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Europe-Focused Fundraising Strengthens – December 2013

by Christopher Hardy

  • 16 Dec 2013
  • PE

Modest economic growth, fears of further bailouts abating, and the launch of the AIFMD regulation have been the backdrop for the slow but steady recovery of Europe-focused private equity fundraising in 2013. Despite the complex regulatory framework imposed upon managers investing in the region, and the challenges regarding the changing culture of fundraising, 2013 has seen strong aggregate capital figures being posted by firms that raised funds with a focus on European investments. In fact, the fundraising figures for 2013 outstrip the amount of capital raised each year since 2009 but represent a 32% drop in the number of funds raised in 2012. 

Although Europe is viewed as a mature private equity industry and a unified market with pan-continental regulations, there is a trend of polarization in the distribution of LP commitments across sub-regions in 2013. Funds primarily focusing on Western Europe or Pan-Europe have attracted increasing amounts of capital for three consecutive years, whereas fundraising for Central and Eastern Europe and Southern Europe has significantly diminished in 2013. 

The average fund size of Europe-focused vehicles has more than doubled since a low of $312mn in 2010, increasing to $685mn in 2013. In part, this is due to 21 funds that held a final close on over $1bn in 2013. Combined, these 21 vehicles raised an aggregate $63bn, accounting for 70% of total capital raised by all Europe-focused funds in 2013. Western Europe-focused CVC European Equity Partners VI was the largest fund to close in 2013, having raised €10.5bn. 

Buyout fundraising has increased year on year since 2010, and accounts for the majority of all Europe-focused fundraising in 2013. The $53bn raised by Europe-focused buyout funds accounts for 60% of the region’s aggregate total in 2013. Venture capital fundraising remained stagnant, matching the $3bn raised in 2012, though with 14 fewer funds reaching final closes in 2013. In light of improving macroeconomic conditions and high prices for secondary debt, Europe-focused distressed private equity fundraising has declined from its peak of $11bn raised by funds closed in 2012, down to $3bn in 2013. 

The relatively stable economic conditions in the Eurozone over the last 12 months has led to cautious, but still growing, confidence in investment in the region, with 2013 annual fundraising by Europe-focused vehicles amassing the largest aggregate total since 2008. Preqin’s Funds in Market product shows that there are currently 496 funds currently raising capital with a focus on European investments collectively seeking $205bn. Fifty-two percent of these funds have held an interim close, having raised $51bn so far; an encouraging indication of the momentum in European fundraising for 2014. 

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