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Chart of the Week: PIIGS focused funds

 LPs are allocating more capital to Portugal, Ireland, Italy, Greece and Spain focused funds since 2011.  

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LPs are allocating more capital to Portugal, Ireland, Italy, Greece and Spain focused funds since 2011, an indication that private equity is expressing greater confidence towards the Eurozone.

 

In 2011, 14 funds closed collecting $1.5 billion – the lowest since the financial crisis. The largest fund to close that year was Explorer III, managed by Portuguese GP Explorer Investments. The fund fell short of its $407.5 million target by $36.2 million.

 

In 2013, more than three times as much capital was raised from 11 funds than in 2011. Investindustrial Fund V and FOND-ICO Global were the largest funds to close raising $1.72 billion and $1.65 billion respectively. The two funds accounted for 67 percent of the total capital raised for funds focusing on PIIGS in 2013. The latter of the two funds is a fund-of-funds which has a sole commitment from the ICO, a state-owned firm with the purpose of boosting venture capital activity in Spain.

 

The five European economies were considered to be the worst hit since the financial crisis and investors had limited confidence to commit to funds investing there.  In PEI's Investor Sentiment Survey that took place last year, 60 percent of LPs stated our option of the ‘Fate of the Eurozone’ to be the most concerning issue.  However, with the global economy recovering, it is evident from our fundraising numbers that LPs are starting to gain confidence in these economies.