These latest stats follow on from the preliminary figures published in March, and confirm a stellar year for the industry. Buyouts funds raised €84bn, up from the already massive €58bn in 2005, and venture funds experienced a 60% increase on the previous year’s figures, raising €17bn (up from €11bn), the second highest amount after the record breaking year 2000 which saw VCs accumulate €22bn.
The USA was the main fund source, pumping in 28.8% of the amount raised over 2006, with the UK trailing in second place with a 21.3% share. Significantly below these figures follows France on 7.9%, Sweden on 5.1%, and the Netherlands on 4.9%. In regards to investor type, pension funds continued to lead the way, comprising 27.1% (compared to 24.8% in 2005), with fund-of-funds committing a record €20bn, or 18% of the total.
Private equity also invested €71bn across 7,500 European companies in 2006, with almost 90% of said companies employing less than 500 members of staff. Buyout firms invested €50bn last year, up from the €32bn of 2005, with mega buyouts seeing the biggest increase with €19bn invested in 31 companies, and mid-market funds parting with almost €19bn in 343 companies. Venture investments increased to €17.3bn from €12.7bn in 2005, accounting for 74.2% of the total number of companies. Start-ups more than doubled with €5.7bn invested in 1,905 companies and expansion capital more stable reaching €11.4bn in 3,335 companies.
The UK remains in pole position as a destination for investment, with 33% of European money heading to UK companies, followed by France with 15.2% and Germany with 10.2%. In terms of business sectors, consumer-related and non industrial or financial services businesses proved the most popular last year, absorbing over 30% of investment, followed by communications businesses, though the largest number of investments was made in the computer-related and medical and healthcare sectors.
Returns figures remain in a healthy state with strong one year and long-term annualised net returns of 36.1% and 10.8%, respectively, with top quarter private equity funds returning a hefty 23.3%. Both venture and buyout produced strong top quarter internal rate of returns (IRR) of 17.4% and 31.0% respectively. Gemma Postlethwaite, vice president,
Over 4,400 companies were sold in 2006 by private equity firms, with 23% of the €31bn divested coming from trade buyers. Loan repayments made up 17.1% of divestments, secondary buyouts 16.1% and IPOs 16.2%. Write offs reached a record low for the industry, comprising just 11.1% of the total number of companies divested. Almost 60% of the money divested – €19.8bn – was by UK based funds, with France (11.4%, €3.8bn) and Germany (6%, €2bn) in second place.