PwC report notes shift in Eurozone technology investment

A report issued today by PricewaterhouseCoopers (PwC) Global Technology Industry Group has confirmed a shift in investment strategy for investors in European technology companies.

'Money for Growth 2004 – The European Technology Investment Report 2004' found that buyouts represented almost 40% of overall volume of technology investment in 2003. PwC's report concluded that the downturn in private equity investment in Europe in 2003 had passed its low-point and that the level of deal activity in the technology industry being maintained.

Technology private equity investments in Europe rose by 2% to €5.4 billion. There were 4,811 investments made in the technology sectors - communications, internet, computer software and hardware, semiconductors, other electronics-related, medical instruments/devices and biotechnology. This was virtually unchanged from the 4,819 in 2002.

However, the report found that the number of investee companies was down 14% on 2002 at 3,325. Technology represented 46% of all private equity investments in Europe by number, down slightly on the 2002 figure.

PwC's Keith Arundale said: “2003 was the second best year ever for the European private equity industry as a whole in terms of investment activity. Technology investments also held up well with almost €5.5 billion invested, up slightly from 2002, but the focus is towards buyouts and a more cautious approach to investing in early stage technology deals.”

The single largest sector remained Computer Software with total investment of €951m or 18% of total technology investment, narrowly ahead of Communications Carriers at 17% (€899 million). Computer Software also led in terms of number of investments, at 28% ahead of Biotechnology at 14%.

The UK led the way in terms of European private equity investment in technology, with total investment almost doubling to €2.0 billion, up from €1.1 billion in 2002. France slipped to second place with €954 million and Italy at €495 million claimed third place. The UK also had the most deals, at 1,148, followed by France at 987 and Germany at 516.

The UK invested 42% at the venture capital stages compared to France’s 67%, and Germany’s and Italy’s 57%.

(SP)