Exits in Europe hit record levels in 2014

Private equity divestments in Europe reached €37.8 billion in 2014, up 10 percent from 2013, as firms across the continent exited 2,416 companies.

According to new data from the European Private Equity and Venture Capital Association the divestment figure last year hit the highest level to date for the private equity industry in Europe. The €37.8 billion figure values the 2,416 businesses at cost, or the amount which was originally invested on acquisition.

Exit levels were boosted by a strong IPO market, with exits via public markets doubling from 23 to 51 companies. The most popular exit route by amount was trade sale, accounting for 26 percent, followed by secondary buyouts, which accounted for 24 percent.

Private equity investment in European companies also increased in 2014, up 14 percent to €41.5 billion. The number of businesses backed reached a five-year high of more than 5,500, an 8 percent increase on 2013.

More than 900 companies received buyout investments, with capital invested amounting to a combined €31.3 billion. The majority of equity was invested in small and mid-market transactions, according to the data.

Fundraising in Europe reached €44.6 billion, down from 2013’s high of €54.4 billion, but substantially higher than the €24.6 billion raised in 2012.

Pension funds provided more than a third of the capital raised from institutional investors, while funds of funds contributed 12 percent, government agencies accounted for 11 percent and insurance companies contributed 10 percent. Institutional investors outside Europe contributed 40 percent to the annual fundraising for Europe last year.

Among last year’s successful fundraisings were Inflexion, which raised £1.05 billion for two funds, CVC, which secured $2 billion, reportedly from Singaporean sovereign wealth fund GIC, for a 15-year “strategic opportunities fund”, and TDR Capital, which collected €2 billion for its third buyout fund.

“In 2014, we saw a clear pickup of investment and divestment activity across Europe, supported by robust fundraising,” EVCA chief executive Dörte Höppner said in a statement. “Against the backdrop of extremely high liquidity in financial markets, our numbers are proof of a strong and stable private equity industry which displays no signs of overheating; the industry will continue to play a central role in the European economy.”