Unquote

Corporate carvery

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The year is nearly over, much to the relief of many. But as 2009 draws to a close, there is some good news: it will end on a higher note than it started. Indeed, according to data from the Q3 unquote" Private Equity Barometer, produced in association with Candover, European private equity investment activity has grown for the second quarter in a row

What is more, some exits have begun to materialise. Take for instance 3i's divestment from Dockwise, which saw the firm net 2.1x money. Then there was the sale by Sofindev, Stonefund and Becap of labelling firm Bopack to French trade player Autajon.

Going forward, there is further good news: the expected opportunities coming from corporate carve-outs are beginning to filter through. Take for instance Belgian brewer AB InBev, which recently sold its US amusement parks to Blackstone for EUR3bn, while its Central and Eastern European assets (comprising 11 breweries) went to CVC Capital Partners in a EUR1.4bn deal.

The ongoing pricing issues, which could threaten to stymy these deals, are often offset by sellers retaining a stake in the newco, allowing them to get a slice of any future upside from a later sale. In the case of AB InBev's Central and Eastern European assets, for instance, the deal included an earn-out structure that could bring an additional payment for the vendor of $800m depending on CVC's returns. AB InBev also has a right of first offer if CVC decides to sell the business in the future.

That there will be potential for profitable investments next year by shopping for non-core corporate assets is widely agreed. The challenge, it appears, is to ensure that, if the seller is not in desperate need of a liquidity boost, the deal will need to be attractive for them too.

Yours sincerely,

Francinia Protti-Alvarez

Editor, Benelux unquote"

Tel: +44 20 7004 7475

Francinia.protti-alvarez@incisivemedia.com.

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