Europe’s Private Equity Industry During COVID-19 and Beyond (Invest Europe)

Summary

• Fundraising in H1 2020 reached €49.2 billion, representing a 4 percent decline compared to 2019.p.5
• Transaction volumes decreased by 17 percent to €36.2 billion in H1 2020 from €43.4 billion in H1 2019.p.5
• A focus on operational development of portfolio companies is planned by 71.3% of GPs in the near future.p.7
• Cost reduction is identified as a very important improvement initiative by 75.5% of GP respondents.p.7
• Higher capital allocation to private equity over the next three years is expected by 60 percent of LPs and GPs.p.9

Key insights

1. Approximately 80 percent of European fundraising processes continued despite the COVID-19 pandemic.p.5
2. Lower valuation multiples compared to 2019 are anticipated by 50.5% of GPs and 58.1% of LPs.p.6
3. An average of 44 percent of portfolio companies utilized government unemployment support during the crisis.p.8
4. Strategy changes are rejected by 57.8% of GPs who plan to invest in the same areas as today.p.9
5. Daily operational focus on risk management will increase for 68.4% of GPs and 54.8% of LPs.p.11
6. Environmental, social, and governance (ESG) approach is highlighted as crucial by 72.0% of LPs compared to 34.6% of GPs.p.13
7. PE firm governance is viewed as an important GP selection factor by 65.6% of LPs versus 16.5% of GPs.p.13