Heavy write-down for NewMedia Spark

Faced with difficult market conditions, the TMT venture capitalists had a “challenging” year which saw its net asset value plunge 45.5 per cent.

NewMedia Spark, a leading early stage TMT venture capital organisation in Europe, has taken heavy write-downs on its portfolio, for the year ending 31 March.

Net asset value per share of the publicly traded venture capitalists plunged by 45.5 per cent, from 77p in 2000 to 42p this year. The group incurred realised and unrealised losses on investments of £73.7m, compared to a gain of £21.3m a year ago. Ten of its 56 investees were written down to nil valuation.

Mike Whitaker, CEO of NewMedia Spark, said that although the results were disappointing it was not as “severe” as the declines in the main quoted technology indices and broader technology venture capital markets as a whole for that same period. For instance, the Techmark 100 fell by 55.9 per cent while the Neuer Market fell by 79.6 per cent.

Faced with difficult market conditions, Whitaker believes the company performed relatively well. He says that its strong financial position enabled it to continue investing at a time when the marked downturn afforded good investment opportunities.

Among 24 new investments acquired over the past year was Softtechnet.com plc, a transaction that contributed £23.4. in additional cash. In November it acquired Internet Indirect plc which added a further £75.5m in cash. As a result of these acquisitions the company ended the year with a stronger balance sheet, including cash of approximately £76.6 and other assets totalling £132.6m.

NewMedia Spark invests in companies at a very early stage, identifying innovative European TMT companies. It has structured its investment teams into the following areas of expertise: digital media, technology and communication and software applications. 68 per cent of its portfolio is in UK companies.

Despite a testing twelve months Whitaker is upbeat about the future. He now sees tentative signs that investment conditions in technology markets are improving and anticipates gradual increases in the company’s asset value during the remainder of the year as the more successful companies continue to develop.

“We continue to believe that as European capital markets converge and information technology re-emerges as a key driver of economic growth in the region, early stage investments in the TMT sector will generate substantial returns for our shareholders,” he said.