2009-04-24

Focus private equity firms on small and medium-sized companies

Investments in start-ups increases

The total amount invested in start-ups increased by 66% to
several large start-up investments in the energy sector, the
"Enterprising Capital" shows. The increase in start-up financing,
investments, which began in 2006, persisted in 2008. Of the invested in, 41%were start-ups. However, 58% of the private equity investments went to innovative biotechnology and health care, communications, computer and the environment. The total sum in capital under management firms is now € 23.3 billion. "Despite the sharp drop in investments in the Dutch private economic crisis is not affecting investments in start-ups, as companies mainly on their long term perspectives. Moreover, not involve funding from banks. We also expect investments 2009," says André Olijslager, chairman of the NVP.

Focus on small and medium-sized companies
Dutch venture capital firms continue to focus on small and medium-sized participations. As in previous years, almost 80% of the total number of investments was less than € 5 million in 2008. There were virtually no buy-outs with a private equity investment of more than € 50 million in 2008. First of all, the economic recession sparked considerable uncertainty about the future of companies, which made it difficult for sellers and buyers to reach agreement on the acquisition price. Secondly, the financing from banks linked to these private equity investments was extremely scarce. Dutch venture capital firms invested a total of € 1.8 billion in private equity in 2008. Domestic and foreign private equity firms together invested € 2.7 billion in private equity in Dutch companies, compared with € 5.4 billion in 2007. Foreign parties continue to show an interest in medium-sized and large takeovers in the Netherlands, but they too face more difficulties in arranging bank funding for their investments. "Despite the difficulty in obtaining financing from banks in 2009, there will be ample opportunities for private equity firms. There is sufficient capital available for investments and more own capital will be invested in existing and new portfolio companies. Private equity firms can now prove their added value by helping their companies through the hard times," says André Olijslager. Fund acquisition sound Dutch private equity firms attracted € 1.8 billion in new funds in 2008. Private equity has become a fixed part of the investment portfolio of many banks and pension funds. In addition, we have seen a sharp increase in the number of private investors investing their capital in private equity firms. This group is obviously opting for alternative types of investments over traditional ones, partly due to market conditions.

The Dutch private equity market in 2008
(pdf file)