84% of private equity backers of UK ICT firms plan to make new
technology acquisitions in 2010
UK firms specialised in Information and Communication
Technologies (ICT) continue to attract private equity investors,
according to a report called 'Where is the Smart Money Going in
ICT?' by leading business and financial advisor Grant Thornton UK
LLP. 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 private equity 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.
For further information please contact:
Alexander Wessendorff, Grant Thornton press office, 020 7728
2048