European private equity firms raised $43 billion across 63 funds in the first half of 2006 — an increase of 12% from this point last year, according to the August issue of DowJones Private Equity Analyst, an industry newsletter that has been tracking the private equity market since 1991. At the half-year point of 2005, 60funds had raised $38.4 billion.
Leveraged buyout funds dominated the fund growth, with 28 firms accounting for 88% of the total private equity capital raised. In fact, the $37.8billion raised by these LBO firms is 45% more than the amount raised by European LBO firms in the first half of 2005.
“The demand from limited partners for funds with proven track records, the need to compete with U.S. firms now active in Europe and the overall maturation of the European financial markets, which can support ever-larger private equity deals, are all driving the growth of the LBO funds,” said Jennifer Rossa, managing editor of the Private Equity Analyst.
Other types of funds in Europe including mezzanine funds, venture capital funds, and funds of funds all raised less capital in comparison with the same period of 2005.
The Private Equity Analyst European fund survey found that despite the in creases in the LBO fund-raising market, the pace of European fund-raising is lagging that of the U.S. At this time last year, European funds had raised 57% as much as U.S. firms, but this year they are at only 44% of the U.S. total. That is primarily because a number of firms are raising or have raised funds of $10 billion or more in the U.S., compared to only one –Permira — in Europe.