Private equity may have developed across Europe, but the industry’s coverage remains patchy. Many firms now claim to be pan- European, but how true is it that there is one big private equity market? Vicky Meek reports
For an industry with a relatively short history, European private equity has moved quickly to become an important source of investment in companies. According to Invest Europe, in 2015 more than €47bn was invested by European private equity and venture capital firms. Both the British Private Equity & Venture Capital Association (BVCA), and the Europe-wide Invest Europe were established in 1983, but private equity only really took off about 25 years ago across Europe, as new firms emerged and some started looking beyond domestic boundaries.
Today there are more than 1,200 private equity and VC firms operating in Europe. With so many, it would be easy to conclude that the market is highly fragmented. In some ways it is – VCs with a focus on early-stage businesses tend to invest on a domestic basis. But what about the buy-outs?
The vast majority of buy-out houses focus on specific markets. Between 2011 and 2015, nearly 68% of the total invested by the industry went into businesses that were domestic to the investing firm. Some 26% went into cross-border European deals, with the remainder going outside Europe.
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