ABN AMRO Says Auf Wiedersehen’

By and large, investors on both sides of the Atlantic Ocean continue to show faith in the future of European private equity. However, some are losing faith in Germany’s ability to sustain a healthy PE market.

The latest example came last week as Dutch banking giant ABN AMRO spun out its German-based ABN AMRO Capital private equity group.

ABN AMRO, which focuses on mid-market buyouts, sold its German portfolio to the former ABN AMRO German management team of Pieter Davidson, Henk Drge and Christof Namenyi. The three will operate a new independent firm called DDN Capital Partners.

ABN AMRO will keep a stake in the portfolio and share in realized returns, but a spokesman declined to disclose the size of its remaining share.

“Our pan-European footprint is very active,” says ABN AMRO London-based spokesman Alexander Evans. “We’ve decided to focus on the more core markets in Europe. It was decided going forward that Germany was not a core market.”

The DDN portfolio will remain a six-company portfolio but the companies within it may grow via acquisition. The portfolio includes Lowen Play GmbH, a German arcade operator that ABN AMRO bought for $11.7 million in 2001; Dyconex, a German circuit board manufacturer that was also backed by Thomas Weisel Partners; and Steco International Plastic Logistics Systems, an Austrian manufacturer of re-usable plastic containers.

DDN Capital Partners will likely raise another fund next year with a target of about $100 million, according to reports from Europe. The firm will target mid-market buyouts in Germany, Austria and Switzerland.

Private equity investment in Germany has dipped this year, according to Thomson Venture Economics (publisher of PE Week). So far, private equity investors have disbursed about $3.8 billion into German companies in 2004 in both venture capital and buyout deals. Private equity deal flow reached $4.4 billion in the same period last year.