Visuel Ipem Summer Letter 2

Dear IPEM friends,

Now that air travel has tentatively resumed in Europe, I am currently enjoying a few sunny days in Greece. And in the spirit of happy holidays and positive thinking, I wanted to share some good news in this IPEM Summer Letter, after what has, undeniably, been a dark few months.

Don’t get me wrong. There is no room here for complacency. The virus is proving irrepressible, the number of cases keep growing in Europe along with the resumption of quarantines between European countries, and many parts of the world remain in its grip. But equally, collective optimism is vital at times like these and I recommend that you consult, as often as the sensationalist headlines of your preferred daily journal.

A record vintage for IPEM

For our own part, we have some cheering news to share. IPEM is heading for a record vintage. At the close of July, we already had 381 companies; 153 exhibitors; 141 GPs and 145 LPs confirmed for the February 2021 edition. More than 80 percent of our exhibiting space has been booked – a level typically not reached until November.

I have my amazing team to thank for this success, of course. But I think it also reflects the eagerness of the IPEM community to reconnect after weeks of remote working and a complete moratorium on live events. The private equity industry has been turned on its head – along with the rest of the world. There will be much to talk about when we meet next year.

Indeed, these numbers are not only good news for IPEM. They demonstrate European private equity’s innate resilience and a clear determination to lead the recovery. Yes, deal activity plunged in the second quarter of the year, but the industry appears to have recovered its spirits.

IPEM’s series of digital meetups this summer, which brought together more than 140 GPs and LPs to discuss the challenges and opportunities emerging from the pandemic, revealed an overwhelming belief that private equity will be a big winner from this crisis – continuing to deliver outsized returns for LPs, and offering unrivalled stewardship for businesses in troubled times.

As ever, the asset class is demonstrating agility, creativity and, above all, real grit. You just need to look at KKR’s deal-making frenzy or record fundraisings for CVC, Vitruvian and HgCapital, all in the midst of a global lockdown, to see that this is not an industry that is easily cowed. Recent buyout activity data from Unquote even suggests that some of the worst hit regions in Southern Europe have revitalised this July.

Europe bounces back

Furthermore, despite dismal GDP figures for Q2, the latest indications are that Europe’s recovery could be stronger and faster than initially expected. In fact, Goldman Sachs’ economists forecast that the eurozone will be the fastest growing geography in 2021. The last time that happened was two centuries ago!

The EU’s historic €1.8€tn recovery plan will prove pivotal, not only providing a monumental financial boost, but accelerating European integration and ensuring future stability. With the US demonstrably struggling in its fight against Covid, and much of Asia embroiled in geopolitical unrest, European private equity is emerging as a safe haven. Around half of this year’s non US activity has come from European shores, whilst European funds also topped eFront’s latest annual Global Private Equity Performance Series.

Of course, much is being made about the scarcity of distressed investment. But is that really such a bad thing? Surely it is good news for our economy that corporate collapses have remained few and far between. Instead, the focus is resoundingly on growth, which is an important shift for the industry. Minority stakes represented 23 percent of all deals in the first half of 2020, up from 11 percent last year, according to an EY study.

Just look at some of the most recent deals completed by industry behemoths such as Blackstone and Carlyle –; Oatly; Magiclab; Memsource. Meanwhile, European venture capital is booming, with record deal values – unbelievably – in the first half of this year.

Private equity is returning to its roots, funding the expansion of the economy and the future of our world.

Making an impact

In one final piece of good news, it appears that impact investing has become the new standard for private equity in the face of international economic and humanitarian devastation. I have long been calling for a “reboot” of the industry. It appears that that is now finally underway.

There are 215 impact funds currently in the market, according to Preqin – many of which are being raised by mainstream managers, not only impact natives. And the latest GIIN report points to the steady growth of impact allocations – up by 25 percent since 2015 for European LPs.

A group of (European) private equity firms have also joined forces to create the first international network, Initiative Climat International, to analyse, manage and mitigate climate-related financial risk.

The news agenda is predictably dominated by scaremongering headlines and these are, undoubtedly, scary times. But, scratch beneath the surface, and there is plenty to be positive about, as well. Indeed, with so much good news to report, and as much as I am enjoying my break, I am also eagerly awaiting my return to work. Vivement la rentrée!