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Continental Europe & Israel: December 2001

Morgan Grenfell to sue EM.TV, Europe's VC-backed companies gloomy about future, New Israeli start-up fund, Europe becoming more entrepreneurial, AXA closes secondaries fund...

EU to inject £50m into regional UK venture capital funds
The European Union is to pour more than £50m into a series of UK regional venture capital funds launched by Chancellor of the Exchequer Gordon Brown in 1999 to fill the so-called ‘equity gap' in poorer parts of the country. The EU's contribution had been delayed by an investigation into whether the funds constituted an unfair state aid. The money will be channelled through the European Investment Fund, which is owned by the European Investment Bank, the European Commission, and a string of private banks and institutions. Its contribution to the regional funds will make up about 20 per cent of their total value.
AltAssets 13.12.01

Morgan Grenfell issues writ against EM.TV
Deutsche Bank has issued a writ against German media group EM.TV. It blames the group for the downfall of Morgan Grenfell, the firm it folded in November into its private equity unit DB Capital Partners. The writ relates to ‘alleged breaches of contractual warranties'.
PrivateEquityCentral 13.12.01

KPMG Transaction Services prepares for rise in German activity
KPMG Transaction Services has geared itself up for a jump in restructuring activity in Germany by relocating two partners and 18 managers from its London office. The implementation of radical tax changes at the start of next year is expected to precipitate a rash of deals. The two partners to move are Stephen Smith and Maggie Morrissey.
AltAssets 11.12.01

Growth.dk and 2M alliance
Two Danish venture capitalists have joined forces to enable them to invest across the lifespan of potential investment companies. Growth.dk had originally focused on seed investment and 2M on post early stage.
PrivateEquityOnline 13.12.01

Cinven report predicts rise in private equity funding for European M&A activity
Private equity firms will increase their participation in the European mergers and acquisitions market over the next six months, according to a survey of investment banks conducted by buy-out specialist Cinven. It found that 71 per cent of managing directors at the surveyed investment banks expected an increase in private equity activity in the M&A market. That expectation was strongest in the UK, where 77 per cent of MDs predicted an increase, compared with 73 per cent in Germany and 62 per cent in France.
AltAssets 11.12.01

WestAM increases fund size
WestAM is looking to raise an extra $300m for the fund of funds it launched in 2001. With an original target of $200m, West AM's Coreplus fund raised $180m at first close last August, but the fund said that it wanted to extend the fund to include some hedge funds. It intends to raise capital from foundations and endowments.
Alternative Investment News December 2001

Europe is ripe with nanotech opportunities
The opportunities for the nanotech sector are far greater in Europe than the US, according to a panel of leading academics and venture capitalists. Europe is particularly strong in materials, tooling and precision engineering, all of which are essential components if the industry is to flourish. There have been accusations that nanotech has been hyped, but the panel insisted that there were huge opportunities, especially in the UK where extensive research is being conducted.
Venturedome 6.12.01

Confidence still falling among Europe's VC-backed firms
Confidence about the business outlook is still falling among Europe's venture-backed firms, according to the latest 3i barometer. The survey's index fell to a new, all-time low of negative 109, suggesting the region's economy is heading for a painful and protracted slowdown. Brian Larcombe, chief executive of 3i, said that there now looked to be little chance of the sort of speedy upturned predicted by the so-called ‘v-shaped' school of economic forecasters. Although firms are a bit more upbeat about the prospects for profitability and turnover, the majority still expect to cut back on investment in the coming quarters.
AltAssets 7.12.01

New Israeli fund to help start-ups
The Industry Trade Ministry in Israel has agreed to set up a fund to grant loans to seed-stage start-ups. This initiative is the first government involvement in venture capital since the 1990s. The government will grant interest-free loans of up to $1m per company to be re-paid over a three-year period.
The Deal 18.12.01

T-Venture and Matav to launch investment fund
T-Venture, the corporate venturing arm of Deutsche Telekom, is to collborate with Hungarian telecoms company Matav to set up a venture capital fund. The fund will launch in the first quarter of 2002 and will invest in early-stage companies across Europe.
PrivateEquityOnline 21.12.01

Europe is becoming more entrepreneurial, says US group
Some European countries are making genuine progress towards liberalising their traditionally sclerotic economies to make them more fertile for entrepreneurs, according to the US National Commission on Entrepreneurship. The NCOE's evaluation runs counter to the prevailing view that Europe lags a long way behind the US in the way that it promotes entrepreneurship and is generally a fairly unsympathetic business environment for young businesses and start-ups.
AltAssets 6.12.01

Spanish partner for Parallel Ventures
Excel Partners, the Spanish investment adviser and private equity manager is to join with Parallel Ventures, the UK fund of funds. This will complete the European network for Parallel, which already works with French, German and Italian affiliates. Parallel will allocate £200m to the group.
PrivateEquityOnline 12.12.01

AXA Private Equity closes latest secondaries fund ahead of target
French firm AXA Private Equity has provided further evidence of the growing popularity of the secondaries market with the news that it has closed its second specialist fund well ahead of target on $480m. The fund will invest in deal values between $1m and $100m.
AltAssets 3.12.01

Positive outlook for European public to private activity
The number of public-to-private transactions is expected to increase in the next twelve months, especially in Germany, said a report published by Hawk Point Partners in conjunction with Mergermarket. The report is based on a survey into future expectations for public-to-privates in Europe among 250 key decision-makers in the UK, France and Germany.
PrivateEquityOnline 13.12.01

European allocation to private equity rise, says survey
European institutional investors plan to increase their allocation to private equity over the next few years, according to the latest edition of the Goldman Sachs/Frank Russell report on alternative investment. The survey said that European respondents expected their strategic allocation to reach 4.3 per cent by 2003 from the present level of around 3.6 per cent. Total assets committed to private equity by the survey's respondents have increased to $246bn this year from $169bn in 1999. There was a big increase in the UK and continental Europe to $23bn from $14bn but there were more institutions surveyed this time around. In fact, the UK was singled out as experiencing a significant increase in interest in private equity.
AltAssets 20.12.01