In 1980, the European Commission (DG XIII) set up a pilot scheme following an analysis of ‘Barriers to Industrial Innovation’ in Europe.
This pilot scheme had to decrease the lack of financing to new technology-based firms and to encourage cross-border operations.
At the end of 1980, in total 7 companies had joined the scheme.
When the EC noticed in mid-1983 that many more companies had wanted to join, it set two subsequent meetings. The interest shown during those meetings resulted in the set-up of a European-level association, which would later carry the name EVCA.
EVCA was provisionally set up on 31 August 1983, without an established staff nor office.
Venture Consort Programme: Launched in cooperation with the EC in 1985 Its goals were to increase financing for SMEs involved in new technologies through the formation of cross-border syndicates of venture capitalists
European Seed Capital Fund Scheme: Launched in 1988 and terminated in 1995, the scheme’s goal was to encourage private investment into innovative, technology-based young firms
NIS Venture Capital Programme: Part of the Phare-Tacis Programmes with an aim to develop venture capital in the former Soviet Union and Central and Eastern European Countries by providing training courses and networking opportunities for venture capital operators
Private Equity Support Programme for CEE: Pilot programme launched in 1993 by EVCA financed by EU’s Phare programme, focussing on strenghtening the private equity capital infrastructure in Central & Eastern European countries
Trends: global financial investment expansion 2005 (Preliminary) $93.4 Trillion 1969 $2.3 Trillion Source: UBS Global Asset Management / Adams Street Partners NVCA Annual Meeting 2006
PE activity levels, confirming a new record in ‘05 € billion Source: EVCA/Thomson Financial/ PricewaterhouseCoopers
Not too much capital overhang
68% of investments in 2005 related to buyout deals, vs. 70% in 2004
Pension funds taking the lead in fund raising (24,8%), followed by banks (17,6%), funds of funds (13,1%) and insurance companies (11,1%)
Stage distribution by % of amount invested 2005 European Private Equity Survey Conducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA
Satisfactory exit conditions Source: EVCA/Thomson Financial / PricewaterhouseCoopers Divestments – Breakdown by Type M&A Activity, Europe* IPO Activity, Europe* Source: Thomson Financial *Public and private deals
European Private Equity Funds Formed 1980-2005 Net IRRs to Investors, Investment Horizon Return as of 31-Dec-2005 Source: Thomson Financial/EVCA Short term and long term indicators show an improving performance 10.4 11.4 2.0 6.3 33.8 All Private Equity 8.6 9.6 -4.3 2.2 52.4 Generalist 13.7 14.3 6.1 9.1 31.7 Buyouts 6.4 6.4 -3.0 1.7 36.5 All Venture 20 YR 10 YR 3 YR 1 YR Stage 5 YR
Private equity continues to deliver a strong performance Evolution of Private Equity and Public Market comparators 10-year rolling IRR for 2000-2005 Updated Benchmarks 31-December-2005 Source: Thomson Financial / EVCA NB: Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cashflows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index.
Buyout funds as main drivers of fund raising and investments
An expanding global investment focus (Respondents by Region/Continent) Comment: Overall, 56% of global respondents will expand their global investment focus. European respondents show the strongest increase at 66%. Source: Deloitte/EVCA
Percentage of GPs expanding their European activity (all respondents split by continents) Comment: Europe is now perceived as a preferred destination by 30% of global respondents who intend to expand their activities. This is outpaced as an international expansion target only by Asia at 43%. Source: Deloitte/EVCA
Primary reasons for investors not to expand their international investment focus in the next 5 years (all respondents) Source: Deloitte/EVCA * predominant reason - the firm was already invested internationally Missing bars indicate the reason is not applicable for the specific region 0% 10% 20% 30% 40% 50% 60% Adequate deal flow in existing markets Contractual restrictions Lack of partner capacity Legal restrictions Size of fund does not allow for cross border investing Superior returns are available in our local market Other * Europe U.S. APAC Middle East/Africa Americas (excluding U.S.)