PRINT THIS PAGE 2007 European venture capital-backed liquidity statistics16/01/2008. Source: Dow Jones VentureSource.
European IPO activity slows in 2007, while the median amount raised at IPO is the highest in six years. M&As dip too and the median price paid for European companies is also at a six-year high, according to Dow Jones VentureSource. Thirty-eight venture-backed European companies completed initial public offerings (IPOs) in 2007, raising €893.6 million, according to today’s European Liquidity Report from Dow Jones VentureSource. This is down 49% from 2006, which saw €1.74 billion raised through 89 venture-backed IPOs, and is a sharp contrast to the United States’ robust IPO market.
However, the report shows that the markets continue to see great value in European IPO companies, as the median amount raised at IPO approached €15.8 million in 2007, a six-year high. Likewise, the median pre-valuation for these companies reached €59.2 million, the most since 2000.
“In a reversal of fortunes, after two years of healthy interest from the public exchanges, European venture-backed companies saw the IPO market pull back in 2007,” said Jessica Canning, director of global research for Dow Jones VentureSource. “While this year’s IPO total is a significant drop, it’s still head and shoulders above the anemic markets we saw in 2002 and 2003. Investors can find solace in the fact that, despite fewer public offerings, the median amount raised by venture-backed companies at IPO is at the highest level since 2001.”
According to the report, the median time between initial equity financing and IPO now stands at a record 6.9 years. Even so, venture capitalists are not pumping a great deal more money into these companies, as the median amount of venture capital raised prior to IPO reached €7.8 million in 2007, up 4% over last year but nowhere near the record of €13.3 million.
For the first time on record, venture-backed health care companies accounted for the greatest number of IPOs in Europe, as 18 of these companies raised €484.3 million through public offerings. Fourteen information technology companies raised €215.5 million via IPO. By region, 12 of the IPO companies in 2007 were based in France, five in Sweden, four in Germany, four in the United Kingdom and three in Norway.
The largest IPO of the year belonged to energy exploration company ElectroMagnetic GeoServices of Trondheim, Norway, which raised €94.9 million in its March offering.
In other exit transactions, the report found that there were 136 merger-and-acquisition (M&A) transactions for European venture-backed companies in 2007, down from 218 completed in 2006 and the lowest annual total since 2000. By industry, 100 European IT companies completed M&A transactions in 2007, while 18 health care companies and 13 business, consumer and retail companies were sold.
“In 2007, we saw a slowdown in the number of M&As for European venture-backed companies, but this isn’t to say that venture capitalists aren’t realizing substantial returns from these exits,” said Ms. Canning. “In fact, the overall median amount paid for a European venture-backed company in 2007 reached €23 million, up 31% over last year and the highest total since the tech boom.”
The report found the median amount paid for a European technology company in 2007 was nearly €30 million, up 62% over 2006, and the median paid for a health care company jumped 51% to €22.5 million.
Even so, it took more time and capital for venture capitalists to navigate portfolio companies to an M&A in 2007. According to the data, the median amount raised by a venture-backed company prior to M&A stands at a record €6.7 million. The median amount of time from initial equity financing to M&A also set a record in 2007 at just over 6.6 years.
By geography, 32 of the M&A companies were based in the United Kingdom, 26 in France, and 12 each in Germany, Finland and Sweden. The largest venture-backed M&A of the year was the € 396.6 million acquisition of data management company IXEurope of West Drayton, United Kingdom, by Equinix.
The liquidity figures included in this release are based on aggregate findings of VentureSource’s proprietary European research. This data was collected by surveying professional venture capital firms, through in-depth interviews with company CEOs and CFOs, and from secondary sources. These venture capital statistics are for equity investments into early-stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.
Copyright © 2008, Dow Jones VentureSource.
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