Preliminary results from the French venture capital association’s 2001 private equity survey reveal a 46 per cent drop in investments to €2.7 billion, compared to 2000. The Association Francaise des Investisseurs en Capital (AFIC) reports a dramatic deceleration in the private equity market but says the industry has shown a good capacity for resisting the slowdown.
Arnaud de Dinechin, executive director of AFIC, said: “Everyone has been saying 2001 was a disastrous year for venture capital but it was not so bad as that. There is more optimism for 2002, as people have cash-reserves in hand and there are lots of opportunities in the market. The year 2000 was extraordinary and the figures for 2001 are more in line with 1999 and 1998.”
AFIC said the fall in investments was more notable in the second half of the year, which normally sees a greater volume of deals. While first round investments attracted just €1.7 billion compared to €3.6 billion in 2000, the market share percentage of these investments fell by just 4 per cent. Overall, both early stage and development investments decreased their share of investments. Although the total value of buyouts fell 30 per cent compared to 2000, they increased their overall share of the market from 41 per cent in 2000 to 52 per cent in 2001.
The amount raised through exits shows an increase from €1 billion in 2000 to €1.5 billion in 2001. De Dinechin said he was surprised by this and attributed the increase to a few large deals, rather than a general trend. However, the value of funds raised in 2001 fell by 17 per cent, mainly in response to a 50 per cent drop in capital raised outside Europe. Investments from France and the rest of Europe remain relatively stable.
These figures are the results of a brief six-monthly questionnaire, which does not include the activities of pan-European funds outside France, or figures from fund-of-funds. AFIC has 170 active members and the response rate to the survey was 70 per cent. The results of AFIC’s annual survey, carried out in conjunction with Pricewaterhouse Coopers, gives a more detailed breakdown of French private equity investments and will be announced in two months time.