BVK, the German venture capital association, has released German private equity investment figures for the first half of the year revealing a steady performance in terms of amount invested, up around three per cent with total new investments reaching DM3.3 billion in 1,004 transactions.
Of this total, expansion capital accounted for the majority of commitments at DM1.2 billion in 460 deals. This was followed by investments in the start-up category, which saw DM860.33 million invested in 359 companies. The two leveraged buyout transactions that took place in the first half of the year accounted for 19.5 per cent of the total amount invested at DM634 million. Included in this figure was the mega Messer Griesheim transaction, said to be the largest industrial leveraged buyout in Europe, valuing the company at E2.7 billion.
Commenting on deal flow in the German market, Dr Holger Frommann of the BVK says in general over the past ten years, the first half of the year has accounted for a third of new investments by volume, while the latter half of the year takes the majority of deals at two thirds. This year, however, Frommann fears that the volume of deals in the second half may decrease. He says:
“The series of high growth rates has finished. Germany has moved on from the boom to a process of consolidation that usually means a stagnation in new investments.”
As far as fund raising is concerned, there is plenty of money about, but, as in most markets, investors in private equity funds are being cautious, looking for experienced management teams that can demonstrate a good track record of investments, says Frommann.
Exits are proving difficult in Germany, with total divestment for the first six months of the year reaching DM1.2 billion. Trade sales were the most popular exit route, with DM254.84 million raised from 56 companies.
The IPO route however remains closed for the time being with only two companies that listed on the Neuer Markt at a value of DM2.03 million.
BVK statistics include the 168 members of the BVK and also another 61 private equity houses, German and foreign-owned, that are active in the German market. Frommann predicts a shake out among players in Germany, and says more M&A within the private equity community will be on the cards for the coming year. One such example is German venture capital firm Knorr Capital’s acquisition of Munich-based IT investment specialist IT-Adventure earlier last month.