Continental Europe funds on rise

Private equity funds investing in Europe raised €25.4 billion in 2004, with non-UK funds accounting for nearly half the total, new research says.

A report entitled “Fundraising Review 2004: A Preview for 2005”, published by placement consultants Almeida Capital, has found that European fundraising increased last year for the first time since 2000.
2004 saw 53 final closes with a total value of €25.4 billion. Buyouts accounted for almost 60 percent of this volume, making it by far the largest sector, despite a fall from its 77 percent share of funds raised in 2003. The second largest segment was funds of funds, accounting for 13 percent of capital raised, while mezzanine was third with 11 percent.
The report noted that nearly half the 2004 funds reached a final close in under 12 months, compared to only a third in 2003, and identified this as a reflection of the improvement in general fundraising conditions.
It also showed that the UK’s dominance of the European market is decreasing, with continental funds accounting for 44 percent of the total raised last year compared to 36 percent in 2003.
Despite the increased strength of the European market, the continent still only represented 24 percent of global fundraising, and was dwarfed by the 72 percent raised by the US. In total, $129 billion was raised globally last year.

However, the report predicts that the US share of the market will diminish slightly in 2005, representing only 65 percent of the global total this year.
Based on LP demand and the supply of funds in the market, Almeida predicts that total European fundraising for this year will be €42 billion, of which around 75 percent will go to buyout funds. It expects growth in both European and Asian markets to outstrip that in the US. In total, $190 billion of private equity capital will be raised this year.