Invest Europe has published two reports, underlining the robust recovery in private equity activity in the first half of 2021, as well as the strengthening belief in the industry’s ability to contribute to a stronger economy and better society.
The first report – Investing in Europe: Private Equity Activity H1 2021 – provides details of private equity activity in Europe and reveals that firms invested €57.3bn in businesses across Europe, the highest ever six-month total.
The record was fuelled by a strong rise in venture capital investment to €10.2bn, a 58% increase on the previous six-month record registered in the second half of 2020.
Growth investments also hit a new high, more than doubling to €17.5bn, highlighting the industry’s focus on innovative, fast-growing businesses.
The data shows strong first-half fundraising of €52.4bn as long-term investors such as insurers and pension funds continue to target private equity in search of better returns for European savers.
A record 365 funds completed fundraising during the first six months of the year – an all-time high for any H1 period.
At the same time, divestment increased by 63% over the same period last year as firms exited businesses via public market listings and competitive sales processes.
European market sentiment survey
The second report – The insight: how Europe’s private equity industry is anchoring long-term investors, pan-European market sentiment survey – conducted and published with consultancy Arthur D Little, reflects the momentum in private equity activity in the first half of the year and maps the role the industry is poised to play in the near term.
More than two-thirds of fund managers see stronger investment opportunities in the coming year compared with the previous 12 months, and almost 60% of investors expect increased allocations to private equity over the coming three years.
As the outlook improves, the industry is concentrating ever more attention on delivering higher sustainability standards and more ethical practices.
Some 95% of general partners said they intend to increase their focus on environmental, social and governance issues and 86% plan to concentrate more on diversity and inclusion.
Impact of Covid
The survey also found that while Covid-19 had had a negative impact on the funds of four in 10 managers, 83% said it had also had a positive impact on their portfolio companies.
The theme of greater social and environmental responsibility runs throughout the survey, with 46% of investors expecting to increase allocations to impact funds over the coming 12 months.
Eric de Montgolfier, CEO of Invest Europe, commented: "Record investment levels and increased confidence in the outlook indicate that European private equity has adapted to the challenges of Covid-19 and is moving past the pandemic.
"At the same time, private equity is evolving as managers and investors focus even more attention on ESG, diversity and inclusion.
"This is an industry that recognises its role as a cornerstone of the European economy and wants to be at the forefront of the recovery, as well as the trends that matter to society.”
• Invest Europe’s Private Equity Activity H1 2021 report and Pan-European market sentiment survey can be accessed here