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.