PE allocations slump 50%
Pension funds' allocation to European private equity funds dropped by more than 50% year on year in 2007, data by the European Private Equity and Venture Capital Association (EVCA) has shown.
The statistics, compiled by PEREP Analytics on behalf of EVCA for 2007 and by Thomson Financials and PWC for the previous years, showed a fall from Ä29bn ($45.5bn) in 2006 to Ä14bn ($22bn) in 2007, allocated by pension funds to European private equity funds.
The total allocation to European private equity in 2007 was Ä77bn, while in 2006, the record level year for private equity, the allocation was Ä108bn.
Mirela Ene, head of research, EVCA, said: "As absolute figure, the amount goes down because the overall fundraising by the private equity industry in Europe is down by 30%. It is still high though, given that 2006 was a record year and fundraising is a cyclical event.
"The investors' profile varies depending mainly on the fund size. Large pension funds allocate primarily to buyout funds, since the venture funds raised for Europe are too small for their allocations to make a difference," she added.
Pension funds remain the largest investors in European private equity funds. Since 1998 they invested 24% of the total amount allocated to the asset class.
Banks are the second largest investor, representing 20%, followed by private equity fund of funds, which represent 13% of the total investment in the last nine years.
As for the pension funds' allocation to European private equity fund of funds, data by Private Equity Intelligence (Preqin) showed that there was an increase of 38% from 2006 to 2007.
In absolute terms the increase was from $5.2bn in 2006 to $7.2bn in 2007. Pension funds accounted for 32% of the total allocation to private equity fund of funds in 2006, while in 2007 they accounted for 30% of the total allocation, according to data by Preqin.
Tim Friedman, spokesperson for Preqin, said: "For a first time investor in private equity, it is a natural choice to allocate to a fund of funds.
"There is a search for alternatives to the traditional focus of pension funds in bonds and equities. You see increased attention lately also to infrastructure, as an asset class."
The total allocation to European private equity in 2007 was Ä77bn, while in 2006, the record level year for private equity, the allocation was Ä108bn.
Mirela Ene, head of research, EVCA, said: "As absolute figure, the amount goes down because the overall fundraising by the private equity industry in Europe is down by 30%. It is still high though, given that 2006 was a record year and fundraising is a cyclical event.
"The investors' profile varies depending mainly on the fund size. Large pension funds allocate primarily to buyout funds, since the venture funds raised for Europe are too small for their allocations to make a difference," she added.
Pension funds remain the largest investors in European private equity funds. Since 1998 they invested 24% of the total amount allocated to the asset class.
Banks are the second largest investor, representing 20%, followed by private equity fund of funds, which represent 13% of the total investment in the last nine years.
As for the pension funds' allocation to European private equity fund of funds, data by Private Equity Intelligence (Preqin) showed that there was an increase of 38% from 2006 to 2007.
In absolute terms the increase was from $5.2bn in 2006 to $7.2bn in 2007. Pension funds accounted for 32% of the total allocation to private equity fund of funds in 2006, while in 2007 they accounted for 30% of the total allocation, according to data by Preqin.
Tim Friedman, spokesperson for Preqin, said: "For a first time investor in private equity, it is a natural choice to allocate to a fund of funds.
"There is a search for alternatives to the traditional focus of pension funds in bonds and equities. You see increased attention lately also to infrastructure, as an asset class."
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