German private equity’s 2012 highlights

EQT buys BSN medical - Germany's first mega buyout since Evonik in 2011 happened in June this year when EQT Partners acquired medical supplies manufacturer BSN medical from Montagu Private Equity for €1.82bn. This deal is widely recognised as the main catalyst for the performance of German overall stats. Germany's total deal value for 2012 stood at €11.72bn (average : €65.82m) at the beginning of December, according to unquote" data. This compared with €9.64bn in 2011 and €6.61bn in the year before.

Montagu exited BSN medical two years after cancelling its first attempt at selling the Hamburg-based business due to market volatility. The firm had originally acquired the company for €1.03bn from medical companies Smith & Nephew and Beiersdorf in 2006, investing from its Montagu III fund. BSN medical's director Sylvain Berger-Duquene stated that Montagu helped BSN grow sales by 30% during its holding period, generating a turnover of €665m in 2011. EQT invested from EQT VI, which closed on €4.75bn in October 2011.

Evonik cancels IPO - The latest mega-buyout before BSN medical and a major player in the global chemicals industry, CVC-backed Evonik was looking to float on the Frankfurt Stock Exchange this summer where it could have entered the benchmark DAX index and achieved a market cap of up to €10-15bn, industry sources estimated. However, the GP pulled the floatation citing market volatility as the reason.

The BSN mega-buyout helped prop up Germany's year-end activity figures

The company had already canned an attempt to float earlier in the summer, also citing difficult market conditions. The flotation was intended to secure income to cover the liabilities associated with the ending of subsidised coal mining in Germany in 2018. Its cancellation highlighted widespread uncertainty around private equity-backed IPOs. Evonik had revenues of €14.5bn in 2011, generating an EBITDA of €2.8bn. CVC paid €2.4bn for its 25% stake in the business in 2008.

DBAG raises €700m - Deutsche Beteiligungs AG (DBAG) hit its €700m hard cap while raising its sixth fund this summer, placing a spotlight on the German fundraising market. Having previously been paid little attention, the market emerged as a key player in Europe, matching the UK's number of funds closed in 2012, according to unquote" data.

DBAG began raising money at the beginning of April 2012, and held a first close on €451m in early July, followed by the €700m final close later in the month. The fund is expected to begin investing in 2013. The fund's predecessor, DBAG Fund V, closed in 2006 at €539m and is 80% invested.

Private equity becomes election battleground - Germany's PE industry suffered a scare in September as newly announced candidate for the chancellor's office, SPD's Peer Steinbrueck, kicked off his campaign with hostility towards the country's financial sector at a press conference in Berlin.

Germany's Bundestag elections are set to be held in the autumn of 2013 and private equity could face damaging curbs should Steinbrueck win the elections and stick to his aggressive rhetoric. However, industry figures remained calm - when Steinbrueck was finance minister of the red-black coalition under Angela Merkel, he proved to be less of a left-wing socialist than a close ally of centrist-conservative Merkel.

German AIFMD draft criticised for strict stance - The German finance ministry published a draft for the implementation of AIFMD in Germany, which drew up measures that seriously threatened the industry. Preventing GPs from investing in their own funds, prohibiting funds-of-funds altogether and making it more expensive for funds to raise money were all part of the agenda. Industry figures feared that an implementation of the draft would have driven fund managers out of Germany to Luxembourg and other European jurisdictions.

However, strong lobbying efforts by the industry led by the BVK achieved a positive revision of the draft which is now making its way through the country's legislative system. This second draft is seen to be roughly in line with the basic AIFMD. Private equity practitioners expressed relief but said they were aware that they are battling against a very strong consumer protection lobby, which could yet influence the final version of the bill.

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• DACH
• Germany
• Deutsche Beteiligungs AG
• AIFM Directive
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