2005 Annual European Private Equity Statistics
Gemma Postlethwaite
Vice President, Thomson Financial
Confirming a new record in 2005
71.8
8.0
48.0
27.0 27.5
20.0 20.3
25.427.5
40.0
36.9
6.8
14.5
9.7
25.1
35.0
24.327.6
29.1
47.0
13.6
19.6
10.712.5
9.18.6
29.8
7.0
3.65.8
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Funds Raised
Investments
Divestments
€ billion
2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA 2
UK and US LPs have committed a much larger amount to European private equity
2.0
20.8
17.0
6.5
4.5 4.0 3.8
1.1 1.1 1.0 0.6 0.5 0.40.10.30.6
4.2
0.9 1.2
4.9 5.6
2.6 2.3
0
5
10
15
20
25
2004 Country of Origin (LP Location)
2005 Country of Origin (LP Location)
0.3
€ billion
Note: US amount of € 17bn comprises fundraising from US LPs to European funds; same reasoning for Asia with €4bn.
2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA
Buyout and venture investments are both increasing
5.68.5
14.4 15.312.1
17.920.7
26.6
3.24.1
6.0
10.7
19.7
12.2
9.88.4
10.3
12.7
3.6
34.3
0
5
10
15
20
25
30
35
40
45
50
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
€ billion
Venture Capital
Buyout and replacement capital
2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA 4
The market is growing for buyouts of all sizes
2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA
Legend: Small < €15 m equity
Mid-market €15m<x<€150m equity
Large €150m<x<€300m equity
Mega >€300m equity
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Small Mid- Market Large Mega
Am
ount
invest
ed
in €
mill
ion
2004 Total Invested 2005 Total Invested
5
0
500
1,000
1,500
2,000
2,500
Small Mid- Market Large Mega
No.
of
Deals
2004 No.of Deals 2005 No.of Deals
Exit prospects look healthy
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2000 2001 2002 2003 2004 2005
in €m
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Number
Rank Value# of Deals
Source: Thomson Financial and PricewaterhouseCoopers for the EVCA Survey
Divestments – Breakdown at cost by type
0
20,000
40,000
60,000
80,000
100,000
120,000
2000 2001 2002 2003 2004 2005
in €m
0
100
200
300
400
500
600
700
Number
Proceeds# of Deals
M&A Activity, Europe*
IPO Activity, Europe*
Source: Thomson Financial
*Public and private deals
9.5%11.0%
14.1% 17.5%
2.9%6.0%
3.9%
4.3%
14.5%
8.4%
15.9%
21.3%
13.1%
20.2%3.9%
3.8%
22.8%
30.0%11.6%
9.7%
7.0%
6.2%
5.3%
9.1%
2.0%
6.6%
5.6%4.8%
23.7%20.4%30.9%
33.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005
Trade Sale
IPO
Sale of Quoted Equity
Write-Off
Sale to Another VC
Repayment of Shares/Loans
Sale to Financial Institution
Other
6
0
500
1,000
1,500
2,000
2,500
3,000
2001 2002 2003 2004 2005
Syn Loan
DCM
ECM
M&A
Growth in private equity has also established the industry as a key focus for investment bankers
0
5
10
15
20
25
2001 2002 2003 2004 2005
Americas
Europe
Asia
Global
Source: Thomson Financial / Freeman & Co
Fees Paid by PE Firmsas a % of Investment Banking Fees
Investment Banking Fees Paid by PE Firms in Europe
7
$m
Methodology - Performance Survey
Performance benchmarks calculated net of all fees
Calculated directly based on cash flows and net asset values provided by GPs and LPs
Data goes back to 1979 for Europe, 1969 for the US
Covers on average over 58.1% of capital under management in the industry for each vintage year
Industry-standard benchmarks are widely used for fundraising, portfolio monitoring and asset allocation
Source: Thomson Financial8
European Private Equity FundsFormed 1980-2005Net Returns to Investors From Inception to 31 Dec 2005
Source: Thomson Financial9
Pooled IRR
Upper Quartile DPI RVPI TVPIStage
Early Stage
Development
Balanced
All Venture
Buyouts
Generalist
All Private Equity
No.
295
179
162
636
349
84
1,069
0.1
9.2
8.3
6.3
13.7
8.6
10.3
2.3
9.0
8.5
6.2
17.8
8.8
10.6
0.40
0.79
0.68
0.61
0.83
0.97
0.80
0.61
0.77
0.61
0.65
0.61
0.40
0.59
1.01
1.46
1.29
1.26
1.44
1.37
1.39
Top QuarterIRR *
13.6
18.8
23.7
17.1
31.8
10.3
22.9
*The top quarter IRR is the pooled return of funds above the upper quartile
European Private Equity FundsFormed 1980-2005Net Investment Horizon Returns as of 31 Dec 2005
Source: Thomson Financial
Returns calculated with cash flows in euros for European funds, in US$ for US funds
Stage 1 YR 3 YR 5 YR 10 YR 20 YR
Early Stage 22.5 -2.1 -7.5 -0.4 0.2
Development 91.4 5.5 1.3 10.3 9.3
Balanced 30.7 2.4 -1.8 10.0 8.5
All Venture 36.5 1.7 -3 6.4 6.4
Buyouts 31.7 9.1 6.1 14.3 13.7
Generalist 52.4 2.2 -4.3 9.6 8.6
All Private Equity 33.8 6.3 2.0 11.4 10.4
10
US Venture
US Buyouts
US All Private Equity
14.1
28.9
21.4
7.7 -6.7
16.7 5.4
23.7
9.4
13.5 1.6 12.4
16.5
13.4
14.3
Public Market Comparators
*Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cash flows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index.
Since Inception Returns to 31 Dec 2005
Stage European Private Equity
Return
Morgan Stanley Euro
Index
HSBC Small Company
index
JP Morgan
Euro Bonds
Early stage 0.1 4.2 10.0 10.6
Development 9.2 8.4 10.3 9.2
Balanced 8.3 6.3 9.9 9.6
All Venture 6.3 6.4 9.8 10.1
Buyouts 13.7 2.7 8.7 10.7
Generalist 8.6 7.4 9.7 10.4
All Private Equity
10.3 2.3 9.7 10.5
11Source: Thomson Financial
Evolution of Private Equity and Public Market Comparators10-year Rolling IRR for 2000-2005
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004 2005
IRR
%
Morgan Stanley Euro Equity
HSBC Small Company
J P Morgan Euro Bonds
European Private Equity
Source: Thomson Financial12
Summary
Fundraising more than double reaching a €72 billion record: 80% of funds expected to be allocated to buyouts
Investments reached a record at €47 billion, a 27% increase compared to 2004: Buyouts represent 68% by amount invested Venture investments + 23% over 2004 figure, representing 27% by amount and 75% by number of investments in 2005
Divestments at cost up 52% at €30 billion, a record level as well: Write-offs decrease at around 5% of total amount divested Repayment of loans became the first exit route in 2005, followed by the “classical”
trade sales
Performance confirming preliminary figures: Solid short-term returns show continuous recovery since the 2002 inflection point Increased distributions, with realisations above last valuations Strong performance compared to other asset classes, with low correlation
13
Contact the Thomson Research Specialists:
Investments, divestments, fundraising: Margherita Del Bianco
+44 20 7566 1934
Cashflows for performance: Cornelia Andersson [email protected] +44 20 7014 1202
www.thomsonfinancial.com
How to contribute data?
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