Click here for printer friendly page

UK and Ireland: July 2001

Two local authorities make private equity moves, buy-outs strong, but not for long, Deutsche Bank drops MGPE spin-off, private equity produces top returns for pension funds…

West Yorkshire local authority launches new private equity fund
The West Yorkshire Pension Fund, which oversees the local government pension scheme in the area, announced the launch of a new private equity fund to invest in businesses in the north of England and Scotland. The fund is the third bespoke regional/local private equity fund that WYPF has launched since 1992. It aims to invest between £100,000 and £1m. WYPF has a total of around £5bn assets.
AltAssets 10.7.01

West Sussex County Council pension fund moves into private equity
West Sussex County Council pension fund is about to join the list of UK local government funds that invest in private equity and is actively looking for someone to manage its £40m mandate. The fund wants to invest the money through a fund-of-funds. The investment will give the £860m fund an exposure of 4.5 per cent to private equity.
AltAssets 12.7.01

BT Wireless raises VC fund
BT Wireless, the mobile arm of BT, is to set up a small corporate venturing arm, according to Venturewire (25.7.01). The telecoms company is said to be in talks with blue-chip venture capitalists, such as Apax Partners and 3i, to invest and develop wireless start-ups.

Buy-outs still strong in spite UK M&A collapse
The UK buy-out market continued to power ahead despite the collapse in M&A activity, according to new figures from the Centre for Management Buy-Out Research. The value of buy-outs jumped 56 per cent to £13.5bn in the first six months of the year compared with the same period last year, while M&A activity more generally plummeted 71 per cent.
AltAssets 9.7.01

UK private equity exits drop 42 per cent on the year
Exits from private equity investments in the first half of the year fell 42 per cent on the same period in 2000, according to research from the Centre for Management Buy-Out Research. The report found that there were only 78 investments exited, compared with 134 last year, and nearly half of them were receiverships.
AltAssets 26.7.01

Deutsche Bank shelves spin-off plan for MGPE
Deutsche Bank dropped plans to spin off Morgan Grenfell Private Equity, prompting the departure of chief executive Graham Hutton. The bank replaced Hutton with deputy chairman of Deutsche Asset Management Sir Robert Smith.
AltAssets 13.7.01

UK government proposes major reforms to bankruptcy laws
The UK government looked set to tackle one of the most symbolically important obstacles to the creation of a truly entrepreneurial culture with a series of proposed reforms to the country's bankruptcy laws. The punitive restrictions on bankrupts are often cited as a major disincentive to legitimate risk-taking. The Department of Trade and Industry's insolvency paper, which is likely to form part of the bigger Enterprise Bill later in the year, recommends scrapping rules that prevent bankrupts from taking up positions such as school governorships as part of a process of removing some of the social stigma of business failure.
AltAssets 31.7.01

Inflexion announces small loss but upbeat about prospects
UK private equity firm Inflexion blamed weak financial markets for a £3m loss in the latest tax year but said that the same circumstances offered some hope in the medium term. Inflexion predicted that 'exceptional opportunities to invest in private equity' would emanate from the depressed state of markets. The firm raised £36m at its IPO in April 2000 and has so far invested £19m in seven companies to leave cash reserves of £15m. It has so far realised two investments, both at modest profits.
AltAssets 4.7.01

UK management buy-outs to slow down this year
The total value of UK management buy-outs is set to slip over the last half of this year, according to a survey by KPMG Corporate Finance. The reason for the slowdown is that corporate vendors are asking too high a price for their companies,  said KPMG. However, the news is brighter for next year, as the report's authors expect activity to pick up again in early 2002 as vendors start lowering their prices in line with private equity funds' offers. The report found that the total value of MBOs in the UK reached £7.2bn in Q2 2001 - the highest quarterly total ever. However, half of this amount was accounted for by just two deals - the Yell IBO and Morgan Grenfell's buy-out of Whitbread's pubs.
eFinancial News 9.7.01

Pension funds expect greater private equity exposure…
UK pension funds expect to increase their investment in private equity following the Myners Review on institutional investment, but it will be some time before the change becomes evident. A survey produced by JP Morgan Fleming Asset Management and Pensions Week found that 67 per cent of funds thought the changes proposed by Myners about strategic asset allocation decision-making would result in more private equity investment, although only about 20 per cent said they had yet reappraised their strategy since the report's publication in March.
AltAssets 17.7.01

…but trustees lack private equity knowledge
The National Association of Pension Funds backed the JP Morgan/Pensions Week survey in its finding that trustees' lacked knowledge about private equity. The survey found that only a third of pension fund respondents had confidence that their trustees were aware of the issues involved in investing in the asset class. ‘Trustees should be more familiar with private equity investment. Private equity is a highly specialised subject,' said NAPF investment services manager Tony Pryce.
eFinancial News 16.7.01

No signs of UK IPO market stirring from torpor
The UK's IPO market remains lifeless and there is little hope of it stirring in the near future, according to a report from KPMG Corporate Finance. Activity has barely flickered since flotations came to a virtual standstill at the start of the year, KPMG said. Only six trading companies joined the main market in the first half of the year, compared with 28 during the same period of 2000, raising a total of £5.1bn. In total there were 40 newcomers, raising £6.8bn, but 34 of these were investment trust and venture capital trust launches.
AltAssets 3.7.01

UK railways pension fund to increase private equity exposure
The UK railways pension fund is to increase its exposure to private equity as a way of diversifying holdings and offsetting weaker performances from more traditional assets, according to the Railways Pension Trustee Company. Chief executive Peter Murray told the Wall Street Journal that the fund planned to increase its holdings in private equity to five per cent or E1.25bn by 2004 from two per cent last year. He said that the decision was based on the improved performance of the asset class in recent years and a poor outlook for bonds and equities.
AltAssets 3.7.01

Private equity star performer for UK local authority pension funds
Venture capital and private equity were comfortably the strongest performing asset class for UK local authority pension funds last year, according to a new report. The report, compiled by performance specialists WM Company, said the average return from ‘other investments' was 32.5 per cent in the year to March 31, compared with an overall average return of just 6.3 per cent. WM Company said long-term performance by private equity had also been very strong and outperformed equities over the last ten years. But it cautioned that there was a massive range of results for the asset class - almost 100 per cent difference between best and worst over the last year - reflecting their risky nature.
AltAssets 2.7.01