BVK Survey on IPO: Numerous IPOs in the pipeline

German private equity investors see a great potential for a successful IPO of their portfolios. That is the conclusion of a survey on IPO in 2004 carried out by the BVK among its members and other German private equity investors in which 111 companies evaluate their curren situation for going public and at present see 132 companies in the pipeline to be ready for an IPO. 56 investors reported to have at least one IPO candidate in their portfolios while only 36 of all participants could imagine to carry out an IPO under the present circumstances.

Half of all IPO candidates are venture-backed

“The outcome of our survey proves the positive effects the private equity market has on the primary market. Dozens of IPO candidates lie dormant in the portfolios of the private equity companies. Half the number of the IPO candidates of the years 2004 and 2005 are venture-backed”, says Dr. Holger Frommann, Managing Director of the BVK, e. g. A.T.U Auto-Teile Unger (Doughty Hanson), Grohe (BC Partners), Tank & Rast (Apax Partners and Wincor Nixdorf (KKR, Goldman Sachs Capital Partners).

Many of the interviewed companies see an interdependence of the private equity market and going public: Private equity investors are indispensable for IPO candidates while the return of the first essentially results from IPOs and later sales of shares of their portfolio companies. However, the participants in this survey consider going public to be more important for the private equity market than for their own businesses.

Germany in need of new IPO segment for small and medium-size companies

For private equity investors the present IPO structure in Germany is insufficient: More than half of those who responded to the questionnaire assess the current IPO segments to be inadequate or insufficient for small and medium-size companies (KMU). At least 51 of the participants consider the planned Entry Market , an alternative initiated by Initiative Finanzstandort Deutschland and Deutsche Börse AG to be a positive sign although many investors still lack information on these plans.

“Since the New Market has come to an end, Germany has been missing an IPO segment meeting the demands of small and medium-size companies but as a business location with a well-established middle-class Germany needs such a segment”, says Frommann.

Regular IPOs of German companies expected for 2005

The climate in the international private equity and venture capital markets has already considerably improved but the whole sector is rather sceptic concerning increasing speculations of future IPOs of German companies. Only 9 companies expect regular IPOs of German companies for the year 2004, 45 players estimate that the first half of the year 2005 will see IPOs in full swing. About one quarter of the private equity investors (28) expects regular IPOs for the year 2006, only. “The cancelled IPOs of X-Fab and Siltronic seem to prove the sceptics”, says Frommann. “But appearances are deceptive - in both cases the mechanisms of the market worked – an indication of the increasing maturity of the German private equity and venture capital market.”

Annex

The 6 key statements of the BVK Survey on IPO:

• Going public is of greater importance for the overall climate of the private equity market than for the individual companies.
• Private equity companies /investors expect regular IPOs of German companies for the next year.
• German private equity investors have many potential IPOs in the pipeline.
• Going public facilities in Germany are inadequate for IPOs of small and medium-size companies.
• Germany needs a new going public segment for small and medium-size companies.
• In future, private equity investors will alternatively switch to international for their portfolios’ IPOs.
   

Contact

Bundesverband deutscher Kapitalbeteiligungsgesellschaften –
German Venture Capital Association e.V. (BVK)
Dr. Thomas Kuehr, Chairman of the Board
Dr. Holger Frommann, Managing Director
Residenz am Deutschen Theater
Reinhardtstrasse 27 c
10117 Berlin
Germany

Phone: +49.30.30 69 82-0
Fax:  +49.30.30 69 82-20
E-mail: bvk@bvk-ev.de
Website: http://www.bvk-ev.de

VOCATO public relations
Birgit Brabeck/Corinna Bause
Bahnstrasse 19
50858 Köln
Germany

Phone: +49.22 34.6 01 98-0
Fax:  +49.22 34.6 01 98-12