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Early-stage deals bounce back in Q4

Volume and value of European early-stage investments

unquote.com
30 January 2013

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After a slow summer, early-stage investments took off in Q4, according to the latest unquote” Private Equity Barometer, published in association with Arle Capital Partners.

Completing the set of strong investment performance in the three months to December 2012, the early-stage segment also recorded impressive growth following a stark slowdown in Q3. Activity was up by more than 60% as the number of deals rose from 23 to 37, although comparisons with past quarters show that the problems affecting European venture capital clearly continue to weigh heavily on the sector. The volume total was lower than any other quarter over the sample period apart from Q3, and the figure is around half of the averages witnessed between Q1 and Q3 2011. The 2012 annual total of 150 deals is 41% and 43% behind 2011 and 2010 respectively.

As was witnessed for buyouts and growth capital deals, the rise in value was stronger, with the fourth quarter aggregate investment of €181m more than double the total witnessed in Q3. Average deal value rose to €5m in Q4, higher than both preceding quarters and a figure that has only twice been bested since 2010. However, in value terms the early-stage segment remains in the doldrums, having recorded three consecutive sub-€200m totals for the first time since 1999. On an annual basis the comparisons are again stark, with the €765m recorded for 2012 as a whole representing a drop of 39% and 36% respectively compared to 2011 and 2010.

The German-speaking DACH region was the most active in early-stage investment terms in Q4 2012, with 12 deals being recorded, 11 of which occurred in Germany. This included the second largest deal with a disclosed value for the quarter – the €34m investment in Switzerland-based Biocartis by a syndicate led by PMV. The UK saw just six deals completed over the three months, though this did include the largest deal of the quarter – the €82m invested by US giant JC Flowers as start-up capital for mortgage investment business Castle Trust.

Click here to read the full Q4 2012 barometer