Private Capital in a Recovering Europe

Fundraising, investment, and performance have accelerated in H1 2021. Preqin’s upcoming report on Alternative Assets in Europe will give you granular data and analysis

Private capital has bounced back on all metrics across Europe. Transaction levels were high in H1 2021 for both new investments and exits, fundraising is on track for a record, and returns have been given a boost. 

Preqin’s annual Markets in Focus: Alternative Assets in Europe report will launch in mid-September and is produced in collaboration with leading European asset manager Amundi for the fourth year in a row. The report highlights the positive and growing role played by private capital in the two defining economic issues of our time: the recovery from COVID-19 and the transition to carbon neutrality.

First, some numbers. Fundraising by Europe-based private capital GPs in H1 2021 reached 59% of 2020’s full-year total, which, despite the practical challenges caused by travel and meeting restrictions, was the second-highest on record. Investment teams have been busy, with the value of private capital transactions closed in H1 2021 already at 83% of 2020’s full-year total, with venture capital, infrastructure, and private equity the most active sectors (Fig. 1).

Strong equity and debt capital markets since Q2 2020 have translated into a buoyant exit market, not just for IPOs, but also for trade sales and refinancing. While return data in the early years of limited partnership funds is only an indicator of future performance, median net IRRs for 2018 vintage private equity & venture capital (PEVC) funds stand at 22.0%, while vintages 2011-2017 have been lifted to between 14.0% and 19.4%.

“Real assets appear to be the ‘winning bet’ for the post-COVID world, as they aim to combine protection against inflation with the prospect of higher returns than traditional liquid assets,” explains Dominique Carrel-Billiard, Global Head of Real Assets at Amundi. “In addition to these financial advantages, we are convinced that real assets are a ‘shorthand for ESG.’ They can contribute directly to the energy transition, particularly by financing green infrastructure.”

However, performance will not be uniform and the fundamentals of private market investing – manager selection, growth markets, and due diligence – will be as critical as ever. Our report, the most comprehensive study of alternative assets in Europe, highlights which sectors, asset classes, and countries currently offer the best opportunities for investors. 

Keep an eye out for our Preqin Markets in Focus: Alternative Assets in Europe report in mid-September, as well as individual country reports focused on France, Germany, Italy, and the UK. In the meantime, you can take a look at our 2020 edition.