Private equity investment in European companies reached a new record of €80.6 billion in 2018, a 7% year-on-year increase, according to data released today by Invest Europe. Private equity funds invested in over 7,800 companies, also a new record, with 86% of the total made up by small and medium-sized enterprises (SMEs).
Invest Europe’s 2018 European Private Equity Activity Report is the most comprehensive and authoritative source of fundraising and investment data available. It reveals that investment increased across all segments of private equity, including larger buyouts, mid-market investments and growth capital, with venture capital backing for European companies hitting an all-time high at €8.2 billion.
“Record investment levels show that private equity and venture capital can identify attractive companies with the capacity to grow whatever the broader political and economic climate,” said Michael Collins, Chief Executive of Invest Europe. “Europe is packed with high-potential and innovative businesses, and private equity is increasingly seen as a supportive partner for companies looking to expand.”
Fundraising remained strong in 2018, as €97.3 billion was committed to European private equity, the highest total since the financial crisis. Investors from outside Europe contributed 46% of total fundraising, reflecting the findings of last November’s Global Investment Decision Makers Survey, in which 78% of participants said they expected increased investment in Europe in the next five years. Pension funds remained the largest investor group, accounting for almost one-third of total fundraising.
Total private equity exit activity declined in 2018, with divestments at cost  down 28% to €32 billion. The number of private equity-backed companies that were exited remained steady at 3,750. Write-offs across all segments (buyout, growth and venture) fell to their lowest levels in ten years, underlining the industry’s resilience in 2018.
European venture capital fundraising reached a new high of €11.4 billion, up 11% from 2017. Private investor interest increased with family offices and private individuals accounting for 20% of capital raised, closely followed by funds of funds and other asset managers on 19%. The proportion contributed by government agencies fell to 18%, the lowest share in a decade.
“European venture capital has truly come of age thanks to a combination of strong returns, a growing band of billion-euro-plus tech and life sciences start-ups, and a string of high-profile exits, including the listing of music streaming service Spotify and the sale of mobile payments platform iZettle. There are eager strategic buyers and open markets around the world for Europe’s top-quality start-ups” said Nenad Marovac, Invest Europe’s Chair. “The result is increasing appetite among global institutional investors who see European venture as the way to invest in some of the world’s most dynamic and entrepreneurial companies.”
The 2018 European Private Equity Activity report covers activity on over 1,400 firms, directly verified by the fund managers via the European Data Cooperative (EDC). Working together with national private equity associations from across Europe to collate robust and comparable statistics, Invest Europe has developed the industry’s most comprehensive database. The EDC holds data from over 3,300 European private equity firms on 9,000 funds, 75,000 portfolio companies and 255,000 transactions since 2007.