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Continental Europe: October 2001

Europe to escape the US downturn, Austria allows private equity allocation for pension funds, Pantheon sees slump in portfolio value…

Cinven seals one of biggest German deals of the year
Cinven, the UK buy-out firm sealed one of the biggest German deals of the year with E925m purchase of plastics films unit Pentaplast from Kloeckner Werke AG. The firm succeeded in knocking down the final price from E1.1bn but still outbid rivals BC Partners and Bain to seal the transaction. The deal is the largest leveraged buy-out to be agreed in Europe since Goldman Sachs and Schroder Ventures agreed to pay Henkel E2.6bn for its speciality chemicals unit Cognis last month.
AltAssets 22.10.01

Duke Street Capital launch as Iberian private equity business and new E120m fund
Duke Street Capital, the UK-based pan-European private equity firm launched a new subsidiary to invest in Spain and Portugal. Iberduke Capital Partners is based in Madrid and is currently raising its first investment vehicle. Iberduke, 51 per cent owned by Duke Street, will be one of the largest independent private equity investment vehicles in the Iberian peninsula. Its first fund, Iberduke Participaciones, has completed a first closing at E80m and expects to close at E120m later this year.
AltAssets 25.10.01

Israeli start-up funding plummets in Q3
Just $150m was invested in early-stage business in Israel in Q3, compared with $392m in the same period last year, according to research from IVC. This marks a 60 per cent drop. Foreign investment mirrored this. Israeli government tax breaks aimed at encouraging foreign investment have done little to improve the situation. The Israeli Venture Capital Association has forecast foreign investment in Israeli funds will fall to $1bn, a drop of $2.2bn from last year. This has been attributed to economic uncertainty and the Palestinian situation.
Venturedome 17.10.01

German tax reforms not expected to produce big jump in deal flow
The long-awaited German tax reforms are unlikely to unleash a gushing flow of private equity deals, according to a panel of experts. It will make it easier in some instances to complete deals but it won't be a driver towards greater activity, they said. Some commentators have predicted that the tax reforms coming into effect in January 2002, particularly the abolition of tax paid on the sale of corporate shareholdings, will trigger a surge in deal flow. They argue that companies have been waiting for the introduction of the new tax regulations before spinning off assets or completing restructuring.
AltAssets 5.10.01

Austria allows pension funds to invest in private equity
The Austrian government is to pass legislation that will allow pension funds and insurance companies to invest between five and ten per cent of assets to private equity and venture capital. This will add to what is already an optimistic picture as venture capital has grown nine-fold since 1996, according to the Austrian Venture Capital Association.
PrivateEquityCentral 3.10.01

Sweden's investor AB suffers big write-down on private equity portfolio
Swedish investment firm Investor AB has taken a hit on its private equity portfolio in the third quarter, reflecting the general and far-reaching deterioration in venture capital markets. It said it had reduced the estimated value of its portfolio by SEK1.5m for the latest quarter and SEK2.9m for the year to date.
The firm remains committed to venture capital but would be ‘selective' about its new commitments.
AltAssets 12.10.01

Candover opens French office
In a bid to extend into the French buy-out market, Candover has opened an office in Paris. Candover has been an active player in the French market for years. It is hoped that the office will put the company in a good position to benefit from opportunities once the market improves. Christopher Spencer and Jean Michel Coulot will run the Paris operation.
EVCJ October 2001

Nestle to launch CHF200m corporate venturing fund
Swiss food giant Nestle announced plans to launch a CHF200m corporate venturing fund to invest in strategically attractive small businesses. It will be managed by an independent team and will focus on the food and life sciences sectors. Many large technology and electronics firms have set up corporate venturing arms in recent years. Nestle's entry to the market signals the trend may be broadening across other industrial sectors.
AltAssets 19.10.01

Losses announced at Private Equity Holding
Poor market conditions have been blamed for the SFr70m loss announced by Swiss asset manager Private Equity Holding (PEH). PEH warned that investors should not expect things to improve in the short term.
PrivateEquityOnline 16.10.01

Europe seen escaping severity of US VC downturn
The European private equity industry will escape as severe a downturn as the one currently being suffered in the US, according to Keith Arundale, director of business development for PricewaterhouseCoopers. He said that preliminary figures for the first half of the year showed a marked slowdown in Europe but not on the same scale as in the US. The immediate challenge will be to continue attracting new investors in the asset class, particularly pension funds, to increase their allocations in spite of the slowdown, he said. The assimilation of the euro across the continent will stimulate pan-European activity and cross-border deal-making, helping to reawaken the moribund M&A sector.
AltAssets 4.10.01

Apax acquires Italian asset management division
Exclusive rights for the acquisition of Italian bank Bipop-Carire's Azimut assets management unit have been obtained by Apax Partners in a deal estimated at E500m to E600m. Bipop had valued Azimut at E1bn last spring but falling profits of 70 per cent at the bank in the first half of this year have accounted for this reduced price.
PrivateEquityCentral 23.10.01

Commission warns that European venture capital slipping further behind US 
The European Commission warned that the European venture capital industry, despite its rapid growth over the last few years, is falling further behind the US. The EC says that member states need to accelerate reforms if they are to meet their self-imposed 2003 deadline for the implementation of the Risk Capital Action Plan (RCAP). Venture capital investment in the US was twice the size of that in Europe in 1998 but by 2000 was more than four times bigger, it said. The commission also complained that there were still too few innovative projects in Europe and that entrepreneurship was still underdeveloped.
AltAssets 29.10.01

Softbank Europe closes Munich and Paris offices
Softbank Europe is to operate solely out of London now and will close its Munich and Paris offices. The focus of the London-based company will continue with the same early-stage focus in Europe and Israel.
EVCJ October 2001

Disappearance of early-stage venture capitalists will create deal flow vacuum, says investor
Europe will experience a contraction of early-stage and seed stage venture capitalists over the coming years, causing deal flow problems for later stage private equity firms in the future, according to industry players. They said that the euphoria and subsequent downturn in venture capital investing over the last two to three years meant that the industry would see a third of early-stage venture capitalists disappear.
AltAssets 18.10.01

Net.IPO shuts down IPO business
Net.IPO is to shut down its IPO business and will focus on its venture capital division. This comes after the firm closed its offices in Italy, France, Belgium and Spain. The company will concentrate on developing its pan-European portfolio and restructuring. It has no immediate plans to start raising new funds.
EVCJ October 2001

Apax and Siemens call off deal
Further evidence of a slowing economy emerged as the £500m deal between Apax Partners and German electronics company Siemens AG, for its Mannesman Plastics Machinery unit, fell through. The deal is said to have fallen apart after it announced a drop in profit forecasts for Mannesman, which led to the bank, Newco, withdrawing its finance.
PrivateEquityCentral 10.10.01

Bridgepoint Capital cements relationship with Nordic region
The European buy-out firm Bridgepoint Capital is to open an office in Sweden. This office will add to offices in the UK, Germany, Spain, Italy and France. Bridgepoint has $3bn under management.
eFinancial 4.10.01

Carlyle Group may reduce its European fund
The Carlyle Group, the giant US venture and buy-out firm, is considering reducing the size of its $657m European fund because of a shortage of attractive investment opportunities and the fall in valuations since the end of the technology boom.
Financial Times 22.10.01

FLV to wind up fund
Troubled Belgian technology venture capital fund FLV has thrown in the towel following a $30m ‘embezzlement' in its Korea fund. FLV said yesterday that it was to wind up the fund by 31 December 2004. It will make no investments in new ventures and will concentrate on existing portfolio companies to secure their ‘gradual and orderly' realisation, the firm said. Other plans to ensure returns to investors include a management restructuring and cost reductions to bring down operating costs to E30m. It is already preparing to return E1.36 per share to investors through a decrease in fund capital.
AltAssets 5.10.01