June issue 2005

June issue

News analysis

Outperforming the competition

Without a crystal ball it is impossible really to know which private equity firms will outperform their competitors. But consultancy McKinsey, in a survey of private equity houses, claims to have unearthed the key elements showing how active ownership can lead to outperformance.

It’s not what you owe, it’s can you pay it?

With almost €20bn of new debt raised in 2004, distressed debt specialists are gazing greedily at those companies piling on the leverage. All the ratings agencies agree the current levels of leverage cannot continue. In a textbook example of stating the obvious, Moody’s says the default rate is likely to rise because much of the debt raised is rated in the lower rating categories and therefore liable to default later on. Speak to an analyst and they tend to be much less equivocal, and deal more in definites than likelihoods.

Euro venture heads west

With Euro venture funds having a job getting themselves noticed by LPs in the current fund raising rounds, some think the answer is to set up an office in the US. These European VCs have either decided they are being too parochial in their investment strategies and are looking for new deal flow or they are looking to enhance the potential of their current portfolio by looking at co-investment opportunities Stateside.

Quick flips: The fund manager’s wake-up call

Recent ‘quick flip’ IPOs of private equity-backed companies may be widening the divide between some City fund managers and the private equity market, but on reflection, it is validation that private equity is just doing its job – and well at that. On closer inspection, such deals could precipitate a whole new way of thinking for institutional investors.

News highlights

Jefferies acquires Helix

O’Brien new BVCA chairman

3TS name change

PCG sets up in Europe

Oak Hill opens London office

Abingworth opens new US office

PtP deal flow strong

Murray Johnstone holds onto VCT4

Quester VCTs first to merge

Seed through early stage

Enterprise Capital Funds hit the ground

HNW self-certification unclear

Startups Awards 2005

Throwing down The Gauntlet

HNWs access Montagu PE’s latest fund

NBAN becomes BBAA

BBAA inaugural conference

Fund news

Unigestion wins Union fund-of-funds mandate

IFE Conseil to raise second mezz fund

American Capital launches European mezz fund

ATP raises €1bn for second fund-of-funds

Pets at Home returns £70m to shareholders

3i to return £500m to shareholders

Montagu €2bn fund raising

CDC Entreprises close third fund

3TS raises €100m

Delta closes second Russian fund

Atlantic launches maiden fund

GED launches second SE European fund

Adveq launches US FoF

Nordea launches second FoF

Exit news

Arpida IPOs on Swiss exchange

Finndomo exit for 3i & CapMan

3i sells BetterCare to Four Seasons Health Care

Barclays Ventures exits Prima Corporate Wear

EQT sells FlexLink to ABN

AMJPE’s Firstline secondary buyout

Bowmark celebrates 3x return on RDF

PAI makes 10x return on Panzani sale

IG Group returns to the market

CVC celebrates Polimoon IPO

KPMG warns of IPO pitfalls

ISISEP exits Fat Face

EQT exits Sirona

NBGI makes first exit

Close Brothers VCT and Bamboo make 40% IRR

Granville makes 3.8x return on Ultralase sale

Tuffnells in secondary buyout

Barclays France sells SAIME

Pets at Home returns £70m to shareholders

3i to return £500m to shareholders


Spread betting still hot

The buyout of London Capital Group has been funded through a straight term loan provided by a private individual. The funds raised were used to buy out the existing owner, who retains a minority stake in the business, and fund future expansion. Frank Chapman, MD of London Capital Group, said: “We financed [the buyout] privately, not through a bank. We considered everything and we were offered funding by venture capital and private equity players but we decided that it would probably be more interesting for us to keep all the equity because we believe the business we have got has very strong growth potential.”


Israeli tech investing slows

UK 2004 performance figures

UK 2004 investment & fund raising figures

Hungary attracts pension funds

Hungarian PE investment value falls


Kirkland lawyer award

BoS reshuffle

New Warburg MD

Barclays PE heads

Hotbed appts

Pedersen & Partners in Estonia

GE Commercial appts

Barclays Capital appts

Oxford Uni scholarships

Osborne Clarke promotes

BoS new team

Ex-3i US appt

Blake wins prize

LDC regional teams

New Cinven associates

SJ Berwin promotions

New MDs for 3TS

New SCM chair

Abingworth in US

PCG in Europe

Pinsents promotes

Cambridge fund chair

GSC advisory board

Squire Sanders in Poland

PPM name change


Leveraging to maturity

It’s been over a year since the European Union welcomed ten new members, a year since this handful of emerging markets officially joined the ranks of their Western neighbours. While the region has yet to see a great influx of Western European or US funds, things are definitely changing. Tom Allchorne looks at the rise and rise of Central and Eastern Europe

Solvency II – insurance industry investment

Fundamental changes to the insurance industry’s solvency regime to establish a pan-European capital adequacy framework are currently being formulated. Joanna Gant looks at the implications of ‘Solvency II’ on the insurance industry’s private equity exposure.

Turnarounds: is it worth it?

Ask a selection of limited partners and most will have a proportion of their funds allocated to special situations. With the current boom in buyout fund raising and the exuberant debt markets, limited partner interest in these investments continues to increase in anticipation of a generation of companies on the brink of default that may make for some good returns in the future. Angela Sormani takes a look at the case for private equity investing in turnarounds.

Can Silicon Valley-style save Euro VC?

“The traditional European VC market is better at making excuses than returns, such as ‘there aren’t any entrepreneurs’ and ‘there is no exit market in Europe’,” says Guy Fraser-Sampson, co-founder of Mowbray Capital. His take on this, given the buoyancy of the London Stock Market, especially the Alternative Investment Market alone, over the last year or more, is harsh, but probably fair: “Too right there’s no exit market; for your small unexciting company!”

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