European Private Equity & Venture Capital and Business Angels

Transcription

1 European Private Equity & Venture Capital and Business Angels EBANCONGRESS2008 Arnhem, 14 April 2008 Georges H. Noël, EVCA Director

2 Agenda European Venture Capital in 2007 The EVCA VC Platform Action Plan Collaboration between EVCA and EBAN

3 2007 European Private Equity Activity Survey Preliminary data produced by PEREP_Analytics

4 Evolution Activity Flows Funds Raised Investments Divestments Source: PEREP_Analytics Europe = location of PE firm

5 2007 Fundraising Profile Incremental amount raised for each 2007 closing 2007 Buyout 87% 2006 Buyout 82.8% Expansion/ Development 8% Early- Stage 5% Expansion/ Development 11% Early- Stage 6% Source: PEREP_Analytics

6 2007 Fundraising Profile Incremental amount raised for each 2007 closing Small & Mid- Buyouts 34.1% 13 funds closing > 1bn = 53% of total 13 funds closing > 1bn = 47% of total Small & Mid- Buyouts 36% Expansion/ Development 8% Early-Stage 5% Expansion/ Development 11% Early-Stage 6% Source: PEREP_Analytics

7 2007 Fundraising Profile Full amount raised at 2007 final closings for independent funds FUND STAGE Amount (mil ) Nr funds Avrg Fund size Early-stage Development 2, Balanced 1, All Venture 5, Buyouts 53, Of which > 1 bn 40, ,680.5 Mezzanine 3, Generalist 4, Independent Funds 67, SPECIALISED FUNDS Amount (mil ) Nr funds Energy and Environ ICT 1,183 9 Life sciences 1,090 6 Source: PEREP_Analytics

8 Typology of LPs behind the 2007 fundraising Pension Funds 25.3% Insurance Companies 10.3% Fund of Funds 13.3% Pension Funds 27.1% Insurance Companies 10.1% Fund of Funds 18.2% Banks 16.3% Government Agencies 7.3% Private Individuals 5.5% Corporate Investors 1.7% Other 6.1% Academic Institutions 0.3% Capital Markets 7.8% Endowments and Foundations 2.7% Other Asset Managers 2.3% Family Offices 1.2% Banks 14.4% Government Agencies 8.7% Private Individuals 8.9% Academic Institutions 3.6% Capital Markets 1.2% Other 4.1% Corporate Investors 3.7% Source: PEREP_Analytics

9 European investments at 63.3 Billion (Equity only from private equity funds) billion Venture Capital Buyout Source: PEREP_Analytics Prel. Europe = location of PE firm

10 Investments by stage of financing INVESTMENTS BY STAGE Mega buyouts By amount inv % share % share 17.7% 26.1% By number inv % share % share 0.5% 0.4% Growth Rate Amt 07/06-31% Large buyouts 20.4% 10.2% 1.0% 0.4% +103% Mid - market buyouts 32.5% 25.9% 7.9% 3.7% +27% Small 6.8% 6.8% 18.6% 18.4% +1% All buyouts 77.4% 68.9% 27.9% 22.8% +11% Replacement capital 5.7% 5.2% 1.8% 3.6% +11% Expansion 12.9% 15.4% 35.6% 41.1% -16% Early stage 4.1% 10.5% 34.6% 32.5% -61% Total in % 100.0% 100.0% 100.0% 100.0% Total in numbers ( mil) 68,500 67,800 6,160 10,318 Source: PEREP_Analytics; Europe = location of target

11 European Divestments by Segment Venture Buyouts # cos # cos 1.4 bn bn bn bn bn 3.7 bn Source: PEREP_Analytics Europe = location of target 2007 Top Exit routes: Trade Sale Repayment of principal loans Sale to another PE house

12 2007 European Private Equity Performance Statistics Preliminary Data produced by Thomson Financial

13 Indicators Show Good Average Performance European Private Equity Funds Formed Investment Horizon IRR (%) for period ending 31-Dec-2007 Stage 3 YR 5 YR 10 YR 20 YR All Venture Buyouts Generalist All Private Equity Source: Thomson Financial on behalf of EVCA

14 Mid- to Long-Term Venture IRR Remains In Positive Territory European Venture 3-,5-,10-Year Rolling IRRs year IRR 25 5-year IRR Rolling IRRs (%) year IRR Source: Thomson Financial on behalf of EVCA

15 Mid- to Long-Term Buyout IRR Shows Strong Momentum for Buyout Funds European Buyouts 3-,5-,10-Year Rolling IRRs year IRR 35 5-year IRR Rolling IRRs (%) year IRR Source: Thomson Financial on behalf of EVCA

16 Industry Average Stays Close to 12% Net IRR European Private Equity Funds Formed , Measured as of 31-Dec-07 Stage Pooled IRR Minimum Value Top Quarter (Upper Quartile) Average Top Quarter Return* Percentile Avg Top quarter 23.5% Net IRR 357.2% 11.0% All Venture 4.5% 5.1% 15.0% 50 2nd quarter Buyouts 16.1% 19.0% 33.4% 25 3rd quarter 4th quarter Generalist 9.5% 9.4% 20.4% All Private Equity 11.7% 11.0% 23.5% *The top quarter IRR is the pooled return of funds above the upper quartile Source: Thomson Financial on behalf of EVCA

17 Private Equity and Public Market Comparators 10-Year Rolling IRR for Morgan Stanley Euro Equity HSBC Small Company JP Morgan Euro Bonds European Private Equity IRR (%) *Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cash flows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index. Calculations based on methodology proposed by J Coller and published by A Long and C Nickles. Source: Thomson Financial on behalf of EVCA

18 Conclusions Increasing asset allocations; Growing inflow into the asset class from all over the world and particularly from North America and from SWF European Buyout experienced an exponential growth over the last 8 years; but what will be the longer term impact of the state of the debt markets? How small and midcap buyouts will evolve in comparison with the mega and large buyouts? Quid fund and deal sizes? PE/VC benefits from a superior governance model PE/VC to outperform consistently public markets European VC has passed turning point and looks to a brighter future; increased funds available but not oversupplied; trend to expansion; Greater competition for funds between asset classes (HF, Real Estate, Infrastructure, Distressed Debt) and from Government funds as investors PE/VC growingly under public scrutiny and need for more disclosure and improved communication Impact of recession of the US economy and state of the stock markets on the whole PE/VC Ecosystem? Decreasing valuations? Increasing holding periods? EVCA s Set of Professional Standards considered being the world standard

19 EVCA Venture Capital Platform ACTION PLAN September 2007 December 2008

20 Venture Capital Platform Industry Structure & EVCA s Market Share

21 Industry Structure VC Industry Structure EVCA Market Share Total VC Funds active in Europe Of which doing more than 4 deals per year EVCA Full VC Members (strictu sensu Early Stage) Assets under Management by EVCA VCs (25%) bn Top 10 36% Top 20 55% Top 50 80% Funds > 1bn #8 Funds > 500m #12 Funds over 100m #74 Funds < 100m #83 (of Assets under Management) Key Markets: UK 20%, Germany 19%, France 17%, Benelux 15%, Scandinavia 14% Sources EVCA Desk Research VentureOne

22 European PE/VC Industry in terms of activities by segment 7-Year Investment activity (transactions) Segment Number of transactions Value Venture = 79% 82bn = 27% Buyout = 21% (*) 223bn = 73% (*) included 111 transactions with EV over 1bn

23 EVCA Venture Platform Action Plan Articulated mainly around: 1. Support for fundraising 2. Support for Exits 3. Public Affairs 4. EVCA Venture Forum 5. Member services & involvement 6. Research 7. Communication

24 Venture Capital Platform Action Plan (1) First 100 Days Actions derived from the 18 months action plan 1. Biotech Roundtable Chairman s initiative (done 30 August 2007 & 7 February additional meetings in 2008) 2. Reach out to members: Workshop with members and academics from LBS/CEFS in Munich, London, Paris - Meeting with key media on VC at the occasion of the 3 workshops 3. Selling European VC - LP s: Workshops and visits in Europe, Australia, Asia - Lobby: Meeting with the relevant DG s of EC Public Procurement for small & medium sized companies- YICS 5. Prepare Message grid and communication plan for the VCP 6. Recompose the representation of the VCP

25 Venture Capital Platform Action Plan (2) Plan for 2008 Main goals: 1. Selling European VC: 1.1. Fundraising support - LP Workshops in the mid-east, Europe, North America, Asia, Australia - Family office conferences - VC Panel in Geneva Investor Forum - Integrate VC in all IRC initiatives 1.2. Public Affairs - Develop & Execute action plan for Biotech - Push EC for Public Procurement system for technology firms - Co-operate with EC on ICT, Biotech, Tax & Legal Benchmark, Regulatory issues and EC Action Plan for SME s

26 Venture Capital Platform Action Plan (3) Plan for 2008 Main goals: 2. Events - VCP Workshops in Barcelona, Stockholm, CEE countries, Cleantech Workshop September 2008, Dublin (fall 2008), Benelux (with EBAN) fall 2008, Zurich (November 2008), Ljubljana, Moscow - CVC Workshop (8 April 2008) - Seed/Cluster/Spin-off Workshop - Further increase quality and status of the VC Forum - Co-operate with EC on the ICT event November Support EC DG ENTERPRISE on 27 SME Events until Member support - Desk research on Serial Entrepreneurs networks - Launch a new academic research based on member s feedback

27 Venture Capital Platform Action Plan (4) Plan for 2008 Main goals: 4. Communication - Exploit LBS Study - Engage dialogue with media raising awareness of economic & societal benefits of VC - Re-compose data for communications with stakeholders 5. Representativity of the VCP - Create a strong VC community within EVCA - Increase market share where appropriate 6. Other - Monitor trends for PS (VC4S, CSR, SRI, etc.) with PSC - Increase visibility for VCP through non-evca conferences & speakers pool - Maintain & extend Academic Network - Build relationship with other markets: NVCA, BRIC countries, etc.

28 Venture Capital Platform Action Plan (4) Potential additional actions for 2008 Other actions ongoing: - Academic Research & PhD candidates support - Workshop/Roundtable with the top TTO s/seed Funds European Research Institutes (how VC can enhance transformation of Innovation into businesses?) - Exit initiative (IPO and M&A) (how to enhance liquidity for VCbacked companies?) - EVCA/Business Angels initiative (how to improve interactions between VC s & SE(s?) - Other co-operations: TechTour, EBAN, Copenmind, etc.

29 Venture Capital Platform - Challenges Five big challenges: Succeed new VCP representation Get active members support for creating buoyant VC community and execution of the action plan Increase data coverage Position VCP as THE European market-& meeting place for VC and the legitimate representation of European VC Develop a 5 year strategic plan for the VCP with VCP representatives

30 Opportunities of Collaboration between EVCA and EBAN BA and VC are part of the same Ecosystem Joint Regional Fora or network events Contributions to specific EVCA Workshops Academic and/or desk research Publications & links EVCA Institute Lobbying Professional Standards

31 Thank you very much! For more information