News round-up


UK business misses out on £52bn of sales

Small and medium enterprises (SMEs) across the UK are losing out on £52bn of sales due to a lack of funding according to figures published by GE Commercial Finance. In a survey of 400 SME managers in the UK, the report found that more than one in 10, or 13%, of established SMEs across England each lost out on an average of £1.39m of additional sales because they lacked capital.

John Jenkins, chief executive of GE Commercial Finance, said: “With firms across the country predicting a healthy year of growth, it is vital that they secure the right amount and type of funding early on if they are to achieve their goals and minimise missed opportunities.”


EVCA opens up on three fronts

The European Venture Capital Association officially revealed plans to operate on three platforms at its annual symposium in Rome.

Contrary to reports in the FT, the organisation is not splitting or changing its fee structure but focusing specific attention on three different areas of the private equity industry: venture, mid-market buyouts and mega buyouts. All three business units will operate under the EVCA umbrella. In a statement the organisation said: “Common needs and messages will continue to be managed from the centre of EVCA, such as professional standards, lobby, communications and investor relations.”

It hopes to have exact details of how this new structure will work in the coming months, with full implantation planned by June 2008.


Carlyle to launch fund on Euronext

US buyouts giant Carlyle is to become the latest private equity firm to try and tap the public markets for capital by listing a US$1bn fund on Euronext Amsterdam.

Carlyle Capital will be priced at between US$20 and US$22 per share. The fund has already raised US$600m via private placement over the last 12 months and expects to add US$400m to this following the IPO.

Carlyle has already invested the majority of the private placement money in fixed income assets, including high grade AAA US Agency mortgages and credit products. Including leverage, it has investment assets worth US$17bn.


Austria sees largest buyout ever

Mid Europa Partners and France Telecom are to acquire Austrian mobile operator One GmbH for an €1.4bn, the largest industrial leveraged buy-out ever in Austria. Mid Europa will own a controlling stake in the company (65%), with France Telecom owning the balance.

The vendors include Austrian utilities firm E.ON, Danish telecoms group TDC and Norwegian telco Telenor. FT already owned a 17.45% stake.

One, which has two million subscribers, is the third largest mobile phone operator in the country with a 20% market share, generating revenues of €633m last year. It will now operate under the Orange brand.


Brown takes over at No 10

Gordon Brown has taken over the reigns as prime minister of the UK amid fears the former Iron Chancellor is about to come down hard on private equity tax breaks.

Speaking at the GMB Union Conference in Brighton, he said “We will make sure that there is justice and equity in the treatment of the tax arrangements in that area.” This has prompted speculation that carried interest could no longer be regarded as capital gains but instead as normal income.

The Treasury select committee investigating private equity listened to a range of opinions as part of its investigations into the industry, from union officials to buyout chiefs, claiming one scalp with the resignation of BVCA CEO Peter Linthwaite two days after he was mauled by the committee and the press.


Vigilance in the face of leverage

The head of the IMF, Rodrigo Rato, has warned regulators to be vigilant in the face of ever growing leverage at the G8 Summit in Germany. He spelled out his fears that rising interest rates could spell danger for some LBO deals. He said: “Some big mergers pose risks. This is not to say mergers are not good. But I think regulators should be careful.”

The run up to the summit was characterized by a concerted effort of trade unions, most notably by the UK’s TUC, to force private equity and hedge funds onto the agenda, but to no avail. The G8 summit – consisting of the heads of government of Britain, Canada, France, Germany, Italy, Japan, Russia, and United States – failed to mention anything concerning future regulation of the industry.


European funds smash fundraising records

European private equity funds raised €112bn in 2006, a new record, according to figures released by the European Venture Capital Association (EVCA).

Buyout funds attracted €84bn with €17bn allocated to venture capital, a 60% increase on 2005, making it the second highest grossing year for VC after 2000. A total of €71bn was invested into 7,500 European businesses by the industry, with buyout firms committing €50bn and mega buyouts parting with €19bn across 31 companies. Venture investments increased to €17.3bn from €12.7bn in 2005, accounting for 74.2% of the total number of companies. Start-ups more than doubled with €5.7bn invested in 1,905 companies and expansion capital more stable reaching €11.4bn in 3,335 companies.