2009 European Private Equity Market EVCA, The Voice of European Private Equity Industry since 1983 Philippe Defreyn COO and Mid-market Buyout Platform Director EVCA
The severe global crisis takes its toll on European private equity Source: EVCA/PEREP_Analytics for EVCA/Thomson Reuters/PwC for previous years Europe, by location of private equity firm
And not only on private equity European M&As Source: Dealogic
Fundraising went to a major drop in Q (Q = 100) Source: EVCA/PEREP_Analytics
Less concentration of capital Total amount at final closings Source: EVCA/PEREP_Analytics
Fundraising picture not so bleak after all Source: EVCA/PEREP_Analytics European private equity firms by vintage year of latest fundraising
Source: EVCA/PEREP_Analytics Average amount at final closing Venture funds dominate final closings
Average fund size stays constant for most of the market players Source: EVCA/PEREP_Analytics Average amount at final closing Excluding €1 bn+Including €1 bn Average fund size 2008 Average fund size 2009 Average fund size 2007 Number of funds 2008 Number of funds 2009 Number of funds
Shift in LP base – a trend or a fad? Source: EVCA/PEREP_Analytics Incremental closings during the year
Fundraising: More level playing field across regions € 5.1bn (€50.2bn) €1.6bn (€6.1bn) € 2.2bn (€ 3.4bn) € 2.7bn (€ 11.3bn) € 151m (€ 1.3bn) € 842m (€ 9.3bn) Fundraising by GP location
Europe believes in Europe 22.4% (13.6%) 10.3% (10.4%) 18.0% (3.3%) 21.2% (9.7%) 0.4 % (0.3%) 7.5% (6.2%) North America 12.0% (38.9%) Australia Asia 2.5% (7.8%) Rest of World 0.0% (0.3%) Other Western Europe 5.6% (10.2%) Location of LPs behind 2009 Fundraising
Regional diversity in the LP base Funds raised by type of investor - % of amount Source: EVCA/PEREP_Analytics The percentage split is based on the known sources of funds
Private equity supported more than 4,000 companies in 2009 (Investments - PE funds’ contributions only) Source: EVCA/PEREP_Analytics for EVCA/Thomson Reuters/PwC for previous years Europe, by location of the private equity firm
An uptick in investment as EU GDP growth turns positive Source: EVCA calculation based on Eurostat and PEREP_Analytics EU GDP growth and index of buyout investment activity by amount
Growth capital – the new paradigm? Source: EVCA/PEREP_Analytics for EVCA/Thomson Reuters/PwC for previous years Europe, by location of the private equity firm Prior to 2007, growth capital was part of venture capital
Mid-market deals drive buyout activity Source: EVCA/PEREP_Analytics Europe, by location of the portfolio company
Debt ratios decreased further in 2009 Source: S&P LCD
2009 Investments by GP location 40.4% (41.7%) 13.2% (15.9%) 8.1% (10.2%) 22.9% (20.9%) 4.0 % (2.1%) 11.5% (9.2%)
2009 Investments by investee company location 24.6% (25.9%) 16.0% (19.7%) 11.4% (15.9%) 24.0% (23.9%) 11.0 % (4.7%) 13.1% (9.8%)
UK drives cross-border activity €4.7 domestic investments Foreign PE firms investment €3.9bn €0.4bn Top 3 destinations by amount: 1.CEE 2.USA 3.Germany inflowoutflow Investments by UK & Irish PE firms at €8.6bn
CEE – a net beneficiary Foreign PE firms investment €1.4bn Top 3 sources: 1.UK 2.Austria 3.France inflow €839mn domestic investments in CEE €10m outflow Investments into CEE companies at €2.2bn
CEE – a diverger ? Average investment size Source: EVCA/PEREP_Analytics By location of the portfolio company
More follow-on investments to support current portfolio * Percentages are calculated on the number of companies for which the breakdown was known Source: EVCA/PEREP_Analytics Europe, by location of the portfolio company Initial versus follow-on investments % of number of companies*
Life sciences/healthcare leads the ranking Overall private equity investment by sector 2009 preliminary2008 Source: EVCA/PEREP_Analytics Europe, by location of the portfolio company
Top sectors per segment remain the same in 2009 Source: EVCA/PEREP_Analytics Europe, by location of the portfolio company Consumer goods and retail Venture Buyout/Growth Capital € 2.1 bn # co 2009 Top Sectors: Communications Business and industrial products Communications Computer and consumer electronics Life sciences € 2.1bn € 2.4bn €2.2bn € 576m € 672m € 950m
Divestment window closed in 2009 Source: EVCA/PEREP_Analytics for figures Europe, by location of the private equity firm Quarterly index (Q1 2007=100) Annual index (2000=100)
Consumer goods & retail takes the lead in exits from business & industrial products Divestments (excluding write-offs)Write-offs Source: EVCA/PEREP_Analytics Europe, by location of the portfolio company
Conclusions Activity flows fall dramatically and bottom out in Q However, 4,000 European companies receive private equity backing in 2009 Shift in LP base but mainly driven by sparse fundraising Deal making moves towards the lower end of the market and growth capital gains momentum Life sciences/healthcare becomes the most popular sector Private equity firms focus on management and cleaning of current portfolio Private equity in 2010: fitter and more efficient?
Methodology Data collected through questionnaires and reliable public sources (coverage rate by number of players 70%. For EVCA Members only: 94%) Europe:for deals, it is defined either by the location of the PE firm (industry statistics) or by location of the portfolio company (market statistics) as referenced in the source; for fundraising it covers funds primarily focused on investments in Europe. Fundraising:only formal closings included with committed amount; covers only direct PE funds (excludes distressed debt, infrastructure, real estate, funds of funds) Investments:equity value captured, debt only if provided by the PE funds (bank leverage excluded) unless specified it is transaction value Divestments:measured at amount at cost divested, not proceeds Segment definitions Venture Capital: Seed, Start-up, Later-stage Buyout: Buyout (MBI, MBO, LBO, PIPE, PTP), Replacement capital, Rescue/turnaround, Growth Prior to 2007, growth capital was part of venture capital Prior to 2007, rescue/turnaround was part of venture capital