Arthur D. Little and Invest Europe Survey Shows Record High Private Equity Investment in First Half of 2021 and Increased Focus on ESG Issues

Arthur D. Little (ADL) today released ‘The insight: how Europe’s private equity industry is anchoring long-term investors’, a new report based on a survey conducted in partnership with Invest Europe, the association that represents Europe’s private equity, venture capital and infrastructure sectors and their investors. The report shows that, despite the ongoing impact of COVID-19 on business and society, private equity investment levels reached a new record high in the first half of 2021. This is a dramatic bounce-back compared to the same period last year, with fund managers and investors evidently facing the future with greater confidence.

The report also highlights that far from adopting a return to ‘business as usual’ approach, private equity is now concentrating on new priorities, with the greatest shift being an increased focus on environmental, social and governance (ESG) issues. For example, 95.5% of general partners (GPs) said they intended to increase their focus on ESG over the coming year, and 86% are planning to concentrate more on diversity and inclusion. In addition, 45.9% of investors expecting to increase allocations to environmental/social impact funds over the coming 12 months.

While cost reduction was the top prioritized initiative for GPs last year, it dropped to sixth place in this year’s survey. Instead, the leading priority was digitalization as managers invest in technology to add value. In particular, the pandemic has spurred a mass roll-out of new technology solutions at portfolio companies to enable flexible ways of working for staff and build more innovative platforms for improved collaboration.

As the general outlook improves, the survey indicates a healthy future for private equity. More than 50% of fund managers see stronger investment opportunities in the coming year, and almost 60% of investors expect increased allocations to private equity over the coming three years.

Jonas Fagerlund, co-author of the report and Lead Partner in ADL’s Global Private Equity practice, comments: “The message that comes through loud and clear through this report and the survey it is based on is that European private equity is adaptable, resilient and innovative, and looking forward to the future. The industry has come through a challenging period for the global economy with higher-than-ever levels of investment, robust fundraising, and an improving outlook for divestments.”

Guillaume Picq, co-author of the report and Partner in ADL’s Private Equity practice, adds, “While GPs are looking to deploy new value creation strategies, more investors want to commit to funds that deliver tangible benefits for people and the planet alongside investment returns. ESG is a trend that Europe is leading, and that the European private equity industry is committed to supporting.”

To download a copy of the report please visit: www.adl.com/PrivateEquityAnchor

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Cate Bonthuys
Catalyst Comms
+44 7746 546773
cate@catalystcomms.co.uk