84% of private equity backers of UK ICT firms plan to make new
technology acquisitions in 2010 - study
UK firms specialised in Information and Communication
Technologies (ICT) continue to attract private equity investors,
according to a Grant Thornton report called 'Where is the Smart
Money Going in ICT?'. The survey of the 40 leading private equity
investors backing UK ICT firms recorded 84% as saying that their
firm planned to undertake an acquisition in the UK ICT sector over
the next 12 months.
"Our survey indicates that there will be stiff
competition for quality ICT assets in the coming months. 72% of
existing private equity backers of ICT expect an overall increase
in investments in the sector and an increasing number of private
equity houses are looking to move into the ICT space," commented
Wendy Hart, Corporate Finance Advisory Partner at Grant
Thornton.
90% of respondents believe the most likely
exit strategy in the coming months will be a sale to a trade
player.
"In terms of exits for PE houses, the
sterling/dollar exchange rate and the relative speed with which the
US appears to be coming out of recession suggests that there will
be continued appetite from the US for UK acquisitions," said Wendy
Hart.
89% of the private equity houses surveyed
identified the cloud computing and Software as a Service (SaaS)
space as the most attractive investment location within the ICT
sector in the coming 12 months.
"Our survey shows that cloud computing and
Software as a Service provide the most attractive investment
opportunities within ICT. These services are benefiting from cost
cutting measures where businesses shift from acquiring software to
acquiring licenses for applications as a service on demand," added
Niki Dixon, Head of Technology at Grant Thornton.
39% of respondents also cited the green IT
niche as an attractive investment location for private equity
buyers this year.
"I don't think the opportunities provided by
the green IT niche have been fully recognised. As computing
capacity and the use of mobile devices increases, we are likely to
see increasing government support for emerging technologies such as
optical computing, the development of solid state drive
technologies and a broad range of solutions to improve operational
efficiency," argued Niki Dixon.
"Our study also shows that the average size of
ICT investments has dropped in recent years. In the UK, 86% of
private equity transactions with an announced deal value have
fallen in the £5m-£100m range, compared to 67% in 2007. 95% of
respondents expect most future deals to be worth less than £100m,"
concluded Grant Thornton's Wendy Hart.
ENDS
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