A record $250 million private equity was invested in Irish companies during the technology bubble last year. But forecasts show investment will slump to less than half that figure during 2001, a new study has predicted.
The global private equity report by 3i/PricewaterhouseCoopers shows the private equity market in the Republic has been transformed since 1997 when just $43 million was invested here.
Fuelled by the technology bubble during 1999/2000, venture capitalists, private investors and private companies invested $369 million in a two year period.
This represents a compound annual growth rate of 55 per cent in the Republic. This compares favourably to a global rate of 35 per cent.
Some 84 per cent of all Irish private equity investment during 2000 was invested in technology firms, amounting to some $210 million.
However, forecasts for the current year by Mr Joe Tynan, a partner in PWC's global technology industry group, predict investment will slump to between $100 million and $120 million.
"There is no money going into dotcom investments, many of the corporate and angel investors have left the market and venture capitalists are taking longer to close deals," said Mr Tynan.
"I expect a significant reduction in investments in the current year to a level of $100m-$120m which essentially would see a return to 1999 levels of investment," he said.
Despite strong growth in private equity and venture capital investment since 1997 the Republic is still only ranked ninth in Europe. Investment as a percentage of GDP measures just only 0.25, compared to a world average of 0.62 per cent.
Funds raised in the Republic fell to $223 million in 2000, down from a record high of $357 million during 1999. Comparing the funds raised and invested in 2000 there should be $211 million available for investment this year.
The full report shows that a record $177 billion of private equity and venture capital was invested globally in 2000, an increase of 30 per cent on 1999.
North America raised the most private equity, with $126 billion invested or some 71 per cent of all global investment.
Some $225 billion of funds were raised globally in 2000, up from $135 billion in 1999.
