European private equity investment fell 28 percent in 2008 from 2007 to €54 billion, largely driven by a decrease in large buyouts, which fell around 40 percent by both number and value of investments, but with a noticeable shift to towards growth financing, according to final figures for 2008 from the European Private Equity and Venture Capital Association (EVCA).
The non-profit trade body said in a report that in addition to the dip in large deals, the value of small and mid-market deals fell by 30 percent, while the number of companies financed dipped by a fifth.
Meanwhile, early-stage venture capital investment remained undeterred by the economic slowdown, with a 15 percent increase in the number and 7 percent in value of seed-stage and start-up companies receiving finance, it said.
In terms of quarterly trends, investment levels recovered from a slow start to the year with robust second and third quarters, before a significant drop in the final quarter of 2008.
Growth capital investment almost doubled in size during 2008, to more than €7 billion of equity investment, driven by a greater participation from buyout players. More than 20 percent of buyout & growth equity was invested into SMEs last year, compared with less than 12 percent in 2007, the EVCA said.
SMEs attracted a growing majority share of the total number of private equity investments, accounting for 81 percent of deals, up from 77 percent in 2007. In total, more than 5,400 European companies received private equity funding during 2008.
The EVCA was established in 1983 and is based in Brussels. It represents, promotes and protects the interests of the European private equity and venture capital industry.