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European technology investment shifts from venture capital to buy-outs, survey finds

Investment in European technology buy-outs increased by 36 per cent in 2003 to E2.1bn, according to a new report produced by PricewaterhouseCoopers' Global Technology Industry Group. As a result, the proportion of technology private equity investment going into buy-outs rose from 29 per cent in 2002 to 39 per cent in 2003.

'2003 was the second best year ever for the European private equity industry as a whole in terms of investment activity,' said Keith Arundale, head of European venture capital in PricewaterhouseCoopers' Global Technology Industry Group. 'Technology investments also held up well with almost E5.5bn invested, up slightly from 2002, but the focus is towards buy-outs and a more cautious approach to investing in early-stage technology deals.'

Computer software remained the single largest sector, with E951m invested, or 18 per cent of total technology investment, narrowly ahead of communications carriers at 17 per cent. Computer software also lead in terms of the number of investments taking place with 28 per cent of the total, followed by biotechnology at 14 per cent.

The UK led the way in terms of European private equity investment in technology, with total investment almost doubling to E2bn, up from E1.1bn in 2002. France, which topped the list in 2002, slipped to second place with E954m, down from E1.2bn. Italy with E495m claimed third place ahead of Germany at E414m.

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