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Business year 2011
11
According to the ECB, access to finance remained a more
pressing problem for eurozone SMEs than for larger firms.
Towards the end of the year, SMEs reported a decreased
availability of bank loans and expected this to continue.
The situation of core markets in which EIF is active is as
follows:
Equity
There are indications that the moderate pick-up of private
equity in Europe which was recorded in 2010 continued
in 2011. However, this recent market improvement should
be seen in the context of the extreme economic uncer-
tainty of 2009, which had driven activity to historic lows.
On balance, the industry is still far from the pre-crisis levels
of 2005-07.
Moreover, the recent improvements mainly ref lect a
partial rebound of the buyout sector which had strongly
suffered during the economic slowdown. In contrast, the
environment remained difficult at the venture end of the
market where activities largely continued to follow their
downward trend in 2011. According to preliminary fig-
ures, venture investment further decreased to EUR 3.3bn
while venture exits fell to EUR 1.8bn. In contrast, venture
fundraising increased to EUR 4.2bn. However, this was
mainly driven by public or semi-public investors. Venture
performance has remained weak, apart from those funds
in the top quartile, emphasising the importance of careful
selection by investors.
The fact that much of the institutional fundraising activity
has been driven by public or semi-public Limited Partners
proves that government agencies played their role and
supported the market in a counter-cyclical way. In ad-
dition, some of the gap left by the fall in venture capital
investment has been filled by increased business angel
activity; their proximity to the market has been beneficial
during this difficult period.
The 2012 perspectives remain uncertain as the blurred
outlook for the general economic and financial environ-
ment will also strain prospects for private equity and ven-
ture capital. However, a crisis is also a source of oppor-
tunities since, as valuations decrease, acquisitions can be
completed at more favourable prices.
Structured finance/securitisation
During the crisis, European securitisation issuance re-
mained at high levels, but these volumes were almost
exclusively driven by the eligibility of Asset Backed Se-
curities (ABS) as collateral for ECB liquidity operations.
Given the dominance of the securitisation of residential
mor tgages, SME securitisation remained a relatively
European Venture Capital activity by amount – in EUR bn
2007
2008
2009
2010
2011
Funds raised
Investments
Divestments
10
8
6
4
2
0
Source: EVCA/PEREP_Analytics