SVCA quarterly report - quiet optimism

The Swedish Private Equity and Venture Capital Association has published its report for Q3 2004, which indicates that private equity and venture capital companies in Sweden still have a positive outlook for the coming business cycle. 81% of those who answered the survey believe that the business cycle will improve during the coming twelve-month period. That is a lower percentage than in the latest four surveys. 67% believe that there are a sufficient number of good ideas and projects to invest in on the market today. The report also looked specifically at how many private equity and venture capital companies had portfolio companies that are ready for exit. 63 of the companies surveyed cited that they have in their portfolio a total of 280 companies that are ready for a positive exit. This corresponds to 25% of the total number of investments in the investors' portfolios. On average the investors' have 3.9 portfolio companies that they believe are ready for a positive exit. On average, they have been owners of these companies for approximately four years. A mere 48 of the companies ready for exit are deemed eligible for an IPO, and of these 14 are owned by buyout houses, and 34 by venture capital firms. The total number of investments for the 84 companies that responded to this survey was 160, compared with 191 in Q2. This corresponds to a total invested amount of Skr 3.588bn (Skr 3.759bn in Q2). 59% (63% in Q2) of the respondents made at least one investment during this quarter. Within the growth stages (seed, start-up and expansion) 134 (160 in Q2) investments were made, representing a total amount invested of Skr 640m (Skr 1.232bn in Q2). Of these 31 were initial investments, with a value of Skr 187m. Within the buyout stage 12 (14 in Q2) investments were registered with a value of Skr 2.885bn (Skr2.460bn in Q2), corresponding to 80% of the quarter's invested capital. Most capital was invested in the consumer, retail and computers/IT and services sectors. The largest number of investments were made in the sectors computers/IT, software and Biotechnology. 77% (84% in Q2) of the investments were made in Sweden. In terms of exits, 34 (54 in Q2) divestments were made, corresponding to a value of Skr 2.449bn (Skr 5.785bn in Q2). Of these divestments, 13 were made by buyout companies, at a value of Skr 2.185bn, representing 89% of the quarter's total divested amount. The largest number of divestments made were trade sales, but the largest amounts divested were to financial institutions or other private equity companies. The largest divested sums were in trade sales to foreign buyers, representing a value of Skr 2.042bn. The greater part of the divested capital came from sales of foreign companies, not Swedish. The respondents to the survey had a total of Skr 212bn in funds under management and an invested capital of Skr 108bn. The respondents had a total of 1,117 investments in their portfolios. Five companies raised a total of Skr 24.823bn in funds during Q3 2004, of which almost all was raised by buyout funds.

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