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Western Europe: March 2003

Kennet Capital spins out from Broadview, L&G Ventures shuts German office, Pantheon ‘cautiously optimistic', Private Equity Holding gets reprieve, Myners report encourages UK pension funds to look at private equity…

L&G Ventures pulls out of Germany
UK-based Legal & General Ventures has closed its office in Germany following a year of disappointing deal flow. The firm will concentrate on its areas of strength, the UK and France, as well as considering other European markets including southern Europe and the Nordic region. Chief executive Adrian Johnson said that the amount of money chasing after deals in Germany was pushing prices higher.
EVCJ March 2003

EVCA says private equity investment crept higher in 2002 but fundraising slowed
Private equity investment activity across Europe rose 12 per cent in 2002 but fundraising nearly halved, according to preliminary figures published by the European Private Equity and Venture Capital Association (EVCA) and PricewaterhouseCoopers. The data simply confirms the dramatic rebalancing that is still ongoing across the industry after the implosion of the technology bubble in 2000 precipitated a more general downturn in financial markets. EVCA said private equity firms raised E19.4bn in 2002, compared with E38.2bn. The figure is the lowest since 1996, when just E8bn was raised, but broadly in line with fundraising in 1997 and 1998. The peak of E48bn in 2000 is unlikely to be matched for some years to come.
AltAssets 13.3.03

Pantheon pronounces itself ‘cautiously optimistic' for the coming months UK-listed fund of funds vehicle Pantheon Ventures has pointed to an ‘encouraging uplift' in transactions in the fourth quarter of 2002 and said that it is ‘cautiously optimistic' about the outlook for private equity investment. The company's interim results for the six months to the end of December showed that its fully diluted net asset value fell 2.7 per cent to 526.9p from 541.6p on 30 June 2002. Pantheon sounded some confidence about prospects for the buy-out market, both on the back of a gentle increase in activity towards the end of last year and because of the valuable source of liquidity being provided by secondary buy-outs.
AltAssets 3.3.03

3i European Barometer shows marginal increase in confidence for private companies 
Private equity-backed companies in Europe are a little more confident about the general economic outlook than at the end of 2002, according to the latest 3i Barometer, which measures private companies' confidence in business, political and economic climates. The index sank to an all-time low of negative 114 in October 2002, but crept up to negative 73 in January 2003.
AltAssets 6.3.03

EVCA points out drawbacks of Basel Accord
The European Private Equity and Venture Capital Association has repeated its concerns about the negative impact on the private equity industry of the Basel II Accord, which is due to be implemented in 2007. The EVCA stressed the possibility that the new capital requirements for banks would jeopardise institutional investors' commitment to the asset class.
EVCJ March 2003

HSBC finalises MBO of private equity arm, reducing stake from 100 per cent to 19.9 per cent
HSBC Private Equity has joined the growing list of captive funds gaining independence after the announcement by HSBC Holdings that it has finalised the MBO of its private equity business. HSBC did not disclose the transaction size, although in an agreement reached in August it was said the business would be sold for £50m. HSBC has reduced its shareholding from 100 per cent to 19.9 per cent, with the management taking an 80.1 per cent stake.
AltAssets 18.3.03

Permira preparing for another mega European buy-out fund 
UK-based buy-out firm Permira, formerly Schroder Ventures, is gearing up to launch a new multi-billion euro European buy-out fund in the next few weeks. Permira Europe III is expected to trump its E3.5bn predecessor with a target of more than E4bn. The new fund will join a handful of others, such as Doughty Hanson, Terra Firma and Charterhouse, in the market. Some of the major US private equity houses - Warburg Pincus, for example - are also raising fresh capital, some of which will be focused on the European market.
AltAssets 13.3.03

French Siparex announces good year despite challenging economic conditions
Listed French private equity fund Siparex Croissance, which is run by Sigefi Private Equity, announced healthy results for 2002 despite a tough economic environment. The firm unveiled gross capital gains of E15m compared to E12.3m in 2001. The company was able to increase its dividend by 12.7 per cent. Looking forward, Siparex said that despite the uncertainty of the global situation, ‘certain factors' should contribute to the company's continuing growth.
AltAssets 25.3.03

EVCA unveils rankings of EU tax and legal environments with UK at the top
The tax and legal environment in the UK is the most supportive in Europe for the private equity industry, according to research produced by the European Private Equity and Venture Capital Association (EVCA). The report ranks conditions in all 15 EU member states as part of an exercise to accelerate regulatory homogenisation. EVCA's benchmarking tool measures a series of variables for each country and then produces a composite score to determine the supportiveness of each local environment. The scoring runs from one to three, where one is optimal. The UK topped the table with a score of 1.20, followed by Ireland with 1.58 and Luxembourg on 1.67. Germany, Denmark and Austria were at the bottom, with scores of 2.41, 2.48 and 2.53 respectively.
AltAssets 31.3.03

Swiss Life extends deadline for Private Equity Holding
Listed Swiss private equity fund Private Equity Holding's parent company Swiss Life has extended the deadline by which time PEH must pay back a E222m loan. The last minute extension meant that PEH did not have to go into liquidation, although the firm still has to find the financing from somewhere. Secondaries specialist HarbourVest is reported to be interested in the portfolio although it refused to comment on whether or not it would acquire it.
Financial News 11.3.03

French private equity industry puts transparency at the top of its agenda The French private equity industry has put transparency at the top of its agenda to ensure it can build on its significant success of recent years in growing local investment activity. Xavier Moreno, President of the country's private equity association AFIC, told its annual conference that greater transparency was the key to attracting new investors to the asset class and retaining existing investors during difficult market conditions. 
AltAssets 12.3.03

French venture capital investment turns upwards in H2 2002
Evidence of the relative buoyancy of the French venture capital activity: after four consecutive semesters recording decline, the second half of 2002 brought a marginal increase in investment levels, according to L'Indicateur Chausson Finance. There was a six per cent increase in H2 2002 with E271m invested compared with E254m in H1 2002. But the gentle increase in investment was mainly to the benefit of existing portfolio companies and the proportion of capital committed to start-ups continued its downward path, Chausson Finance said. New investments accounted for 38 per cent of total financings, compared with 42 per cent in the previous year, and 63 per cent in H2 2000.
AltAssets 5.3.03

BVCA chairman calls for renewed commitment to economic reform in Europe
British Venture Capital Association (BVCA) chairman Michael Queen will use a keynote speech on Tuesday to call for more strenuous efforts among policymakers to ensure that Europe's economy does not fall further behind the US, citing the fertility of landscape for venture capital investment as an essential part of that ambition. Queen will stress that the BVCA applauded various reforms implemented by the present UK government, including granting independence to the Bank of England, the establishment of the Financial Services Authority, and the creation of the ten per cent capital gains taxation rate of entrepreneurs.
AltAssets 24.3.03

French VC Part'Com launches new technology fund
French venture capital firm Part'Com has launched a new technology fund with an ambitious target of E150m. Venture fundraising conditions have been miserable for the last 18 months and look unlikely to improve significantly in the immediate future. If successful in meeting its target, Part'Com's fund would be one of the largest to have been raised in Europe since the later stages of the technology boom.
AltAssets 17.3.03

Schroders' private equity results creep into the black in 2002
UK investment group Schroders had some good news in the shape of a profit posted for its private equity investments in 2002. The group's private equity results reached £12.9m (pre-tax) for 2002 compared to a loss of £19.6m in 2001.
AltAssets 4.3.03

Myners report has encouraged UK pension funds to turn to private equity, report says
UK pension funds are reviewing their investment attitudes with regard to private equity, according to a survey conducted by JP Morgan Fleming Asset Management. Some 30 per cent of respondents to the survey said that they had reappraised their attitude to private equity investment because of the Myners report, up from 21 per cent who had done so in 2001.
Financial News 11.3.03

French private equity investment activity rose seven per cent in 2002
The French private equity industry defied the gravitational forces being suffered elsewhere with a seven per cent increase in investment activity in 2002, according to figures from industry association AFIC. Its members invested a total of E3.524bn, compared with E3.287bn in 2001. AFIC said the total for 2002 was closer to E5.8bn if a handful of large deals financed by non-members, such as KKR's Legrand acquisition, were included in the total.
AltAssets 12.3.03

UK IPO market shows worst performance for 20 years
The health of the UK IPO market is the weakest for almost a generation, according to new figures from KPMG Corporate Finance. There were no company listings on the main market in the first quarter and just two investment trusts floated with a combined value of £14.45m. Exit conditions for private equity-backed investments have been difficult since the public markets began their steep descent in spring 2000 and there is no sign of improvement. The combination of the complete absence of an IPO market and a scarcity of trade buyers has left secondary buy-outs as almost the only source of liquidity. AIM, the London Stock Exchange's junior market for smaller businesses, managed only a slightly more encouraging first quarter performance. There were five listings with a combined value of £5.3m.
AltAssets 31.3.03

Access to manage funds of funds for AA Advisors
European firm Access Capital Partners is to manage two funds of funds for AA Advisors, the multi-manager arm of ABN Amro group in France. The funds of funds, which have a target size of E75m, will be offered to the bank's high net worth individuals in France through its private banking and life insurance arms.
AltAssets 14.3.03

IT-focused Bure Equity seeks refinancing: chairman resigns 
Bure Equity chairman Gösta Wiking has resigned as chairman of the board of directors, to be replaced by Håkan Larsson, as the Swedish private equity firm struggles to negotiate a refinancing. Bure suspended trading and announced last week that terms and conditions of the refinancing would be announced as soon as possible. The firm's net asset value amounted to SEK18.50 per share at the end of 2002, a 49 per cent fall on 2001.
AltAssets 7.3.03

UK's Permira underlines commitment to Nordic region with Stockholm office
UK-based Permira has announced the opening of a new office in Stockholm to better enable the firm to take advantage of opportunities in the Nordic market. Kurt Björklund will head up the new office. Permira has also appointed a new industrial partner, Ole Oftedal, to the new Nordic team. Oftedal was previously CEO of Fritidsresor and Adcore. Permira has already completed four transactions in Nordic companies and will focus on those companies in the business services, chemicals, consumer, industrial products and services, media and technology companies.
AltAssets 3.3.03

European M&A activity in the media and entertainment sector set to increase in 2003
The slight increase in M&A in the media sector seen in 2002 looks set to continue in 2003, according to a media sector insight report from PricewaterhouseCoopers. It's expected that media and entertainment corporates will come under increasing pressure from banks and shareholders to sell non-core assets in order to drive down debt burdens.
Real Deals 13.3 03

AXA Private Equity CEO calls for further transparency in private equity industry
Dominique Senequier, CEO of AXA Private Equity, called for more transparency within the private equity industry in order to get its ‘true development,' at a Frankfurt round table. Senequier also pointed out the under-exploited nature of the opportunities in continental Europe compared to North America, and said that AXA saw good opportunities in Germany.
AltAssets 5.3.03

3i signals more big losses on its technology portfolio
Europe's biggest private equity firm 3i has warned that the losses on its technology portfolio in 2002 are likely to have been larger than expected. It has issued a statement saying writedowns on its tech investments in the year to the end of March will be in the region of £360m, double the level last year but still less than the £400m in fiscal year 2000-2001.
AltAssets 27.3.03

Caledonia Investments acquires stake in Nova Capital
UK-based Caledonia Investments has taken a 33 per cent stake in specialist portfolio management company Nova Capital. Nova, which acquired Lica Development Capital in the alt quarter of 2002, now manages a £70m portfolio of around 20 UK-based companies including publishing group Duckworth Publishers.
Real Deals 13.3.03

European mezzanine investment increases by 120 per cent in H2 2002
Mezzanine investment in Europe more than doubled in the second half of last year, compared with the first half, providing some proof of the market's relative buoyancy in the region. As much as E2.2bn was invested in the second half of 2002. This represented an increase of 120 per cent on H1 2002, when E1bn was invested, according to the Mezzanine Management Monitor. Total mezzanine investment levels in 2002 remained below those of 2001, with E3.2bn invested compared to 2001's total of E4.2bn, reflecting the smaller size of transactions throughout the industry. In terms of geographical breakdown, the UK market share of mezzanine investment fell to 35 per cent in 2002, compared to 52 per cent in 2001. Mezzanine investment in France, in contrast, more than doubled its share of the market from 15 per cent in 2001 to 36 per cent in 2002. This was partly because two of 2002's largest deals took place in France, the E1.6bn buy-out of Télédiffusion de France and the E4.3bn buy-out of Legrand.
AltAssets 21.3.03

UK Kennet Venture Partners spins out from Broadview
Managing directors Michael Elias, David Carratt and Javier Rojas have led a management buy-out of Kennet Venture Partners from global M&A adviser Broadview. Kennet has joined a recent spate of private equity spin-outs seeking independence from their institutional owners. Kennet focuses on investment in technology and telecommunication firms and currently manages $280m in two funds. Kennet's key investors include Bank of America, Swiss Life and Allianz.
AltAssets 31.3.03