UK climate for investment in IT companies improving

Institutional investors and IT companies expect the investment climate for the IT sector to continue to improve during the next five years, with 80% of investors expecting to increase their weighting in IT companies. The most widely perceived benefit of investing in IT companies is their long term positive growth rates.

Eighty-three per cent of investors and 44 per cent of IT companies believe the investment climate for IT companies has improved during the last five years.

Around three in five private IT companies surveyed would consider the option of going to a public market and two in five say they are already actively considering doing so. The survey found that IT companies considering going public are most likely to choose either AIM (43%) or the main market/official list (19%) as their preferred markets. Fourteen per cent also mention the American market NASDAQ, but no other market is mentioned by more than three per cent.

The research also shows that although few (13%) investment companies employ IT specialists, the gap in understanding between investors and IT companies is narrowing. All the investors questioned cited better explanation by IT companies of the application of their technology as the key to improving understanding, while nine in ten IT companies acknowledge that there is a need for analysts to be better informed about IT.

Technical details

The research was commissioned by the London Stock Exchange in association with the Worshipful Company of Information Technologists. Seventy one senior managers of IT companies and 30 institutional investors were interviewed for the survey. Seven in ten of the investors surveyed manage funds of between 163100 - 163600 million and the average holding in IT companies is around nine per cent of the total funds managed.