Press Release March 9, 2011
Today the SVCA presents the 2010 statistics for the private equity industry. The figures show a record level for buyout investments, while it is still really tough for venture capital, where the invested capital once again decreases.
Swedish buyout investments at record levels
In 2010, buyout investments in Swedish portfolio companies totaled 23.7 bn SEK. This is the highest investment level ever registered for the Swedish buyout segment, and more than twice the size of the 2009 investment level.
- This year's record level is a clear indication that the buyout segment is back on track and that the decline during the 2009 financial turmoil is now over. The trend shows that we are now moving towards larger deals in the buyout. Many buyout funds have to sell their holdings, while funds that were raised before the crisis now are in investment mode. This, combined with a growing interest from industrial companies, makes prices going up, says Marie Reinius, CEO of the SVCA.
No signs of recovery for venture
While the buyout segment has revitalized, activity in the venture segment is still weak. In fact venture investment activity fell for the third year in a row and we must go all the way back to 2005 to find a year with a lower supply of venture capital to Swedish companies. Venture capital to Swedish companies dropped 11 percent from 2009 to 2010.
- In 2009 we saw a halving of investment compared to 2008 and now venture declines further. If not for the increasing inflow of foreign venture capital, the drop in activity would have been even bigger, says Marie Reinius.
Fundraisings still subdued
About 7.5 bn SEK in funds was raised by the industry in 2010, of which only 0.3 bn SEK was raised by venture funds. Although the industry doubled the amounts raised in 2009, the level of fundraising is still lower than what is necessary to keep the industry fueled for further activity. For the buyout segment, the low level of fundraising does not raise serious concerns as capital available for investment is still solid.
- The situation for venture segment is now critical. Gradually, venture funds are running out of capital for new investments in early stage companies. Norway and Denmark have understood the problem and act with force through fund of fund solutions. Once again, I ask the Swedish politicians to review a similar solution, says Marie Reinius.