€170m tech investment fund raised

30 Jan 2003

ACT Venture Capital has raised a €170m fund that will be mainly targeted at technology-based companies.

The fund, which is the third such fund to be raised by ACT, is the largest technology- focused venture capital fund raised in Europe in the past year.

The company said that the fund would be aimed primarily at indigenous Irish companies with strong technologies aimed at international markets.

ACT added that the amount to be invested in companies would range between €3m and €15m and that the companies that would benefit from the investments would be at various stages of development.

The fund was raised from institutional and fund-of-fund investors from Ireland and overseas. Local investors include Bank of Ireland Asset Management, KBC Asset Management, AIB Group Irish Pension Scheme, Eircom superannuation fund, ESB Pension Fund, Hibernian Investment Managers, Friends First and the GMS superannuation fund.

International investors include JP Morgan Fleming and Merrill Lynch from the US, Partners Group from Switzerland, Access Capital Partners from France, Extorel and VCM from Germany and the European Investment Fund from Luxembourg.

This latest fund brings to €350m the total value of funds under management at ACT Venture Capital. The company was established in 1994 and has since invested in over 50 private companies throughout Ireland and in a small number of companies in the UK.

The portfolio is made up largely of technology companies, but ACT has also backed traditional businesses, including aiding management buyouts.

ACT generally aims at providing first round investment in companies but invests again in follow-on rounds if further funding is needed for expansion, usually in syndication with overseas venture capitalists depending on the market focus of the companies involved. So far an additional €150m has been invested in this way in ACT-backed companies by overseas investors.

ACT’s managing director, Niall Carroll believes more money should be ploughed into making Irish technology firms more successful on the international stage. “”Since
2000 the technology sector worldwide has been experiencing a sharp reduction in demand and it is taking longer for companies to build revenues in the global market place. To succeed internationally early-stage companies need access to relevant experience and connections and require larger amounts of capital to fund their growth to the stage that they become financially self-funding.”

“As with public companies, valuations of private companies have declined as a reflection of the downturn in world economic growth, political uncertainty and of general investment conditions. Nevertheless, companies with innovative technologies addressing real market needs will be able to raise the necessary venture capital to realise their potential”, he added.

By John Kennedy