Global PE investment down by $100bn

Worldwide private equity and venture capital investment fell by just under $100bn in 2001, reflecting the downturn in investment in global technology markets last year.

The Global Private Equity Report, published by UK private equity firm 3i and Pricewaterhouse Coopers, shows that $100bn was invested worldwide last year, equivalent to 0.32 per cent of the world’s gross domestic product. The percentage invested in 2000 was 0.63 per cent.

The contraction was somewhat less dramatic for fundraising during 2001. Global fundraising in 2001 stood at $151bn, a 39 per cent fall on the $247bn raised in 2000. Despite a small decrease in its global percentage North America continues to lead the way in fundraising, generating just over $100bn of the overall total.

The Asia Pacific region was arguably the best performer in 2001, maintaining investment levels at $11.9bn, down only three per cent on the amount invested in 2000. However fundraising in the region showed a considerable fall, down 32 per cent at $12.1bn.

Western Europe accounted for 15 per cent, or $21.5bn of the overall total, a decrease of 33 per cent since 2000. However fundraising was less affected, down 22 per cent at $34bn.

Introducing the report, 3i chief executive Brian Larcombe said that on current projections, private equity and venture capital investments were likely to fall further by more than 30 per cent in 2002.

Larcombe added that his firm saw the current decline both in investment and fundraising as a ‘short term stumble’ rather than a shift in the value of private equity investment. “Whilst private equity returns are coming under pressure, the case for substantial outperformance of the public markers remains intact. Given the outlook for the public markets going forward, the case for investing in private equity could well be even stronger.”