Private equity still attracted to UK technology firms

Businesses focused on software-as-a-service and cloud among the most sought-after

Private equity deals within technology are set to increase

ICT firms based in the UK continue to attract the interest of private equity backers, according to a recent survey carried out by business and financial advisor Grant Thornton.

Some 84 per cent of the 40 large private equity investors surveyed said they intend to acquire a business in the technology sector over the next 12 months.

The survey adds that 72 per cent of those polled expect the transaction volume in ICT to increase over the next few months and that more investors are looking into opportunities to acquire such businesses, which may indicate more competition for deals.

Cloud computing and software-as-a-service (SaaS) was cited by 89 per cent of the private equity houses surveyed as a key investment opportunity over the next 12 months, while 39 per cent mentioned green IT as another main area of interest.

“[Cloud and SaaS] are benefiting from cost cutting measures that see businesses shift from acquiring software to acquiring licenses for applications as a service on demand," said head of technology at Grant Thornton, Niki Dixon.

"As computing capacity and the use of mobile devices increases, we are likely to see increasing government support for emerging technologies such as optical computing, the development of solid state drive technologies as well as a broad range of solutions to improve operational efficiency," added Dixon.

And 95 per cent of those surveyed expect most future deals to be worth less than £100m.