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Continental Europe: June 2001

Private Equity Holdings abandons Vontobel, Carlyle now in Spain, Intel Capital slows investment, Germany tops European buy-out league table…

Private Equity Holdings ends relationship with Vontobel
Swiss fund Private Equity Holdings brought to an end its strained relationship with private bank Vontobel and chosen instead to forge an association with Swiss Life Private Equity Holders. Tensions were heightened between PEH and Vontobel after Hans-Peter Bachmann was dismissed for financial irregularities. Looking forward, PEH said its new relationship with Swiss Life Private Equity Partners, a wholly owned subsidiary of Swiss Life, would open up significant opportunities for future growth Private Equity Holdings manages private equity investments in a range of funds for institutional and private investors. (8.6.01)

Carlyle launches in Spain
The Carlyle Group extended its European reach by opening two Spanish offices. The firm said it wanted to capitalise on growth in the Spanish market, driven in part by changes in private equity legislation and the single European currency. Carlyle already had offices in London, Milan, Munich and Paris. Its Spanish operations will be run from Madrid and Barcelona. The Carlyle Group has over $13bn under management. (11.06.01)

New Media SPARK announces £46.3m loss
NewMedia SPARK, the early stage technology investor, announced a disappointing set of annual results but said there were signs that conditions were improving. The group unveiled pre-tax losses of £46.3m in the year to the end of March, compared with a profit of £2.8m the previous year. The group has now written off £73.7m on investments in its portfolio, an additional £8m from the amount announced at the time of interim results in December. It closed the year with £76.6m in the bank, compared with £33.5m last year. (15.06.01)

VC pessimism forces Intel Capital to slash investments…
Intel Capital, the corporate venturing arm of the semiconductor group, has been forced to halve its investments so far this year. Intel Capital director Tim Keating blamed a general slowdown in VC investments, said EFinancial News (18.06.01). ‘Our plan was to keep up our pace and do as many investments as we did last year,' he is reported to have said. ‘But as co-investors we can only move at the industry pace and things are not going that fast.' Last year, Intel Capital invested $1.3bn across Europe, doing roughly a deal a week.

…while BC Patners increases its fund
Bucking the general trend for pessimism, BC Partners has increased the size of its fund, BC European Capital VII, by E700m to E4.2bn. The fund, which originally closed in July 2001, was oversubscribed by 95 per cent. (7.6.01)

Finnish private equity investment leaps by 40 per cent
The total amount invested by Finnish venture capital firms jumped by 40 per cent in 2000, according to the Finnish Venture Capital Association's preliminary figures. In 2000, venture capital firms in Finland made 418 investments in 298 companies, worth a total of 2.4bn FIM. Finnish funds also recorded some impressive IRR figures. The FVCA said that pooled IRR for all stages of investment stood at 28.4 per cent, with the strongest performances from MBO/MBI funds. The European figure for pooled IRR was rather lower at 14.9 per cent. The amount raised by firms in 2000 dropped slightly to 3.5bn FIM, compared with 3.7bn FIM in 1999. This brought the total venture capital under management in Finland to 13.1bn FIM at the end of 2000. (5.6.01)

Axa Investment Managers launches private equity products in Germany
Axa Investment Managers announced it is to launch a range of products aimed at German institutional investors. The new vehicles will include a fund of funds, a buy-out fund and a venture capital fund and are set to take advantage of the rapid growth in the German private equity market. Axa has a well established private equity subsidiary in Europe and now has 21 managers managing or advising funds totalling over E1.2bn. (25.6.01)

Germany takes the lead in European buy-outs
Germany has stormed into the lead of continental Europe's buy-out league, quadrupling its deal value in 2000 to E15bn on the previous year, according to the latest research from the Centre for Management Buy-Out Research. The research, produced in conjunction with Deloitte & Touche and Barclays Private Equity, said the trend, particularly in Germany, had been towards larger deals. The average deal size increased to E74.3m in 2000 from E64.2m in 1999. (25.6.01)

European VC tech investment catching up with US
European venture capital investment in technology hit a new record in 2000 and is slowly starting to catch up with US levels. Tech investment jumped 68 per cent to E11.5bn last year, according to a PricewaterhouseCoopers' Money for Growth 2000 survey. The report said that more than 6,500 investments were made in tech companies last year and the average deal size edged up to E1.5m. This remains still some way smaller than the US average of $18.5m (E21.5bn). (26.6.01)

Swiss firm Adveq earns upgraded fiduciary rating
Swiss private equity fund of funds firm Adveq has earned an upgraded fiduciary rating for its investment activities. RCP & Partners, one of the only organisations to rate private equity firms, has pushed Adveq's score up to AA2. The firm said that it constituted a ‘very good' standard of service, governance, diligence and risk control. Adveq is still unusual among the private equity industry in having a fiduciary rating, but RCP co-founder Shane Norman predicted that they would become more commonplace as institutional investment in the asset class grows. (22.6.01)

‘Respectable' results in 2000 for Castle private equity
Castle Private Equity, the Swiss private equity investment firm, has unveiled what it described as 'respectable' results for calendar year 2000 against the background of turbulent market conditions. The company's earnings per share slipped to $3.68 from last year's $4.68, while the net asset value of the firm's portfolio increased by 17.5 per cent. It said that the well diversified nature of the fund, from early stage to buy0out, had enabled the portfolio to benefit 'from extraordinary venture capital returns that were available in 1998 and 1999, and to a lesser extent, 2000'. (21.06.01)

Henderson Private Capital sets out on expansion trail
Henderson Private Capital is aiming to develop a pan-European private equity business. Toby Boyle from Morgan Grenfell Private Equity now heads the European team. Henderson's focus will be on mid-market companies demonstrating potential for good growth and above-average returns, mainly buy-out opportunities in the E10m to E150m bracket but also some growth capital investments. (Private Equity Europe, June 2001)