The confidence of Europe’s private equity firms is increasing according to the EVCA (European Private Equity & Venture Capital Association), which announced preliminary fundraising, investment and divestment figures for 2003 at its sixth annual International Investors Conference in Geneva.
Key statistics included a 55.6 percent fall in write-offs compared with the previous year; a slight increase in fundraising to almost €28 billion; and over €23 billion of investment activity, characterised by a strong second half of the year.
Of particular encouragement was the reduction in write-offs, from €3.2 billion in 2002 to €1.4 billion last year (from 30 percent of total divestments to 15 percent). The EVCA report said sentiment on exits in 2004 was optimistic with a number of successful trade sales and IPOs in the first quarter and more anticipated in the second.
The fundraising figures showed a small increase last year to €28 billion, compared with €27.5 billion the previous year. This made 2003 the third highest year in terms of fundraising since 1990. The majority of funds raised in 2003 were for later-stage and buyout investment.
Investment activity improved in the second half of 2003 after a slow start. The total amount of equity invested was just over €23 billion, 67 percent of which was committed to buyouts.
“The environment in 2003 was tough but, as in the US, the second half of the year saw a noticeable upturn in activity,” said Jean-Bernard Schmidt, EVCA chairman and managing partner of Sofinnova Partners. “The prospects for 2004 are encouraging – we see that investor confidence is returning, with a number of investments and exits completed in all the major economies.”
Other positive trends he noted included increasing momentum in the fundraising market; fewer but better entrepreneurial deals; a recovery on stock markets; and opportunities arising from the expansion of the EU on 1 May.