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No resolutions at MGPE

Question marks continue to hang around Morgan Grenfell Private Equity. Namely, what, if anything, will it make on its shareholding in EM TV, which resulted from a cash and share settlement received for a 12.5 per cent stake in SLEC it sold the German media group; will its long planned buyout proceed; and what of Scott Lanphere?

Lanphere is the venture capitalist who joined Morgan Grenfell Private Equity from Advent International in 1998, after some 11 years with the latter firm of which, apart from a couple of years, were spent in London. With Morgan Grenfell Private Equity undoubtedly having to buy Lanphere out of carry built up at Advent steep expensive figures have guessed at. Lanphere, who got Morgan Grenfell Private Equity into bed with Bernie Ecclestone via the 12.5 per cent purchase of SLEC (the Formula One holding company), has certainly earned his keep for his current employer. He led the March 1999 buy into Giraudy at $232 million, which was sold the same time the following year to TDI, a division of Infinity Broadcasting, for $400 million. Media is Lanphere’s thing and his contacts are said to be enviable within that industry.

Talk is that Lanphere is out of Morgan Grenfell Private Equity, which increased in its intensity following the recent Super Return conference in Munich where Lanphere was a speaker. Currently Lanphere is still at Morgan Grenfell Private Equity.

But the fact remains that Lanphere got Morgan Grenfell Private Equity involved with Bernie Ecclestone (see evcj February 2001 p16 for earlier reporting.)

Scarcity in the European recruitment market of individuals with successful private equity and venture capital investment experience at present means Lanphere is likely to have options to choose between. For that matter the rest of the team at Morgan Grenfell Private Equity are unlikely to have worries in that direction.

Press speculation around Morgan Grenfell Private Equity has been rife since EM TV’s share price started its slow descent late summer last year. Morgan Grenfell Private Equity, presumably thanks to the insistence of its German parent, has declined to enter the fray.

For the time being what, if anything, Morgan Grenfell Private Equity will make on its shareholding in EM TV is probably as much of a mystery to those involved as it is to observers. With Bernie Ecclestone and the Federation Internationale de l’Automobile, neither of whom will feel the squeeze if EM TV goes under, look set to scupper Kirch Gruppe’s offer of a rescue package for EM TV, if Kirch’s bankers don’t scupper it first. Ecclestone and the FIA’s motivation is to ensure that Formula One doesn’t get relegated to the exclusivity of Kirch’s pay-tv channel. This part of the story has plenty more laps to run.

As for Morgan Grenfell Private Equity’s planned buyout it would appear this was in train last summer but has been stalled by the mounting concern over EM TV. Given that Deutsche has signaled its intent to divest and has not publicly rescinded logic follows that if the EM TV achieves a resolution the buyout may proceed. It’s an open question as to what level of support an independent, or otherwise, Morgan Grenfell Private Equity would get from institutional investors when it next hits the fund raising trail. However, it is well to remember that Morgan Grenfell Private Equity has suffered the intensity of the spotlight in a way that few other investors with major headaches will have to deal with. Institutional investors with their inevitable inside track will be in a position to put Morgan Grenfell Private Equity’s troubles into context in a way that others cannot.