Speaking at the leading private equity conference,
Investcorp foresees strong investment opportunities in Europe
Bahrain, 06 March 2006 -
Senior executives from the world's leading private equity firms took the stage at last weeks Super Return conference, the leading international forum for the private equity industry, held in each year in Frankfurt in Germany.
Addressing the conference of over 1,500 private equity investors and investment bankers, Steve Puccinelli, Investcorps Head of Corporate Investment for Europe, explained that, despite high price levels, the improving European business climate meant that there were attractive opportunities for mid-market private equity investment, although these had to be carefully selected.
Puccinelli said that Investcorp was optimistic on the outlook for Germany, that had an upbeat business climate following the formation of the new government: "Germany is important to Investcorp three of our last seven investments in Europe have been in Germany, and it has many interesting mid-market companies with well entrenched market positions, often based on export performance. Our track record of supporting our investments is particularly important in Germany and across continental Europe: the message has got out that were a reliable partner and this often helps us have the edge when competing to buy a company."
In a panel discussion with other leading private equity figures, Puccinelli commented:
"Prices for companies are high, so you have to add value rather than just rely on leverage for your returns. That means being selective about which deals you do, and key to that is making sure you get the right brains involved in each investment decision. From our senior team, we assemble the group with the relevant expertise to consider each potential investment, generally involving some of our six advisory directors, who are all former CEO across a variety of industries.
Puccinelli highlighted that the easy availability of debt finance can result in deals being done with too much debt at too high a price: "Debt capital is being thrown at private equity firms, and for the moment thats not going to change. As a result we need to be highly disciplined, using the right amount of leverage to help generate the return from an investment, but being prepared to walk away from a deal, as we often do, when someone else is using too much debt to pay a over-the-top price."
Also speaking in Frankfurt, Savio Tung, Investcorps Head of Technology Investment, explained how, after a long period of contraction, European venture buyout investing was becoming highly attractive: "With our new $300 million Investment Technology Ventures II fund, were ahead of the pack in seizing opportunities for good investments.
"Tough times over recent years for technology have left many companies with good prospects but needing new equity capital to expand. We provide the growth capital, taking the business risk, perhaps for only a year or two, between early stage venture capital and the corporate financing for a mature business. Carefully managed on a fund basis, taking this business risk can deliver significant returns.
"Some of the attractive companies needing capital are publicly quoted, but with limited activity in the shares, and PIPE investment (private equity investment to increase the capital of a public company) has been one interesting aspect of our venture buyout business. In Germany, weve invested in two publicly quoted technology companies: Utimaco, which we successfully exited, and Mania Technologie, where the share price has performed strongly since our investment late last year. Five years on from the collapse of the tech bubble, its a propitious time to be investing in some of the companies that have survived and adapted, and are now well placed for growth."
Private equity and venture capital are two of the four products in Investcorps range of alternative investment products, alongside real estate investment and hedge funds.
Investcorp is a global investment group with offices in the Kingdom of Bahrain, New York and London. The firm has four lines of business: private equity investment, real estate investment, hedge funds and venture capital. Established in 1982, it now manages total investments in alternative assets of around $9.5 billion.
Further information on Investcorp is available at www.investcorp.com
Issued on behalf of Investcorp by Hill & Knowlton.
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Investcorp Press ReleaseAttachment: Investcorp-PrivateEquityConference(E)6March20.doc
Monday, March 6, 2006