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Private equity investment in tech hits four-year high


Investment in UK technology companies by private equity firms has reached its highest level since 2012, totalling GBP1.93 billion in 2015, according to international investment bank Altium.

The latest figures represent a 124 per cent rise on 2014, where deal values reached GBP865 million. The data, provided by Experian Corpfin, showed that average deal size value stood at GBP50.9 million in 2015 – up 189 per cent from the GBP17.6 million average in 2014.
 
The largest transaction in the last 12 months was the GBP499 million buyout of insurance technology firm Innovation Group by American private equity firm Carlyle. Other standout deals included the acquisition of enterprise software provider Access Technology Group by TA Associates and the GBP140 million management buyout of employee engagement software provider Reward Gateway by Great Hill Partners.
 
These strong figures are representative of increased confidence in the market, which was notably boosted following the general election in May. Average deal size prior to the election stood at GBP28m, a figure which more than doubled to GBP64m following the event.
 
Over the last decade London has dominated the UK tech scene, with 28 per cent of all deals transacting in the City. However, with the overwhelming majority of deals taking place outside of the capital, cities like Manchester and Leeds have built upon their tech expertise. In particular, private equity houses have increasingly looked towards the North West for their investments, with cyber security firm Avecto receiving a USD49 million investment from US-based firm JMI Equity in December 2015.
 
Adrian Reed, managing director at Altium, says: “Private equity is continuing to recognise the opportunity the tech sector provides and we have been part of a number of deals involving private equity houses over the past 12 months. Most notably, we led the investment by Lyceum Capital in TotalMobile, the market-leading developer of enterprise mobility software in September 2015. We expect this strong momentum to continue well into 2016 and beyond as companies continue to push boundaries and develop their offerings.
 
“Tech is becoming ubiquitous in our society, impacting almost every aspect of our lives, from travelling to exercising, working to socialising. As a result, some of the most disruptive and innovative businesses in the world today are tech companies, such as Uber, Apple and Air billionb. It is no surprise that private equity investors are interested in the sector, with firms keen to back products and services that are increasingly becoming integral to our work and the way we live.”
 
Altium was particularly active in 2015, completing 28 technology transactions worth GBP1.8 billion. Most recently, Altium advised on the sale of hosting and application delivery specialist C24 to Six Degrees Group.

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