European capital overhang at ‘1.5 years’ supply’

In 2003, members of EVCA invested €29bn of equity in 7,500 companies while raising €27bn of fresh capital.

2003 was the second most active year for European private equity and venture capital firms in terms of capital deployed, according to the European Private Equity & Venture Capital Assocation (EVCA).

Statistics compiled by PricewaterhouseCoopers and Thomson Venture Economics on behalf of EVCA and published yesterday at its 19th Annual Symposium in Berlin show that members of the association invested €29.1 billion ($35.6 billion) last year, up 5.2 percent against 2002. It is the second largest number on record after 2000, which saw €35 billion worth of investment.

Also last year, European firms raised €27 billion of new private equity and venture capital, equivalent to the total raised in 2002. The UK, home to most large pan-European funds, accounted for 55 percent of new funds raised.

It is the first time since 1995 that funds invested in Europe exceeded funds raised. Speaking at a press conference in Berlin Keith Arundale, European Venture Capital Leader at PwC, estimated that at current run rates, the industry had 1.5 years worth of capital left to invest.

Jean-Bernard Schmidt, EVCA chairman and managing director of Paris-headquartered Sofinnova Partners, commented in a statement: “These figures reveal what we on the ground have felt: a return of confidence and cautious optimism for 2004 which has already been borne out by a real upturn in investment activity in the first half of 2004 and a number of successful IPOs and trade sales.”

EVCA also said that the industry’s European portfolio at cost was estimated at €139 billion net of divestment on 31 December 2003, up from €123 billion in 2002.