The German equity capital market is taking the upswing of the first quarter with it and reaches a new business climate record in early summer: The business climate index of the German Private Equity Barometer rises by 10.4 points to 77.1 balance points in the second quarter of 2018. Both the business situation and business expectations are at record levels. The indicator for the current business situation rises to 79.6 balance points (+8.4), the indicator for business expectations to 74.5 balance points (+12.4).
The business climate is boosted by the development of demand for equity capital: the quantity and quality of the deal flow of the equity capital investors is increasing significantly. The indicator for the level of demand thereby exceeds its previous best value from summer 2011 and the quality indicator remains only slightly below its previous high. By contrast, there are signs of a turnaround in the fundraising climate and exit environment. Both sub-indicators continue to fall and have already moved somewhat away from last year's records. This is likely to be connected to the general unrest on the financial markets, which was triggered by the danger of an international "trade war".
The business climate in the venture capital market reaches a new high, the corresponding indicator rises by 9.6 points to 72.5 balance points. The current business situation beats its best value of the previous quarter (+ 5.6 to 73.3 balance points) and business expectations are also becoming significantly more optimistic again (+ 13.5 points to 71.8 balance points).
The business climate also reached a new high in the late stage segment of the German investment market with 80.8 balance points (+ 10.7): the indicator for the current business situation increased by 10.3 points to 84.8 balance points, the indicator for business expectations by 11.2 points to 76.8 balance points.
"The beginning protectionist escalation spiral between the USA on the one hand, and the EU and China on the other, will not leave the German private equity market untouched," says Dr. Jörg Zeuner, Chief Economist at KfW. "We therefore hope that this conflict will soon be resolved, and not only for the export industry. The still relatively young German venture capital market has already had to endure sufficient growth pains. A longer-term phase without major distortions would be desirable for its further development, so that investors can build up long-term faith.
"We are currently experiencing the longest and most stable upswing in the history of the German investment market," adds Ulrike Hinrichs, Managing Director of BVK. "The market is experiencing a process of maturity and growth that will prepare it for possible future setbacks. There is currently no sign of a downturn. The assessments of deal flow suggest that start-ups and medium-sized businesses continue to focus on growth and that venture capital plays a decisive role here. Increasing investor interest facilitates fundraising with a friendly exit environment at the same time. And in the trade conflict there will hopefully be sensible solutions."
KfW calculates the German Private Equity Barometer together with the German private Equity and Venture Capital Association e.V. (BVK) exclusively for the Handelsblatt. A detailed analysis with data table and graphic of the current German Private Equity Barometer is available at www.kfw.de/gpeb