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Private and venture capital investments halve in 2009

Private and venture capital firms invested in twelve Hungarian companies in 2009, only half of the number recorded in 2008, while only one-tenth of Hungarian medium-sized companies are suitable for private capital investments, Riverside Magyarország told MTI on Wednesday.

The statement said the decline was due to the fact that few Hungarian companies satisfy stringent investor requirements, however Hungarian managers could also make a difference in this area by making business indicators more transparent, Riverside, a market leader among private capital companies specialising in takeovers, said.

Riverside's statement quotes figures from the Hungarian Venture and Private Capital Association showing that private and venture capital firms invested into Hungarian companies in twelve transactions 2009 to a value of €214 million, compared to €477 million in 25 transactions in 2008. Of the 12 transactions, only 7 involved the appearance of a new investor in the company, with the existing investors providing a new capital injection in the case of 5 companies.

The decline is also due to the recession as the number of takeovers in Hungary does not show a bigger fall than in other countries in the region.

Riverside, for example, only invests in companies worth between €15 million and €150 million, which excludes a lot of Hungarian companies. They estimate that there are currently around 1,000 such companies in Hungary, but only around 500 the Hungarian subsidiaries of large international companies are excluded. Figures published by Ecostat last November show that there were 4,715 medium-sized companies operating in 2008 in Hungary, 90 of which did not meet the investment criteria of private capital companies. (MTI-Econews)