BVK: Private equity market on course for a new record year
“At a figure of €7.3 billion, private equity firms have invested more in Germany than ever before in a six-month period. The German market is therefore well on course to set a new investment record this year”, according to Ulrike Hinrichs, Executive Member of the Board of the German Private Equity and Venture Capital Association (BVK) at today’s presentation of the market figures for the first semester of 2017. 602 companies received financing, the same level as in the same six-month period last year.
“A new record level in large majority takeovers made a significant contribution to this result. But in the venture capital segment and in minority holdings, too, investment is well on track”, says Peter Pauli, Member of the BVK Board and Managing Director of BayBG Bayerische Beteiligungsgesellschaft, which is where the latest market figures were presented at a press briefing.
Lively buyout market
Already in the last quarter of 2016, buyout activities in Germany had increased significantly and this trend has continued into the first half of 2017. “Many of the transactions announced just before the end of last year were actually closed in the first half of 2017 and these are now having a positive impact on the market figures for this year”, explains Hinrichs. In fact, buyout investments reached a new record high of €5.91 billion, which is significantly above the figures for the same period last year (H1 17: €1.29 billion, H2 2017: €3.78 billion). Many buyout firms, both international and German, have recently been able to raise new funds and thus have the corresponding financial strength at their disposal. In conjunction with financial offers from the banks and debt funds that remain affordable, buyout investors find themselves in an attractive environment, especially for large transactions. While some large takeovers, such as Atotech, Xella and Solvay Acetow had already attracted plenty of attention in the last quarter of 2016, they were followed in the new year by SGB-SMIT and Concardis, for example, and over the summer by the takeovers of STADA and Schenck Process and the minority investment in Ottobock Healthcare. “Based on the transactions we know about at the moment, we are expecting a record year for buyouts and for the entire German private equity market”, predicts Hinrichs.
When it comes to minority investments (growth, replacement capital and turnaround finance), most of which are aimed at small and medium-sized companies, the trend has also been upwards. Their volume adds up to €0.94 billion and has already surpassed the figure for the whole of last year (€0.59 billion) in the first six months alone. In addition to the still large number of growth investments in small and medium-sized companies, there have also been a few outstanding individual investments in established medium-sized firms and more mature start-up companies. “The public focus on the big transactions overlooks the fact that by far the largest proportion of more than 1,000 companies that receive private equity every year are small and medium-sized enterprises and start-ups”, explains Peter Pauli, whose firm BayBG is one of the 15 so-called “Mittelständische Beteiligungsgesellschaften” (MBGs) that are active in Germany, supporting regional SMEs in their respective federal states with equity investments.
Continued high level of investment of venture capital
Having reached €0.93 billion in 2016, its highest volume in since 2008, venture capital investments are well on track to reach the same level again this year. In the first six months, venture capital investment added up to a total of €0.43 billion, as it did in the first half of the previous year. The level of the second six months in 2016 has not been reached (€0.52 billion). “German start-ups are currently benefiting from lively investment activity. At the moment, there is no end to this trend in sight and we are expecting investments of at least the same level as last year”, says Hinrichs in relation to the year as a whole.
Janine Heidenfelder, Press Spokesperson
German Private Equity and Venture Capital Association e.V. (BVK)
Tel +49 30 306982-24, Fax +49 30 306982-20, e-mail firstname.lastname@example.org