View all insights

Private Equity Technology Investments Outperform Traditional Sectors

Realized technology investment returns spiked last year as the sector gained further momentum, writes Chris Godfrey, president and chief product officer at CEPRES

Technology investing in private equity, already a hot sector before covid, gained further momentum during 2020, according to the latest analyses from CEPRES Market Intelligence, a digital private market investment data solution.

The data shows further increases in capital flowing to tech investment deals and away from traditional sectors, combined with increased returns and thriving fundamentals. Almost 50 percent of all private equity deal capital flowed into tech deals during 2020, while non-tech-focused industrials fell significantly. During recent years, private equity-backed tech deals produced strong returns at the top of the market.

During 2020, the sector significantly outperformed when evaluating already realized deals, coinciding with some of the highest revenue growth rates and peak EBITDA multiple pricing on deals. Additionally, CEPRES data also shows that whereas traditional private equity-backed companies exhibit reducing returns as leverage increases, within technology investments in private equity, high pricing and leverage are correlated to the best-performing deals.

We already knew that private equity-backed tech investments had solid fundamentals going into covid, and public market data has shown covid gave further tailwinds to the sector. Now, we have the private market data to truly prove this thesis and have the right data to underwrite post-covid investment strategies for both LPs and GPs.

This article originally appeared in Private Equity International's Investing in Technology report. View original.

Want to get the best private market data? Reach out to CEPRES.

Read next


Private Equity Asset Allocation Models: Why High-Quality Data is Paramount

Private equity asset allocation models are sophisticated frameworks used by investors to strategically distribute their capital across different types of assets within the private equity universe. Asset allocation decisions involve determining the appropriate mix of investments across various asset classes, such as venture capital, growth equity, and buyouts, as well as considering factors like industry focus, geographic allocation, fund type, risk management strategies, and liquidity considerations.


Benedikt Hoefelmayr interviewed at BAI AIC 2024

Watch Benedikt Hoefelmayr's full interview at BAI AIC on Private Equity Liquidity Management in times of ELTIF2.


Whitepaper | Private Markets Look-through Data

In an era of political and macro-economic uncertainty, access to granular and accurate knowledge on investments is critical to meet portfolio challenges and goals. With accurate investment data, rather than guessing, you can unearth deeper insights, detect risk patterns, and uncover opportunities that elude those using only basic financial reports.

Download our whitepaper as we navigate the complexities of today's political and macro-economic uncertainty.

Client Exclusives

Private credit: Spotlight on deals — the winners and losers & bounce back from the crisis

Read more

Navigating Private Debt: A Deep Dive into Historical Risk and Returns

Read more