European PE investment falls 30 per cent

Figures published by the European Venture Capital Association show a fall in private equity investments to 1999 levels.

Private equity investment in Europe fell to E24.3bn in 2001, 31 per cent below the figure for 2000 and slightly lower than the figures for 1999, according to the findings of the EVCA Annual Survey of Pan-European Private Equity. The UK led the way with E7bn of investments, with Germany (E4.4bn) and France (E3.3bn) second and third respectively.

The survey, carried out by PricewaterhouseCoopers, revealed that German companies were the recipients of the greatest number of investments, with just under 2000 firms receiving private equity or venture capital funding, ahead of both France and the UK.

The technology sector was hardest hit by lower levels of investment, with the total amount invested in technology-related businesses declining by 37 per cent, to stand at E6.8bn. Biotechnology also saw a marked decrease, down 15 per cent (E844m) on the figures for 2001.

In terms of fundraising, commitments to private equity and venture capital funds fell by just over 20 per cent to E38bn. Despite the reduced level of fundraising, the figures for 2001 were just over 50 per cent up on the E25bn raised in 1999. Pension funds were once again the biggest investors, accounting for 27 per cent of the total raised. The largest proportion of non-European investment came from the US, which contributed around 25 per cent (E9.6bn) of the total.

Eduardo Bugnone, chairman of EVCA, said that while the figures for 2001 highlighted a downturn in investment opportunities and commitments, 2002 was likely to offer ‘solid opportunities’ to those firms able to learn from the experiences of the downturn.