2003 - A year of success for medium-size private equity and venture capital companies

The year 2003 was a success for the medium-size private equity and venture capital companies organized in the BVK. The 14 companies invested 155.1 million Euro in 421 medium-size companies thus underlining their role as reliable partners of the middle-class.

“Compared to the previous year, investments Dr.opped to 193.9 million Euro but in view of the overall caution dominating the German market the year 2003 was a success”, says Wolfgang Hanke, Managing Director of Mittelstaendische Beteiligungsgesellschaft Sachsen and head of the BVK special group of publicly promoted medium-size private equity and venture capital companies. Medium-size companies proved that they can be succesful in the market consolidation, too.

Partner and motor of the middle-class

Medium-size private equity and venture capital companies have been supporting the German middle class for 30 years and turned out to be an important motor for it. Since their founding, the companies invested more than 2.1 billion Euro into 7,700 companies, at the end of the year 2003 they had 2,609 companies with more than 1,012 million Euro in their portfolios. “They have a turnover of 26.1 billion Euro. With this amount the 14 medium-size private equity and venture capital companies finance about 1.2% of the German GDP”, explains Dr. Holger Frommann, Managing Director of the BVK.

Flexibility means success in the long term

Over the past 10 years, the medium-size private equity and venture capital companies expanded their activities. In 1994, they had 1,883 portfolios totalling more than 416 million Euro, in 2003 the figures increased to 3,232 and 1 billion Euro, respectively, a success they owe to their flexible reaction to changes in the market and their  ability to meet the needs of the middle-class. “In recent years, many medium-size private equity and venture capital companies expanded their programmes for young technology firms and/or launched new projects like special programmes supporting the successorship in the middle class”, says Hanke.

Baden-Wurttemberg and Bavaria in the lead

More than half of all investments were made by Baden-Wurttemberg (41 million Euro) and Bavaria (38 million Euro), followed by Saxonia-Anhalt (18 million Euro) and Saxonia (13 million Euro). “In Baden-Wurttemberg and Bavaria companies can profit from a well established and represented middle-class sector. The developments in the new Länder where Saxonia and Saxonia-Anhalt play a very active role give reason to hope” , comments Dr. Frommann.

Importance will grow in future

“The medium-size private equity and venture capital companies are part and parcel of the German private equity and venture capital market und their importance will continue to grow”, Hanke says. “The growing demand for alternative investments to be provided by medium-size private equity and venture capital companies is to their advantage. Silent partnerships offer them many advantages compared to pure private equity or bank loans.” Medium-size private equity and venture capital companies try to conquer new markets to expand their business as for instance with the programme “Eigenkapital für den breiten Mittelstand” which is an attempt of Bavaria and the KfW to cooperate.