EUROPE - EVCA stats show record 2006 fundraising and investment

Final figures for European private equity activity and performance were announced by EVCA today, confirming a booming buyout industry and continued UK dominance. The figures also showed something of a revival for European venture, with €17bn allocated to venture capital funds, up 60% on the €11bn raised in 2005. 'These figures confirm what we were saying last year, although there was actually more to spend than we thought', Javier Echarri, EVCA Secretary General, told unquote". The stats, compiled by Thomson Financial and PricewaterhouseCoopers, revealed that the USA continues to play a large part in driving the European market. It was the largest source of capital for European funds last year, at 28.8%, followed by the UK on 21.3%. France was in third place, supplying 7.9% of capital, followed by Sweden at 5.1%, putting the dominance of the UK and the US in perspective. Echarri believes that France has great potential but must first enact changes to encourage greater LP participation in the asset class. 'The French model isn't missing much. The regulation is as sophisticated and specific as in the UK, which is a great starting point, but LPs currently allocate too little to private equity,' Echarri said. He is confident that the recent political changes will assist this process, remarking that 'Sarkozy will be good for the industry.' As was widely assumed, 2006 was a record year for fundraising and investment, with €112bn raised, €84bn to buyout funds. Capital invested stood at €71bn. This cash was invested in 7,500 companies, 90% of which employed less than 500 people, a testament to the positive role played by private equity. 'This figure is impressive and is revealing of the huge role played by private equity in the European economy', Echarri said. He also stated his belief that rather than a case of too much money chasing too few deals, the industry is currently running far short of capacity, with 'many more companies out there to be financed.' He attributed the resurgence of venture to the rapidly increasing interest in clean-tech products and systems, saying it is the 'new fashion and is pushing venture forward again.' However, he also sounded a note of caution, reminding companies active in this area that they must 'continue to develop their business model' to take advantage of the appetite for clean technologies. Turning his attention to the current debate surrounding private equity in Europe, currently at feverish levels in the UK, he issued a warning to the detractors. 'The capital market world we live in today is non-negotiable.' He said that he understood the need for greater transparency, but was not prepared to join in the chorus of those arguing for a change in the tax system. He worried that 'any changes in the UK which may arise from the current debate over the tax treatment of carried interest could affect other countries. There must be no knee-jerk reactions.'