Click here for printer friendly page

European fundraising experiences 37 per cent slump year on year

Further evidence of the decline in private equity fundraising in 2002: just E24bn was raised for private equity investment in 2002, a 37 per cent fall from that recorded in 2002, and a 42 per cent fall from that raised in 2000, says Initiative Europe.

‘The fundraising climate that prevailed during last year was an extremely tough one,' confirmed Initiative Europe's head of research, Nicholas Gordon. ‘Institutional investors in private equity have become much more cautious about investing in the asset class, following the collapse of the public markets and the downturn in the global economy.'

Venture capital fundraising experienced a particularly serious decline. Funds raised to target venture capital opportunities accounted for just nine per cent of all capital secured in 2002, a fall of 22 per cent from 2001.

‘Those investors that have continued to commit to the private equity asset class have, in the main, opted for the relative safety and security of the buy-out market,' explained Gordon.

‘Established groups, able to point to a consistent track record, have performed well in the current climate and many such “brand name” managers have managed to close over target. This “flight to brand” is likely to remain a feature of the market throughout 2003 and debut funds are likely to continue to find the going tough.'

Buy-out and generalist funds accounted for around 85 per cent of total funds raised, and Initiative Europe calculated that the average size of such a fund was around E650m.

Copyright © 2003 AltAssets