Europe private equity 2018 in five charts

Last year set a record for private equity investment in Europe, with €80.6 billion invested across different strategies, the highest level recorded in history.

Year-on-year, 2018 had a 7 percent growth in value of investments compared with the previous year, according to industry body Invest Europe’s 2018 European Private Equity Activity report. The number of investee companies also broke a record, increasing by 7 percent to over 7,800, most of which were SMEs.

Buyouts and venture capital deals last year rose by 10 percent and 13 percent respectively compared with the previous year. Buyouts totalled €58.8 billion across 1,285 companies, with larger transactions – more than €150 million – accounting for more than 50 percent of all deals.

Mid-market buyouts – between €15 million and €150 million in equity – made up roughly 40 percent of market share. By sector, business products and services received 26 percent of total buyout investment, followed by consumer goods and services (20 percent), ICT (15 percent) and biotech and healthcare (14 percent).

Venture capital exceeded the 2017 record by 17 percent at €8.2 billion across more than 4,400 investments. Growth investments recorded hit €11.9 billion, with 2,106 companies financed.

Looking at individual markets, France and Benelux, Nordics and Southern Europe saw increases in total deal value in the last year, with €24.2 billion, €8.2 billion and €13.5 billion, respectively. The DACH region and Central and Eastern Europe, on the other hand, saw deal values slip to €14.6 billion and €2.6 billion, respectively. The UK experienced the largest drop in deals, from €19.6 billion in 2017 to €17.3 billion in 2018.

One London-based, Europe-focused fund manager told Private Equity International that the decrease in UK investments could either be a result of Brexit or of heavy deal volume over the last two years.

“While we have definitely seen volumes come down, there’s still activity in the lower end of the market, of smaller, more domestic companies trading around the UK,” he said.

“Brexit is undoubtedly having an impact on dealflow today. [French president] Macron and gilets jaunes will have an impact on France for a period of time, but these are short-term events in the scheme of a 20- to 30-year investment cycle.”

Capital raised by Europe-focused funds last year held steady at €97.3 billion, roughly in line with 2017’s total of €96.6 billion. Last year had the highest total fundraising since 2009 and the number of funds that raised fresh capital dropped 5 percent to 581, the report noted.

By capital source, pensions funds provided about one third of total capital raised last year, followed by fund of funds managers and other asset managers (18 percent), family offices and private individuals (11 percent), and insurance companies (11 percent), among others.