European fundraising has recovered well since the financial crisis, with the number of funds closed by Europe-based managers increasing year-on-year since 2010. Preqin’s Fund Manager Profiles database currently tracks 2,339 private equity firms that are headquartered in Europe, which together have raised €647bn in capital over the last 10 years. Private equity firms have a tendency to cluster together in the main financial districts, taking advantage of the existing infrastructure in these cities. Additionally, technology and start-up hubs can attract a number of venture capital fund managers, as seen most famously in the US with Silicon Valley. This blog looks at the 10 largest European cities in terms of the number of private equity fund managers they host.
As shown in the table above, London, unsurprisingly, houses the bulk of private equity firms based in Europe, accounting for 21% of all firms and 48% of the total capital raised over the last decade. The largest manager based in London by capital raised over the last 10 years is CVC Capital Partners, having raised €39bn. CVC’s last Europe-focused vehicle closed in 2013, collecting almost €11bn. Alongside its European investments, CVC also targets opportunities in North America and Asia, with a preference for controlling stakes in buyout and growth opportunities.
Paris comes second to London in the number of private equity managers it houses, though it accounts for only 8% of all Europe-based managers, a notable drop from across the Channel. Ardian is the largest manager based in Paris, having raised nearly €3bn over the course of the last decade. The firm operates a global investment strategy targeting a broad range of investment vehicles, with a specific preference for energy, technology and life sciences industries, alongside others.
The largest fund manager based outside the top 10 European cities is Partners Group, headquartered in Baar-Zug, Switzerland. With more than €15bn raised over the last 10 years, Partners Group is the fifth largest fund manager in Europe. Though larger cities present many opportunities in terms of national and international transport links, networking opportunities and larger recruiting pools, space is often at a premium and moving away from such hotspots could make financial sense for some firms.
The top 10 cities play host to 49% of all fund managers in Europe, which together account for 77% of the capital raised over the last 10 years by Europe-based fund managers. Larger and more successful fund managers that can afford the comparatively higher prices often commanded by such cities gravitate towards these financial centres, which are full of talent and networks. As new firms look to establish themselves, they will take into account the locations that will provide them with the best chances of success in terms of ease of business balanced against the cost of starting up. Software and technology that help to reduce the time and cost of doing business across cities may lead to greater diffusion across geographies; however, it is likely that the main financial centres will continue to assert a powerful draw over private equity firms.