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Venture capital investments reach record level in 2005

Venture capital investments in Hungary totaled more than €131 million in 2005, more than in any year previous, according to statistics compiled by the Hungarian Private Equity and Venture Capital Association (MKME).

There were 30 venture capital investments made in Hungary in 2005. Of these, figures from 26 were available to MKME, which calculated their total value was €131 million, 21% more than the value of venture capital investment it calculated in 2004. MKME earlier explained the increase in the amount of venture capital investments in 2005 citing changes to Hungary's Capital Markets Act, which allow institutional investors to invest in venture capital funds.
2005 saw the biggest single venture capital investment ever in Hungary, a €100 million investment in the healthcare sector. Of the 26 investments that MKME included in its figures, 18 involved investments of under €1 million, while just a few involved sums of between €1 million and €5 million.
Six of the investments were in the services sector, five were related to consumer goods, four were in the manufacturing sector, four in the IT sector, two in the communications sector, two in the healthcare sector, two in the farming sector and one in the "other" category.
MKME registered 25 exits, of which it was able to compile figures from 16. These exits were worth more than €45 million. Half of the exits were completed through buyouts by the management, five were bought by strategic investors, two exits were made through stock exchange listings and one exit was completed by a sale to another group of venture capital investors.
In the entire Central and Eastern European region, venture capital investments came to €1.05 billion in 2005, more than double that in 2004. Considering the size of the investments as a percentage of GDP, Hungary's rate of 0.15% is good compared to the regional average of less than 0.1%, but low compared to the Western European average of 0.3%, MKME noted. Preliminary figures from the European Private Equity and Venture Capital Association (EVCA) show that a combined €60 billion was raised in European venture and private capital funds in 2005.