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Western Europe & Israel: August 2003

European venture investment down slightly on last quarter but rate of decline slows, Belgian FLV Fund negotiates secondary market transaction for entire portfolio, EVCA launches new attack on Basel rules…

NIB Capital invests E210m in buy-out funds
NIB Capital Private Equity, one of the largest private equity investors in the world, has unveiled some of its recent European buy-out fund investments. New commitments totalling E210m have been made to Permira, CapVis and Altor. NIB has invested E150m in Permira Europe III, making the firm one of the largest investors in the E3bn mega-fund. NIB has also backed Swiss CapVis with a E35m commitment to Capvis II, which exceeded its original target of E300m when it closed on £340m in June. NIB has also announced a E25m commitment to the Altor 2003 fund, which managed to raise E650m within just four months of launching.
AltAssets 27.8.03

BVCA demands tax relief for venture capital trusts
The British Venture Capital Association is trying to persuade the UK government that venture capital trusts are the answer to the UK's aim of financing small businesses. Over the past three years funds raised by VCTs havE collapsed from £450m a year to just £50m. The BVCA's suggested solution is to improve the tax relief given to investors in VCTs. The current level of relief is 20 per cent but the BVCA has proposed that the government doubles this to 40 per cent in order to transform VCTs into an investment that attracts more people.
eFinancial News 18.8.03

Abingworth's sixth biotech fund oversubscribed at $350m
Abingworth Management, the UK-based life sciences venture capital group, has closed its sixth biotech fund at $350m, comfortably ahead of its original target of $275m. BV IV attracted significant global interest from both new and existing investors, the firm said. 54 per cent of commitments came from the US, 32 per cent from the UK and continental Europe and 14 per cent from the rest of the world. The fund will invest broadly across the life sciences field including platform technologies, therapeutics, medical devices and instrumentation. Investment size will range between $1m and $20m.
AltAssets 18.8.03

Belgian FLV Fund negotiates secondary market transaction for entire portfolio
Troubled Belgian venture firm, FLV Management, is in negotiations to sell its entire FLV Fund portfolio in a secondary transaction. The fund decided to wind up its operations after a $30m embezzlement scandal hit its fund in 2001. FLV fund is currently in negotiations with an unnamed Europe-based secondary investment firm. The potential acquirer has asked for exclusivity for the duration of the negotiations but the transaction is subject to further due diligence procedure.
AltAssets 15.8.03

Merlin Biosciences to expand into Finland with Helsinki office
UK life sciences venture firm, Merlin Biosciences, is expanding its European practice into Finland by establishing an office in Helsinki. A dedicated team, headed by Niilo Santasalo, will be responsible for identifying and evaluating Finnish investment opportunities. Santasalo joins Merlin from PCA Corporate Finance where he served as a senior investment banker.
AltAssets 21.8.03

UK quoted private equity past the worst
The UK's six quoted private equity firms have outperformed the FTSE All Share index by between seven per cent and 56 per cent since last August. Schroder Ventures International Investment Trust has been the strongest performer beating the index by 56 per cent. 3i Group outperformed the index by ten per cent, while fund of funds group Pantheon outperformed it by 15 per cent. Candover beat the index by nine per cent, while Graphite and Electra each beat it by seven per cent.
eFinancial  News 21.8.03

UK Charterhouse reaches final close at E2.7bn
UK Charterhouse Development Capital has reached a final close on its latest buy-out fund at just over E2.7bn. CCP VII initially targeted E3bn when it was launched in early 2002 but scaled back its fundraising efforts to E2.5bn in May this year. Charterhouse is one of a number of European mega-funds that has fallen victim to deterioration in the fundraising market over the last 12 months. Guy Hands was forced to reduce his E3bn mega-fund by a third in April while Doughty Hanson and Industri Kapital continue to struggle to secure commitments.
AltAssets 4.8.03

West LB's Saunders reportedly in talks with Coller Capital
Robin Saunders, the glamour-banking boss of West LB's troubled principal finance unit, is reportedly in ‘advanced talks' with UK-based secondaries specialist Coller Capital about backing for a buy-out bid. Saunders was also talking with other potential financiers, who might fund the bid alongside but separately from Coller.
AltAssets 13.8.03

German Ergo Equity Partner takes over management of IMH Funds
Ergo Equity Partner, the private equity arm of the Ergo Insurance Group, has taken over the management of the private equity funds of the IMH Group. Ergo is assuming responsibility for managing the funds after IMH failed to secure sufficient funding from its investors. IMH has set up three venture funds since 1999 with a total value of approximately E100m. The three funds originally targeted a total of E150m.
AltAssets 21.8.03

Nordic CapMan opens Norwegian office
Nordic private equity firm, CapMan, has opened an office in Norway, the smallest of the region's markets. The firm has also attracted a Norwegian investor, which will boost the firm's latest fund to E303m. The firm has received a E50m commitment from Argentum Fondsinvesteringer, the Norwegian government-owned fund of funds which has E295m under management.
PrivateEquityOnline 29.8.03

Change of fortune for Private Equity Holding with first profit for two years
Private Equity Holding (PEH), the troubled Swiss listed fund of funds, has reported its first quarterly profit for more than two years after a series of damaging write-downs and management problems. PEH made a CHF4m profit in the first quarter of 2003, compared with a loss of CHF34.8m in the same period last year. In the second quarter the firm's portfolio suffered a write-down of just five per cent to CHF254m compared with a 62 per cent write-down from CHF1.1bn last year.
AltAssets 5.8.03

BS Private Equity announces final closing of Italian Private Equity Fund IV at E550m
BS Private Equity has announced the final closing of its Italian Private Equity Fund IV at E550m. The fund held a first close in February this year at E400m and has now exceeded its stated target size. The fund will continue BS's strategy of investing in middle-market Italian companies, mainly focusing on buy-outs and buy-ins, as well as selected development capital transactions. The fund's investors include Scottish Widows Investment Partnership, PPM Ventures and SPF.
AltAssets 27.8.03

French BNP Paribas closes second CLO fund on E187m
French bank BNP Paribas has sold E187.2m of notes for BNP Paribas' Leveraged Funds Group Leveraged Finance Europe Capital II, a collateralised loan obligation fund that will invest in a managed portfolio of senior and mezzanine LBO debt across Europe. BNP's first CLO product raised E330m in 2001 and is fully invested.
PrivateEquityCentral 4.8.03

European venture investment slightly weaker in Q2 03 but rate of decline slows
European venture capital investment suffered a further decline in the second quarter of this year but there were faint signs that the long-running downtrend is flattening. Both the number of transactions and the amount invested dipped slightly but the average financing size edged upwards, according to figures published by Ernst & Young and VentureOne. European venture capitalists invested a total of E709m in Q2, a decline of 1.5 per cent from the previous quarter. The volume of investments fell by three per cent. But the average size of financing actually increased from E1.7m in the first quarter to E2m in the second, its highest level since 2001.
AltAssets 19.8.03

EBRD commits E15m to Hungarian fund
Hungarian private equity firm Euroventures Capital Advisory has secured a commitment of E15m from the European Bank for Reconstruction and Development for its third fund, Euroventures Hungary III. The EBRD allocation will be made alongside Hungarian pension funds that will invest via a separate special vehicle, allowing them to gain access to the asset class for the first time.
AltAssets 21.8.03

Tchenguiz and Lanphere to launch £500m debut private equity fund
Iranian property magnate Robert Tchenguiz and former director of Morgan Grenfell Private Equity Scott Lanphere are to launch a property-based private equity fund. The fund will be managed by Tchenguiz's new investment firm, Aletheia Partners, and will target between £300m and £500m. The fund will target companies with mid-market opportunities with sizeable property assets in the UK, Germany and France. It will identify companies with existing management teams to run cash generative property-based businesses.
AltAssets 11.8.03

Swedish A-P Fonden1 to invest in private equity
Swedish national pension fund, A-P Fonden 1, is to commit up to ten per cent in alternative assets including private equity, hedge funds and property. The fund currently has three per cent in alternatives, purely in property holdings. AP1 has made its first ever private equity investment with Amaranth Capital, a Swedish private equity firm.
eFinancial News 29.8.03

RBS expands leveraged team
The Royal Bank of Scotland has announced two appointments to bolster syndication and origination capabilities at its London-based finance unit. Mike Potter is joining the team as a director focusing on German and Italian markets. He previously served as executive director in syndications at West LB. Thomas Wolffe is also joining the team. He joins from Deutsche Bank.
PrivateEquityOnline 20.8.03

EVCA launches new attack on Basel rules
The European Private Equity and Venture Capital Association (EVCA) has launched a new attack on the proposed Basel rules on banking regulation. EVCA claims that European companies could lose between E5bn and E10bn in equity finance if the new rules on bank capital adequacy are implemented in their present form. The new Basel II rules are intended to match the amount of capital banks are required to hold by regulators more closely with the risks they take in their businesses. But EVCA says the rules could lead to banks turning their backs on private equity due to the proposed changes in risk weightings.
AltAssets 26.8.03

Profit growth of UK companies slows after flotation
Floating a portfolio company is no guarantee that it will continue to grow, according to a report by Ernst & Young. A report entitled Route for Growth covers UK IPOs that took place between 1998 and 2002. It found that less than 40 per cent of new issues increased their profits after going public. Although 82 per cent of the businesses did increase sales, bottom lines were hit, particularly in the first year after an IPO when private equity backers still retain a significant shareholding.
Real Deals 21.8.03

Deloitte to launch private equity fund placement group
Accountancy firm Deloitte & Touche is to launch a private equity fund placement service. Chris Ward, head of corporate finance advisory, and John Maxey, a senior tax partner at Deloitte, will lead the division. Deloitte's move comes as an increasing number of private equity funds are struggling to reach their fund raising targets. Firms such as Doughty Hanson, Terra Firma, Industri Kapital and Charterhouse have all experienced difficulties raising funds this year.
AltAssets 19.8.03

UK local authority picks private equity managers
Hertfordshire County Council pension fund, the UK local authority fund, has appointed Standard Life Investments Private Equity and HarbourVest Partners, both fund of funds investors, to manage a £55m private equity mandate. The UK local authority has pledged five per cent of its fund to private equity, an increase from 0.5 per cent. It is the latest in a line of public pension funds to increase its allocation to the asset class.
eFinancial News 8.8.03