Denmark has seen steady growth in the private equity market over the past years and the trend looks set to continue, according to data from The Danish Growth Fund. The Danish market has a greater focus on venture investments, rather than later stage and buyouts. Capital under management for venture capital investments for 2002 increased nine per cent compared to 2001 reaching DKK17.2 billion with the number of players increasing to 68. While total capital for investment in private equity remained stable for 2002 at DKK6 billion.
The Danish venture capital market has shown resilience to the global economic downturn. According to the Danish Growth Fund, investment levels in 2001 increased 16 per cent from DKK2.9 billion in 2000 to DKK3.4 billion. Investments in seed and start-ups accounted for over 50 per cent of venture investments. “The seed market can be viewed as the cradle for new innovative enterprises,” says Kim Forum Jacobsen of the Danish Growth Fund. “Without venture capital these enterprises will not be able to achieve their full potential and some will not be able to continue development. A well functioning seed market is thus crucial to the further development of the venture market.”
Last year, life sciences attracted 43 per cent of the investments, a substantial increase to 2000 when they attracted just 22 per cent. In the same period investments in ICT companies dropped from 54 per cent in 2000 to 38 per cent in 2001. The shift in focus from ICT to life sciences is enhanced by the fact that several new life sciences funds have entered the Danish market over the last year. One of these is an offering from Danske Private Equity, which is in the process of fund raising for Danske Life Science, which has a target of EURO100 million. Danske Life Science is a traditional venture fund focusing on life sciences and biotechnology in the Nordic region. Leif Helth Jensen has been appointed managing director of the fund. He was previously president and CEO of Cureon, a biotech company that develops therapeutic products.
A trend towards greater internationalisation of the Danish VC industry has also been noted in the geographic pattern of investments. Danish VC investments outside Denmark have increased, by volume, as well as by value. In 2001, 32 per cent of the capital was invested in foreign companies compared to only 11 per cent in 1998.
By co-investing with foreign VC funds, Danish VCs gain valuable access to networks of investors in foreign markets, says the report. Moreover, they build up operating experience in foreign markets, which strengthens their capacity to help Danish portfolio companies expand into the same markets.