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2008-04-25 2007 record year for Dutch private equity investors Heavy investment in start-ups The Dutch private equity market enjoyed a top year in 2007. Investments by Dutch private equity firms increased by more than 70% to 4.0 billion. Dutch private equity firms were responsible for the largest buy-outs in 2007. In a buy-out, the management team of a company acquires the company or part of it together with a private equity firm. A total of 1.4 billion was invested in the five largest buy-outs. Total investments in buy-outs came in at 2.5 billion. At the same time, the number of investments in start-ups and small companies also increased rapidly. A total of 47% of all investments were made in start-ups, which attracted a total of 137 million.
Andrι Olijslager, chairman of the NVP, says about 2008: 2007 was a record year, but 2008 will certainly not be a bad year either. The biggest deals are being hit by the liquidity shortage, but Dutch private equity firms focus primarily on medium-sized companies and start-ups, for which there is still ready financing. This means that spin-offs, company successions and start-ups will continue to attract financing.
2007 record year for investment in private equity from Dutch firms
The Dutch private equity market enjoyed a top year in 2007. Investments by Dutch private equity firms increased by more than 70% to 4.0 billion. Approximately 75% of this amount was invested in Dutch companies.
The average investment in each company increased to 9.9 million, from more than 7 million. This underlines the undiminished focus of Dutch private equity firms on medium-sized and small participations.
Dutch and foreign private equity firms together invested a total of 5.4 billion in private equity in Dutch companies.
These figures are evidenced in a study among private equity firms with head offices in the Netherlands, conducted by PricewaterhouseCoopers at the request of the Nederlandse Vereniging van Participatiemaatschappijen (NVP). More information on this study is available in the report Ondernemend Vermogen. De Nederlandse private equity-markt in 2007 (Enterprising capital. The Dutch private equity market in 2007).
Dutch firms accounted for largest buy-outs
Dutch private equity firms were responsible for the largest buy-outs in 2007. A total of 1.4 billion was invested in the five largest buy-outs.
The annual number of buy-outs by Dutch firms has for a number of years been steady at around 100 per annum. The average size of these transactions continues to increase. In 2007, the investment per transaction averaged 27 million.
Medium-sized buyouts accounted for the majority of Dutch private equity investments. The number of large acquisitions also increased. A total of 2.5 billion was invested in buy-outs in 2007. This is an increase of 50% compared with 2006.
Considerable rise in private equity investments in start-ups
At the same time, the number of investments in start-ups and small companies also increased rapidly: 47% of total investments were in start-ups, which attracted total investment of 137 million. This figure was 30% of the total in the previous year. The number of investments smaller than 5 million was 20% higher.
Other news
The capital available for private equity investments continued to increase. The total capital under management by Dutch private equity firms now stands at 22.5 billion.
Dutch and foreign private equity firms together invested 5.4 billion in Dutch companies, compared with 4.0 billion in 2005 and a very high one-off amount of 8.4 billion in 2006.
Expansion financing (investments to fund further growth) fell by 13% in 2007 to 465 million, although it should be noted that the amount in expansion financing in 2006 was exceptionally high. Compared with 2005, this form of investment increased by more than 20%. Private equity funding is attractive for very rapid growth.
The year 2007 was good for selling off participations. Participation sales by Dutch firms continued to increase, to more than 1.9 billion. Almost 50% of this total was effected through a so-called secondary buy-out or, in other words, sale to another private equity firm.
Dutch private equity firms attracted a total of 2.9 billion in new funds in 2007. Private equity has now become a permanent part of the investment portfolio of many banks, pension funds and insurance companies.
The average duration of participations is five years.
The full report contains a summary in English
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