Venture-Backed European Companies Complete Twice as Many IPOs in Second Quarter from a Year Ago, Raising Almost 140% More

-- Merger and Acquisition Activity Constrained but Higher Amounts Paid in Acquisitions, According to the European Liquidity Report from VentureOne

Fourteen (14) venture-backed European companies completed initialpublic offerings (IPOs) in the second quarter of 2005--twice as manyas occurred in the second quarter of 2004, and the most in a singlequarter since the second quarter of 2001--according to the EuropeanLiquidity Report from VentureOne, a unit of Dow Jones Newswires andthe publisher of VentureSource. These companies raised a total of EUR313.5 million, an increase of 139% over the amount raised a year ago(EUR 130.9 million).

In other venture-backed exits, there were 32mergers-and-acquisitions (M&A) deals for European venture-backedcompanies in the second quarter--a decline from the 48 that occurredin the same quarter of 2004. In fact, it was the fewest number in asingle quarter since the first quarter of 2003. However, more was paidfor these acquired companies: a median amount of EUR 33.9 million inthe second quarter, compared to EUR 24.7 million in the second quarterof 2004.

The increase in IPOs is in stark contrast to the liquidityactivity in the U.S., which reported only five IPOs in the secondquarter--the fewest number in a single quarter since the first quarterof 2003.

"While IPOs in the U.S. declined considerably this quarter, inEurope, a small but significant IPO window remains open for the mostpromising entrepreneurial companies, although they are taking longerto reach this exit," said Steve Harmston, director of internationalresearch at VentureOne. "About 60% of the exiting companies wereinitially financed in 1999 or 2000."

Mr. Harmston continued, "One factor that may relate to the varyingexit climates in the U.S. vs. Europe is that while the regulatoryenvironment has become more stringent for IPOs in the U.S., in Europe,the maturing of AIM and new exchanges such as Alternext are making iteasier for smaller companies to achieve exits via the public market.The third quarter is likely to be a quiet period because of Europeanvacation patterns, but it will be interesting to see what happens bythe end of the year."

For the M&A exits, the median amount these companies raised priorto going public was EUR 5.7 million, compared to EUR 6.7 million ayear ago. But the companies that were acquired in the second quartertook about six months longer--a median of five years--to achieve theexit than those acquired in the same quarter a year ago.

By industry segment, more than half the M&As--20--were in theinformation-technology (IT) segment, while eight were in thehealth-care industry. Three were products-and-services companies andone was an energy company.

As for European IPOs, the distribution among major industries wasspaced more evenly in Europe than in the U.S., where most of the IPOswere for health-care companies. In Europe, six of the second-quarterIPOs were in the health-care industry; five were IT companies; twowere products-and-services companies; and one was an advancedmaterials company. The largest IPO of the quarter was for Arpida (SWX:ARPN)--a drug discovery firm based in Munchenstein, Switzerland--whichraised EUR 62.9 million in its offering and had a post valuation ofEUR 190.7 million. The IPO that achieved the highest postvaluation--EUR 263.1 million--was for ProStrakan Group (LSE: PSK), apharmaceutical company based in the United Kingdom, which raised EUR58.5 million in its IPO.

By geography, seven of the IPO companies were from the U.K., whileFrance and Belgium each had two. Switzerland, Poland and Denmark eachhad one apiece. The time it took these companies to go from initialfinancing to IPO grew to a median six years, from 4.3 years in thesecond quarter of 2004.

The median premoney valuation of the European IPO companies wasEUR 50.7 million, slightly down from EUR 55.5 million in the samequarter a year ago. Meanwhile, the median amount these companiesraised in equity financing prior to their IPO was EUR 11.4million--slightly higher than the EUR 9.2 million in the secondquarter of 2004.

The investment figures included in this release are based onaggregate findings of VentureOne's proprietary European research. Thisdata was collected by surveying professional venture capital firms,through in-depth interviews with company CEOs and CFOs, and fromsecondary sources. These venture capital statistics are for equityinvestments into early-stage, innovative companies and do not includecompanies receiving funding solely from corporate, individual, and/orgovernment investors. No statement herein is to be construed as arecommendation to buy or sell securities or to provide investmentadvice. Copyright (C) 2005, VentureOne.

About VentureOne

VentureOne (www.ventureone.com), a unit of Dow Jones Newswires,has been the leading provider of finance and investment data to theventure capital industry for almost 20 years. VentureSource, asophisticated electronic database on the venture capital industry, ispublished by VentureOne.

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