The European Venture Capital Association (EVCA) has released the 2000 Annual European Private Equity survey compiled in conjunction with PricewaterhouseCoopers at its 16th annual symposium, which was this year held in Rome.
Last year saw the largest amount of capital ever invested by European private equity and venture capital firms reaching e34.9 billion in 10,440 companies, an increase of 39 per cent on the previous year.
Funds raised also reached record levels at e48 billion, up 89 per cent. For the first time since 1995, the largest chunk of funds raised came from pension funds, accounting for 24 per cent of the total, with banks contributing 22 per cent and insurance companies 13 per cent. Significant growth came from fund-of-funds, which accounted for 11 per cent of the total, and funds raised from corporate investors doubled in 2000 reaching e2.4 billion.
While 1999 was the year of the buyout, a shift of investment focus was noted in 2000, with venture capital investments (seed, start-up and expansion) accounting for the majority of commitments at e19.6 billion (56 per cent), compared to 1999’s e10.6 billion, taking 43 per cent of the total amount.
Buyouts did not fare as well in attracting investments in 2000 with the share of the total amount represented by buyouts decreasing from 53 per cent in 1999 to 41 per cent in 2000. However, total amount was up nine per cent to e14.4 billion and average deal size is increasing from e2.2 million in 1999 to e2.7 million in 2000.
High tech was the largest industry category for investment at e11 billion, accounting for 31 per cent of the total investments, up 71 per cent from e6.4 billion in 1999.
The UK continues to lead Europe in fund raising with e17.7 billion, 37 per cent of total funds raised. The UK industry represented 38 per cent of total amount invested (e13.2 billion). France followed the UK with a 16 per cent share of funds raised at e7.5 billion and e5.3 billion (15 per cent) invested. Germany accounted for the highest number of individual investments, at just over 3,000. Investment in venture capital as a percentage of total amount invested in Germany remained high in 2000 at 80 per cent (e3.8 billion).
Norway and Ireland made a mark last year with the largest share of venture capital investment as a proportion of country total with 98 per cent and 95 per cent of investment, respectively. In the buyout sector, Sweden and Switzerland invested the largest proportion of country total investment with 765 and 705 deals, respectively.
Divestments posted growth in 2000 up six per cent to e9.1 billion in 2000 with trade sales remaining the most popular exit route.
The survey reveals that throughout much animation in stock markets and signs of a possible economic slowdown, the industry has demonstrated its ability to find opportunity in every phase of the economic cycle. In particular, with pension funds increasing their exposure to private equity, it is being recognised as an attractive asset class for institutional investors.