Private Equity and Venture Capital in Switzerland Venture Valuation VV AG Badenerstr. 18 8004 Zurich Switzerland Phone +41 (43) 321 86 60 Fax + 41 (43) 321 86 61 info@venturevaluation.ch
Agenda - Overview of Swiss Private Equity and Venture Capital Industry - Outlook - Valuation of High Growth Companies
A growing industry... Steady growth of Swiss Private Equity and Venture Capital market in number of funds and deal flow in the past 5 years Top 20 ranking worldwide in terms of growth of Swiss PE and VC markets as of 2002 Top 5 ranking in Europe and top 20 worldwide in terms of attracting High Tech Capital Funding Source: EVCA 2003/2004; PWC/3i
A fertile climate... Lower inflation and interest rates and lower corporate and personal tax rate than European average PE and VC Lobby Groups (S.E.C.A. and Le RESEAU) promote private equity and corporate finance activities, enterpreneurship and small company creation in Switzerland. SWX Swiss Exchange provides know-how and state of the art access to Swiss and International financial markets
Innovation and People... High level of innovation within top research institutions such as CERN, EPFL, ETH, and the Biocenter paired with mature technology transfer practices ensure a steady flow of new investment opportunities Exceptional presence of major multi-national corporations (Nestle, ABB, Novartis, Roche) provides experienced management pool, R&D spin-off companies and capital Banking Tradition fuels pool of talented private equity managers High Standard of Living continues to attract people, companies and investors from around the world.
Sources of Capital Raised Millions 300 250 200 150 100 2001 2002 50 0 Corp. Investors Private Individuals Banks Pension Funds Insurance Companies Funds of Funds Capital Markets Realized Capital Gains
Investment Trends... Million 1200 1000 800 600 400 200 0 Funds Raised Investments M 2001 2002 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Amount of Investment (%) 2002 Number of Investments (%) 2002 Buyout Replacement Capita Expansion Start-up Seed A B Source: EVCA 2003 YEARBOOK
Venture Capital Scene... Investor Sector PE Capital Portfolio (m EUR) Aravis LS, HS n/a 5 Aventic (UBS Group) Tech, IT, LS, HS 160 30 BioMedinvest AG LS, HS 33 5 CapVis (ABB) Tech, Med Tech 400+ 25+ HBM BioVentures AG LS, HS 700+ 44 Index Ventures LS, HS, IT 497 36 Inventages (Nestle) LS, HS 150 n/a Invision Tech, IT 200+ 21 Novartis Venture Fund LS, HC 204 117 Partners Group Tech, IT, LS, HS n/a n/a Schweizerhall Holding Chem, LS, HS 164 21 SAM (sust. asset mgmt) Energy, Nutrition 90 12 Ultreia Capital Ltd LS, HS 130 35 Venture Incubator Tech, LS, HS 100+ 10
Focus on Technology... Top 5 European High Tech Capital, Country Breakdown 2002 Other 24% UK 34% Switzerland 6% Sweden 7% France 12% Germany 17% Source: Tornado Insider Research 2004
Biotechnology and Medical/Health related sector Hot Spots 3 main clusters BioAlps (Geneva, Lausanne; 22%) BioValley (Basel; 25%) Greater Zurich Area (Zurich; 36%) Rest of Switzerland (17%)
www.swisslifesciences.com Partners: Free, searchable database with focus on Swiss Life Sciences Industry Transparency for investors, companies and all other stakeholders in Switzerland and abroad Promotes Switzerland as one Biotech hub Biotechnology 49 Biotechnology Instrumentation & Services: 114 Biotechnology related: 99 Medical Technology: 107 Supplier: 266 Consulting: 87 Investors: 44 Public organizations/npo: 95 Total 861 Medical Technology Consulting Biotechnology Biotechnology Instrumentation & Services Biotechnology related Non-profit Organization Supplier Investor
Outlook... Growth Technology Funding in Europe by Quarter -6.8-6.8-43.8 Q4 2000 Q4 2000 Q1 2001 Q2 2001 9.2-19.2-18-16.7-25.9 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Quarter -4.4-7.7-45.3 4.4 1.7 15.4 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 30.00 20.00 10.00 0.00-10.00-20.00-30.00-40.00-50.00-60.00 Percent Growth Source: Tornado Insider Research 2004
Outlook... Growth of Swiss PE and VC Industry, especially in the biotech and high tech sectors, is expected to continue Risk Capital, is increasingly available and sophisticated fund managers continue to be open to good opportunities both in Switzerland and abroad High level of innovation and experienced pool of management will continue to ensure steady flow of new investment opportunities in Switzerland
High Tech Valuation Issues Volatility of quoted companies Long investment cycle, especially biotech Traditional valuation methods unsuited Understanding the drug value chain Industry lacks transparency (number of companies and therapeutic approaches) Multiple forms of competition (capital supply, IP, partnerships, market share & sales force) Complex technology and IP situations make for non traditional risk assessment
Venture Valuation Approach... Specialize in independent, third party Valuations of high growth companies and portfolios Combine experts in Finance, Lifesciences and High Technology to assess soft factors, risk profile and future earnings Systematic / Validated Approach Track record of over 80 valued companies world-wide International presence (Offices in Switzerland, Germany, France and Canada) Clients are companies, investors, governement and academic institutions
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