Preliminary figures compiled by
The report reveals that of the €90bn raised, €71bn (US$93bn) was allocated to buyouts, up from €58bn (US$76bn) in 2005. Venture capital accounted for €16bn (US$21bn).
Focusing on returns, the study reports one-year returns for all private equity of 21.3% and a historical 27-year annualised return net of fees at 10.3%. This compares with an equivalent return of 5.5% had similar funds been invested in the markets and more specifically the Morgan Stanley Euro Equity index.
The two largest sources of commitments in 2006 came from pension funds and funds of funds, investing €22bn (US$29bn) and €18bn (US$24bn) respectively. The proportion of the total funds contributed by funds of funds increased dramatically from 13% in 2005 to 21% in 2006. The overall proportion committed from pension funds was virtually unchanged from 2005.
Brendan McMahon, European private equity assurance leader at PwC, confirmed that pension funds are increasingly looking to invest in funds of funds as a means of gaining access to the best managers.
“The level of returns and the speed with which pension funds are receiving these returns has meant that pension funds have been struggling to allocate the money so fund of funds have increasingly become the fastest and most effective option”, he added.
Commenting on the figures, Javier Loizaga, chairman of the EVCA and CEO and managing partner of Mercapital said: “2006 has highlighted the growing importance of the European private equity industry, with private equity firms in Europe clearly demonstrating their continuing ability to attract record amounts of capital from institutional investors”.