European fund raising down 40%

European private equity fund raising continued its path of decline in 2003 to confirm the toughest market since the peak in 2000, according to provisional figures from Almeida Capital. There were a total of 37 final closes in Europe in 2003 accounting for €17.6bn, down 40% on the 72 closes in 2002 worth €29.3bn.

Chris Davison, head of research at AltAssets, a division of Almeida Capital, says: “Capital was in short supply in 2003, which made marketing a pretty brutal experience for all but the very best firms. There is no reason to expect a dramatic turnaround in the short term, but investor sentiment has strengthened in recent months and that is likely to translate into a pick-up in fund raising as the year progresses.”

Buyout funds increased their share of total commitments to over 75% and mezzanine funds accounted for almost as much as venture. And for the first time, buyout funds in Europe raised more money in 2003 than their US counterparts.

There are currently around 180 European private equity funds actively trying to raise capital. And a significant number of large and established firms are expected to enter the market in the second half of this year in anticipation of an improvement in conditions.