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Big numbers again in EVCA survey

Despite the slump, European private equity funds raised and invested more money in 2000 than ever before.

A slowdown may be underway in European private equity, but, as one would probably expect, the numbers for investment and fundraising in 2000 do not reflect this yet.

According to the latest survey published today by the European Venture Capital Association (EVCA), the industry set new records in 2000 both in terms of new funds raised and capital invested.

What is most interesting is that unlike last year, funds raised in 2000 significantly exceeded funds invested, a sign that private equity investors approached investment opportunities with more caution. E48bn raised stand against E35bn invested, constituting a E13bn differential that suggests the European wall of money is rising fast.

Funds raised

New funds raised in 2000 totalled E48bn, up 89 per cent on the previous record set in 1999 when E25.4bn had been collected.

Pension funds overtook banks as the largest contributor to funds raised at 24 per cent, posting an increase of 125 per cent. Banks provided 22 per cent of the total (up 29 per cent), and insurance companies accounted for 13 per cent (up 70 per cent).

Funds of funds and corporate investors contributed 11 per cent each, while private individual investors put in 7 per cent, thus more than doubling their contribution.

Almost 70 per cent of funds were raised by independent funds, whereas captives accounted for 22 per cent of the total.

Between them, the UK (37 per cent) and the US (22 per cent, up from 16 per cent in 1999) accounted for more than half the money raised, with American investors increasing their exposure to the asset class in Europe by 6 per cent in 1999.

Cash raised for buyouts shot up by 106 per cent to E24.3bn. Technology funds focussed on early stage and expansion capital funds received E15.2bn, 91 per cent more than last year.

Funds invested

An unprecedented E35bn were invested in 2000, 39 per cent up on 1999. UK investments accounted for 38 per cent of the total.

In terms of number of investments made, Germany (over 3,000) made the largest individual contribution to a total of 13,000. Of these 5,000 were in start-up companies. E14.4bn were invested in buyouts, E11.2bn (31 per cent) were put into high-tech transactions, making it the most popular industry segment for investment.

Just over 1500 trade sales were completed during the period, while the number of IPOs increased from 193 in 1999 to 318 in 2000.

The EVCA survey was conducted by PricewaterhouseCoopers' Global Technology Industry Group. 21 separate countries were polled including the Czech Republic, Hungary, Poland and Slovakia which in 1999 and 1998 were included as pilots. Bulgaria, Lithuania and Romania were included as pilots for the first time.

Out of 1,349 eligible private equity companies, 949 returned the completed questionnaire.