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87% rise in UK pensions allocation to venture

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UK – Investment by UK pension funds in venture capital rocketed by 87% over the year 2000 to reach a level of £817m, according to the British Venture Capital Association’s (BVCA) annual investment activity report.

UK private equity firms also invested a record £8bn (e13bn) last year, says the report, which covers 96% of BVCA members.

Overall, the BVCA says that more money than ever was invested in start-up and early stage ventures, with start-up investment increasing by more than 50% in number and amount.
US pension funds though remain the main investors in the UK venture capital industry for the fourth year running – with US investment accounting for 40% of the total invested assets.

“With the improved climate for early stage investing and more experience in this field, we have seen significant growth across the whole spectrum of start-up and early stage business,” says David Thorp, BVCA chairman.
“We are delighted to see UK pension funds increase their allocation to UK private equity and look forward to working with them more closely in the future,” he adds.

Worldwide investment by British venture capitalists in 2000 amounted to £8,160m invested in 1,431 companies, says the report.
Investment in start-ups rose by 55% and in early stage companies by 32% to £199m and £288m respectively.
The number of financed start-ups jumped by 52% to 154. The overall number of early stage investments was the highest ever, increasing to 28% of the total.

Last year, the number of overseas companies backing British private equity investment, increased by 36% to 339, while investment increased by 12% to £1,885m.
The report says more than three quarters (77%) is invested in domestic companies.

On the one hand, investment in management buy-outs decreased by 22% to £3,359m, while the amount invested in management buy-ins decreased by 25% to £302m.
On the other hand, investment in UK high technology companies increased by 37% over 1999 figures to reach £1.499m.
Almost half (47%) of the high technology companies were either start-ups or at early stage.


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