs distribute capital faster than anywhere else in the world, returning cash to investors in under four years.