Private equity investment in European companies hit a 10-year high in 2017, at €71.7bn – a 29 per cent year-on-year increase – according to new data from Invest Europe. Almost 7,000 companies gained investment, of which 87 per cent were small and medium-sized enterprises (SMEs).
Invest Europe’s 2017 European Private Equity Activity report reveals that private equity fundraising reached €91.9bn in 2017, surpassing the previous year by 12 per cent for the highest amount since 2008.
European private equity managers put their investment capital to work at an increasing volume across all fund sizes, delivering decade-high investment levels. Divestments (measured at cost) increased by 7 per cent to €42.7bn. This is the third highest level of the past decade, as around 3,800 European companies were exited in 2017.
EU economy
The report comes as the European Union enjoys its highest growth in a decade. The EU economy grew by 2.4 per cent last year, according to figures from the European Commission. Globally, demand for private equity has risen, as investors increasingly look to the asset class for returns during this extended period of low interest rates.
“European private equity saw highs in both fundraising and investments in 2017, demonstrating that private capital markets are deepening as European economies are growing,” said Michael Collins, Invest Europe’s CEO. “This investment capital is supporting European companies of all sizes — helping start-ups to achieve scale, expanding SMEs and transforming large corporates.”
Sector analysis
Companies focused on consumer goods and services in Europe increased their share of private equity investment last year, at 24.4 per cent of the total. Almost equalling this were business-to-business products and services, increasing by 51 per cent to account for 23.5 per cent of the total.
The technology sector reached a 10-year investment high, with 17 per cent of the total, a year-on-year increase of 6 per cent.
France and Benelux-based companies received 27 per cent of private equity investments in 2017. Close behind were the UK and Ireland with 26 per cent, followed by DACH-based companies (those in Germany, Austria and Switzerland) at 20 per cent, southern Europe at 13 per cent, the Nordics at 9 per cent, and Central and Eastern European countries at 5 per cent.
Pension funds provided 29 per cent of all capital raised, followed by funds of funds (20 per cent), family offices and private individuals (15 per cent), sovereign wealth funds (9 per cent) and insurance companies (8 per cent).
The 2017 European Private Equity Activity report covers activity on more than 1,250 firms, verified by fund managers via the European Data Cooperative (EDC). The EDC holds data from over 3,000 European private equity firms on 8,000 funds, 64,000 portfolio companies and 250,000 transactions since 2007.
• The full report is free to download from investeurope.eu