Experts to Educate Northern Ireland in Equity Culture; Northern Ireland Continues to Play Catch-Up in the Use of Venture Capital and Private Equity. but It Is Getting Great Help along the Way. PAUL McKILLION Reports on the Latest Event to Educate SMEs, Business Advisors and Local Venture Capitalists and Talks to One Man Who Has Enjoyed Record Returns across the US and UK and Is Now Looking to Ireland for New Opportunities
WHILE Gordon Brown's Budget offered little in the way of fostering an enterprise culture among Northern Ireland's SMEs by way of tax incentives, the work continues to encourage companies to grow by using venture capital.
Tomorrow's Private Equity Conference at the Ramada Hotel in Belfast is a major example of that work.
It has been organised by Equity Network, a team within IntertradeIreland, the north-south business body, which is working to promote an equity culture throughout the island.
Included in the team of speakers is Scott Malpass, head of Notre Dame University's investment management programme.
In 14 years, Mr Malpass has grown the value of the Notre Dame portfolio from $460m to $3.5bn.
He says the principal to invest in private equity and diversify the portfolio was set out early in his tenure, well before the internet boom.
But it was the mid-90s explosion of funding internet start-ups, which then went into the market at extraordinary prices, where Mr Malpass saw stunning gains.
"Obviously it worked out even better than we had expected, in terms of our increases in private equity. But at that point, we didn't know the internet was going to happen.
"We knew that long term, private investing was going to be an important diversifier for our portfolio and that if we did it with the top-tier venture groups we would earn a premium over the public market - a minimum of five per cent a year and hopefully more.
"But we did not know the internet was going to happen and we would get 100 per cent returns or more in venture capital.''
Two years ago, the success was being maintained - Notre Dame enjoyed a return of 58 per cent for the year, the best of any US university.
But ''a little bit of pull back'' last year has reflected more depressed markets.
Mr Malpass says the US and UK are now awash with private equity - providing little return from investments.
It's time to seek out new opportunities.
"There has been too much money in venture capital and private equity - too many new funds raised, too many first-time funds, too much capital going in and, therefore, returns are going to moderate substantially in the US and probably in the UK as well because they also had a record amount of fundraising in their buy out funds.
"But there has been less capital put into continental Europe, Ireland and other areas and I would particularly feel eastern Europe offers some great possibilities.''
Ireland is viewed "very favourably'', according to Mr Malpass, offering a young workforce, technology developments, attractive tax policies, and a regulatory environment suited for entrepreneurs.
"Not to mention the incredible economic growth you've experienced in Ireland. But the economy is small, so that puts a little bit of a damper on how much capital people are willing to put in.
"But the nice thing about Irish businesses is they can be pan-European. …