High-tech investors optimistic despite fears of global recession
A new survey finds that despite fears of a global recession, investors will make more and bigger investments in tech, media and telecoms in 2008. The survey from Cobalt, a technology, media and telecoms (TMT) corporate finance specialist, predicts optimistic times ahead but investors will have to work harder to see returns; the hottest TMT sector for investment is digital media.
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The annual survey of more than 100 investors managing investments with a collective value of over £40 billion looked at the views and opinions of the TMT investment community and the opportunities and predictions they see for the coming year.
The overall results of the survey paint a positive market picture for 2008 despite the threat of a global recession. Investors are positive about 2008 and are likely to invest more and bigger amounts in the coming year. Of those surveyed, 86 percent expect to be investing similar or greater amounts in 2008. Furthermore an overwhelming majority of 95 percent say their investment sizes will be similar or greater than in 2007. Additionally, 26 percent are anticipating growth in their TMT teams whilst 72 percent say they will remain the same.
Despite the positive outlook, there has been a shift in exit expectations with investors saying they won’t get an easy ride this year. Both venture capital and private equity investors will have to work harder in 2008 in order to achieve successful exits. Ninety percent of respondents said they’ll be implementing measures to counter the negative macro shifts and credit crunch. In addition:
- 39 percent are planning to exit investments later than anticipated
- 13 percent are changing their exit strategies from IPO to a trade sale
- 10 percent will refinance current investments
A very real concern for investors is the prospect of recession with 86 percent seeing this as a threat to business in 2008.
The digital media sector is generating the greatest interest with 82 percent of those surveyed stating that as one of their top five sectors to watch in 2008. The other top four sectors identified are:
- Mobile software (62 percent)
- Cleantech (60 percent)
- Software (52 percent)
- Integration services (41 percent)
The survey has also demonstrated the differing perspectives of private equity and venture capital.
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Private Equity |
Venture Capital |
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57% say their number of exits will be lower in 2008 than 2007 |
18% say their number of exits will be lower in 2008 than 2007 |
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11% anticipate that they will have a higher number of exits in 2008 compared to 2007 |
33% anticipate that they will have a higher number of exits in 2008 compared to 2007 |
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70% see availability of debt as a threat to their investment activity in 2008 |
23% see availability of debt as a threat to their investment activity in 2008 |
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3% say changes to capital gains tax would affect their investment strategy |
22% say changes to capital gains tax would affect their investment strategy |
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63% anticipate a lack of new opportunities in 2008 |
50% anticipate a lack of new opportunities in 2008 |
Interestingly the proposed changes to capital gains tax has had little impact on the investment community, with over 80 percent stating no change in investment appetite or investment structures since the proposed changes.
Paddy MccGwire, founding partner at Cobalt, said, “These findings are very encouraging and reinforce what we are finding which is that M&A activity is continuing, albeit more cautiously. The private equity industry has considerable amounts of money to put to work and hence their appetite for increased investment activity. We are still seeing many entrepreneurs looking for a sale or MBO and so the deal flow is there, but the variance in value expectations is growing.”
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© Chilli Publishing Ltd 2008 |
19 FEB 2008 |
