Record breaking year for private equity deals in 2000 - but what's the outlook for 2001?

Record breaking year for private equity deals in 2000 - but what's the outlook for 2001? Stockholm 2001-09-10 · 3i/PwC Global Private Equity report shows 30% surge in investment world-wide to new high of US $177 billion in 2000. · 2001 - somewhat weaker but still likely to be one of the biggest investing years in private equity history. · Sweden - ninth largest market in the world and strongest growth during the past few years. A new record total of US $177 billion of global private equity/venture capital was invested in 2000, up 30 per cent on the previous year. Also the amount of new funds raised soared by 67 per cent to a new record of US $225 billion, according to the second annual Global Private Equity research report by 3i, a leading international venture capital company, and PricewaterhouseCoopers, the world's largest professional services organisation. The Global Private Equity 2001 report is divided into six regions - North America, Western Europe, Asia Pacific, Middle East/Africa, South America, and Central Europe. Overall, the balance of investment activity shifted last year with buy-outs falling as a proportion of total investment and early-stage investments showing continued growth. Amongst the top 20 countries high growth was evident in Sweden, and in a six-year perspective Sweden presents the highest growth of all, 188 per cent, followed by Switzerland and Finland. GLOBAL TREND Alan MacKay, Managing Director of 3i, responsible for Nordic Europe and for Central Europe addresses the question whether the growth in investment levels and funds raised will continue: "all the evidence suggests that the substantial surplus of funds available for investment (in Europe US $43.7 billion of new funds were raised in 2000), will continue to provide excellent opportunities for companies seeking private equity and venture capital. In the Swedish market, the ninth largest in the world for investments in private equity, the amount of funds raised (US $3.4 billion) also exceeded the invested amount (US $2.1 billion). NORTH AMERICA RETAINS LEAD North America's share of global investment fell in 2000, but the amount remained almost four times that recorded in the whole of Western Europe WESTERN EUROPE Alan MacKay observers that: "the numbers show Western Europe experienced a 20 per cent increase to US $32 billion in private equity and venture capital investments in 2000 - this is an excellent performance and good news for the small and mid-size company sector across all of Europe. EUROPE - TECHNOLOGY GAINS in 2000 The technology sector gained around the world last year and claimed the major share of all investments. At US $113 billion, investments in technology-related companies represented 64 per cent of the total compared with 36 per cent in 1999. By contrast management buy-outs declined from US $79 billion to US $58 billion, equating to a fall in their share of total investments from 58 per cent to 33 per cent. Commenting on European Technology, Kent-Åke Jönsson who leads the technology activities of 3i in Sweden says "the dot-com bubble inflated the figures for technology activity in 1999 and 2000 but the underlying trend shows continuing growth in technology ventures". EUROPE - BUY-OUT BOOST for 2001 Investment in European buy-outs has enjoyed a strong start to the current year, although with fewer but larger deals. The "public to private" deals, which created some of the larger buy-outs in 2000, has continued in 2001. Commenting on Western European buy-outs, Gustav Bard who leads the buy- out activities of 3i Sweden says: "There has been a huge leap in funds raised that has pushed the boundaries of the private equity market. 2001 is likely to be a record year for buy-out investments. CENTRAL EUROPE MAKING STEADY PROGRESS Countries in Central Europe are expected to benefit from the continuing integration with Western Europe. Additionally, economic growth, coupled with a range of incentives by governments, is poised to lift investment by encouraging foreign investors and private equity houses to put down roots in the region. ASIA PACIFIC PROSPECTS BOLSTERED by CHINA There was only a nominal 1 per cent increase to US $9.1 billion in investment in the Asia Pacific region last year. Buy-outs in the region, though, claimed a higher 29 per cent share of total investments, up from 21 per cent in 1999. Early stage investments fell from 27 per cent to less than 20 per cent of the total, whilst expansion capital registered a 2 percentage point gain to 37 per cent. The growth in funds in 2001 is expected to slow as investors in private equity and venture capital turn more cautious. Jane Crawford, Managing Director, 3i Asia Pacific, says: "There has been a reduction of foreign capital coming into the region; a number of venture capitalists have retreated back to the US." China is the potential big growth area in the region. The country's prospects have been significantly bolstered by the preparation for membership of the World Trade Organisation, and through increases in investments by multi-national companies. High growth is also anticipated for Japan where the poor economic conditions has led to an emergence of foreign private equity investors focused on the buy-out market. REST OF THE WORLD Elsewhere in the world, there was a reversal in 1999's downward trend of investments in South Africa and in South America. Investment in the Middle East and Africa fell in line with the downward global trend in the second half of last year, notably amongst technology investments. The report is available on www.3i.com and www.pwcmoneytree.com For further information please contact: Kenth-Åke Jönsson, Managing Director, 3i Nordic plc (UK), Sweden branch, advisor to 3i Group plc +46 8 506 101 31, +46 70 587 8978 Gustav Bard, Managing Director, 3i Nordic plc (UK), Sweden branch, advisor to 3i Group plc +46 8 506 101 51, +46 70 511 6427 Robert Barnden, Partner, Öhrlings PricerwaterhouseCoopers +46 8 555 330 16 +46 70 929 3016 NOTES TO EDITORS 3i 3i brings capital, knowledge and connections to the creation and development of businesses around the world. It invests in a wide range of opportunities from start-ups to buy-outs and buy-ins, focusing on businesses with high growth potential and strong management. 3i invests in businesses across three continents through local investment teams in Europe, Asia Pacific and the USA. To date, 3i has invested over £13.5 billion (including co-investment funds). In the 12 months to 31st March 2001, an average of £7.8 million (including co- investment funds) was invested each working day. 3i's current portfolio is valued at almost £6 billion. PricewaterhouseCoopers PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organisation. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, PricewaterhouseCoopers help clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to the member firms of the world-wide PricewaterhouseCoopers organisation ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/09/10/20010910BIT00280/bit0001.doc http://www.waymaker.net/bitonline/2001/09/10/20010910BIT00280/bit0002.pdf