European PE Breakdown - Q2 2020 - AltAssets
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European PE Breakdown Q2 2020
Contents Credits & contact
PitchBook Data, Inc.
Introduction 2
John Gabbert Founder, CEO
Adley Bowden Vice President,
Overview 3-6
Market Development & Analysis
Deals by size and sector 7
Research
Spotlight: France & Benelux 8 Dominick Mondesir Analyst, EMEA
Private Capital
Exits 9-10
reports@pitchbook.com
Fundraising 11-12
Data
Masaun Nelson Data Analyst II
Design
Julia Midkiff Junior Graphic Designer
Click here for PitchBook’s report
methodologies.
Introduction
European PE deal volume plunged in Q2 2020 to PE fund count in 2020 is pacing towards a new annual
its lowest quarterly figure since Q3 2013, driven nadir, while capital raised came in extremely subdued.
by the uncertainty caused by COVID-19. Lenders Nevertheless, capital raised is expected to significantly
concentrated on existing loans, which saw leveraged rise in H2 2020 due to a number of open mega-funds
lending activity fall precipitously; sellers tabled exit in the market. LPs evaluating the denominator effect,
plans amid the volatility; and most GPs either paused liquidity schedules, and allocation targets substantially
or outright cancelled transactions as portfolio triage contributed to the lackluster fundraising amounts,
took precedent. That said, we believe deal activity will while less experienced GPs paused on launching new
gradually pick up in the coming quarters, as managers funds amid the volatility. That being said, while history
seek to deploy their €237.2 billion in dry powder does not repeat but often rhymes, in this no-interest-
aggressively but wisely. While bolt-ons are apace rate environment, LPs recognize 2020 vintages have
for a record year, the UK & Ireland saw the largest the potential to produce top-tier metrics. As a result,
YoY decline in deal volume. Multiples are expected brand-name European managers will grow their LP
to sustain in the short to medium term, and carveout wallet share during the downturn.
activity should progressively rise in H2 2020.
European PE exit value in 2020 is apace for its lowest
annual total in six years. However, exit value in Q2 Dominick Mondesir
surprisingly saw an uptick from Q2 2019, propelled EMEA, Private Capital Analyst
by the largest European IPO in nearly a decade. Exit
volume in the lower end of the market has been
disproportionately affected by the pandemic. IPOs may
pick up steam in the coming quarters, as it appears the
public equity markets have whole-heartedly embraced
central bank and government stimuli.
2 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NOverview
PE deal activity
4,170 4,145
4,053
3,759 3,796
3,264
2,945 2,863
2,734 2,821
2,579
2,455
2,189
1,771
1,751
€284.97
€305.41
€196.86
€179.02
€198.58
€188.32
€214.61
€295.03
€394.32
€329.97
€423.61
€480.29
€81.81
€475.0
€198.2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Deal value (€B) Estimated deal value (€B) Deal count Estimated deal count
Source: PitchBook | Geography: Europe
*As of June 30, 2020
European PE deal activity slowed considerably in Q2 professionals have used to describe economies running
2020. Both deal count and value plunged to their lowest at sub-optimal capacity due to the detrimental
quarterly figures since Q3 2013 and Q4 2016, ramifications of COVID-19. The knock-on effects of high
respectively. 650 transactions closed in the second unemployment are anticipated to lead to reduced
quarter of the year for a total of €79.8 billion—YoY consumer demand, which will mean further portfolio
decreases of 31.5% and 18.7%, respectively. As the downgrades and rising defaults, as PE-backed entities
COVID-19 crisis unfolded, a multitude of factors run into repayment issues. Heavy debt burdens,
converged to reduce deal activity. Lenders aggressive EBITDA add-backs that won’t materialize in
concentrated on existing loans, which saw leveraged the near future, and weak balance sheets coming into
lending activity fall precipitously; sellers tabled exit the crisis will also contribute. Around 16 European
plans amid the volatility; and most GPs either paused or defaults occurred in H1 2020, including PE-backed
outright cancelled transactions citing MAC clauses, as entities such as Spain-based Lecta. In 2020 thus far,
crisis management took precedent. Managers instead defaults across European companies have surpassed
went into triage mode with their portfolio crisis the full-year 2019 and 2018 tallies already, the lead
response teams. They focused on defending portfolio reason being missed interest and principal payments. 2
companies they deemed could ride out and thrive post
crisis by identifying pandemic-related risks and The trend prior to the COVID-19 crisis of a larger
opportunities, while still trying to assess consequences European PE transaction environment has been
related to the wider macroeconomic environment. For completely flipped on its head in the second quarter.
example, The European Commission recently projected The median European PE deal size fell to €25.0 million
in a press conference that the EU’s GDP will fall by 8.3% for H1 2020. A lack of activity in the upper end of the
in 2020,1 with the impact of the lockdown proving more market significantly contributed to the smaller
severe than analysts initially thought. Additionally, transaction environment. Only two transactions sized
unemployment in the block rose to 7.3% in April, up between €1 billion and €2.5 billion closed in Q2,
from 7.1% in March. One of the largest threats to PE collectively worth €3.3 billion—YoY declines of 75.0%
dealmaking efforts is growing unemployment rates and 72.1%, respectively. These were the largest YoY falls
turning systemic, which could result in Europe of any PE deal size bucket. The majority of GPs did not
transitioning into a “90% economy,” a term industry make outsized bets in the quarter, as the economic
1: “Remarks by Commissioner Gentiloni at the press conference on the Summer 2020 Economic Forecast,” The European Commission, July 7, 2020
2: “Defaults, Transition, and Recovery: 2020 Corporate Defaults Surpass the Full-Year 2019 Tally,” S&P Global Ratings, June 25, 2020
3 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NOver view
PE capital overhang (€B)
€237.2 Total
€206.8 2019*
€186.3 2018
€177.6
€159.7 2017
€152.1 €151.6
€140.0 €138.2 2016
€125.5 €138.4
€126.2 €127.5 €128.8
2015
Overhang by 2014
vintage
2013
Cumulative
overhang 2012
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
Source: PitchBook | Geography: Europe
*As of September 30, 2019
consequences of the pandemic were yet to play out in full. Median PE deal size (€M)
Moreover, larger entities that likely had institutional
€40
backing tabled exit plans, as they refused to sell at
discounts while global uncertainty remains aloft amid a
second round of spikes in confirmed cases and localized €35
lockdowns. €31.3
€30
As we transition from the health crisis of Phase 1 and move €25.0
into the economic crisis of Phase 2, we expect deal activity €25
to gradually pick up in the second half of 2020 and
sponsors to aggressively deploy capital in 2021. With the €20
virus more contained in Europe compared to other regions
and the continent reopening in the second half of the €15
year—albeit with localized lockdowns/outbreaks—
confidence should gradually revive in European €10
consumers and businesses. It took managers around one
year following the GFC to deploy capital at scale, and with
€5
that we anticipate managers will invest their record €237.2
billion of dry power (as of Q3 2019) into discounted assets
€0
that are cyclically but not secularly under pressure. Some
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
companies that were previously not interested in a sale
may now seek an exit as the time and effort to rebuild
businesses back to pre-crisis profitability may not be Source: PitchBook | Geography: Europe
appealing. This is where the largest and most well- *As of June 30, 2020
resourced GPs will be front footed, as sponsors have been
preparing for a downturn for several years due to Europe’s compelling during market dislocations, especially in digital
protracted cycle. Managers have learned lessons from (or digital-adjacent) assets that have the ability to be even
previous downturns in not waiting to understand the full more disruptive in a remote-everything world. For
impact before resuming investment activity. Large example, KKR (NYSE: KKR) acquired UK-based data
brand-name managers with the firepower and staying center developer Global Technical Realty in Q2 2020 for
power will invest more flexibly in any risk-reward they find €917.9 million.
4 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NOver view
While Phase 1 of the crisis presented large but swift Bolt-ons as proportion of overall
opportunities to invest in discounted public equities and
buyouts (#)
credit, we see Phase 2 as an opportunity for sponsors to
provide liquidity to SMEs via rescue or bridge capital 3,500 70%
and to accelerate bolt-on investments as a slightly 61.2%
lower-risk defensive approach to deploying capital. 3,000 60%
Bolt-ons as a percentage of buyout volume stands at 54.8%
61.2% through H1 2020 and is apace for a record year.
2,500 50%
Managers are likely to be focused on increasing
platform resilience, agility, and stability during the crisis,
while playing offense via bolt-ons to heighten 2,000 40%
geographic, product, customer, and supplier
diversification. Sponsors will look to be consolidators 1,500 30%
within sectors by acquiring weaker competitors that
likely have no institutional backing to increase portfolio
1,000 20%
value. The largest bolt-on in Q2 2020 was Italy-based
Dedalus’ €975.0 million acquisition of Afga-Gevaert
healthcare information technology business. After first 500 10%
making significant inroads in the Italian and French
clinical healthcare software sector, the combination 0 0%
marks Dedalus consolidating the industry at the
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
European level.
Bolt-on Non bolt-on Bolt-on % of buyout
Although we saw YoY declines in PE deal volume across
Source: PitchBook | Geography: Europe
every European region, the UK & Ireland attributed the
*As of June 30, 2020
largest drop at 62.3%. Sponsors’ hesitancy regarding
the region’s assets in Q2 was not surprising. First, the
UK & Ireland region has the worst COVID-19 death rate UK & Ireland PE deals (#)
in Europe. Second, its lockdown lasted through the bulk 1,400
of Q2, ending after several of its European counterparts
started reopening. Third, the backdrop of a no-deal
Brexit and resurgence of the virus—as seen from a 1,200
recent localised lockdown in Leicester—is deterring
dealmakers. As PE-backed assets are somewhat GDP 1,000
linked, the IMF predicting the UK’s GDP will fall by 10.2%
in 2020 has accelerated uncertainty.3 That said, deals
800
will still close in the region despite the murky road
ahead. For example, US-based Searchlight Capital
Partners completed an €839.2 million buyout of the 600
UK’s second-largest independent insurance
intermediary, Global Risk Partners (GRP) in Q2 2020. 400
GRP was founded in 2013 and has grown rapidly
through 59 acquisitions of regional brokers and
specialist managing GPs. 200
Although divestiture activity has seen a subdued first 0
half of 2020, we anticipate public and private carveouts
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
will considerably pick up in the second half. As the
transition into the economic crisis intensifies in the
coming quarters, due in part to government fiscal Source: PitchBook | Geography: UK & Ireland
*As of June 30, 2020
support winding down, the inevitable second wave of
cases hitting Europe in autumn, and the resulting strength, levels of flexibility on costs, margin protection,
localised lockdowns, many companies will be forced to and secular demand changes. Carveouts allow entities
raise cash and deleverage. Companies and activist to pursue each of these while maintaining their focus on
shareholders will be laser-focused on balance sheet outperforming units. Four of the top-five divestitures by
3: “World Economic Outlook Update,” International Monetary Fund, June 2020
5 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NOver view
Carveout deal activity
558
507
484
454 451 464
434 418 424
361
330
243 257 238
137
€54.9
€47.4
€26.8
€11.9
€32.9
€33.1
€40.3
€36.9
€52.6
€80.5
€65.6
€68.8
€89.2
€83.7
€18.3
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Deal value (€B) Deal count
Source: PitchBook | Geography: Europe
*As of June 30, 2020
deal size in H1 2020 occurred in Q2 2020, attributing Rolling four-quarter median PE buyout
close to €4.5 billion in deal value. The largest carveout
EV/EBITDA multiple
in the second quarter was Germany-headquartered
AutoScout24’s €2.9 billion divestiture to US-based 12x
Hellman & Friedman. AutoScout24 initiated the sale
under pressure from activist investor Elliott
10x
Management, which wanted the company to focus
5.6x
5.5x
6.0x
solely on its outperforming property listing business
5.8x
ImmoScout24.
4.6x
8x
5.2x
4.5x
5.1x
4.9x
4.1x
5.0x
3.7x
3.7x
4.9x
4.1x
4.0x
4.0x
3.5x
The rolling four-quarter median PE buyout EV/EBITDA
multiple came in at 10.0x in Q2 2020, dropping half a 6x
turn from the same quarter in 2019. In the short to
medium term, we expect multiples to remain in the high 4x
single digits and low double digits, largely buoyed by
6.5x
6.2x
6.0x
5.8x
5.8x
5.6x
5.5x
5.6x
strong European equity prices. The European Stoxx 600
5.4x
5.4x
5.4x
5.3x
5.3x
5.2x
5.1x
5.2x
5.0x
4.9x
index climbed 3% in June 2020 which outperformed the 2x
S&P 500. In addition, the persistent fiscal and monetary
stimuli, such as Europe’s proposed €750 billion joint
0x
fiscal programme, will assist in sustaining valuations.
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
The COVID-19 crisis has accelerated the bifurcation in
the “haves” and “have nots” in terms of assets. 2016 2017 2018 2019 2020
Companies that are fundamentally strong and have Debt/EBITDA Equity/EBITDA EV/EBITDA
managed to survive or even grow through the crisis
Source: PitchBook | Geography: Europe
could command an even higher valuation in this
*As of June 30, 2020
environment. Sponsors will likely accept lower pro
forma returns for the “haves” in this no-interest-rate ecommerce, cybersecurity, cashless payments, and
world. For example, Dedalus acquired Agfa-Gevaert collaboration are anticipated to be part of the “haves”
Healthcare Information Technology Business at a 19.5x cohort, in which valuations will sustain, if not rise above,
premium to its implied revenue. Entities within their pre-crisis levels.
healthcare and data, as well as the 5 Cs of, cloud,
6 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NDeals by size and sector
PE deals (€) by size PE deals (#) by size
100% €2.5B+ 100% €2.5B+
90% €1B- 90% €1B-
€2.5B €2.5B
80% €500M- 80% €500M-
€1B €1B
70% 70%
€100M- €100M-
60% €500M 60% €500M
€25M- €25M-
50% €100M 50%
€100M
40% Under 40% Under
€25M €25M
30% 30%
20% 20%
10% 10%
0% 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
2020*
Source: PitchBook | Geography: Europe Source: PitchBook | Geography: Europe
*As of June 30, 2020 *As of June 30, 2020
PE deals (€) by sector PE deals (#) by sector
100% B2B 100% B2B
90% B2C 90% B2C
Energy 80% Energy
80%
Financial Financial
70% 70% services
services
60% Healthcare 60% Healthcare
IT 50% IT
50%
Materials &
40% Materials & 40% resources
resources
30% 30%
20% 20%
10% 10%
0% 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
Source: PitchBook | Geography: Europe Source: PitchBook | Geography: Europe
*As of June 30, 2020 *As of June 30, 2020
7 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NSpotlight: France & Benelux
PE deal activity
1,099 1,075 1,079
1,028 1,034
849 876
844
745 753
693
631
559
485
406
€102.20
€127.15
€77.02
€75.07
€40.70
€17.02
€56.73
€54.62
€49.78
€52.28
€86.25
€93.81
€92.20
€108.9
€34.2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Deal value (€B) Estimated deal value (€B) Deal count Estimated deal count
Source: PitchBook | Geography: France & Benelux
*As of June 30, 2020
This section is adapted from the 2020 France & Benelux Top five PE investors in France & Benelux
Private Capital Report, written by Dominick Mondesir
companies since 2015 by deal count
and Nalin Patel and published on June 24, 2020.
Investor name Deal count
PE deal activity in the France & Benelux region has Bpifrance 348
grown considerably over the past decade, with France
Crédit Mutuel Equity 142
contributing the bulk. Over 1,000 deals per annum
Idinvest Partners 136
have closed since 2015, and GPs have invested at least
€100 billion in aggregate each year since 2017. A few Siparex Group 113
factors have influenced the upward trajectory of PE BNP Paribas Développement 107
deal activity. First, Brexit has reduced the number of
Source: PitchBook | Geography: France & Benelux
available deals in the UK, Europe’s biggest market, *As of June 30, 2020
which has shifted a portion of deal activity to the
France & Benelux region. With the no-deal Brexit district. However, despite the region significantly easing
cloud firmly back in the picture, we may see a further its lockdown in recent weeks, the pandemic’s effects
disproportionate shift of deal activity to the region, as are likely to bring about a break from the norm in 2020,
seen from Sweden-based EQT (STO: EQT) launching with PE deal flow pacing considerably below levels
a brand-new French operation in 2020. Second, the of recent years. No mega-deals closed in H1 2020, as
2017 election of pro-business leader Emmanuel Macron GPs avoided making outsized bets in this environment,
helped alter institutional investors’ attitudes towards which saw the first fall in the region’s median deal size
the territory. Macron’s easing of company taxes, in three years to €17.8 million. Additionally, France’s
favourable tax breaks for managers relocating to France, government recently revised its GDP forecast, with
reduced corporate income tax, and tools to share French Finance Minister Bruno Le Maire indicating a
capital gains with employees have boosted the region’s contraction of 11.0%. The country’s jobless rate also
attractiveness. In addition, Macron has transformed surged by a record 23% in April 2020.4
France’s wealth tax and added a variety of measures
to attract top talent and technology companies to the
4: “French Jobless Numbers Surge as Europe Limps Out of Lockdown,” Financial Times, Martin Arnold and Valentina Romei, May 28, 2020
8 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NExits
PE exit activity
1,399
1,347
1,279
1,246
1,173
1,064
1,011 1,049
976
856
784
713 736
521
381
€157.8
€195.4
€104.3
€140.8
€207.9
€135.7
€191.3
2€49.9
€303.2
€266.6
€295.7
€280.7
€254.9
€43.4
€97.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Exit value (€B) Estimated exit value (€B) Exit count Estimated exit count
Source: PitchBook | Geography: Europe
*As of June 30, 2020
European PE exit value in the first half of 2020 puts PE exits (#) by size
the year on pace for its lowest annual total in six
100% €2.5B+
years. €55.2 billion worth of liquidity events occurred
in Q2 2020, a YoY increase of 4.9% that was largely 90% €1B-
propelled by JDE Peets’ IPO. In Europe’s largest €2.5B
listing since 2011, the company raised €2.3 billion at a 80% €500M-
pre-money valuation of €14.9 billion. This offering in €1B
part pushed the year’s median exit size up to €133.7 70%
€100M-
million. Without JDE Peets’ outsized IPO, we would €500M
60%
have seen a considerable drop in exit value YoY,
€25M-
and on the whole, we expect exit activity to remain 50% €100M
tepid through the second half of 2020. Only 122 exits
closed in Q2, and only five of them were over €1.0 40% Under
€25M
billion, marking YoY decreases of 44.6% and 50.0%,
respectively. In a recent report by Investec, 83% of
30%
GPs surveyed said they did not expect to liquidate 20%
any of their portfolio companies over the next 12
months. If market conditions change and we receive 10%
positive news on the health front (vaccine and/or
treatment for COVID-19), exit activity could pick 0%
up as GPs are coming off multiple years of strong
2020*
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
dealmaking and aging portfolios. In addition, exit
activity for a subset of assets benefitting from the Source: PitchBook | Geography: Europe
pandemic or deemed COVID-19 proof may sustain as *As of June 30, 2020
there likely won’t be valuation disconnects.
9 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NE xits
The lower end of the market (exits sized between €25 Median IPO size (€M)
million-€100 million) has been disproportionately
affected by the pandemic, clocking close to a €800
€722.6
90.0% fall in exit volume YoY. Exit activity for these
assets is likely to remain subdued over the next €700
six months to a year for a few reasons. First, the
inherent volatility and lack of available financing €600
in the lower middle market could lead to wider
bid-ask spreads, especially in a time of pandemic- €500
driven demand shocks. Second, most GPs will
avoid selling assets at discounts and will wait for a €400
more stable period to unload portfolio companies.
Third, substantial barriers to exit execution remain, €300
including challenges in conducting face-to-face
due diligence. Fourth, managers are likely to be €186.0
€200
focused on company health issues, liquidity, and
business disruptions as opposed to exit plans. And
€100
fifth, new weaknesses are expected to have evolved
in entities that perhaps thought of themselves as
€0
mission critical but have discovered clients view their 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
services as discretionary.
2020*
The median IPO size has rocketed to €722.6 million
Source: PitchBook | Geography: Europe
due in part to JDE Peets’ listing. We anticipate *As of June 30, 2020
IPOs may pick up steam in the coming quarters, as
it appears the public equity markets have whole-
PE exits (#) by type
heartedly embraced central bank and government
policy responses, as well as a V-shaped recovery. 100% Secondary
Shares in JDE Peets climbed more than 12% in its first buyout
day of trading, highlighting the optimistic recovery
90%
IPO
public equity markets have priced in. Sponsors 80%
are likely to cash in and take advantage of these Corporate
buoyant markets, even in the face of diverging and 70% acquisition
weak economic data, as optimism grows for (and
investment opportunities surround) a vaccine or 60%
treatment for COVID-19 and as substantial fiscal and
50%
monetary support initiatives continue.
40%
30%
20%
10%
0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
Source: PitchBook | Geography: Europe
*As of June 30, 2020
10 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NFundraising
PE fundraising activity
192 188
168 168
137 142 137 138
123
128
123
113 111
101
38
€72.5
€79.9
€54.9
€38.2
€20.3
€38.9
€25.5
€60.1
€45.5
€51.4
€64.8
€86.8
€75.2
€93.7
€19.6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Capital raised (€B) Fund count
Source: PitchBook | Geography: Europe
*As of June 30, 2020
European PE capital raised came in extremely PE funds (#) by size
subdued through H1 2020. At the halfway point in
100% €5B+
the year, €19.6 billion was raised across 38 vehicles.
No funds closed above €2.5 billion in H1 2020, which 90% €1B-
significantly contributed to the lackluster fundraising €5B
total, as LPs reviewed portfolios and evaluated the 80% €500M-
denominator effect, liquidity schedules, and allocation €1B
targets. In a recent LP sentiment survey by Campbell 70%
€250M-
Lutyens, only a third of LPs stated they would €500M
60%
continue with business as usual. The rest are putting
commitments on hold, proceeding with re-ups instead €100M-
50% €250M
of new commitments or with opportunities in process.
40% Under
That being said, brand-name European managers will €100M
30%
grow their LP wallet share during the downturn, as
the bifurcation in the fundraising market will continue
20%
to heighten in the coming quarters. LPs will lean into
existing GP relationships to take advantage of the 10%
dislocation. With a number of European brand-name
mega-funds in the market, we anticipate capital raised 0%
will increase considerably in the coming quarters.
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
While not included in our Q2 datasets, CVC Capital
Partners recently closed on €21.3 billion in Europe’s Source: PitchBook | Geography: Europe
largest-ever buyout fund. The firm started fundraising *As of June 30, 2020
in January 2020 and continued to attract a significant
amount of capital through the lockdown, highlighting
the healthy fundraising trail for brand-name managers. vintages have the potential to produce top-tier metrics
While history does not repeat but often rhymes, in as a result of lower multiples, an expanded opportunity
this no-interest-rate environment, LPs recognize 2020 set, and less competition.
11 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NFundraising
Fund count is on pace to hit a new annual nadir by the PE funds (€) by type
end of 2020. COVID-19 has disproportionately affected
the fundraising trail for first-time GPs, spinout GPs, 100% Restructuring/
and those without a solid track record. Most of these turnaround
90%
managers paused on launching funds amid the volatility PE growth-
due to travel restrictions, challenges in meeting LPs 80% expansion
face to face, and allocators concentrating on portfolio
70% Mezzanine
triage and existing GP relationships. Funds sized
under €100 million closed only six vehicles in H1 2020, Buyout
60%
putting the size cohort on track for its lowest annual
Other
reading in our datasets. Managers without a solid track 50%
record may have to work with seeding groups such as
Evolution Managers Capital, which provides new GPs 40%
capital with which to invest and build a track record
30%
before they move into the traditional PE fundraising
market. Moreover, protracted fundraising timelines and 20%
the increased use of placement agents or deal-by-deal
fundraises may prove beneficial during this time for 10%
those struggling to attract capital.
0% 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020*
Through H1 2020, buyout funds have dominated the
fundraising market, accounting for €15.9 billion in
capital raised, equating to an 81.2% share. Growth Source: PitchBook | Geography: Europe
equity funds have also been gaining considerable *As of June 30, 2020
traction, contributing around 20% of the year’s
total commitments. The ability for businesses to be than traditional buyouts. During the downturn, fund
disruptive and shake out incumbents has exponentially mandates have become increasingly flexible, allowing
increased due to COVID-19. We may start to see a sponsors to straddle investments across both private
shift away from traditional large late-stage PE deals and public markets, as well as across a range of
to more growth equity investments, as the ecosystem asset classes and capital structures. In addition to
evolves and focuses on companies that are growing more growth equity funds, we anticipate fundraising
significantly faster than the broader economy and are for strategies such as distressed, special situations,
uniquely positioned to withstand the downturn due to dislocation, and rescue vehicles will proliferate as we
low leverage and close proximity to profitability. This move into Phase 2 of the crisis. A number of highly
could potentially lead to GPs raising more growth leveraged private entities will soon come under severe
equity vehicles as LPs seek returns akin to late-stage liquidity stress due to top-line decreases, inflexibility on
VC, coupled with less leverage and lower losses costs, and portions of fiscal support winding down.
Top 10 open European PE funds by target size (€B)
Firm name Fund name Target size HQ location
EQT EQT IX €15.0 Stockholm
Apax Partners Apax X €11.0 London
BC Partners BC European Capital XI €8.5 London
Partners Group Partners Group Direct Equity 2019 €5.0 London
Nordic Capital Nordic Capital Fund X €5.0 Stockholm
HG Capital (UK) Hg Genesis 9 €4.5 London
HG Capital (UK) Hg Saturn 2 €4.4 London
Vitruvian Partners Vitruvian Investment Partnership IV €4.0 London
Montagu Private Equity Montagu VI €3.6 London
Eurazeo Pme Eurazeo PME IV €2.5 Paris
Source: PitchBook
*As of June 30, 2020
12 P I TC H B O O K Q 2 2020 E U R O P E A N P E B R E A K D OW NCOPYRIGHT © 2020 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.
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