rory earley director investment and sme finance
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1
Rory Earley
Director Investment and SME Finance
Small Business Service
2
Global Private Equity
Trends in Investment and Fund Raising
PricewaterhouseCoopers and 3i
3
The Global ViewKey Points• At least $155 billion of private equity and venture capital invested globally in
2003 – increase of 43% on 2002 level of $109 billion• Equivalent to 0.48% of worlds GDP (based on 2002 GDP from World Bank Development
Indicators - $32,300 billion)
• Almost $82 billion of funds were raised globally in 2003 – down 12% from $93 billion in 2002
4
Key Points• Technology investments totalled at least
$42 billion in 2003 – 27% of total investment – down 11% on 2002
• Around $19 billion was invested in expansion stages in 2003 – down 27% on 2002 levels
• Approx $118 billion invested globally in buyouts in 2003 – increase of 83% on 2002
5
Investment and Fund Raising Trends
93
165214
110 109155
133154
262
177
93 82
050
100150200
250300
1998 1999 2000 2001 2002 2003
Year
US$
bInvestments Funds Raised
6
• Investment – compound average growth rate 10.81%
• Funds Raised – compound average growth rate –9.20%
Source – The PricewaterhouseCoopers/Venture Economics/National Venture Capital Association Money Tree Survey/Buyout Newsletter/ Private Equity Analyst/ CVCA Annual Statistical Review/EVCA Yearbook/ AVCJ Guide to Venture Capital in Asia/ Venture Equity Latin America/ SAVCA Private Equity Survey/ IVC Online
7
High Technology Investment Trends
93
165
214
110 109
155
3264
121
5940 42
0
50
100
150
200
250
1998 1999 2000 2001 2002 2003
Year
US$
bInvestments High Technology
8
• Investments: Compound average growth rate 10.81%
• High Technology: Compound average growth rate 5.93%
Source: The PricewaterhouseCoopers/ Venture Economics/ National Venture Capital Association Money Tree Survey/ Buyout Newsletter/ Private Equity Analyst/ CVCA Annual Statistical Review/ EVCA Yearbook/ AVCJ Guide to Venture Capital in Asia
9
Expansion Investment Trends
93
165
214
110 109
155
2146
87
39 26 190
50
100
150
200
250
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Expansion
10
• Investments: Compound average growth rate 10.81%
• Expansion: compound average growth rate –1.54%
Source: The PricewaterhouseCoopers/ Venture Economics/ National Venture Capital Association Money Tree Survey/ Private Equity Analyst/ CVCA Annual Statistical Review/ EVCA Yearbook/ AVCJ Guide to Venture Capital in Asia
11
Buyout Investment Trends
93
165
214
110 109
155
5583
6240
65
118
0
50
100
150
200
250
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Buyouts
12
• Investments: Compound average growth rate 10.81%
• Buyouts: Compound average growth rate 16.00%
Source: The PricewaterhouseCoopers/ Venture Economics/ National Venture Capital Associate Money Tree Survey/ Buyout Newsletter/ Private Equity Analyst/ CVCA Annual Statistical Review/ EVCA Yearbook/ AVCJ Guide to Venture Capital in Asia
13
North AmericaKey Points• $108.2 billion of private equity and venture capital
was invested in North America in 2003 – an increase of 67% on 2002 which had seen a decrease of 3% on 2001
• This is equivalent to 0.97% of North American GDP (based on 2002 GDP for USA and Canada from World Bank Development Indicators - £11,116bn)
• £45.3 billion funds were raised in North America in 2003 – down by 21% on 2002 levels
14
Key Points• At least $27.5 billion was invested in technology
investments in North America in 2003 – up 6% on 2002 levels which were down 33% on 2001 levels
• Approx $10.4 billion was invested in expansion stages in 2003 – a decrease of 24% on 2002 which saw a decrease of 41% on 2001
• At least $89.0 billion was invested in buyouts in 2003 – up 114% from $41.6 billion in 2002 which was up 78% in 2001
15
Investment and Fund Raising Trends
63.5
120.1152
66.4 64.6
108.295.9 103.6
180.5
117.9
57.1 45.322.7
50.4
93.5
40.326.1 27.5
0
50
100
150
200
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Funds Raised High Technology
16
• Investments: Compound average growth rate 11.25%
• High Technology: Compound average growth rate 3.96%
• Funds Raised: Compound average growth rate –13.94%
Source: The PricewaterhouseCoopers/ Venture Economics/ National Venture Capital Associate Money Tree Survey/ Buyout Newsletter/ Private Equity Analyst/ CVCA Annual Statistical Review
17
Investment Trends by Stage
63.5
120.1
152
66.4 64.6
108.2
11.331.7
62.7
2413.6 10.4
4163.5
41.523.3
41.6
89
020406080
100120140160
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Expansion Buyout
18
• Investments: Compound average growth rate 11.25%
• Expansion: Compound average growth rate –1.80%
• Buyout: Compound average growth rate 16.75%
Source: The PricewaterhouseCoopers/ Venture Economics/ National Venture Capital Associate Money Tree Survey/ Buyout Newsletter/ Private Equity Analyst/ CVCA Annual Statistical Review
19
% Stage of Investments
27 3565
8211
12
6
4
4136
221019 16 7 42 1 1
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003
Tota
l Inv
este
d (B
illio
ns) %
Buy out Other Late Stage ExpansionEarly Stage Seed/Start-up
20
• Data for North America has been created by adding Money Tree/Buyout Newsletter and CVCA data
Source: The PricewaterhouseCoopers/ Venture Economics/ National Venture Capital Associate Money Tree Survey/ Buyout Newsletter/ Private Equity Analyst/ CVCA Annual Statistical Review
21
EuropeKey Points• An estimated $27.1 billion of private equity and venture
capital was invested in Europe in 2003 – a 16% decrease on 2002
• This is equivalent to 0.28% of European GDP (based on 2002 GDP for Europe as calculated using the World Bank Development Indicators - $9,568 billion)
• Approx $32.5 billion funs were raised in Europe in 2003 – up 1% on 2002 levels
22
Key Points• Approx $5.7 billion was invested in expansion
stages in 2003 – decrease of 29% on 2002 which saw a decrease of 9% in 2001
• The buy-out market totalled £18.1 billion in 2003 – down 9% on 2002 which had seen an increase of 65% on 2001
• Technology investments totalled $7billion in 2003 – double 2002 levels ?
23
Investment and Fund Raising Trends
16.9
29.4
41
28.532.3
27.123.829.8
56.346.9
32.4 32.5
4.5 8.313.3
8.3 7.3 70
10
20
30
40
50
60
1998 1999 2000 2001 2002 2003
Year
US$
bInvestments Funds Raised High Technology
24
• Investments: Compound average growth rate 9.82%
• Funds Raised: Compound average growth rate 6.37%
(Source: EVCA Yearbook/ EVCA Preliminary Data
25
Investment Trends by Stage
16.9
29.4
41
28.532.3
27.1
5.18.7
15.29.4 8 5.78.7
15.5 16.912.8
19.8 18.1
0
10
20
30
40
50
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Expansion Buy out
26
• Investments: Compound average growth rate 9.82%
• Expansion: Compound average growth rate 2.27%
• Buy out: Compound average growth rate 15.87%
Source: EVCA Yearbook/EVCA Preliminary Data
27
% stage of InvestmentsSource: EVCA Preliminary Data
42 4562 67
3 5
35
37 3325
2117 15 10 62 2 1 1
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003
Tota
l Inv
este
d (B
illio
ns) % Buy Out Replacement Capital Expansion Start-up Seed
28
Asia PacificKey Points• A predicted $17.5 billion of private equity and
venture capital was invested in the Asia Pacific region in 2003 – a 91% increase on 2002
• Equivalent to 0.23% of Asian GDP (based on 2002 GDP calculated using the World Bank Development Database - $7,479 billion)
• Only $3.3 billion of funds raised are predicted for 2003 – up 11% on 2002 levels
29
Key Points• Technology investments in Asia Pacific
totalled an estimated $7.3 billion in 2003 – up 100% on 2002 levels
• Approx $2.6 billion invested in expansion stages in 2003 – decrease of 28% on 2002
• The buy-out market totalled a record $8.9 billion in 2003 – up 454% on 2002
30
Investment and Fund Raising Trends
4.9
9.112.3 11.2
9.1
17.5
7.4
16.617.9
9.9
3 3.31.8
45.6 5.2
3.7
7.3
0
5
10
15
20
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Funds Raised High Technology
31
• Investments: Compound average growth rate 28.91%
• High Technology: compound average growth rate 33.17%
• Funds Raised: Compound average growth rate –14.87%
Source: AVCJ Guide to Venture Capital in Asia/ AVCJ estimates
32
Investment Trends by Stage
4.9
9.112.3 11.2
9.1
17.5
2.44.1
64.6 3.7 2.6
0.4 0.8 1 2 1.6
8.9
0
5
10
15
20
1998 1999 2000 2001 2002 2003
Year
US$
b
Investments Expansion Buy out
33
• Investments: Compound average growth rate 28.91%
• Expansion: Compound average growth rate 1.73%
• Buy out: Compound average growth rate 86.72%
Source: AVCJ Guide to Venture Capital in Asia/ AVCJ estimates
34
% Stage of Investments Source: AVCJ Guide to Venture Capital in Asia/ AVCJ estimates
51
626
152
0%
20%
40%
60%
80%
100%
2003tota
l Inv
este
d (b
illio
ns) %
Buy out OtherTurnarond/restructuring ExpansionStart-up/early stage
35
Data SourcesNorth America• The PricewaterhouseCoopers/ Venture Economics/
National Venture Capital Association MoneyTree Survey www.pwcmoneytree.com
• Buyouts, a Venture Economics publication www.ventureeconomics.com
• The Private Equity Analyst, Asset Alternatives inc, Wellesley Massachusetts 781-304-1400 www.assetnews.com
36
• Canadian Venture Capital Association (CVCA) Annual Statistical Review, Macdonald and associates Ltd www.cvca.ca
Europe• European Private Equity and Venture Capital Association
(EVC) Survey, PricewaterhouseCoopers and Thomson Venture Economics www.evca.com
Asia Pacific• Asian Venture Capital Journal (AVCJ) Guide to Venture
Capital in Asia and estimates from the AVCJ for 2002 www.asiafn.com
37
Central/South America• Venture Equity Latin America 2003 Year-End Report
www.ve-la.comMiddle East and Africa• The Kesselman and Kesselman PricewaterhouseCoopers
MoneyTree Survey, Israel www.pwcmoneytree.com• Israel Venture Capital Research Centre Annual Survey
www.ivc-online.com• KMPG and South African Venture Capital Association
(AVCA) Private Equity Survey www.savca.co.za
38
Summary
• Maturing but still very dynamic industry• Cyclicality will continue to be a problem for
funders of private equity• Technology investing has unique attributes• Future looking bright but challenging ?
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