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Continental Context: A Comparison of German and European Private Equity

by Henry Morgan

  • 29 Mar 2017
  • PE

Preqin’s Private Equity Online profiles 136 Germany-based private equity investors. Together these investors have a total €52bn invested in the asset class, making them a major source of institutional capital for GPs looking to fundraise in the region.

Investor Types

Although Germany is the largest economy in Europe by GDP, the German and European private equity markets possess several notable differences. Germany-based investors are concentrated in terms of type, with family offices, insurance companies, corporate investors and both public and private sector pension funds each representing at least 10% of the domestic market and 63% collectively. In contrast, the overall European market is far more evenly distributed, with pension funds the only investor type representing more than 10% of the Europe-based investor population.

Fund Type Preferences

A larger proportion of Germany-based investors target buyout investment than their Europe-based counterparts (73% vs. 67% respectively); however, Europe-based investors have a greater appetite for venture capital and growth vehicles.

Regional Preferences

Unsurprisingly, both groups show a domestic bias: 88% of Europe-based investors consider Europe-focused funds, similar to the 81% of Germany-based investors. Appetite for North America-focused funds is comparable, with 43% of Europe-based and 49% of Germany-based investors considering the region.

Although the regional investment preferences of Europe and Germany appear to be aligned at present, they are beginning to display signs of divergence. The proportion of Germany-based investors seeking increased exposure to North America over the next 12 months is six percentage points larger than that of Europe-based investors. A larger share of Germany-based investors are seeking European exposure than in the whole of Europe, with 80% planning to invest in the region in the year ahead, compared with 62% of investors in the wider continent.

Although there are signs of divergence in certain investment preferences, the German and European private equity landscapes are at present highly similar. Germany’s large presence in the European private equity market naturally aligns the preferences of investors from each location, with evidence of only minor differences in investments plans.

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