Private equity’s €350bn engine of innovation

Michael Bow
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PRIVATE equity financiers have been responsible for about €350bn (£232.8bn) worth of innovative technologies invented since the depths of financial crisis, new research estimates, underscoring the sector’s strength as a catalyst for growth.

Around 116,000 patents registered between 2007 and 2011 are attributable to private equity backed companies, the research says, building on a long run trend that links 12 per cent of total European industrial innovation since the late 1970s to private equity cash.

The research, conducted by Frontier Economics on behalf of the European Private Equity and Venture Capital Association, also shows inventions by private equity-backed companies are used more often than their stock market backed counterparts.

Citations for patents from private equity backed businesses in the US occur 2.49 times versus 1.99 times before private equity cash is introduced into a company.

“In light of the economic challenges we face in Europe, these findings clearly demonstrate that private equity has an indispensable role to play in delivering responsible, stable investment to companies of all sizes across Europe, regardless of the economic cycle,” EVCA chairman Vincenzo Morelli said.