Apax is finally jettisoning venture capital as part of its investment strategy.

Apax will not earmark any of the new fund it is raising for venture capital investment. Instead the fund will be 100 per cent devoted to private equity buy-outs.

“Our last fund Apax Europe VI, which was raised in 2005 is 97 per cent invested in buy-outs. The fund that we are raising now will invest solely in buyouts,” said an Apax spokesman. "We haven't made a VC investment for a few years. It's partially to do with Ronald Cohen retiring, and the new CEO bringing in a new strategic direction, and it's because our limited partners [investors] have become a lot more sophisticated in the way they allocate funds to investment firms like us."

Apax’s founder and former chairman, Sir Ronald Cohen, now a key adviser to Gordon Brown, used to point to Apax’s VCs as a valuable contribution to the economy by helping to found and grow small companies.

"It's increasingly untenable for one firm to do multi-stage venture capital investments at one end, and billion dollar buy-outs at the other end. And it’s also a matter of our internal resource allocation," said the Apax spokesman.

Apax has been changing rapidly. In 1999, its latest €1.8bn fund allocated €600m for venture capital. In 2001, one third of Apax’s €12bn under management was dedicated to venture capital.

Asked if this spelt bad news for VC investment in high-tech in the UK, Stuart McKnight, managing director of technology-focused investment house Ascendant, replied: “At the smaller end of the scale, at the £1m to £3m mark, investment is pretty robust. UK technology, as an asset class, will attract about £1bn in VC this year. That’s the biggest it’s been for a long time.”