Private Equity in Europe 2007

Presents views on the market for private equity investment based on a survey of 100 leading asset managers across Europe.

Report Highlights


Activity by European private equity and venture capital management firms is reaching record levels. Annual investment activity reached EUR47 billion in 2005, a 27% increase on 2004, and the expanding market offers a potential opportunity for new entrants. Many wealthy clients are entering private equity in an attempt to diversify assets, which offers a large potential target market. This report offers tools to identify, understand, and evaluate this market.
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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market Context 2
Customer Focus 2
Table of Contents 3
Overview 1 3
Catalyst 1 3
Summary 1 3
Executive Summary 2 3
Market Context 2 3
Customer Focus 2 3
MARKET CONTEXT 8 3
Introduction 8 3
Key findings 8 3
Demand for private equity funds is increasing 8 3
Demand for private equity funds is likely to remain strong and steady 11 3
Institutional demand is likely to increase by around 5-10% per year 11 3
High net worth interest in private equity funds is predicted to grow by around 0-10% per year 13 3
Mass market demand for private equity funds is likely to increase over the next 3 years 14 3
AXA is the leading competitor for private equity funds in France 15 3
Goldman Sachs leads the field in Germany 16 3
Société Générale is the top player in Italy 16 3
Allianz Dresdner holds a third of the private equity market in Spain 17 3
The UK private equity market is led by HSBC, but is more closely competitive than most European markets 17 3
AXA Private Equity manages investments in excess of EUR10 billion worldwide 17 3
Goldman Sachs runs a comprehensive global private equity program 18 3
Société Générale is growing its private equity business 19 3
Allianz Dresdner has developed its private equity activities after its merger 20 3
HSBC has a strong presence in both European and global private equity 21 3
CUSTOMER FOCUS 23 3
Introduction 23 3
Key findings 23 3
The institutional market is the biggest customer group in Europe for private equity products in Europe 23 3
Institutional investors are likely to remain the biggest customer base for these funds in the future 25 3
The high net worth market is likely to see the biggest increase in demand for private equity funds 28 3
The retail banking channel is the most successful method of distributing private equity funds to the mass market in Europe 29 4
High net worth investors prefer financial advisors as a distribution channel 31 4
Institutional investors across Europe tend to purchase private equity funds directly 34 4
APPENDIX 38 4
Definitions 38 4
Methodology 38 4
Further reading 38 4
Ask the analyst 38 4
Datamonitor consulting 39 4
Disclaimer 39 4
Table of figures 5
Figure 1: In your opinion, what is the most important reason why wealthy clients are demanding alternative investments? 10 5
Figure 2: Which is your biggest customer group for private equity products? 16 5
Figure 3: Which is your biggest customer group for venture capital products? 17 5
Figure 4: In 3 years, what will be your biggest customer group for private equity products? 19 5
Figure 5: In 3 years, what will be your biggest customer group for venture capital products? 20 5
Figure 6: What do you think is the best way for private equity products to be distributed to mass market investors? 31 5
Figure 7: What do you think is the best way for venture capital products to be distributed to mass market investors? 32 5
Figure 8: What do you think is the best way for private equity products to be distributed to high net worth investors? 34 5
Figure 9: What do you think is the best way for venture capital products to be distributed to high net worth investors? 35 5
Figure 10: What do you think is the best way for private equity products to be distributed to institutional investors? 37 5
Figure 11: What do you think is the best way for venture capital products to be distributed to institutional investors? 38 5
Table of tables 6
Table 1: In your opinion, what is the most important reason why wealthy clients are demanding alternative investments? 10 6
Table 2: What type of alternative investment fund is most in demand by your wealthy clients or the wealth managers who offer your funds to their clients? 11 6
Table 3: Thinking of the next 3 years, how do you think demand for the following alternative investments will change among institutional investors? 12 6
Table 4: Thinking of institutional investors, what do you think will be the major barriers to wider take-up of the following alternative investments in the next three years? 12 6
Table 5: Thinking of the next 3 years, how do you think demand for the following alternative investments will change among high net worth investors? 13 6
Table 6: Thinking of high net worth customers, what do you think will be the major barriers to wider take-up of the following alternative investments in the next three years? 13 6
Table 7: Thinking of the next three years, how do you think demand for the following alternative investments will change among mass market investors? 14 6
Table 8: Thinking of mass market customers, what do you think will be the major barriers to wider take-up of the following alternative investments in the next three years? 14 6
Table 9: Which is your biggest customer group for the following products? 15 6
Table 10: In 3 years, which will be your biggest customer group for the following products? 18 6
Table 11: For the following investments, from which customer base will the most increase in demand come in 3 year's time? 20 6
Table 12: In France, who are the 3 best asset managers at building private equity investments? 22 6
Table 13: In Germany, who are the 3 best asset managers at private equity investments? 23 6
Table 14: In Italy, who are the 3 best asset managers at building private equity investments? 23 6
Table 15: In Spain, who are the 3 best asset managers at building private equity investments? 24 6
Table 16: In the UK, who are the 3 best asset managers at building private equity investments? 24 6
Table 17: Goldman Sachs private equity fund overview, as of 31/12/2006 25 6
Table 18: Sectors within SGAM private equity group 27 6
Table 19: Montagu sample investment portfolio, 2004-2006 28 7
Table 20: What do you think is the best way for the following alternative investments to be distributed to mass market investors? 30 7
Table 21: What do you think is the best way for the following alternative investments to be distributed to high net worth investors? 33 7
Table 22: What do you think is the best way for the following alternative investments to be distributed to institutional investors? 36 7
MARKET CONTEXT 8
Introduction 8
Key findings 8
Demand for private equity funds is increasing 8
Wealthy European clients are demanding alternative investments because they are keen to diversify 9
Demand for private equity funds is likely to remain strong and steady 11
Institutional demand is likely to increase by around 5-10% per year 11
Regulatory difficulties and a lack of understanding are the major barriers to future take-up of private equity funds by institutional investors 12
High net worth interest in private equity funds is predicted to grow by around 0-10% per year 13
A lack of understanding and a lack of selling expertise is likely to be the primary barrier to high net worth take-up of private equity investments 13
Mass market demand for private equity funds is likely to increase over the next 3 years 14
Lack of understanding and concern over risk will be the likely barriers to mass market take-up of private equity funds 14
AXA is the leading competitor for private equity funds in France 15
Goldman Sachs leads the field in Germany 16
Société Générale is the top player in Italy 16
Allianz Dresdner holds a third of the private equity market in Spain 17
The UK private equity market is led by HSBC, but is more closely competitive than most European markets 17
AXA Private Equity manages investments in excess of EUR10 billion worldwide 17
Venture Capital funds are a lucrative source of assets for AXA 18
LBO business has been growing in recent years 18
Goldman Sachs runs a comprehensive global private equity program 18
Recent activity in Germany has been successful 19
Société Générale is growing its private equity business 19
SGAM has several successful private equity teams 19
Allianz Dresdner developed its private equity activities after its merger 20
HSBC has a strong presence in both European and global private equity 21
HSBC private equity in Europe is managed through Montague Private Equity 21
HSBC's Asia business is well-established 21
HSBC Capital is HSBC's private equity operation in North America 22
CUSTOMER FOCUS 23
Introduction 23
Key findings 23
The institutional market is the biggest customer group in Europe for private equity products in Europe 23
The high net worth market in Italy is the largest customer group for private equity products 24
In Spain and Italy the high net worth segment shows the most demand for venture capital products 25
Institutional investors are likely to remain the biggest customer base for these funds in the future 25
French asset managers believe the institutional market will remain their biggest customer group for private equity funds 26
France, Germany, and Italy predict a decrease in institutional clients for venture capital funds, while Spain and the UK forecast an increase 27
The high net worth market is likely to see the biggest increase in demand for private equity funds 28
The retail banking channel is the most successful method of distributing private equity funds to the mass market in Europe 29
The mass market for private equity products in the UK is dominated by independent advisors 29
High net worth investors prefer financial advisors as a distribution channel 31
French high net worth customers prefer to purchase private equity products via a retail bank 32
Institutional investors across Europe tend to purchase private equity funds directly 34
In every country, direct sales are the most popular channel for institutional private equity funds 35
APPENDIX 38
Definitions 38
Private Equity 38
Private Equity Funds 38
Venture Capital Funds 38
Leveraged Buyout (LBO) 38
Methodology 38
Further reading 39
Ask the analyst 39
Datamonitor consulting 39
Disclaimer 39

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Table 1: In your opinion, what is the most important reason why wealthy clients are demanding alternative investments? 9
Table 2: What type of alternative investment fund is most in demand by your wealthy clients or the wealth managers who offer your funds to their clients? 11
Table 3: Thinking of the next 3 years, how do you think demand for the following alternative investments will change among institutional investors? 11
Table 4: Thinking of institutional investors, what do you think will be the major barriers to wider take-up of the following alternative investments in the next three years? 12
Table 5: Thinking of the next 3 years, how do you think demand for the following alternative investments will change among high net worth investors? 13
Table 6: Thinking of high net worth customers, what do you think will be the major barriers to wider take-up of the following alternative investments in the next three years? 13
Table 7: Thinking of the next three years, how do you think demand for the following alternative investments will change among mass market investors? 14
Table 8: Thinking of mass market customers, what do you think will be the major barriers to wider take-up of the following alternative investments in the next three years? 15
Table 12: In France, who are the 3 best asset managers at building private equity investments? 15
Table 13: In Germany, who are the 3 best asset managers at private equity investments? 16
Table 14: In Italy, who are the 3 best asset managers at building private equity investments? 16
Table 15: In Spain, who are the 3 best asset managers at building private equity investments? 17
Table 16: In the UK, who are the 3 best asset managers at building private equity investments? 17
Table 17: Goldman Sachs private equity fund overview, as of 31/12/2006 18
Table 18: Sectors within SGAM private equity group 20
Table 17: Montagu sample investment portfolio, 2004-2006 21
Table 9: Which is your biggest customer group for the following products? 24
Table 10: In 3 years, which will be your biggest customer group for the following products? 26
Table 11: For the following investments, from which customer base will the most increase in demand come in 3 year's time? 28
Table 20: What do you think is the best way for the following alternative investments to be distributed to mass market investors? 29
Table 21: What do you think is the best way for the following alternative investments to be distributed to high net worth investors? 32
Table 22: What do you think is the best way for the following alternative investments to be distributed to institutional investors? 35


Figure 1: In your opinion, what is the most important reason why wealthy clients are demanding alternative investments? 10
Figure 2: Which is your biggest customer group for private equity products? 24
Figure 3: Which is your biggest customer group for venture capital products? 25
Figure 4: In 3 years, what will be your biggest customer group for private equity products? 27
Figure 5: In 3 years, what will be your biggest customer group for venture capital products? 28
Figure 6: What do you think is the best way for private equity products to be distributed to mass market investors? 30
Figure 7: What do you think is the best way for venture capital products to be distributed to mass market investors? 31
Figure 8: What do you think is the best way for private equity products to be distributed to high net worth investors? 33
Figure 9: What do you think is the best way for venture capital products to be distributed to high net worth investors? 34
Figure 10: What do you think is the best way for private equity products to be distributed to institutional investors? 36
Figure 11: What do you think is the best way for venture capital products to be distributed to institutional investors? 37

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