Market confidence levels among mid-market private equity investors are riding high, according to a survey carried out by Grant Thornton Corporate Finance. During Q1 2006, 92% of mid-market VCs predicted the volume of transactions would increase or stay the same over the next 12 months. However, 89% also anticipated the value of transactions would follow suit.
From the survey’s results, almost half (44%) of the private equity investors questioned said new investments would be their biggest priority during 2006 while a quarter (24%) said exits would top their agenda. The emphasis on value creation (13%) and seeking refinance opportunities (8%) also featured prominently on private equity investors’ list of priorities.
Business services, (21% of sample) healthcare (16% of sample) and financial services (13% of sample) were cited as the most popular sectors for VCs to invest in over the next 12 months. Computing and leisure sectors (11% and 9% of sample, respectively) were also tipped to be popular.
Marking a significant shift from the corresponding period last year, the number of private equity investors expecting to invest in the computer activities sector over the next 12 months has doubled. The travel and leisure industry is also cited as an emerging sector, which will attract greater private equity interest in the coming months.
Looking at barriers for investment over the course of the year, 38% of private equity investors pointed to competition from trade buyers and micro or macro economic factors (20%.) Pension deficits (15%) were also regarded as a significant investment hurdle.