Chart of the week: Big players dominate European market

Largest closed-ended private equity funds gather proportionately more than their smaller counterparts.  


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Market volatility is causing LPs to flee to the safety of large-cap buyout funds, according to Cebile Capital’s Sunaina Sinh, who spoke to Private Equity International this week about the investor appetite for European mega-funds.

In times of macro-economic uncertainty, investors place their capital with the largest and most diverse funds, while first-time fund managers and smaller vehicles miss out. Likewise, the developed European market will offer a more reliable opportunity for stronger returns than most emerging economies.

PEI’s Research & Analytics team analysed the dominance of funds that have gathered $1 billion or more for the European market, to assess whether this sentiment is reflected in the data. 

In 2010, European-focused closed-ended private equity vehicles worth $1 billion or more accounted for 32 percent of total capital raised in the year. Five years later, these funds were responsible for 73 percent.

Of the 97 funds that held a final close in 2015, 20 vehicles collected $1 billion or more from investors. EQT VII was the largest, with $7.56 billion raised by final close in July.

As we near the end of Q1 2016, 51 percent of aggregate capital gathered has come from funds that have raised $1 billion or more to invest into Europe. 

However, with 24 European-focused vehicles on the road targeting $1 billion or more, including BC European Capital X which has a target size of $7.84 billion, it is likely that this proportion will have increased by year end.