European Alternatives Industry Hits €1.62 Trillion in Assets

The report finds that although the macroeconomic picture for Europe has been muted in the past 24 months, the alternatives industry in the region is moving from strength to strength. 2018 has seen record activity across most alternative asset classes, with Europe-based alternative asset fund managers holding €1.62tn in AUM as of the end of June 2018 – up almost €300bn in just three years.

The opportunities present in Europe are apparent to investors globally – almost half of the institutions with a preference for the region are now based in North America, with significant proportions coming from the Middle East and Asia.

Hedge funds remain the largest part of the European alternatives market (€608bn), but across the industry, AUM has declined in the past 12 months, leaving private equity poised to overtake as the largest asset class in the region (€559bn). 2018 marked a record year for private capital deal making, with transactions surpassing €374bn, while the record rate of fundraising seen in 2017 showed no signs of slowing.

“Europe’s alternative assets industry is in rude health, with assets under management surging even as the wider financial picture remains cool,” said Mark O’Hare, Chief Executive of Preqin. “Moreover, it is extremely diverse both in terms of asset class and the different regions and countries across the continent. With more than 6,300 fund managers and 3,000 investors active in Europe, it is more important than ever to shed light on the incredible array of opportunities present throughout the region. That is why we are pleased to partner with leading operators like Amundi to present the most in-depth analysis of trends across the industry ever compiled.”

Pedro Antonio Arias, Global Head of Real and Alternative Assets at Amundi commented: “The continued growth of the European alternatives industry demonstrates the vital role that insurance companies, pension funds and asset managers such as Amundi provide in funding the real economy, while Europe’s small and medium enterprises have never had such a diverse range of solutions when considering their capital structure. The benefits for our clients are obvious, with real assets in particular allowing pension funds and insurance companies to capture an illiquidity premium while still delivering superior and predictable returns with a diversified portfolio.”

Key Facts on Alternatives in Europe:

• Europe-based alternatives funds now hold €1.62tn in assets under management.
• The UK remains the largest market by far, with fund managers based in the country holding €948bn. 2018 saw the country match 2015 in activity levels, reversing a decline seen in the wake of the Brexit vote.
• Hedge funds are the largest asset class (€608bn), but assets fell by 9% in 2018 due to underperformance. Private equity, meanwhile, has grown by 8% in the first half of 2018 to reach €559bn.
• 2018 saw record deal values for private equity buyout, venture capital and infrastructure transactions in Europe. As a result, total private capital deals reached a record €375bn.
• There are 6,300 fund managers and 3,000 investors based in Europe that are active in alternative assets in 2019.
• 3,900 investors now target private equity investments in Europe. The largest proportion (48%) are based in North America.
• The largest proportions (80%) are targeting private equity and real estate investments, with 59% seeking hedge fund investments and minorities targeting real assets and private debt.