The eurozone crisis that began in 2008 is believed to have had some impact on LPs’ confidence in investing in the so-called PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) in particular. According to Preqin’s Funds in Market online service, there are currently 71 private equity vehicles on the fundraising trail looking to invest in these countries either exclusively or as part of a wider strategy. By looking more closely at the data, it is apparent that in 2013 so far there have only been two funds to have reached a final close that have focused solely on one or more of these countries. In comparison, in 2007 when these European economies were performing relatively well, there were 46 private equity funds targeting only these countries that reached a final close; these funds raised an aggregate €20.8bn of capital. Since then, the number of funds and the aggregate capital garnered has fallen year on year, and so far in 2013 there have only been 10 funds that reached a final close, accumulating €4bn in total capital commitments.
Breaking down the funds by fund manager location shows that Italy-based GPs have raised the greatest number of funds since 2008, with Spain-based managers ranking second; these fund managers have raised 82 and 43 funds respectively targeting the PIIGS countries. UK-based fund managers have raised 22 private equity funds that include a focus on these specific countries since 2008, which is the highest for managers based outside of the five PIIGS countries.
Of the 71 funds currently in market targeting this region either exclusively or as part of a wider strategy, infrastructure funds are the most prevalent in terms of number of funds; there are presently 15 infrastructure funds in market collectively targeting €4.8bn in capital commitments. On the other hand, buyout funds are targeting the largest aggregate amount of capital, with 13 buyout funds focused on the PIIGS countries aiming to secure an aggregate €7.5bn. Since the onset of the eurozone crisis in 2008, the most common fund type that reached a final close is real estate funds, with 63 vehicles closing in the period from January 2008 to September 2013. Surprisingly, there have not been many distressed private equity funds targeting this region since 2008, with only six distressed debt, turnaround or special situation vehicles being raised with a focus on the PIIGS countries to date.
The largest private equity vehicle that is focused on only this region to report a final close since the eurozone crisis started is Fondi Italiani Per Le Infrastrutture. This fund targets at least 80% of its investments in Italian infrastructure companies, and reached a final close of €1.9bn in February 2009 after approximately 18 months on the road.