At long last, the global private equity and venture capital
industry seems to be turning a corner. For the first time in
two years, the number of private equity deals completed and the
total amount of funds invested are expected to increase. In the
first six months of 2003, $57 billion in private equity has
been invested globally, versus $102 billion for all of 2002,
according to a recent survey by PricewaterhouseCoopers
And although the numbers are still far off their boom market
highs, investor confidence also seems to be rebounding. Private
equity buyouts increased by more than 75% worldwide in 2002 and
have continued to rise in 2003, accounting for $42 billion, or
almost three-quarters of all private equity investment, in the
first six months of the year.
At the venture and early-stage investment level, valuations
are beginning to move higher, reflecting increased optimism
among investors about the viability of reaching a positive exit
event, such as an acquisition or even an initial public
In the US, for example, the world's largest private equity
market, investment in start-up and seed-stage companies jumped
50% from the second to the third quarter. Deal activity is also
up - more than $33 billion of private equity deals were
announced in the first half of 2003.
The European market is also showing fresh signs of life.
Overall private equity fundraising in Europe increased by 10%
in the second quarter of 2003 from the first quarter,
principally due to a strong rise in funds raised by independent
vehicles. Larger private equity players are investing in a
regional rebound as well. Credit Suisse First Boston's $5.4
billion buyout fund, for example, recently upped its allocation
for European deals from a quarter of the fund's total assets to
more than a third.
In Asia, the $14.6 billion of private equity invested in
2003 has already outstripped last year's total, and is
estimated to reach a record $17.5 billion by the end of the
year. China, in particular, continues to attract interest, as
do fast-developing markets such as India, South Korea and
But the market's recovery remains in its nascent stages.
Corporate information technology spending, a driver of
high-tech investment, has not yet recovered, dampening venture
capital funding. The private equity industry also faces looming
regulatory hurdles, particularly on issues such as how firms
value their private equity holdings and what information they
should be required to disclose to their investors.
To private equity investors, any signs of a recovery,
however muted, must seem long overdue. To help keep track of
developments and their impact, IFLR is publishing The 2004
Guide to Private Equity and Venture Capital.
Here, specialists worldwide provide detailed analysis of the
investment and regulatory trends in their region. We hope you
find the guide a useful tool and one you will refer to