"The German private equity market holds its ground despite the turmoil of the European debt crisis and the uncertain economic outlook. Investment so far this year has already reached the level of full last year, " said Ulrike Hinrichs, managing director of the German Private Equity and Venture Capital Association (BVK) at the presentation of statistics for the German private equity market for the third quarter of 2011. With investments of € 4,669 million in 877 companies, the results have not only surpassed that for the same period last year (€ 3,284 million), but have already exceeded the total for the whole of last year of € 4,646 million.
In the third quarter, the total investment of € 1,470 million closed nearly one quarter behind the same period last year (€ 1,887 million). Nevertheless, the results for the first three months of 2011 (1,312 million €) could still be exceeded. The current decline in investments is likely to be largely due to the uncertainty caused by the European debt crisis and the overall difficult financial market and financial conditions. Together with the revised economic outlook, this affects the propensity of companies to invest and thus their demand for capital. All in all, the private equity market, however, has proved resilient to the adverse macroeconomic conditions.
Of the total investment in the third quarter in Germany € 1,284 million (i.e. 87%) is accounted for by buyout transactions. Whilst these results were less than the previous quarter (€ 1,509 million), they exceeded investments in the first quarter (€ 1,014 million). The difficult situation of many banks in the course of discussions about the debt crisis and at Basel III are not yet reflected in the buyout figures. At € 144 million or ten percent of total investments, venture capital activities (seed, start up, later-stage venture capital) fell by almost a quarter compared to the previous quarter (€ 190 million). The results for the first three months of the year were also higher at €170 million.
So far this year, venture capital investments in Germany, at a total of € 504 million, slightly above the previous year's figure (€ 475 million). A significant plus in investments has come in the area of buyouts which at €3,807 million reached more than double the previous year's figure (€1,881 million). The result of the previous year (€ 2,833 million) marked by the effects of the financial and economic crisis have also been exceeded. The area of minority investments (growth, turnaround, replacement) remained, at € 359 million, well below the level of the first three quarters of 2010 (€ 929 million). The reason for this is the smaller number of very large minority transactions of some buyout firms in the current year.
Despite the strong third quarter, the outlook is muted. "Whether in the last quarter of the year, the growth trend of the past four half-years, in which we have seen investments increases continue, remains to be seen," said Hinrichs. Nevertheless, after the encouraging indications of the year to date, 2011 will be seen as another step towards the stabilization of the German private equity market. "It is hoped that future policy initiatives to provide sustainable solutions for the Eurozone will help regain the confidence of the markets."