AUSTRIA – Investment into private equity remained stable from Austrian investors in 2002, although fundraising in Austria showed nearly a 30% increase, according to the Austrian private equity and venture capital organisation, AVCO.
Around 146 million euros were invested in private equity out of Austria in 2002 – down just one million from 2001.
Replacement capital attracted the majority of Austrian investors – early-stage engagement gave up eight percentage points to replacement capital. Expansion-stage and buy-out deals showed only a small shift in favour of expansion.
Increased appetite for investment abroad was noted in 2002 – domestic investments accounted for 75% but this is 13% down on the previous year.
Sources of investment changed over the year. Banks accounted for 41% of capital provision, down from 63% in 2001. Funds of funds increased their participation from 4% to over 20%, while insurance companies doubled their investments from 8% to 16%. Pension funds, which did not play a part in 2001, contributed around 3% to the total funds raised in 2002.
Fundraising indeed saw a marked increase in 2002, showing growth of nearly 30%, bringing total of funds raised to 177 million euros.
While Austria bucked the European trend with regards to fundraising – fundraising in the whole of Europe fell from 40 billion euros in 2001 to 27.5 billion euros in 2002 – further developments are needed in the Austrian PE/VC industry, says AVCO. “Appropriate legal, tax and economic policy conditions have to be in place under with private equity and venture capital can operate. In this respect Austria clearly shows the need to catch up,” says the association.
In the European Private Equity and Venture Capital Association report, Austria came last in a ranking of 15 European countries with regards to fund structures, tax system, investment directives for institutional investors, and entrepreneurial environment.
AVCO is working with the Austrian Federal Ministry of Finance to prepare proposals for a reworking of the country’s private equity and venture capital environment.
Explains Thomas Jud, AVCO managing director: “Proactive engagement on this topic is a must. AVCO is engaging in enhancing fund structure, improving the access of institutional investors to PE/VC and preparing investor relations guidelines, in order to make the asset class more understandable and transparent.”