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