Private Equity Investment On Record Pace

October 17, 2000 ( - Global private equity and venture capital investment rose at a 65% pace last year, to $136 billion, and looks to be on track to beat that in 2000, according to a new study.

According to Global Private Equity 2000, the $99 billion of North American private equity investments topped the global list and was 73% of the total. The US accounted for 98% of North American investments, according to the study by by 3i, a global venture capital company, and PricewaterhouseCoopers.

Global Going

In the US, private equity soared 77% from 1998 to 1999, while Western Europe grew nearly as fast, rising 65% during the same period.

The remaining investment came from the following regions:

  • Asia Pacific – $6 billion
  • Middle-East and Africa – $1.4 billion
  • Central and South America – $700 million
  • Central and Eastern Europe – $227 million

Over the past five years, private equity and venture capital investments have shown an average annual growth rate of 36% on a global basis, with Sweden (201%) and Switzerland (119%) topping the list.

In the US, buyouts accounted for approximately $62 billion of the $98 billion of private equit, or 63 percent of the total. The rest of the dollars, approximately $36 billion, up 150 percent from $14 billion in 1998, were traditional venture capital investments in emerging, private companies in the form of cash-for-equity.

The report also noted that the $36.7 billion of venture capital investments in the US during the first six months of this year already exceed the $35.6 billion raised in all of 1999.

“The stock market may be uncertain about the (US) economy, but venture capitalists aren’t,” said Tracy Lefteroff, global managing partner, private equity and venture capital, at PWC. “They’re betting on the future. Barring catastrophic occurrences, we expect venture capital investing in the USA to double 1999’s figure in 2000.”

Supply In Demand

The study cited substantial funds available for investment as a result of:

  • significant overhang of funds raised over investment in previous years
  • the increase in fundraising activity in 2000
  • an increase in corporate venturing activity
  • the emergence of seed capital incubators