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.