Svca presentation eng 081205

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Svca presentation eng 081205

  1. 1. 1. The Swedish Private Equity Market
  2. 2. 2. About SVCA
  3. 3. 3. Business Angels Venture Capitalists Buyout firms Business Angels …supporting the interests of….
  4. 4. 1. SVCA’s tasks: Professional development Transfer of knowledge Research and statistics Ethical guidelines & valuations principles Contacts with politicians and policy makers Information Conferences and network
  5. 5. 5. Swedish private equity follows European standard….  Ethical guidelines based on EVCA’s Code of Conduct  International Private Equity & Venture Capital valuation guidelines (AFIC, BVCA, EVCA)
  6. 6. 6. Working towards improved conditions for entrepreneurs and investors = new jobs and growth A main task:
  7. 7. 7. What is private equity?
  8. 8. 8. Definition of private equity Private Equity …equity investments in unlisted companies with an active ownership Business Angels … investments by private individuals in companies without a family connection… Venture Capital …equity investments in seed, start-up- or expansion phases Buyout …investments in more mature development phases. Financing through equity and debt Public Equity …listed companies
  9. 9. 9. Cash flow Time Different development stages – different investors Business Angels & Venture Buyout Expansion Maturity Decline Seed & Start-up
  10. 10. 10. A significant industry… Capital under management (EUR bn) Capital invested (EUR bn) Number of PE companies Number of portfolio companies Buyout 31.9 18.4 30 250 Venture Capital 5.8 3.5 90 800 Total 37.7 21.9 120 1050 Source: SVCA member data …..where the portfolio companies combined turnover constitutes more than 10% of the Swedish GDP
  11. 11. 11. Swedish Private Equity in an international perspective EVCA Yearbook 2008 Private equity investments in % of GDP 2007 By country of portfolio company
  12. 12. 12. Swedish Private Equity in an international perspective Private equity investments in % of GDP 2007 By country of private equity firm EVCA Yearbook 2008
  13. 13. 13. Swedish PE funds financed by international capital Source: SVCA Q1-Q4 2007 Capital origin BuyoutVenture
  14. 14. 14. Pension funds and fund of funds dominates Private equity financing sources Source: SVCA Q1-Q4 2007 BuyoutVenture
  15. 15. 15. Stage distribution Number of investments 2007Amount invested 2007 Source: SVCA Q1-Q4 2007
  16. 16. 16. Where do Swedish private equity funds invest? BuyoutVenture Number of investments 2007 Source: SVCA Q1-Q4 2007
  17. 17. 17. The Private Equity value chain
  18. 18. 18. Different roles in the value chain… Public financing Famliy, friends, fools Capital needs Company development Business Angels Venture Capital Buyout Capital IPO
  19. 19. 19. Business angel and Venture Capital focus…  Innovative & unique business idea  Strong entrepreneurial team with industry experience  Growth potential & scalability  Targeting international growth markets  Potential for high profitability  Clear exit possibilities
  20. 20. 20. …but Business Angels ... ... also have different investment criteria compared to venture capitalists…  Can invest smaller amounts  Investment decisions more based on intuition and confidence in the entrepreneur – ”gut feeling”  Faster investment decisions – business angels are normally invests their own money  Often prioritizes local entrepreneurs  Except return, e.g. contribution to society, fun, stimulating and support to the region can be important reasons for business angels to invest
  21. 21. 21. Venture Capital investments …a few Swedish examples…
  22. 22. 22. Venture Capital firms – how they operate Appoint/restructure management team Appoint professional Board of Directors Continuous ”sounding board” Active board work Open doors to potential customers and partners Expansion Financing Reporting systems Investment process 3-6 months Value creation 3-5 years Exit process 4-6 months
  23. 23. 23. Buyout focus  Strong market position  Competent & committed management team  Profit improvement potential  Strong cash flow  Independent of business cycles
  24. 24. 24. Buyout firms – how do they operate? Board work Focus on operational improvements Focus on core business Add-on acquisitions Divestments Corporate governance Industrial restructurings Expansion Financing Reporting systems Investment process 4-6 month Value creation 3-5 years Exit process 4-6 months
  25. 25. 25. Buyout investments …a few Swedish examples
  26. 26. 26. Trends
  27. 27. European investments at €73.8 Billion (Equity only from private equity funds) 8,5 14,4 15,3 12,1 17,9 20,7 26,6 34,4 53,9 61,6 4,1 6,0 10,7 19,7 12,2 9,8 8,4 10,3 12,7 17,3 12,1 5,6 0 10 20 30 40 50 60 70 80 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 € billion Venture Capital Buyout Source: PEREP_Analytics for 2007 figures Venture Capital: Seed, Start-up, Expansion, Rescue/Turnaround Buyout: Buyout, Replacement capital
  28. 28. The bigger picture – All private equity activity flows in Europe (industry statistics) Source: PEREP_Analytics for 2007; Thomson Reuters/PwC for previous years; € billion
  29. 29. 29. Source: SVCAs quarterly surveys 2004-2008 0 50 100 150 200 250 300 0 5000 10000 15000 20000 25000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2004 2005 2006 2007 2008 Total invested amound Number of investments Investments 2001-2008, MSEK
  30. 30. 30. Investments 2001-2008, MSEK Source: SVCA quarterly surveys 2001-2008 6713 6514 5688 12789 35988 39560 43 290 29 820 5042 3072 4000 3814 4399 6395 5552 5196 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 2001 2002 2003 2004 2005 2006 2007 2008 Q1- Q3 Buyout* Venture The total invested amount within venture and buyout constitutes 94% and 69% respectively compared to the full year 2007
  31. 31. 31. VC focus on start-up and expansion Early-stage investments 2001-2008, amount (MSEK) Source: SVCA quarterly surveys 2001-2008 247 93 81 190 114 108 204 64 911 630 1515 1205 1638 1 759 1 784 959 3884 2349 2404 2419 2647 4 528 3 564 4183 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2001 2002 2003 2004 2005 2006 2007 2008 Q1-Q3 Seed Start-up Expansion Tydlig förskjutning mot expansionsinvesteringar under de tre första kvartalen 2008.
  32. 32. Investments in Swedish portfolio companies 2005-2008 32. 12405 16233 22075 17006 2090 4089 3976 4618 0 5000 10000 15000 20000 25000 2005 2006 2007 2008 Q1-Q3 Buyout* Venture Positive trend for invested amount into Swedish companies for the three first quarters 2008 and the amount invested in Swedish venture companies has already reached all time high.
  33. 33. 33. Medtech , biotech and IT attract most investments Source: SVCA Q1- Q4 2007 Number of investments
  34. 34. 34. Largest investments within healthcare and service Invested amount, MEUR Source: SVCA Q1- Q4 2007
  35. 35. 35. Investments in Cleantech Cleantech accounted for 9.1 % of all venture investments into Swedish companies during 2007. Total invested amount and number of investments since Q1 2006 40 142 24 63 26 92 85 155 205 70 284 6 8 5 9 12 17 11 21 5 14 16 0 5 10 15 20 25 0 50 100 150 200 250 300 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2007 2008 MSEK Number of investments
  36. 36. 36. Exits
  37. 37. 37. Exit alternatives IPO Industrial trade sale Financial sale Write-offBuyback of entrepreneur
  38. 38. 38. Divestments 2001-2007 Received amounts Source: SVCA quarterly reports 2001-2007
  39. 39. 39. Källa: SVCA kvartalsrapporter Q1-Q4 2007 Divestments 2007 Number of divestments BuyoutVenture
  40. 40. 40. Belopp Vinstmultipel 1 Venture 755 2,0 Buyout 9 385 5,1 High multiples for exits 2007 1. Encompasses 93% of divested amount Source: SVCA Q1-Q4 2007
  41. 41. 41. High multiples for exits 2006 1. Encompasses 88% of divested amount Source: SVCA Q1-Q4 2006 Amount (MEUR) Multiple 1 Venture 782 2,4 Buyout 3 511 2,6
  42. 42. 42. Source: ”Rapporten Utvecklingen för riskkapitalbolagens portföljbolag 2001-2006” Swedish private equity financed companies grow faster!
  43. 43. 43. The industry’s messages Private equity is an industry that...  … generates good returns for investors  … creates new jobs  … generates growth and new companies  … develops business environment  … attracts international capital  … is fun, stimulating and attracts highly qualified people  … develops entrepreneurship in Sweden! … and contributes with capital, active ownership and long-term value creation

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