Stock market pressures feed venture capitalists

The trend for public-to-private management buyouts continues. Three companies listed on the London Stock Exchange took the plunge in the second week of September and opted to leave behind a market low on sentiment for smaller old economy companies by taking their businesses private through a management buyout.

All Hi-Tec Sports, which makes sports footwear, Dawson Group, a specialist asset rental business in the logistics sector, and PWS Holdings, a specialist international reinsurance broking group- however, either opted or were more suitable for debt rather than equity finance.

These latest announcements are a further indication of the strength of the trend for public-to-private, which is being driven as much by the venture capital industry as it is by those companies suffering an ignominious fate at the hands of public market investors. With firms like Alchemy, which delights in difficult deals and some time ago took into double digits the number of previously publicly quoted companies in its portfolio, enjoying successful investments and not struggling to find agreeable exit opportunities see Instem Computer Systems exit this issue this can only encourage.

Also driven by the public stock markets is the uncertainty presumably facing the private equity operations both of Chase Manhattan and its acquisition JP Morgan and those of Credit Suisse First Boston and its target, Donaldson Lufkin & Jenrette. Meanwhile Dresdner Kleinwort Benson, which is acquiring privately owned Wasserstein Perella see private equity news this issue recently designated private equity as a separate business line within the bank, underlining its increasing importance to the bank.

Also in this issue we look at the role accountancy firms play in private equity and how Sweden’s venture

capital community is coping with the present hype that has spawned countless incubators and a flood of money that is raising prices.