Private equity and venture capital in Belgium

Outlook for 2017

The M&A market in 2016 was clearly demand driven. A couple of studies and surveys confirmed that M&A activity in Belgium is currently fuelled by easily available bank financing and extensive dry powder in the hands of private equity players. However, most of the deal activity in 2016 took place on the mid-market. Other than the acquisition of SABMiller by AB InBev, very few megadeals were completed in Belgium in 2016.  But with a number of large transactions announced during the last days of 2016, it seems that Belgian M&A activity is set for a promising start in 2017.

Current market trends

The most active sectors in the Belgian VC/PE scene are the tech, media and comms, manufacturing, retail and life sciences/healthcare sectors. It is expected that this trend will continue in 2017.

FinTech continues to gain momentum in Belgium, with FinTech-specific accelerators being set up. We expect the FinTech sector to further grow in 2017, especially with the presence of business angels with a professional background in the FinTech sector looking for investment opportunities.

Legal and regulatory developments

New legislation has been implemented at the Belgian level to regulate license conditions and rules of conduct for alternative financing platforms. Crowdfunding platforms that target Belgian investors will now need the prior approval of the Belgian Financial Services and Market Authority. At the same time, the new law makes it easier to launch a crowdfunding campaign without the need for a prospectus. This will hopefully further boost the appetite of start-ups to turn to crowdfunding for their financing needs.

In 2016, the Belgian government also improved the so-called ‘start-up tax shelter’ for equity investments made by natural persons in start-up businesses. The purpose of the tax shelter is to support Belgian start-up businesses that are facing a funding gap: if a natural person (either Belgian or foreign tax resident) makes a qualifying equity investment in a start-up business, they are entitled to a personal income tax credit of up to EUR 30,000 (rising to EUR 45,000 if certain conditions are met). Before February 2017, the equity investment had to be made directly into the business. But from February 2017, as a result of the law organizing the recognition and supervision of crowdfunding adopted on 18 December 2016 (official gazette: 20 December 2016), the realization of such equity qualifying investments will also be possible via a crowdfunding platform or a starter fund/private starter pricaf.

The Belgian tax exemption on capital gains on shares is expected to remain an attractive feature of the Belgian tax regime supporting Belgian M&A activity (the current political debate around a major corporate income tax reform makes any change to the current favourable tax regime for individuals unclear, but would keep the current exemption regime for companies). Furthermore, the speculation tax on capital gains (personal income tax) has been abolished as from 1 January 2017. This tax was applicable from 1 January 2016 on the quick selling of listed stocks and certain listed financial instruments by individual taxpayers.

Key deals in 2016

Our team in Brussels acted on the following VC/PE deals in 2016:

• For the lead investor, on the EUR 18 million Series B financing of Nyxoah, a pioneering medical device company developing a breakthrough therapeutic solution for the treatment of obstructive sleep apnea.
• For OncoDNA, a medical diagnostics company specialising in the genetic analysis of tumours, in relation to a EUR 7.7 million Series B funding, its acquisition of the Spanish entity BioSequence SL and its EUR 9 million fundraising through “avances récupérables” of the Walloon Region.
• For one of the founders of an online used cars platform in connection with the trade sale of the business to PE investors.
• For ImmunXperts, a Belgian immunogenicity company, on its latest capital round.