The financial spotlight remains very focused on Europe and the challenges that the eurozone is facing. The Benelux region, however, comprising Belgium, the Netherlands and Luxembourg, has been under considerably less scrutiny compared to its immediate neighbours France and Germany and the faltering economies of Spain, Italy, and Greece in the south of Europe. It is therefore interesting to look at the private equity investments of the smaller Benelux region and how these counties fit into the private equity universe.
Preqin’s Investor Intelligence currently tracks 114 active private equity investors within Benelux, which account for 2.5% of all the LPs tracked globally by Preqin. Of these investors, over two-thirds (68%) are located in the Netherlands, 22% are based in Belgium and the remaining 10% are in Luxembourg, by far the smallest country in the region.
Private sector pension funds represent the largest proportion of investors in Benelux, accounting for almost a third (30%) of the LPs based in the region, which is considerably higher than the rest of Europe, where such institutions make up 15% of LPs. Asset managers account for the second highest proportion of investors in the region at 10%, followed by corporate investors, which make up 9% of the LPs in the region; banks and investment companies each represent 8%. Foundations and endowments only account for 2% of LPs in Benelux, while they account for 9% of investors in the rest of Europe.
Benelux-based investors are broadly at their target allocations to the asset class, with an average current allocation to private equity of 6.6% of total assets and an average target allocation to the asset class of 6.5%. However, since the onset of the global financial crisis, investors in Benelux have decreased their exposure to the asset class, perhaps as a result of the ongoing volatility in wider Europe. In 2007, the average current allocation to private equity stood at a higher 8.2% of total assets, with an average target allocation of 8.6%.
It is evident that although the Benelux region is relatively small, LPs in the region have remained active in the asset class over recent years. However, the impact of the global financial crisis in 2008 and the more recent eurozone sovereign debt crisis has meant that Benelux-based LPs have become steadily more cautious towards the asset class, decreasing their average allocations over time. How these allocations might change in the future is uncertain, but it is clear the Benelux region is home to a number of significant investors in the private equity asset class, with LPs in the region likely to continue to invest in the asset class for some time to come.