Only fools rush(ed) in

In the space of 18 months, the market has gone through a 180 degree flip from a leveraging frenzy to de-leveraging one. The Ferretti deal in Italy is a good case in point: the company recently underwent a restructuring that saw embattled private equity backers Candover and Permira carved out of the capital structure. Another example is the KKR-led EUR8bn NXP acquisition in the Netherlands: the business recently divested its wireless chip division and completed a loan swap with creditors as it attempts to free up cash and reduce its debt burden.

The apparent stillness of the market hides a world of activity beneath the surface, as private equity firms attempt to manage pressured portfolios - often involving tricky re-financing negotiations or the painful decision to cut their losses altogether.

The idea of public-private partnerships is the new phase in supporting the recovery of the financial system. It is not a new idea; governments have frequently flirted with it, particularly when it comes to infrastructure. However, the effectiveness of the model is being questioned in the wake of the large fiscal stimulus packages that have been perceived as largely ineffectual. In the US, banks have initially decided to stay away from the scheme, while reception of the idea among private equity firms has been mixed.

Suspicion is rife in the current climate and few are prepared to be the first to move and potentially lose, especially as many are still not through with counting the damage from the last round of exuberance. Discipline and judicious planning seem to be the terms that will float around for some time to come. Better late than never.

Yours sincerely,

Francinia Protti-Alvarez

Editor, Benelux unquote"

Tel: +44 20 7004 7475

Francinia.protti-alvarez@incisivemedia.com.

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