Press Releases

• Positive Trends in Investments
• Total Losses on the Decline

Berlin, 20 February 2007 – Throughout the year 2006 the private equity firms operating in Germany had invested 3.6 billion €, a plus of 20 per cent compared to the previous year.  The percentage of investments in Germany rose from 70.2 per cent in 2005 to 90.5 per cent.  “The pleasant rise in investments is first of all the result of more investments in buy-outs dominating investment activities since 2001.”, comments Thomas U.W. Pütter, Chairman of the BVK Board and Chief Executive, Allianz Capital Partners GmbH, the rsults of the BVK Statistics for the Year 2006 at the Press Conference of the Bundesverband Deutscher Kapitalbeteiligungsgesellschaften - German Private Equity and Venture Capital Association e.V. (BVK).

Buy-out Financing is Driving Force for Growth

Thanks to some bigger single transactions the fourth quarter was extremely strong and achieved the highest quarterly result ever – 2.2 billion € invested in 390 companies.  Throughout 2006 private equity firms invested 3.6 billion € in 970 companies (2005: 3.1 billion € in 983 companies).  Like 2005,  investments of the last quarter outdid the amount invested in the first three quarters 2006.  Pütter:  “Like in previous years investments made a great leap forward in the 4th quarter.  Many transactions were meant to be finalised before the end of the year to be allocated to the current business year.”

Big buy-out financing continued to increase and with 71.5 per cent (2.6 billion €, 92 transactions) had a favourable influence on the good annual results (2005: 1.8 billion €, 82 transactions) while venture capital investments fell from 1.3 billion € in 2005 to now 1.0 billion €.  Within this sector early stage investments dropped from 304.9 million € to 264.3 million €.  Managing Director Dr Holger Frommann:  „Despite the decline in the venture capital sector we are satisfied to see that seed financing enjoys a revival and could multiply by five compared to 2005.”

The invested portfolio  rose to 23.1 billion €  invested in 5,986 companies (2005: 21.5 billion € invested in 5,723 companies).

Bavaria Leads Geographical Distribution of Investments

As before,  federal states where groups are located or where the mittelstand is well-developed  could profit from the regional distribution of buy-outs and so Bavaria leads by a wide margin of 50.5 per cent,  followed by Baden-Wurttemberg with 13.6 per cent, Hesse with 12.9 per cent and North Rhine Westfalia with 7.7. per cent.

The vast majority of new investments was spent on the branches other services (42.7%), mechanical engineering (18.5%), iron, steel, light metal (5.5%) and computer (4.3%).  Hightech industries (computer, communication technologies, biotechnology, medical related) together received 12.9 per cent (2005: 28.2 per cent) of all investments but can refer to almost one third of financed companies.

Raising of Funds Remained Stable

In 2006,  2.8 billion € were raised which means hardly no change compared to the amount raised in 2005 (2.9 billion €).  65.8 per cent of these funds were raised independently from external investors.  The lion share of new funds was raised from buy-out funds – 1.5 billion € or 52.5 per cent.

More than two thirds of the new funds came from international investors thus proving the growing importance of international investors compared to previous years (2005: 22.9%; 2004: 19.3%).  “German private equity firms are intensifying their efforts to raise fund abroad.  The continuous restraint of German investors  forces private equity firms to raise funds abroad.”,  explains Frommann.  The biggest group of financiers were fund of funds (19.1%) followed by private investors (individuals or family offices) (17.9%) and institutional investors  such as banks (13.4%) and insurance companies (12.5%).

Divestments Reach Almost Record Values, Total Losses Drop

Divestments totalled 2,066.3 million € which is almost the record amount of 2,131.8 million € reached in 2002.  “It reflects the optimistic trends in the share and M&A markets.”,  Pütter says.  “Many firms took advantage of favourable conditions and the market players’ disposition to buy and sold their commitments.”

As a result of the good economic situation and decreasing insolvencies,  total losses dropped from 10.3 per cent in the year 2005 to 5.0 per cent.  Like in 2005,  the majority of exits were trade sales (25.1%), sales of shares after an ipo (19.2%) and sales to other private equity firms (29.0%).  All in all 15 portfolio companies, 9 of them in Germany, were quoted on the stock exchange.

Economic Impact

Private equity firms finance above all small and medium-size companies and that is why start ups and the mittelstand profit from equity capital.  More than two thirds of all companies financed in 2006 have less than 100 employees and 72 per cent of them have turnovers under 10 milion €.  All companies that were provided initial or follow-on funding in 2006 had a total turnover of 47.3 billion € and 288,500 employees.  All portfolio companies of the private equity investors produced a total turnover of 188.5 billion € with 962.400 employees.  Frommann:  “The number of financed companies and of portfolio companies reflects the constant high number of buy-outs in established companies with high turnovers and numbers of employees.”

Key Facts
31 Dec 2006		31 Dec 2005
28.7 billion  €	Funds under management	26.5 billion  €
2.8 billion €	Funds raised	2.9 billion €
3.6 billion €	Investments	3.1 billion €
2,600.3 million € in 92 companies	… in buy-outs	1,767.9 million  € in 82 companies
1,037.7 million € in 878 companies	… in venture capital	1,271.7 million € in 901 companies
264.3 million € in 337 companies	… in early stage	304.9 million € in 345 companies
23.1 billion €	Portfolio	21.5 billion €
5,986	Portfolio companies	5,723

Remarks

Private Equity means to provide equity capital for unquoted companies in all stages, i.e. venture capital and buy-outs. Venture Capital refers to early stage including seed and start- up and later stage including expansion financing.

For press enquiries please contact:

Bundesverband Deutscher
Kapitalbeteiligungsgesellschaften e.V. (BVK)
Thomas U.W. Pütter, Chairman of the Board
Dr. Holger Frommann, Managing Director
Reinhardtstrasse 27c
10117 Berlin
Germany
Phone:   +49.30.30 69 82-0
Fax:       +49.30 30 69 82-20
bvk@bvk-ev.de, www.bvk-ev.de

VOCATO public relations
Birgit Brabeck / Jessica Amthor
Bahnstrasse 19
50858 Köln
Phone:    +49.22 34.6 01 98-18/-17
bbrabeck@vocato.com, jamthor@vocato.com

  
About the BVK

The Bundesverband Deutscher Kapitalbeteiligungsgesellschaften – German Private Equity and Venture Capital Association e.V. (BVK) was founded in 1989 in Berlin. It represents German private equity and venture capital firms as well as international firms operating in Germany. Its mission is to represent its members’ interests and to foster public understanding of the work and role of private equity investors as reliable partners for companies, initiators of economic growth and a factor of stability for the German economy.