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The EVCA Yearbook is the most comprehensive source for European private equity and venture capital activity

data, collected from more than 1,200 private equity firms. The data includes annual figures on i) the levels of private equity and venture capital investment into European companies, including a breakdown of the amount invested by non -European investment managers. ii) The amount of equity divested at cost by private equity and venture capital firms, from European companies, including the method of divestment, such as an equity market sale, a trade sale or write-off. iii) The amount of funds raised by European private equity and venture capital managers, including a break-down of the overall sources of funds, by type of institutional investor. Private Equity Investment refers to the financing of unquoted companies with growth potential. Private Equity comprises all stages of financing: seed, start up, expansion, replacement capital and buyouts. Venture capital is limited to the growth stages of a company, i.e. seed, start -up and expansion capital.

Annual Survey 2009 14 June 2010


These figures represent annual investment activity undertaken by private equity and venture capital management companies located in Europe. Statistics by country of private equity firm Industry statistics Investments by European private equity firms reached 23bn in 2009, representing a 57% drop compared to 2008. y The number of companies financed decreased slightly (-17%) to 5,046 companies in 2009. This indicates smaller average sizes of investment per company, decreasing from 9m in 2008 to 5m in 2009. y Buyouts represented 53% of the total amount invested, although the number of companies financed through a buyout represented just 12% of all companies financed. Companies in the venture stages, mainly early-stage, attracted most of the investments. y While the amount invested in later-stage halved, early-stage investment fell by 24% compared to 2008.

Small buyouts accounted for 78% of the number of compan ies financed through a buyout, whereas it only added up to 2.3bn or 19% of the total amount invested in buyouts (average investment per company: 4.8m).

Mid-market deals attracted the highest amount with 6.3bn (50% of the total) in 127 companies (average investment per company: 49m).

Large buyouts amounted to 2.1bn (17% of the total buyout amount) in 9 companies (average investment per company: 234m).

Mega buyouts attracted 1.8bn for 4 companies in 2009, indicating an average investment size per company of 438m.

The top three industry sectors invested in were life sciences with 3.6bn (15%), followed by communications with 3bn (13%) and consumer goods & retail with 3bn (13%).

Statistics by country of portfolio company Market statistics Investments into European companies reached 23bn in 2009, of which 98% came from European private equity firms. y The top five countries in 2009 were: the United Kingdom (19.6%), France (13.1%) Germany (11.4%), Italy (6.6%) and Belgium (4.8%). y Buyout and growth deals added up to 83% of the total investment value, venture capital deals accounting for the remainder. y Small buyouts accounted for 78% of the number of companies financed through a buyout, whereas it only added up to 2.4bn or 20% of the total amount invested in buyouts (average investment per company: 5m). y Mid-market deals attracted the highest amount wi th 6bn (51% of the total) in 121 companies (average investment per company: 50m). y Large buyouts amounted to 2.1bn (18% of the total buyout amount) in 9 companies (average investment per company: 234m). y Mega buyouts amounted to 1.4bn invested in 3 co mpanies in 2009, indicating an average investment size per company of 472m. y The sectoral distribution of venture capital and buyout investments differs strongly. y Venture capital was mainly driven by investments in the life sciences sector (28% of the total by amount, and 21% by number of companies). y By amount, consumer goods & retail was the most invested sector in the buyout & growth segment, 15% of the total, while business & industrial products came first by number of companies with 19% of the total.

Charts

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Annual European private equity investment European private equity investment 2005-2009 - percentage of total amount invested by stage

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Sectoral distribution of European investments 2009 Sectoral distribution of venture capital versus buyout investments Private equity investment as a percentage of GDP

Source
These figures are extracted from the EVCA Annual Survey of Pan -European Private Equity & Venture Capital Activity 2009 contained within the EVCA Yearbook 2010, which also includes an editorial section giving accounts of the industry today and provid ing a valuable illustration to the statistics. The divestment or exit of a portfolio company allows the private equity house to liquidate their position and realise a gain from their investment.

Annual Survey 2009 14 June 2010


These figures represent annual divestment activity undertaken by private equity and venture capital management companies located in Europe. Statistics by country of private equity firm Industry statistics UK players divested the highest amount with 4.7bn (42% of the European total). French private equity houses came second with 1.4bn (13% of the European total) divested, followed by German private equity houses with 1.3bn (12% of the European total). y In 2009, private equity firms based in Europe exited 1,846 companies, with a total amount divested at cost of 11.1bn (a 21% drop compared to 2008). y Write-offs accounted for 36% of the total amount divested at cost, and 22% of the companies exited. y Write-offs excluded, trade sales were the largest exit route by amount (47%) in 2009 at 3.3bn, down from 5.3bn in 2008, with 376 companies divested in 2009 compared to 539 in 2008. y Secondaries formed the second largest category by amount (write-offs excluded), down by 74% to 1bn in 2009 (from 3.9bn in 2008).

Statistics by country of portfolio company Market statistics Divestments at cost from UK private-equity-backed companies amounted to 2.6bn or 24% of the European total. Exits from German and French portfolio companies amounted to 2.1bn (19% of the European total) each. y Similar to industry statistics, write-offs accounted for 36% of the total amount divested at cost, and 22% of the companies exited. y In the venture segment, divestments by trade sales accounted for 31% of the total amount divested at cost, while write-offs made up 21% of the total. In the buyout & growth segment, trade sales ranked second by amount at cost (32% of the total), but came first by number of companies exited (156 or 22% of the total). y By amount, most divestments came from consumer goods & retail and business & industrial products (21% and 16% of the total respectively). y By number of companies divested, business & industrial products came first, followed by computer & consumer electronics (20% and 15% respectively).

Charts
y y y Annual European private equty divestment European divestment at cost by exit route in 2009 Sectoral divestments by segment

Source
These figures are extracted from the EVCA Annual Survey of Pan -European Private Equity & Venture Capital Activity 2009 contained within the EVCA Yearbook 2010, which also includes an editorial section giving accounts of the industry t oday and providing a valuable illustration to the statistics.

Key Facts and Figures


y Private equity and venture capital provides investment opportunities to institutional and professional investors.

The vast majority of these private equity and venture capital investors, called limited partners, are banks, pension funds and insurance companies. They do not manage the funds that they have invested in, and do not intervene at the level of the investee company. However, they regularly assess the quality of the investments made on their behalf.

Of the 79bn funds raised in 2007, 60bn (76.0%) was allocated to buyouts and 10.3bn (13.1%) to venture and growth capital. y Private equity and venture capital provides more than finance to investee companies Not all companies are suitable for private equity and venture capital financing. The focus is on investing in high -growth potential companies and: Enabling a growth strategy Professionalizing a company

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Offering on-going support to the management on strategic and policy matters Representing a broader perspective on corporate development Management expertise and sounding board for management ideas Networking opportunities/connections Therefore, the private equity and venture capital investor will seek out investment opportunities and companies where: A balanced and complementary management team have industry and previous entrepreneurial experience and ability to grow the company

The market size and growth potential of the investment can be accurately calculated

The internal processes of the company demonstrate good or strong potential around strategic and financial planning, corporate governance and reporting. A more detailed summary of the typical characteristics of the Private Equity industry can be found in a recent European Commission Expert Group Report on Private Equity , June 2006. Private equity, venture capital and growth and employment

Investments by European private equity and venture capital firms amounted to 73.8bn in 2007, and approximately 5,200 European compani es received private equity investments. About 85% of these companies have fewer than 500 employees.

Studies show that between 2000 and 2004 European private equity and venture capital financed companies created 1 million new jobs, which translates to a compound annual growth rate of 5.4% per year (eight times the EU25 total employment rate of 0.7%). Between 1997 and 2004, the average employment growth in buyout-financed companies was 2.4%, compared to 30.5% for venture-backed companies. y Private equity and Venture Capital: Long-Term Investors

PE/VC fund investors have a long-term commitment horizon of generally ten years, which stems from contractual agreements which bind PE/VC funds to their investors.

On this basis, PE/VC funds should not be considered a s short-term investors,

which implies holding periods of less than one year, as their average holding periods in investee companies is four years. More concretely, PE/VC firms also distinguish themselves from short-term investors by the way they manage their investments. Short-term investors take advantage of market trends but do not influence the way the underlying companies operate, unlike private equity and venture capital. y Industry Regulation

The private equity industry is regulated on a national basis in most EU member states.

Private equity houses deal almost exclusively with sophisticated, professional investors. These investors are able to understand and accept the risks and rewards of investing in the asset class. This is largely reflected in the type and level of regulation across Europe.

In addition, although there is no harmonised framework for private equity at the European Union level, a number of EU legislative measures in place indirectly affect the industry, such as MiFID, UCITS, the Pension Funds Directive, and the Capital Requirements Directive. y Industry behaviours

EVCA believes that the highest professional standards are crucial to a stable, long term relationship with institutional investors and regulators. They are also vital to increasing overall transparency and trust in the asset class. For nearly three decades, EVCA has worked with the industry to create the most advanced professional standards of any alternative asset class anywhere in the world.

The European private equity industry has already enacted IFRS and US GAAP compatible valuation and reporting guidelines, management principles for private equity houses and OECD-inspired guidelines for the corporate governance of portfolio companies. For further information about EVCA Public and Regulatory Affairs, please contact the Public and Regulatory Affairs team at publicaffairs@evca.eu or 32 (0)2 715 00 20.