The ongoing eurozone crisis is a concern on the mind of many PE players, potentially threatening access to financing and the growth prospects of portfolio companies. But, in what could prove to be a controversial view, Dunedin CEO Ross Marshall foresees that it could also spell trouble for euro-denominated funds. Greg Gille reports

"There does not seem to be any conceivable way that the euro can survive in its current form so we hope that there is an orderly break-up of the euro rather than a disorderly break-up to resolve the eurozone crisis," said Marshall while commenting on the UK mid-market firm's outlook for 2012.

"We're just delighted that our existing funds are sterling denominated and not euro denominated - LPs will be asking GPs what will happen when the euro collapses," he added. "This however will create opportunities for well-managed, well-capitalised businesses like our portfolio companies that are relatively un-leveraged, so that they can take advantage of the opportunities that will inevitably arise."

Dunedin's latest vehicle, Dunedin Buyout Fund II, closed on £250m in September 2006. It is approximately 75% invested.

Needless to say, not everybody in the industry will share this outlook, both with regards to the euro's future and the current appetite for Euro-denominated vehicles. "Despite what some Anglo-Saxon industry participants might foresee, I don't think the euro is due to collapse," a global placing agent told your correspondent. "What we are witnessing at the moment is that continental LPs largely prefer euro-denominated funds over their sterling counterparts. First of all, it is their own currency, which helps when balancing assets and liabilities. But the euro has also stood up remarkably well despite the crisis, which reassures investors."

"We are currently raising several euro funds, and they are doing extremely well. I would even say that today, both European and non-European investors would rather invest in Germany than in the UK," he added.

Fundraising activity in 2011 certainly reflected a shift in the European fundraising landscape compared to the previous year. The UK dominated the market in 2010, making up for 59% of fundraising activity in value - this figure dropped to 23% last year, with France closing the gap (18% against 5% in 2010) and the Nordic countries surging to attract a third of all commitments in European funds.

Regardless of currency issues, Marshall also forecast a tough year ahead for GPs wanting to hit the fundraising trail in 2012: "Nobody is under any illusion that fundraising will be easy. There are over 1,800 funds currently in the market and most of them will not succeed. Key factors will include: how the GP performed through the 2009 recession; the stability of the team; how differentiated and repeatable is the investment approach; and successful exits!"