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Continental Europe & Israel: November 2001

Corporate venturing lags behind US, Europe biotechs still attracting VC funding, French private equity market to grow threefold by 2006...

German VC Knorr Capital Partner invests in listed-VC KIMON
Consolidation in the German private equity industry has continued to gather pace. Venture capital firm Knorr Capital Partners has acquired around 45 per cent of listed VC firm KIMON-Beteiligungen to strengthen its life sciences portfolio. A statement from Knorr Capital signalled that the investment was part of an emerging plan to build up a network of strategic partnerships in the life sciences sector.
AltAssets 27.11.01

Venture funding must advance, says European Commissioner
Erkki Likanen, the European Commissioner for Information Society and Enterprise has reaffirmed the need for venture capital to provide finance for entrepreneurs. He emphasised the need to cut down on the red tape and make investment easier, highlighting the need for further policy initiatives from the Commission. He stressed the importance of establishing a European model that would make investment easier, with similar tax incentives spanning the whole of Europe.
PrivateEquityOnline 16.11.01

Israeli start-ups enjoy 24 per cent increase in investment in Q3, says one survey…
Venture capitalists have increased their investments in Israeli start-ups in the third quarter, reversing the recent trend of retreating from the troubled market, according to the latest figures from VentureOne. The survey said that there was a 24 per cent rise in the total amount invested in start-ups to $265.9m. There were 42 investments in total, the same number as in the previous quarter, which produced an increase in the median amount invested to $5.5m from $3m.
AltAssets 27.11.01

…Israeli high-tech investments down still further, says another
Investments into Israeli high-tech companies have slumped in the third quarter of this year, showing a 66 per cent drop on the same period in 2000, according to figures just released by venture research house IVC. Israel's high-tech companies raised $371m in Q3 this year, 28 per cent below even the second quarter's dismal results. The number of companies receiving capital decreased from 137 in the previous quarter to 117 in Q3. The survey is based on reports from 128 venture investors, of which 91 were Israeli funds and the remaining 37 were other - mostly foreign - investment entities.
AltAssets 9.11.01

French private equity market to grow threefold by 2006
According to estimates from Barclays Private Equity France and Burlington consultants, the French private equity market is to treble in size by 2006 to E15.5m. The report projects similar growth for the whole of Europe.
EFinancial News 19.11.01

German private equity firmly on course to defy its sceptics
The German private equity industry is going through a transitional stage that will consign to memory the frustrations of its early evolution and produce a more sustainable and attractive investment market, according to a report just published by AltAssets, sponsored by the Bank of Scotland. The report looks in detail at the size and composition of the German market in the context of the country's recent economic and political history. It describes legislative developments and looks at the rapid evolution of the industry since the mid 1990s. It also surveys the opinions of a wide selection of institutional investors, both domestic and foreign, and analyses their experiences of the market.
AltAssets 26.11.01

Three investors for Nasdaq Europe
Three institutions have taken equity stakes in Nasdaq Europe. ABN Merchant & Venture Capital, Dresdner Kleinwort Wasserstein and Berliner Effektengesellschaft have all agreed to become investors
Venturedome 14.11.01

Scottish Widows invests in Pentech Ventures
Scottish Widows Investment Partnership, one of the largest fund managers in Europe, has announced a £5m commitment to Glasgow-based early-stage venture capital fund Pentech Ventures. Bob Lawson, marketing director at SWIP, said the firm was currently looking at a series of other prospective venture capital investment opportunities. He said the current market conditions had not deterred their interest in technology companies and that in many respects, there could not be a better time to buy.
AltAssets 26.11.01

Eon postpone sale of VAW
German utility Eon has postponed the sale of VAW, its aluminium unit to CVC Capital Partners, in order to avoid footing a E575m capital gains tax bill. This will renew anxieties about corporate restructuring in Germany.
PrivateEquityOnline 2.11.01

European corporate venturing still lags well behind US
European corporate venturing has grown rapidly in recent years but remains a long way behind the US, according to the first ever dedicated report on the subject from the European Venture Capital and Private Equity Association. The report found that corporate funds raised more than E2.5bn in 2000. More than E1bn was invested by corporate venturers in Europe during the same period, with most of it going into seed, start-up and expansion stage capital. Although this marks a huge rise from the low base of previous years, it is still a long way short of the sort of levels achieved in the US. It represents about five per cent of total European VC investment, compared with nearer to 15 per cent in the US.
AltAssets 23.11.01

3i to broaden composition of investment
3i is to shift its investments to ensure an equal balance on all stages of companies from early-stage technology start-ups through to buy-outs. This is to reflect the current market situation as opportunities in early-stage technologies have waned.
Institutional Investor 8.11.01

European exits emerge from the gloom
The exit picture in Europe brightened a little to suggest that there is still life in the private equity firmament. Barclays Private Equity joined Permira and Bridgepoint Capital in a select group to have exited an investment in one week last month. Barclays announced it had sold Ravenstock Tam, to US group Mobile Storage Group to make a ‘good return' on the £23.4m investment it made when the management bought out the firm in 1998. Permira, formerly Schroder Ventures, recently sold its French interest in Domoservice and Bridgepoint and CVC sold its holding in the Parisa café business. Private equity groups have been especially hard hit by the deterioration in public markets this year and by the mounting economic uncertainty that followed clear signs of a slowdown in the US. It remains too early to say whether these recent deals represent the start of a gentle upturn or simply a blip.
AltAssets 20.11.01

Israeli prime minister calls for more tax breaks
Ariel Sharon called for local investors in Israeli funds to receive tax breaks. This came after the downturn in the high-tech sector and a drop in both local and foreign investment. September witnessed the government agreeing to exempt foreigners from capital gains tax.
Venturedome 27.11.01

European biotechs still attracting VC cash but IPO window may be closed for years
European biotech firms continued to attract a generous slice of private equity funding in the first half of this year, despite the deterioration in the investment climate in recent months, according to the latest Ernst & Young European biotech review. The report warned, however, that the exit routes for venture capital investors were still problematic and the IPO window that slammed shut so unceremoniously earlier this year may stay closed for some years. The report singled out UK biotech firms as being particularly successful in attracting money in recent months.
AltAssets 19.11.01

Index Ventures names AOL chief technology officer to advisory board
Index Ventures, the pan-European venture capital firm, has bolstered its advisory board with the appointment of Barry Appelman, the chief technology officer of America Online. AOL Time Warner Ventures invested in Index Ventures II, the firm's $300m fund, earlier in the year.
AltAssets 16.11.01

CapMan slow to invest and exit, but upbeat about next year
CapMan's latest results showed little new investment, plenty of follow-on investment and no exits for the third quarter. The firm announced pre-tax profits of E29.6m for the first three quarters of this year. This compares with E15.4m for the same period last year. CapMan said it would record a ‘good' final result for 2001 and that any further exits this year would boost the firm's results. But in the current climate, this seems unlikely - it reported no exits in the third quarter.
AltAssets 16.11.01

UBS Capital records Q3 loss of CHF112m, restricts direct investments
UBS Capital, the private equity arm of the Swiss banking giant, decided on an organized retreat from direct investment after producing another sizeable loss in the third quarter. It has recorded a pre-tax loss of CHF112m in the third quarter, compared with a loss of CHF351mn in the second quarter. UBS said it expected more bad news in the year ahead.
AltAssets 14.11.01

Pricoa warns that buy-out activity will be restricted by access to debt
European buy-out activity over the next year will be seriously restricted by difficult debt conditions and a reluctance among companies to drop their prices, according to Terence Wong of specialist mezzanine debt provider Pricoa Capital Group. The main reason for the deterioration in debt conditions has been the darkening outlook for the world economy, which has hit loan books and injected a new note of caution into their business activities. Buy-out activity so far this year has held up better than most other sectors of private equity but has started to creak a little in recent weeks and mounting macroeconomic uncertainty has put the brakes on a lot of deals.
AltAssets 12.11.01

Fall in European early-stage investment highlights VC caution
Early-stage venture capital investment in Europe has fallen 40 per cent in the first 10 months of this year compared with the same period a year ago, according to Tornado research. The uncertainty of the economic climate has bred a mood of caution and made VCs more inclined to invest in later stage investments, the report said. The average deal size across all sectors also fell, reflecting the slowdown in the industry and in capital markets in general. The findings echo developments in the US, where activity has been quicker to slow. The last couple of months have seen activity grind to a near halt as firms wait for some visibility on short-term macroeconomic prospects. Optimists predict an upturn in the first or second quarter of next year but others are less sanguine. They are worried public markets will take longer to recover, limiting short-term prospects for VC exits.
AltAssets 8.11.01

FT/OECD report says Switzerland tops league for innovation and industry potential
Switzerland shows greater potential for strong industrial performance, innovation and entrepreneurship in the years ahead than anywhere else in the world, according to a league table produced by the Financial Times and based on research by the OECD.
Sweden was in second place, followed by the US, Ireland and the Netherlands.
The idea of the exercise was to rank countries according to their potential for economic growth over the medium term, based on their receptiveness to new technologies, the strength of their labour markets, productivity growth, and a host of other indicators. Venture capital firms have historically gravitated towards countries that show these sorts of qualities.
AltAssets 2.11.01

CSFB scales back private equity business
Credit Suisse First Boston became another private equity player to scale back its personnel and activities in what looks to be an accelerating trend across the industry. The firm is to lay off a third of its staff and is dropping plans to raise a multi-billion dollar fund. The redundancies are said to be part of a broader restructuring that follows not just a deterioration in the private equity market but also the firm's acquisition of Donaldson Lufkin and Jenrette last year.
Financial Times 1.11.01