Private equity investments and divestments hit five year high in Europe

BY Fraser Tennant

Private equity investment in European companies during 2014 reached its highest level for five years, according to new figures released this week by the European Private Equity & Venture Capital Association (EVCA).

The figures highlighting the number of companies to have received buyout, growth and venture capital investments last year are showcased in the EVCA’s ‘2014 European Private Equity Activity report’ – widely considered to be the most comprehensive source of private equity fundraising, investment and divestment data for Europe (pertaining to more than 1200 European private equity firms).

The report’s core data shows that in 2014: (i) European private equity investment rose 14 percent to €41.5bn; (ii) over 5500 European companies received private equity investment, 80 percent of which were SMEs; (iii) divestments rose 10 percent to a record €37.8bn, with 2400 companies exiting; and (iv) private equity fundraising reached €44.6bn, the second-highest total in five years.

“Private equity and venture capital play an ever increasing role in Europe’s capital markets," said EVCA chief executive Dörte Höppner. “In 2014, we saw a clear pickup of investment and divestment activity across Europe, supported by robust fundraising. Against the backdrop of extremely high liquidity in financial markets, our numbers are proof of a strong and stable private equity industry which displays no signs of overheating; the industry will continue to play a central role in the European economy.”

The EVCA report also indicates that initial public offerings (IPOs) played a significant role in divestment activity. Exits via public markets more than doubled from 23 to 51 companies, while the amount divested at cost increased by more than 50 percent to €3.3bn. Overall, says the report, the most prominent exit routes by amount were by trade sale and sale to another private equity firm.

“Record divestment activity in 2014 reflects the quality of businesses being created by European private equity," concludes Ms Höppner. “While the rise in IPO activity is welcome and demonstrates investor appetite for new share offerings, we must do more to improve public market access for SMEs. The EVCA has been working with fellow European associations via the IPO Task Force to promote a healthier IPO market that benefits companies and investors alike.”

Further EVCA conclusions include confirmation that European private equity continued to attract significant capital from around the globe in 2014, with institutional investors accounting for 40 percent of the funds raised.

Report: 2014 European Private Equity Activity - Statistics on Fundraising, Investments & Divestments

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