Europe’s mid-market raises near-record €24bn

Against the tumultuous economic backdrop, last year investors targeted Europe’s more mature markets at the expense of Central and Eastern Europe.

Fundraising for European mid-market private equity funds held up well in 2008, according to a study by London-based placement agent Acanthus Advisers.

The total amount raised by mid-market firms last year was €24.2 billion, an increase on the €23.3 billion raised in 2007 and a slight decrease on the record amount of €24.7 billion collected in 2006.

The study saw a gravitation of capital to “safe harbours” amid a background of economic turbulence. This meant that the UK, Europe’s most mature private equity market, saw €6.5 billion of funds raised – an increase of €1 billion on the previous year. Other mature markets such as France and the Benelux region also did well, the report found, as investors favoured “highly experienced teams” with “longstanding realised track records”.

By contrast, the emerging Central and Eastern European economies, which raised a combined total of €5.8 billion in 2007, saw a marked decline in fundraising last year at €3.5 billion. The number of funds closed in the region fell from 21 to 11, as South Eastern Europe in particular saw a dramatic decline in capital commitments.

The survey found that 21 percent of the total amount raised last year was accounted for by new and spin-out teams. Meanwhile, fundraising for special situations groups was “surprisingly poorer than expected”. During the year there was a “marked number of delayed closings or postponed fundraisings” as managers switched their focus to existing portfolios rather than building new ones.

Acanthus predicts that 2009 – while “difficult to estimate” – may see total commitments down by one-third or more, with the greatest impact on larger mid-market funds.