June 2006 issue

Editor’s Note

Where private equity fears to tread

News analysis

Hybrid bonds: likely to lower the cost of LBO financings?

Hybrid bonds have started to move into non-investment grade territory in recent months, begging the question of whether they can they be incorporated into the balance sheets of private equity-backed companies. Given their relatively flexibility and cheaper cost, compared to the PIK tranche they would most likely replace, larger buyout firms are beginning to eye these financial instruments with interest. Lisa Bushrod reports.

Rise of the private equity debt fund

The relationship between private equity and the debt market has become much more intimate in recent years. But with firms getting bigger and bigger and increasing liquidity in debt trading, European private equity is branching out. Tom Allchorne reports.

KKR opens public market floodgates

KKR Private Equity Investors (KKR PEI) was admitted to listing on Eurolist by Euronext Amsterdam in May and was the largest IPO on Euronext since the beginning of the year in terms of capital raised. Investor demand for the product was stronger than expected and several days before the flotation KKR PEI increased the number of common units from 60 million to 200 million. Based on the opening price of $24.80 (€19.64), the market capitalisation of the vehicle reached $5bn (€4bn), quite a leap up from its expected $1.5bn. In addition, KKR is in the process of raising some $10bn from traditional LPs and the main question begging an answer is where the firm is going to deploy all this capital and whether investors in the new vehicle will make the returns they are anticipating. Angela Sormani reports.

News highlights

Braveheart to fund raise via AIM IPO

Q1 2006 record Euro CLO issuance

PE exceeds stock market

Mid-market brimming with confidence

Triago-X to list

Seed through early stage

Amadeus handed ECF

UK small co investment peaked Dec 05

Enterprise Ireland €175m handout

Imperial Innovations wins spinouts R&D grants

PE is attractive to SIPPs investors

Fund news

Lead story

Vision Capital secures €1bn

Vision Capital, a buyer of direct private equity portfolio assets, is eyeing a potential pool of €1bn for future investments. The new investment programme comprises a €350m committed core fund, Vision Capital Partners VI LP, which is expandable through a series of parallel investment vehicles that offer an additional funding capacity to reach a final programme size of €1bn. The fund structure will allow for the efficient execution of transactions of varying size and diversification (from €20m to in excess of €500m of equity), reflecting the differing numbers and sizes of companies in the private equity portfolios the firm is targeting. Angela Sormani reports

Quick view

Palmer Capital raises £85m

Madison raises CHF50m

Nordea launches bond for private clients

Partners mezz fund close

Waterland final close

Norvestor IV fund close

New FoFs for Amanda Capital

Exit news

Lead story

Targacept: European venture in the US

Based in North Carolina Targacept specialises in the design, discovery and development of a new class of drugs to treat central nervous system diseases and disorders, such as Parkinson’s and Alzheimer’s. It started life in 1982 as part of RJ Reynolds Tobacco Holdings, set-up to study the effects of nicotine on the human body. In 1997 it was incorporated as a wholly owned subsidiary, achieving independence in August 2000. Tom Allchorne reports.

Quick view


Exits on the up

BVCA looks at IPO appeal

Debenhams IPO priced at bottom of range

Logstor acquired in secondary

CVM sells care homes

IK reduces Oriflame stake

Enermet sold to Bayard Group

Zumtobel IPO

Gresham makes 4x return on Alstec sale

Infinity merger means exit for VCs

VC-backed NoemaLife floats

bmp to float YOC

H&T sold by Rutland

Targacept IPO

Two exits for ABN AMRO

Northzone exits NextGenTel

VCs exit CropDesign

HM Capital sells ETG to Candover

Capiton sells EHR

GIMV exits LA Gym

Investcorp sells Minimax to IK

3i and Electra sell Tensar stakes

Charterhouse makes quick Avent exit

Former Internet start-up gets PE backing

Schmack Biogas IPO


Refinancings on the up

Report on best global PE jurisdictions

2005: a good year for Austrian private equity


Ashton Penney appts

Alfa expands

HSBC poaches

Pedersen expands

SJ Berwin promotes

Ariadne hires

Linklaters German name change

GLSV adds

CCC hires

AGF recruits

Revcap appts

VCM recruits

Allianz appts

Candover expands

CBCM adds

3i new team

Seven Hills appts

BoS hire

AGF hires

Gresham recruits

3i reshuffle

Deloitte appts

SG appts

AnaCap appts

Sofinnova hires

Dechart’s Weil raid

Noble recruits

Celtic Pharma appts

Barclays Ventures hires

Gordon Bros promotes


CEE: full steam ahead

The pace of fund raising, transactions and exits has accelerated in Central & Eastern Europe (CEE) over the past few years. Angela Sormani looks at the attractions of the market for investors and how the increasing availability of debt has changed the buyout landscape.

LP Talking Head

LP Corner

Management fees: alignment of interests

There has been much hype in the press recently surrounding management fees and their impact on returns for LPs. Recent research has revealed annual management and performance fees can vary significantly from fund to fund and the main concern for LPs in the event of poor fund performance is that these fees can eat significantly into returns. Angela Sormani reports on how LPs are ensuring their GPs’ interests remain aligned.

European Buyout Supplement

Indian buyouts

Anthony O’Connor reports on this fledgling, but exciting new market.

Chinese buyouts

Much hype, but little substance to date, reports Anthony O’Connor.

Never had it so good!

It’s undoubtedly a heady time for European buyout firms on the fundraising trail. Preliminary figures for 2005 show European buyout firms captured 76.6% of total funds raised last year, which works out at a whopping €25.329bn spread between 2,178 firms. Figures for 2004 were similar and already the pundits are predicting 2006 will at least match this success. Lisa Bushrod reports

Club buyouts

Patrick McCurry takes a look at the growing trend for club buyouts.

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