European alternatives funds have surpassed €2 trillion ($3.26 trillion) in assets under management (AUM) for the first time, with the UK commanding over half of all assets in Europe and a growing influence of other countries such as Germany and France.
According to Amundi’s ‘2020 Alternative Assets in Europe report’, the UK was the largest market, with €1,180 billion in AUM, followed by France (€242 billion); since the beginning of the year, but Germany overtook the UK as the most active private capital market by total deal value for the first time.
The study said COVID-19 dampened activity across the region, but the industry remained robust and vibrant, and there were indications that activity may rebound as restrictions are lifted, as alternative assets were seen as a portfolio diversifier and volatility dampener, and overall as a source of appealing risk-adjusted returns in a world of persistently low interest rates and volatile equities.
“Despite the disruption, therefore, 2020 has been another active year for the alternatives industry in Europe. Mega acquisitions such as the €17 billion sale of Thyssenkrupp Elevator AG have spurred total buyout deal values across the region to more than €42b in H1, while venture capital investment approached €13 billion,” the study said.
At the same time, real estate and infrastructure saw a more significant decline in deal making, with infrastructure deals falling from €170 billion in 2018 to €40 billion in the first half of 2020 while the logistical challenges brought on by the COVID-19 pandemic made due diligence and deal origination much more challenging.
As far as the regions were concerned, France remained the largest alternative assets market in mainland Europe, and in H1 2020 and saw some bright spots, while Germany was one of Europe’s most active private capital markets – it saw €34 billion of deals recorded in H1 2020, eclipsing even the UK’s €31 billion.
“Europe faces significant challenges in restructuring, reforming, and growing its economies,” said Mark O’Hare, Preqin chief executive.
“The good news is that alternative assets can play a valuable role in helping to unlock the region’s potential. Europe has a dynamic and successful industry, fully equipped and ready to meet the changing needs of all stakeholders.
“Efforts like this report aim to help shed light on developments across these key sectors, and we are delighted and honoured to work in partnership with industry leaders like Amundi to produce such a comprehensive and in-depth study.”
