Kevin Dowd August 03, 2016
IK Investment Partners has held a first close on €1.3 billion toward a €1.6 billion target for its eighth buyout fund, according to a Financial News report. If the London-based middle-market investor reaches that target, IK VIII would exceed the size of its predecessor vehicle (which closed on €1.4 billion in 2013) and approach the roughly €1.7 billion the firm raised for its sixth flagship fund in 2007, just before the financial crisis.
IK, which invests across Western Europe and Scandinavia, is far from the only European-focused PE firm to raise a hefty chunk of capital during 2016. Cinven set the standard with its €7 billion sixth fund the firm closed in late June. Also in June, Apax Partners held a $7.9 billion first close on its ninth buyout fund, reportedly toward a $9 billion hard cap. In all, five Europe-based PE investors have already closed a fund on €1 billion or more during the first seven months of 2016, according to the PitchBook Platform.
And while those specific numbers are impressive, when it comes to billion-euro funds in Europe as a whole, 2016 is lagging behind 2015, when 13 funds closed on €1 billion or more, according to the PitchBook Platform. The average PE fund closed on €716 million last year (€891 million for buyout-specific funds), compared to €612 million so far in 2016 (€664 million for buyout funds).
To broaden the focus and include funds of all sizes, European PE firms have closed 46 investment vehicles so far this year, with the committed capital in those funds totaling €27.53 billion. That puts 2016 on pace to just about equal the 75 funds closed during 2015 and to come in slightly behind the €51.56 billion that firms raised last year.
While the amount of capital raised is trending roughly upward since 2009, the year immediately after the crisis, the quantity of funds raised has plummeted: European PE firms closed at least 110 vehicles every year between 2009 and 2013. That’s resulted in an inconsistent but clear rise in the average fund size, as you can see below.