Hedge funds and Private Equity - PES
Hedge funds and Private Equity - PES
Hedge funds and Private Equity - PES
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70<br />
And it highlights the comparatively difficult position of venture capital managers in recent years,<br />
caused by the ‘bubble’ of 2000, <strong>and</strong> the wider downturn in the EU economy at that time.<br />
Although the top European venture capital <strong>funds</strong> have performed at a similar level to their US<br />
counterparts (where the market is more mature), a wider recovery may take some time because<br />
of the longer holding periods necessary for venture investments.<br />
Since the 2000 bubble, venture capital managers in Europe, in particular in Europe’s smaller<br />
markets, have found it more difficult to raise <strong>funds</strong> as a result of historic underperformance. This<br />
situation is likely to persist until consistent performance is delivered. Taking into consideration<br />
the enormous growth in leverage buy-outs of European companies, it is striking at the same time<br />
to see the dominance of the US <strong>funds</strong>, especially their size. They are simply the most powerful<br />
<strong>funds</strong> in the world. Looking at US <strong>funds</strong> like Texas Pacific Group, Blackstone <strong>and</strong> KKR, they have<br />
together a capacity equalling more than 30 per cent of worldwide equity. Recently, a new study<br />
made public the total LBO take-overs worldwide as shown in the table.<br />
As the pie chart above shows, buyouts account for by far the largest part of the private equity<br />
investments. The buyout markets in Europe have developed substantially <strong>and</strong> aggressively over<br />
the past 25 years. The European market seems to be experiencing its third phase of significant<br />
growth, following the waves of buyouts during the latter halves of the 1980s <strong>and</strong> 1990s.<br />
Records have been set in terms of both individual deal size <strong>and</strong> the total market value of transactions<br />
in recent years. From 1996 to 2005 the value of buyouts/buy-ins has experienced a<br />
tremendous rise of 445.4 percent points, as shown in the table.<br />
Development of LBOs – value of buyouts/buy-ins in EUR mil in Europe<br />
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005<br />
Index<br />
figure<br />
100 156,9 193,1 391,9 326,3 285,8 294,8 287,5 353,0 545,4<br />
Source: CMBOR/Barclays <strong>Private</strong> <strong>Equity</strong>/Deloitte, figures taken from http://greywww.uvt.nl:2080/greyfiles/center/2006/doc/70.pdf<br />
€ millions<br />
Number <strong>and</strong> value of buyouts/buy-ins in Europe. 1996-2005<br />
140000 900<br />
120000<br />
100000<br />
80000<br />
60000<br />
400000<br />
20000<br />
0<br />
1996<br />
1997<br />
1998<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
850<br />
800<br />
750<br />
700<br />
650<br />
Number of transactions<br />
Value of buyouts/buy-ins<br />
Number of buyouts/buy-ins
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