Our markets

Europe is our principal geographic market, with the majority of our assets and investment activity being conducted in this region. Our business strategy is focused on harnessing our strong regional presence and deep sector experience.

2005 was a record year for the market, with the level of fundraising being twice that of the previous year and total investment increasing by 39%. A number of substantial buyout deals in the UK and across continental Europe were a major contributor to this record level of activity.

European buyout investment increased by 44%, driven by increased M&A and secondary market activity, the return of trade buyers and improved IPO markets.

Activity levels in the growth capital market in 2005 were similar to 2004, although this market presents an excellent opportunity as the economy continues to restructure, sectors consolidate and companies seek to expand internationally.

The venture market is showing increased levels of investment and capital market activity.

The year also saw divestments in Europe at record highs as favourable exit conditions were prevalent. The return of trade buyers, improved IPO markets, secondary sales and increased M&A activity were all strong sources of exits.

This region comprises a number of stand-alone markets and each market has very different characteristics. Asian markets are in the growth phase and forecast macroeconomic growth rates make this a particularly attractive region for private equity investment.

At the present time, Asia is predominantly a growth capital market for 3i. However, we expect to develop Buyout and Venture Capital teams in the longer term.

Currently, India and China represent the highest potential private equity markets, although we will seek opportunities to develop our business in Japan, South Korea, and South East Asia.

In 2005 the Asian private equity industry saw a very significant increase in incoming funds compared to 2004, with India leading the way. Investment increased 29%, with growth capital returning to prominence. Japan accounted for the largest proportion of capital returned to investors, followed by India and China. IPOs were the most preferred exit route, making up 50% of divestments, although trade sales remained the dominant exit route in Japan.