EVCA research paper shows impact of crisis on funding for European business
08 December 2009
It demonstrates how private equity firms have changed focus from financing new deals to supporting companies in their portfolios through the recession. The most active regions in investments by amount this year have been the UK and Ireland.
The Report analyses the impact of the changing economic environment over the period of investment, debt and deal structures, fundraising, divestment and performance, including which regions and industry sectors have been the most affected by the changed funding environment. The data also demonstrates the extent to which private equity firms have changed their focus, from financing new deals to supporting companies in their portfolios through the recession.
Buyout fund invested in 4.660 European companies between 2007-Q3 2009, with investment peaking at €62 bn E in 2007. 2008 continued to be relatively strong before falling to €11 bn invested so far in 2009, reflecting fewer new deals and lower valuations.
Even so, 993 companies have been supported this year with funding and over half (59 per cent) of those received follow–on rounds. Last year also saw a significant increase in follow–on financings to €17bn in 763 companies, but for the first time since EVCA has compiled research, Q1 – Q3 2009 has seen the number and amount of follow–on investment exceed new investment.
The most active regions in investments by amount this year have been the UK and Ireland (28 per cent), followed by Belgium and The Netherlands (15 per cent). By number of companies backed, the DACH regions have led the field (23 per cent).
The financial crisis has taken a severe toll on reduced investment level, but also produced new opportunities, with almost 40 per cent growth in turnaround and rescue deals in Q1- Q3 this year, as against 2008. Buyouts of below 50 m euro deal size have accounted for 89 per cent of pure buyout transactions thus far this year.
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