Global private equity investments increased for the second year running in 2004 to $178bn according to IFSL estimates in a new IFSL report Private Equity.
Investments were up around a half on the previous year largely due to a pick up in buyout activity in the US, and were just 8% below the peak in 2000.
Funds raised globally increased 40% in 2004 to $112bn, the first increase since 2000. The decline in fund raising between 2000 and 2003 was partly due to a large overhang created by the end of 2000 between funds raised and funds invested.
North America dominates the global private equity market with two-thirds of global investments and 62% of funds raised in 2004. Between 1998 and 2004, Europe increased its share of investments from 24% to 26% and of funds raised from 18% to 31%. Asia-Pacific regions’s share of investments and of funds raised was virtually unchanged at around 6% while the share of the rest of the world fell.
The UK is the second largest global center and the biggest in Europe for private equity. With 13% of investments and 11% of funds raised, the UK’s share of the global private equity market nearly doubled between 2000 and 2004. At 1.1% of GDP, in 2004 the UK had a higher ratio of investments and funds raised than any other country. Other important centres for private equity in include Japan, France, Germany and Spain.
According to the report, the global private equity secondary market has seen substantial growth over the past decade. Between 3% and 5% of total committed capital each year is invested in the secondary market. Global secondary transactions totalled around $5.5bn in 2004, up from $4.0bn in the previous year. Europe accounted for about a third of this.