The survey for the 1999 EVCA Yearbook, conducted by on behalf of the European Private Equity and Venture Capital Association (EVCA), reveals a new record for fundraising of ECU 20.
Fundraising hits new record at ECU 20.3 billion
3 billion. The total amount invested increased by 49.8% to ECU 14.5 billion.
The money available from European venture capitalists is being steadily invested into companies. Almost half of the investment was from the UK. Investment in seed and start-up companies more than doubled. Private investors doubled their contribution to funds raised from ECU 0.8 to ECU 1.6 billion. The high-tech sector and the consumer related sector remain the most popular sectors. EVCA elects a new chairman, Emile van der Burg from PARNIB.
Funds raised totalled ECU 20.3 billion, the highest level ever and an increase of 1.7% over 1997. The UK contributed 44% of the amount raised. Other significant contributions come from France, Germany and The Netherlands. France recorded the largest increase with an amount 3.5 times greater at ECU 3.8 billion.
The total amount invested increased substantially and was up 50% at ECU 14.5 billion. This clearly demonstrates the need for capital amongst Europe's dynamic, fast-growing, entrepreneurial companies. The UK posted an increase of 61% while Germany was up by 47% and France by 42%. Belgium and The Netherlands had increases of 45% and 39% respectively. Switzerland showed growth of 292%. Almost 70% of companies invested in employ less than 100 people.
The amount invested in seed and start-up companies more than doubled from ECU 711 million in 1997 to ECU 1.6 billion in 1998. Seed and start-up investments are the fastest growing sector of the European market, having increased from a level of ECU 200 million in 1993. The average size of seed investments doubled from ECU 322,000 in 1997 to ECU 648,000 in 1998 while the average size of start-up investments rose by 31% from ECU 540,000 to ECU 709,000.
Management buyouts and buyins made up over half the total amount invested at 51%. The predominance of buyouts and buyins was most marked in the UK with 71% of the total amount invested compared to 29% in Germany and 46% in France.
The amount contributed by private investors to total funds raised doubled from ECU 0.8 billion to ECU 1.6 billion. However, banks remain the largest source of capital in terms of amount at ECU 5.7 billion. With 28% of the total, banks are just ahead of pension funds at 24%. Corporate investors were the next largest category at ECU 2.0 billion.
The amount invested in the high-tech sectors increased by 75% to reach ECU 4.0 billion in 1998, representing 28% of the total amount invested in 1998, up from 24% in 1997 and now making it the category with the largest share of investment. The high-tech sectors include communications, computer related, other electronics related, biotechnology and medical/health related industries. Within high-tech, computer related companies attracted the highest number of investments. Consumer related is the second most popular sector accounting for 15% of the total amount invested, down from 22% in 1997.
The number of divestments by public offering rose from 391 to 924. The number of divestments by trade sale fell from 1,431 to 1,090. The amount at cost of divestments made in 1998, at ECU 6.97 billion, was up by 20% from last year's total of ECU 5.8 billion.
At the EVCA Symposium in Prague (9-11 June 1999), Emile van der Burg will be elected as EVCA's new chairman. He is Managing Director of PARNIB Holding NV, the private equity subsidiary of De Nationale Investeringsbank (NIB) in The Hague, The Netherlands. Following the recent acquisition of NIB by the Dutch pension funds ABP and PGGM, the private equity activities of PARNIB are to be combined with those of ABP and PGGM. Mr. van der Burg serves as a non-executive director on the board of various companies in The Netherlands and also serves on the investment committee of a number of international private equity funds. Prior to joining PARNIB in 1994, Mr. van der Burg worked at The Chase Manhattan Bank in New York where he held various positions in the field of corporate banking and later in investment banking (Mergers & Acquisitions) in the United States, Venezuela, The Netherlands and the UK. He is a member of the Executive Board of the European Private Equity and Venture Capital Association and presently its Chairman-Elect.
Commenting on the 1998 results, Paul Waller, Chairman of EVCA and Director of Fund Management at said:
'We are especially pleased to see that the level of investment is keeping good pace with the record level of fundraising. Things in Europe are moving, especially in the high-tech sectors. There are still ample opportunities across the various markets for finding quality deals and the potential for further strong development within continental Europe over the next few years is tremendous.'
Marco Rochat, Leader of the Europe, Middle East and African practice of the Global Technology Industry Group of PricewaterhouseCoopers said:
'PricewaterhouseCoopers is delighted to have been appointed by EVCA to conduct the Private Equity and Venture Capital Survey for EVCA from 1998 onwards. We are particularly excited that technology investments in Europe are continuing to increase and have now reached the record level of ECU 4.0 billion and that new funds raised are increasingly being earmarked for technology.'
Gerbrand G. Hop, Chairman of the European Investment Fund, sponsors of the 1999 EVCA Yearbook, said:
'I am very pleased to see that venture capital in Europe is moving more towards investment in the early-stage and technology sectors on which EIF is focusing its own activity. The new challenge for us will be to promote the availability and benefits of venture capital as widely as possible across Europe. We will give particular attention to experienced individuals entering the venture capital industry for their first fundraising.'
Please note: The study correctly refers to ECU as the data concerns the whole of 1998.
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