Hungarian fund sees upturn in opportunities

The Hungarian Innovative Technologies Fund says that its portfolio value has doubled despite a testing environment for deal making.

The Hungarian Innovative Technologies Fund (HITF), the $10m US government-backed fund specialising in technology investments in Hungary, has completed three technology deals in the past year despite a testing time for IT and related technologies in the region.

Last year the firm took its total number of investments to seven when it participated in a E30m investment round for Axxima Pharmaceuticals, a German-based pharmaceutical firm. In January it invested in i-Cell, a mobile communications system integrator based in Budapest. In April, the firm invested in a $6m funding round for N-Gene, a cancer treatment firm which operates in Hungary and the US.

The firm's typical approach is to make investments of around $500,000 in conjunction with other investors, although HITF managing director Francis Skrobiszewski has said that he would be keen to get involved in the occasional larger deal.

Skrobiszewski said the firm had detected an upturn in Hungarian deal flow in the past couple of months and was optimistic about the fund’s prospects of completing three technology deals this year. “We have seen much more realistic deal valuations recently, which enhances our prospects for making successful investments. Despite looking at 70-80 biotech deals recently, we will only do compelling deals, of which there were maybe only two in the biotech sector last year.”

In terms of the Hungarian market, Skrobiszewski believes that the best opportunities for HITF will come from biotechnology, although he doesn’t discount the prospect of investing opportunistically in other technologies. “I would like to complete a larger transaction, not necessarily in biotech or IT, that could crop up in chemicals or environmental R&D, anything that we think has the ability to succeed on a global stage.”

The $10m Hungarian Innovative Technologies Fund was launched in 1999 by the Hungarian-American Enterprise Fund to provide early stage venture capital to Hungarian entrepreneurs.