Activity in the first half of 2009 in the French private equity market
The AFIC and Grant Thorton present the results of their survey on the activity in the first half of 2009 in the French private equity market.
Fundraising drops 80% : the lowest level the last five years
In the first half of 2009 fund raising dropped 80% to reach €1,041 BN, the lowest amount recorded in five years. This reflects the trend of a major reduction in new commitments from banks, insurance companies, public sector investors and retirement funds. Institutional investors and the banking sector account for only €350 MN vs €5 BN in the same period last year.
Retail investors accounted for 60% of the total funds raised. In particular, FCPI, and FIP (funds benefitting from wealth and income tax reduction) contributed 2/3 of the total amount (€415 MN).
Funds raised outside of France fell drastically to €200 MN vs €4 BN over the same period a year ago, and foreign fund raising was limited to the European Union.
Contrasting results in investments
Total investments in the first half of 2009 dropped 65% to €1,787 BN. However, the breakdown shows a contrast between market segments.
While activity in LBOs came practically to a halt with no transactions above €100 MN and a major decrease in smaller deals, the growth and venture capital segments resisted well. 664 companies were funded in these segments vs 663 in the same period in 2008.
Venture capital investments increased by 27% to reach €358 MN. The number of transactions funded by growth capital was stable, but the average ticket size decreased to €1.7 MN in the first of 2009 vs €2.3 MN last year.
Slight decrease in exits
Private equity exits decreased by 10%, with a slight increase in the presence of trade buyers. Young innovative companies continued to draw purchasers. It is worth noting that four deals represent 45% of the total amount of exits.
Jean-Louis de Bernardy, President of the AFIC, commented: “The first half of 2009 reflects the state of the global economic crisis. However, the impact on our industry is uneven. As expected the LBO segment was all but closed in terms of fund raising and investing. However venture and growth capital remained relatively dynamic with an identical number of companies funded. 60 % of the funds raised over the period are accounted for by the retail market with over 2/3 via FCPI and FIP. It is therefore of utmost importance to maintain the framework for these funds which works well and which, even in turbulent economic conditions, provides active support for small and medium sized companies in France.”