In just in the first half of 2021, fundraising by European private capital general partners reached 59% of the total for 2020, and the value of closed transactions reached 83%.
The most active sectors were venture capital, infrastructure, and private equity.
Median net rates of return in 2020 were 22% for 2018 vintage private equity and venture capital funds, and 14% to 19.4% for vintages 2011-2017.
Infrastructure and real assets led the growth. Europe-based infrastructure assets approached €250 billion by December, a 22% growth since 2015. Infrastructure dry powder focused on Europe now represents 43% of the global amount, according to the report.
European governments are pushing infrastructure investments to stimulate economic growth and help meet carbon-reduction targets, while their higher levels of public debt caused by the pandemic will increase demand for private capital, the report said.
Real estate investment, as measured by the number of deals, is tracking at a similar pace to 2020, when it was down substantially. While real estate overall was on a fundraising hiatus in 2020, demand for industrial real estate remains, the report said.
Hedge funds focused on Europe — after experiencing record outflows in the first quarter of 2020 — turned around in the second half with €32.2 billion in net inflows. "As Europe slowly comes out of its prolonged recession, hedge funds are best positioned to benefit from an expected increase in volatility in the market," the report said.
More than 80% of alternative assets under management in Europe are in ESG-committed funds, the report said, driven by investor commitment and the EU's Sustainable Finance Disclosure Regulation. "The SFDR regulation means that Europe is definitely leading the way in ESG," Mr. O'Hare said on the call.
Europe now accounts for 24% of the global alternative assets industry, according to the report, which found the U.K.'s long-standing position as the largest European market for alternative management slightly diminished.
Between 2010 and 2020, private capital assets managed out of Europe increased by 209%, compared to 177% for U.K.-based managers, whose share of European private capital AUM fell to 52% from 59% over that 10-year period. Growth in assets averaged 13% over the past three years, compared to 23% for French managers.
Still, U.K. private equity and venture capital assets under management are 4.6 times greater than in France, the second-largest market.