Private Equity: Episode 18 – The History of PE: The 2010s (2010-2015)

The sector particularly suffered starting from 2007 due to the subprime crisis and the European sovereign debt crisis. Fund raising remained stagnant compared to previous years, as did investments. The unfavorable market conditions limited exit options for the funds, which were forced to keep their investments in their portfolios for longer periods. Investment returns also took a hit.

2012 marked the lowest point of this period of retrenchment, with declines across all fronts compared to 2011: fundraising, investments, and exits.

The drop in interest rates in 2013, combined with the recovery of the stock markets and available liquidity, helped restart the engine, leading to a stellar year in 2014. This year marked the beginning of a decade that would prove very favorable for investments, particularly in Venture Capital, for which the available amounts were substantial. It was also during this period that major unicorn projects started emerging in Europe. In the U.S., these startups began to appear right after the crisis, with companies like Airbnb and Uber, for example, launching in 2009.

Private equity was not left behind, with exits valued at $456 billion and investments in buy-outs reaching $431 billion. The flood of available capital significantly boosted the markets, leading to a 200% increase in Europe and a 120% growth in the Asia-Pacific region, contributing to an exceptional rise in performance, with gains increasing by 40%.

Asset valuations rose significantly due to the intense competition among players to capture the best opportunities. This dramatic recovery laid the foundation for even stronger growth during the period from 2015 to 2020, which would prove especially beneficial to Venture Capital.