Private equity returns hit 11.8 pct in Europe on buyout frenzy-data

LONDON Thu May 15, 2014 11:22am EDT

LONDON May 15 (Reuters) - Private equity returns in Europe rose by 3.8 percent points to 11.8 percent overall in 2013, Thomson Reuters data showed on Thursday, as favourable debt markets, successful fundraisings and a growing appetite for deals boosted activity.

The figures show private equity investments have brought better returns than the FTSE 100 and the STOXX Europe 600 indexes of blue-chip stocks over the past 10 and 20 years, though public markets offer better returns over one, three and five years.

Pure buyout funds, as opposed to private equity classes such as infrastructure and real-estate funds, saw their returns jump even more, up 4.2 percentage points in 2013 to 13 percent, the Thomson Reuters data showed.

The figures are due in part to an upturn in multi-billion dollar buyouts, which have been increasing despite high valuations and intense competition, as private equity funds have raised billions from investors and need to deploy those funds.

Bain Capital for instance last month closed a $7.3 billion fundraising for its next flagship fund and is seeking to raise about 3 billion euros ($4.1 billion) to invest in Europe.

London-based Permira is also in the process of raising about 5 billion euros, while Cinven raised an equivalent amount last year.

Recent sizeable deals include the acquisition of payment provider Nets for $3.13 billion by a consortium formed by Advent International, ATP and Bain Capital.

The uptick in buyout activity is also moving to Europe's periphery, where relatively cheap investments in fast-growing and export-oriented companies based in Spain and Italy are back on the agenda, sponsors and leveraged bankers said.

U.S. investment firm KKR acquired Spain-based Cementos Balboa from Grupo Alfonso Gallardo earlier this month and is expected to refinance 500 million euros of debt held by the company, Madrid-based bankers said.

Venture capital firms have seen higher returns for investments of one and three-year time horizons than those with five-, 10- and 20-year horizons, the data also showed. ($1 = 0.7294 Euros) (Editing by David Holmes)