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French private equity looks healthy in 2002

The French venture capital association, AFIC, has published investment figures for the first half of 2002 that show a 20 per cent increase in investment compared to the same period last year. Total investment increased from EURO1.2 billion in 2001 to EURO1.4 billion in the first six months of this year. There was also a small increase in the number of exits, which achieved a total value of EURO815 million.

There has been an 87 per cent increase, by volume, in leveraged buyout investments compared to the first half of 2001. The EURO906 million invested in buyout situations accounted for 63 per cent of the total invested, a 10 per cent increase on the same period last year but slightly down on the second half of 2001. The period was marked by a number of large deals but the mid-market also recorded a good level of activity.

Fund raising has remained relatively stable at around EURO2.5 billion; a pleasant surprise considering that according to the EVCA in the second quarter of 2002 the total of new funds raised decreased by 70 per cent. However, since last year France has seen a dramatic shift in the origin of the money being raised. Domestic investment in private equity fell by 66 per cent, while funds from Europe rose by 36 per cent and capital raised from the rest of the world increased by more than five times (524 per cent).

Investments in start-ups maintained a good volume, while development capital commitments showed a decrease. The proportion of first-time investments rose 60 per cent, with new commitments to companies accounting for 76 per cent of the total invested, compared to 57 per cent last year. Follow-on rounds fell by 33 per cent.

The activity questionnaire was sent to 178 of AFIC’s members and achieved a 70 per cent response rate.