Invest Europe considers implications for the EU financing ecosystem of changes to EU State Aid rules

Last week the European Commission published its draft General Block Exemption Regulation and opened a consultation calling for stakeholders to comment on its proposal.

The Commission Regulation is an important component of the EU State Aid Framework as it defines the conditions under which Member States are authorised to grant public support without infringing EU competition law. It is especially relevant from a private equity perspective as it specifies when risk finance aid can be granted to national venture and growth funds or the companies they support.

Overall, Invest Europe broadly supported the proposed new Regulation as it will continue to foster the development of a venture capital ecosystem across the continent. Martin Bresson, Director of Public Affairs, said of the draft text: “We are pleased that the European Commission has taken into consideration our concerns regarding the maximum age a company can reach to remain eligible under the framework. The now double threshold – 7 years from first commercial sale or 10 years from registration – will introduce additional flexibility for scale-ups and companies active in tech-intensive sectors”.

Invest Europe however remains concerned that no changes have been made to the definition of undertakings in difficulty, which has shown during the Covid pandemic to be too narrow to take into consideration the specificities of long-term commitments made by buyout funds.

As it did for the recent review of the Risk Finance Guidelines, Invest Europe will mobilise its State Aid Task Force and will put at the disposal of the European Commission the expertise of its members on the changes made to the existing framework.

Want to join the Invest Europe State Aid Task Force ? Contact us here.


European VC shakes off COVID-19 with strong start-up support

  • VC investment volumes in 3.5 months after outbreak remained in line with prior years
  • Investment into healthcare start-ups increased by 77% during COVID disruption

Invest Europe, in partnership with the European Investment Fund (EIF), today published The VC Factor – Pandemic Edition, a new report illustrating European venture capital’s continued strong support for innovative and fast-growing start-ups in the immediate aftermath of the COVID-19 pandemic in 2020.

The study is the second edition of the ground-breaking collaboration between Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, and the EIF – Europe’s largest investor in venture capital funds. It draws on data from 2,611 firms investing into VC and 32,114 start-ups between 2007 and 2020. The findings show that the volume of VC investment during the three and a half months following the onset of the pandemic in March 2020 was in line with the two prior years, despite lockdowns and travel restrictions that meant fewer investments and reduced deal flow for VCs.

The report shows that the number of investments by VCs reduced by 13.6% between March 11, 2020 – the date on which the World Health Organization declared the COVID-19 outbreak a pandemic – and the end of the second quarter. The decline was offset by a 19.3% increase in the average amounts invested into companies, as VC firms continued to back the start-ups driving European innovation and laying the foundation for a better tomorrow.

The European healthcare sector stood out during the period with a 77% increase in investment volumes, reflecting VCs enhanced focus on biotech companies developing potential vaccines and treatments for COVID-19, as well as start-ups committed to improving healthcare for European citizens more widely.

The findings of the VC Factor echo Invest Europe’s flagship report ‘Investing in Europe: Private Equity activity 2020’, which showed that venture capital investment in Europe grew for the eighth consecutive year to €12 billion in 2020, underlining the industry’s resilience despite physical restrictions on people and businesses, as well as intense economic turbulence.

Alain Godard, chief executive of the EIF, said: “Total VC investment volumes did not decrease immediately after the outbreak of the pandemic, despite reduced deal activity exacerbated by lockdowns. Indeed, healthcare investment saw a 77% increase as VCs targeted companies making a difference in this critical sector. The research shows that European VCs were able to adapt quickly to the situation and finish the year strongly, channeling investment into start-ups working at the cutting edge of health and technology.”

Eric de Montgolfier, CEO of Invest Europe, commented: “European venture capital did not escape the effects of COVID-19 but responded with characteristic strength. Across the continent, VCs continued to invest in disruptive technologies as well as life-changing biotech and healthcare innovations. Europe is packed with entrepreneurial talent and venture capital is crucial to a strong recovery from the effects of COVID-19, as well as essential to a brighter long-term future for all Europe’s citizens.”

The latest VC Factor report also shines a new light on where Europe’s venture capital managers are based and where they invest, illustrating that VC firms tend to cluster together much more than their investee companies. The top 12 hubs in Europe represent 61% of the investment capital deployed but only 40% of investment received.

London, Europe’s largest venture hub, accounts for 23% of money invested and 12% of capital received. It is followed by Paris, which is the source of 15% of capital invested while receiving 7% of venture capital deployed. As a proportion of GDP, however, Berlin is the largest VC hub in Europe, followed by East Anglia in the UK where investment is focused on innovation emerging from leading university Cambridge.

To read the VC Factor in full, please click here.

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Invest Europe calls EU policymakers

The European Commission published today its proposal to revise the Solvency Directive, which sets common rules for the risk management and supervision of insurance companies in the European Union. This revision paves the way towards reducing undue costs and barriers that still apply to insurers seeking to invest equity directly or indirectly into long-term projects.

Over the past 5 years, insurance undertakings invested €45 billion into private equity, making up around 9% of the overall capital raised by these funds. Insurers, which are long-term investors by nature, supported thousands of businesses across the continent by committing capital into private equity funds. Yet, insurers’ investment in equities remains extremely low – with an asset allocation in equity funds of only 3,3% (0,6% in private equity) according to the most recent EIOPA statistics.

Changes to the criteria defining the long-term equities category, which will be part of the announced review of the Delegated Regulation, offer a perfect opportunity to better acknowledge the way insurers hold long-term assets and to incentivise them to set up long-term portfolios. Seizing the high potential for improvement could ultimately drive the insurers’ ability to support businesses by investing into venture and private equity funds.

As the representative of the European private equity community, including both fund managers and investors into these funds, Invest Europe is looking forward to working with the co-legislators to ensure insurance undertakings are in a position to commit some of their capital to long-term equity funds while maintaining the high prudential standards of the framework.

For more details on Invest Europe’s position on the review, please look at our position paper here.

SMEs’ growth | Invest Europe

  • The European Union Intellectual Property Office (EUIPO) and Invest Europe, the world’s largest association of private capital providers, have signed a collaboration agreement to promote and encourage activities and services that support small and medium-sized enterprises (SMEs).

As part of the EUIPO’s plan to create a network under the ‘Ideas Powered for business’ brand and to develop synergies among organisations in close contact with SMEs, this agreement brings a sector to the fore that is an essential funding source for businesses of all sizes.

Invest Europe represents the private equity community across Europe, including venture capital, infrastructure investment firms and extensive professional investors, including pension funds and insurance groups. In 2020, private equity invested €88 billion in 8,163 companies, 85% of which were SMEs.

Both the EUIPO and Invest Europe share similar objectives; to help the European economy recover and to stimulate growth through better understanding and use of private equity and intellectual property (IP). A recent study has shown that SMEs with IP rights (trade marks, patents, designs, etc.) report 68% higher revenue per employee than those without. Among other activities, the collaboration includes promoting joint events for investors and SMEs to facilitate investment opportunities and highlight how IP can boost business growth.


“I am pleased to welcome Invest Europe to our expanding Ideas Powered for business network. In these difficult times, investors are key to the recovery of Europe’s economy and to support SMEs in attracting funding. With this agreement, we want investors to be fully aware of the potential intellectual property can play in business growth when selecting the right project to invest in.“

Inge Buffolo, Director, EUIPO Customer Department

“I am excited and warmly welcome the new partnership with the EUIPO. Through this collaboration we solidify our common objective of helping SMEs in benefiting from intellectual property rights and driving innovation. Bringing added value to our members and their portfolio companies stands at the core of what we do and I am looking forward to this collaboration moving forward.“

Eric de Montgolfier, CEO, Invest Europe


European private equity delivers long-term outperformance

  • European Buy-Outs delivered 15.06% IRR, beating MSCI Europe index return of 5.48%
  • European VC returned 11.09% IRR vs. MSCI Europe index return of 7.82%
  • European Growth Capital funds generated 13.66% IRR vs. MSCI Europe (6.40%) and S&P Europe Small Cap Growth index (11.84%)

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 2020, a transparent study of private equity returns. The findings show that European private equity strongly outperformed listed equity benchmarks to the end of 2020, underlining the industry’s resilience during the COVID-19 crisis and its consistent ability to support the long-term investors that guarantee the pensions and savings of European citizens.

The Benchmark Report 2020 tracks Buy-Out, Growth Capital and Venture Capital funds over more than three decades to create a comprehensive picture of industry performance. The data shows that European Buy-Outs, the largest segment in the study, delivered an annualised return of 15.06% since inception to end-2020, far ahead of the 5.48% achieved by the MSCI Europe index over the same period. Within the segment, mid-market Buy-Outs that support, help develop and professionalise medium-sized European businesses across the continent, generated an annualised return of 17.01%, beating the listed equities benchmark by 994 basis points.

The data underlines European Buy-Out funds’ consistently high performance, delivering IRRs between 13.00% and 15.50% over periods of 10 years and longer, the timeframes that help long-term investors – such as pension funds and insurers – to deliver better retirements and savings for millions of Europeans. Furthermore, European Buy-Outs perform consistently and in line with their North American peers, while delivering returns ahead of funds from the rest of the world.

Eric de Montgolfier, CEO of Invest Europe, commented: “Over the very long timeframes that matter to pension funds and insurers, European private equity far outperforms listed equities. Moreover, the data underlines European private equity’s resilience in 2020 as efforts to protect companies through the depths of the crisis paid off. This industry consistently delivers the performance that investors need, while supporting the businesses that underpin Europe’s economy and society.”

European Venture Capital and Growth Capital funds clearly beat equity benchmarks to the end of 2020, as funds backing SMEs, start-ups and scale-ups generated strong performance. Venture Capital funds delivered an 11.09% return since inception versus 7.82% for the MSCI Europe index over the same period, whilst Growth Capital funds generated an IRR of 13.66% against 6.40% for their benchmark.

Returns for Venture Capital funds in particular have accelerated as the industry has matured and demonstrated its ability to rival Silicon Valley for supporting innovation and entrepreneurial start-ups. European VC returned 21.90% over five years to end-2020 and 19.70% over 10 years, beating North American funds that delivered 15.51% and 18.50% respectively. Further evidence of the growing strength of VC in Europe is the 1.97x MOIC achieved in this years’ report, an indication of strong cash returns on a par with the 2.03x seen for North American funds.

Performance overall of European private equity improved in 2020, with private equity firms supporting their portfolio companies through the crisis. These efforts led, in fact, to a widening of outperformance over listed indices, and a reduction in the number of loss-making funds (as well as a reduction in levels of losses seen).

The findings echo the resilience displayed in Invest Europe’s recent Investing in Europe: Private Equity Activity 2020 report which showed it was the second-best year for investment and one of the strongest on record for fundraising.

The Performance of European Private Equity Benchmark Report 2020 is available to Invest Europe members. To request a copy of the report, please email info@investeurope.eu.


PE a VC fondy zainvestovaly rekordní počet společností

PE a VC fondy zainvestovaly v regionu střední a východní Evropy v loňském roce rekordní počet 566 společností. Je to o 46 % více než roční průměr za období 2015–2019 a o 15 % více než v roce 2019. Tento významný skok je důsledkem každoročně rostoucího počtu venture dealů od roku 2018. Celková investovaná částka činila 1,7 miliardy EUR, tedy o 36 % méně v porovnání s předchozím pětiletým průměrem a o 49 % méně než v roce 2019. Důvodem pro tento pokles je absence velkých buyout transakcí v roce 2020. Vyplývá to ze zprávy CEE Activity Report 2020, kterou vypracovala Invest Europe. Zprávu naleznete zde.

Fondy v minulém roce naraisovaly rekordní 1 miliardu EUR, tedy o třetinu více než v roce 2019. Hodnota exitů vzrostla o 47 % oproti roku 2019, konkrétně na 1,4 miliardy EUR. Počet exitů zůstal loni na obdobné úrovni jako v roce 2019, konkrétně fondy v roce 2020 exitovaly 107 společností.

Tiskovou zprávu Invest Europe naleznete zde.

Anne Fossemalle of EBRD assumes role of IE Chair

  • Klaus Hommels of Lakestar named as Chair-elect for 2021-2022

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today announced that Anne Fossemalle, Director, Equity Funds at the European Bank for Reconstruction and Development (EBRD), has assumed the role of chair for 2021-2022, taking over from Thierry Baudon, Founder and Chairman Emeritus, Mid Europa Partners.

Anne has over 25 years of private equity experience and holds numerous Supervisory Board and Investment Committee memberships with major fund managers within the EBRD geography. Anne joined the EBRD in 1993 from Natixis and has worked in several capacities prior to heading Equity Funds, notably leading EBRD’s debt and direct equity investments into financial institutions.

Anne holds Masters degrees from Stanford University, Ecole Nationale du Génie Rural, des Eaux et des Forêts (France) and Institut National Agronomique Paris-Grignon (France).

With Anne’s guidance, and under the leadership of Eric de Montgolfier, CEO of Invest Europe, the association will continue to demonstrate private equity’s position as a cornerstone of Europe’s economy and society, supporting over 10 million workers across the continent and creating over a quarter of a million jobs in sectors that will help feed the recovery from the COVID-19 crisis.

A total of 10.2 million people were employed at 23,009 portfolio companies at the end of 2019, ranging from start-ups and SMEs to large multinationals, according to the second edition of Invest Europe’s ground-breaking employment study. That equates to 4.3% of Europe’s active workforce and is on a par with the entire population of Sweden.

In 2020, European private equity stepped up to the mark and invested €88 billion into over 8,000 companies across the continent. In the midst of intense turbulence, investment was 12% lower than the record deployment of 2019, but nevertheless the second highest total on record.

Capital flowed into every region and into core sectors that target digital growth, consumption and long-term health: ICT accounted for 37% of investment; consumer goods & services a further 19%; and biotech & healthcare 15%. Private equity firms helped portfolio companies through the crisis with follow-on equity investments totalling €26 billion in 2020.

Private equity’s ability to provide strong returns on investment for long-term investors, namely pension funds and insurers seeking to grow savers’ and pensioners’ contributions, was also in full evidence. Fundraising reached €101 billion in 2020, again lower than 2019’s pre-pandemic record, yet the third-year in a row that the industry has secured over €100 billion from long-term investors. That takes fundraising for the last five years to €500 billion, providing abundant capital to support existing European portfolio companies, while identifying and backing new, attractive investment opportunities.

As Chair, Anne will be supported by Invest Europe’s board of directors, including the new appointments of Tom Allen (Advent), Frans Tieleman (Eurazeo), Louis Flamand (Metlife) and Klaus Hommels (Lakestar) who has also been appointed Chair-elect for 2021-2022. Meanwhile, Max Römer, Quadriga Capital, has agreed to remain as Treasurer for another year.

Private Equity at Work

  • Private equity backed companies add over 254,000 jobs in 2019, 5.5% employment growth
  • Businesses benefitting from PE investment employ 10.2m people across Europe

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published its ‘Private Equity at Work report. The research shows an industry that is a cornerstone of Europe’s economy and society, supporting over 10 million workers across the continent and creating over a quarter of a million jobs in sectors that will help feed the recovery from the COVID-19 crisis.

A total of 10.2 million people were employed at 23,009 portfolio companies at the end of 2019, ranging from start-ups and SMEs to large multinationals, according to the second edition of Invest Europe’s ground-breaking employment study. That equates to 4.3% of Europe’s active workforce and is on a par with the entire population of Sweden.

Private Equity at Work demonstrates private equity’s outsized contribution to European job creation. Companies backed by private equity added 254,157 net new jobs in 2019, about the same as the working population of Tallinn. The figure represents growth of 5.5% on the previous year and far outstrips the average job growth of 0.9% for Europe as a whole. Around half a million people in Europe found new work with private equity backed companies in 2018 and 2019 combined.

Private equity is an essential part of the foundation on which the European economy is built and its society flourishes. Our data shows how the industry supports employment and generates jobs through investing in growth, innovation and sustainability across the continent. Private equity’s long-term, flexible patient capital is making a positive difference to European society and is essential to rebuilding the economy after the effects of COVID-19,” said Eric de Montgolfier, CEO of Invest Europe.

Private Equity at Work highlights the industry’s outperformance in sectors that can support the recovery from COVID-19 and drive long-term competitiveness in Europe. ICT was the leading sector for employment growth, adding 7% more jobs in 2019, followed by Biotech & Healthcare and Energy & Environment, both growing by 6%. The large Consumer Goods & Services and Business Products & Services sectors, which each employ over three million people at private equity backed companies, created a combined total of almost 140,000 net new jobs each in 2019.

Private equity is a major employer and creator of new jobs across the continent. France & Benelux was the largest region by number of workers, with firms supporting almost 4.1 million jobs. The UK & Ireland was the fastest growing region for job creation, adding 7.8% more jobs in 2019. The private equity industry significantly outperformed average job market growth across Europe. It is notable that firms in Central and Eastern Europe increased employment by 5.9% against a regional market that was stagnant overall.

The report draws attention to private equity’s key role in helping small and medium-sized enterprises (SMEs) employing fewer than 250 staff, the backbone of Europe’s economy, to develop and expand. A total of 15,278 private equity backed SMEs employed 900,000 people across Europe at the end of 2019. These companies increased employment by more than 10% for the year, with almost one in ten graduating to a higher business size category.

The report marks Invest Europe’s second exhaustive study of private equity’s role in employment in Europe and captures an expanded group of companies. Over time, this data will expand to create a comprehensive picture of private equity’s contribution to jobs and the economy that those jobs support. To download and read Private Equity at Work in full, please click here.

Investing in Europe: Private Equity Activity 2020

  • €88 billion of equity invested in over 8,000 European companies in 2020
  • €101 billion in new capital raised, taking five-year fundraising to €500 billion

Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published ‘Investing in Europe: Private Equity Activity 2020’ – the most comprehensive and authoritative source of fundraising and investment data, covering over 1,600 firms in 2020. The report shows resilient private equity activity in 2020 in the face of the COVID-19 pandemic, with the second highest investment level on record, and fundraising over €100 billion for the third year running.

Despite severe disruption and market uncertainty, European private equity invested €88 billion in 2020, 12% less than the record €100 billion invested in 2019, yet still 18% above the average of the previous five years. A total of 8,163 companies received investment, 85% of which were small and medium-sized enterprises (SMEs), Europe’s engine for growth and recovery from the COVID-19 crisis.

The majority of private equity capital flowed into core sectors that target digital growth, consumption and long-term health: ICT accounted for 37% of investment; consumer goods & services a further 19%; and biotech & healthcare 15%. For more than half of European companies invested by the industry during the year, the 2020 investment was a follow-on.

Fundraising reached €101 billion in 2020, also 12% lower than the record €114 billion of 2019, but similarly well above the long-term average. The capital raised takes fundraising for the last five years to €500 billion, providing abundant firepower to support existing European portfolio companies, while identifying and backing new attractive investment opportunities.

Pension funds and insurers committed 39% of funds raised in 2020, underlining the asset class’s contribution to the pensions and savings of European citizens and beyond. More than 40% of capital came from investors outside the region, rising to almost 55% when focusing on fundraising for buyouts.

Private equity is a long-term asset class. That is what makes it so resilient and such an important cornerstone of the European economy and society. Private equity is already investing significantly in the recovery, providing investment and support that will help companies – and their employees – rebound, adapt and prosper as Europe emerges from the crisis”, said Eric de Montgolfier, CEO, Invest Europe.

Venture capital investment recorded its eighth successive year of growth, reaching €12 billion, while the growth segment posted its second-best year with €14.5 billion invested. Together they accounted for almost 6,900 companies backed.

Investor capital is perfectly aligned with the trend. The venture capital and growth segments both raised €15 billion in 2020 – the best-ever year for growth and the second-best year for VC. That capital will mean more firepower for innovation, growth and the SMEs that are the backbone of the economy as Europe rebuilds following the pandemic.

The data in ‘Investing in Europe: Private Equity Activity 2020’ records the step change in European private equity. Funds are raising and investing more capital on average than at any point in the industry’s history, including the years preceding the financial crisis. Coupled with Invest Europe’s other landmark reports, including “The Performance of European Private Equity Benchmark Report 2019”, and “Private Equity at Work”, the association’s research demonstrates European private equity’s growing contribution to the European economy and society – in terms of investment, financial performance and job creation.

Download the full report here.


Business and individual investors organisations issue statement

On 29 April 2021, business and individual investors organisations – namely Invest Europe, BETTER FINANCE, ecoDa, European Family Businesses, EuropeanIssuers, Federation of European Securities Exchanges (FESE), and SMEUnited – sent a joint letter to the European Commission to convey their shared concerns regarding the upcoming proposal on sustainable corporate governance.

The signing organisations:

  • support the concept of sustainable corporate governance as a means to reconcile economic growth, social progress and environmental protection;
  • acknowledge the aim of encouraging boards to consider their relevant stakeholders as having intrinsic value for decision-making in the best interest of the company over time;
  • encourage the Commission to further pursue strengthening shareholders’ active participation in the governance of companies.

However the signatories:

  • consider that the two topics of due diligence and corporate governance should be treated separately, and that the European Commission should avoid an oversimplified, one-size-fits-all approach;
  • observe that taking into consideration many interests is a natural part of directors’ duties, and that principles related to this are already included in many corporate governance codes;
  • consider that an EU initiative in this area that goes beyond the form of recommendations would be counterproductive;
  • envisage that, if introduced, such a move would paralyse the functioning of the board and, in turn, hamper the ability of companies to act decisively to promote a sustainable transition.

Most shareholders have a long-term vision, whether it concerns the shareholdings of family businesses, public or private equity, or end-investors. One focus for enhancing sustainable corporate governance should therefore be to strengthen the long-term engagement of shareholders and investors (including individual shareholders).

As different companies cannot all be managed the same way, developments related to sustainable corporate governance would best come within the existing framework of codes. This way, companies are provided with useful guidance on governance, while allowing shareholders to decide on the best way forward.

As for listed companies, the signatories wish also to highlight that too many restrictions may increase reluctance to use public markets for financing. In this respect, further restrictions in this regard would risk conflicting with the objectives of the Capital Markets Union.

All signing organisations agree that the European Commission should take the time to develop a fully comprehensive analysis which can form the basis of an initiative that is appropriate for all EU27 jurisdictions.