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
Buyouts
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.”
Dataroom
Israeli tech investing slows
UK 2004 performance figures
UK 2004 investment & fund raising figures
Hungary attracts pension funds
Hungarian PE investment value falls
People
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
FEATURES
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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