Last year might not have been a great time to be a venture capitalist anywhere in the world, but it wasn’t as bad as it seemed. Global private equity investments for 2001 fell by 50%, from the all-time record high of $199 billion in 2000, according to figures published in the third Global Private Equity report by 3i, the international VC firm, and PricewaterhouseCoopers. While the decrease is significant, last year still represented the third highest year for global investment in history.
Although the drop in investments is parallel to the challenging economic climate, funds raised in 2001 exceeded investments made by $51 billion. Thus raising the total funds available for investments in companies to $180 billion.
However, in 2001, the proportion of buyout investment increased, while the proportion of early stage investments decreased.
North America took the biggest fall. Investments in the region fell by 57% in 2001 across all investment stages, according to the report. However, despite the drop from its record high of $145.5 billion in 2000, North America fared better than any other region for the third year running, with investments and funds reaching $62.8 billion and $102.6 billion respectively for 2001.
By contrast, investments activity in Western Europe only saw a 33% decline in 2001. Ironically, the U.K. raised 54% of the funds in Western Europe, which was actually a 12% increase over 2000 levels. However, slightly more than half of funds raised in Western Europe were allocated to buyouts, while 25% went to early-stage and expansion technology companies. The U.K. was less dominant in terms of capital invested, the area only represented 29% of the total amount invested, down from 38% in 2000 and 45% in 1999.
Investment numbers in Asia Pacific fell just 3% in 2001, compared to the 50% decline in total global investments. The small decrease can be attributed to the private equity industry in the Asia Pacific region is still very young, as a result did not experience the same excesses as occurred in the more mature regions.
“The industry is still in the early stages of development. The region offers some real potential in buyouts and growth companies in both North America and Asia Pacific. We expect technology investments to show stronger growth in 2004,” says Martin Gagen, president and CEO, 3i USA and Asia Pacific.
Contact Danielle Fugazy