DACH Congress: Fundraising targets €7bn

Kimberly Romaine
11 October 2011

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Despite a sombre economic backdrop, DACH private equity deal doers are remarkably upbeat, with two thirds of todayТДs unquote" Congress in Munich convinced that LP appetite for the region is actually rising.

Just one third feel it has become harder to sell Europe to foreign investors, and more than half feel the current eurozone woes leave the private equity landscape relatively unchanged, according to a sentiment survey conducted this morning by unquote" and communications specialist Equus.

"It should be a very good time to invest in private equity," said author and former investor Guy Fraser-Sampson. "During a recession has historically been the best time to invest; you do better investing then than within four years either side of a downturn," he continued.

Such confidence may not be matched by investors, with Fraser-Sampson
adding: "But investors are not rational, which may spell bad news for fundraisers."

Indeed, the expected wall of fundraisings in Europe has been slow to materialise, with GPs preferring to postpone launches rather than force a "no" from investors. "GPs we work with are looking to optimise their portfolios. They are also wary of being in the market too soon; there is a real concern about losing momentum," points out SJ Berwin partner Sonya Pauls. She said other reasons for delaying fund launches include the fact that LPs are largely focusing on secondaries now.

But when the launches do come, they will come fast and furious, with CMP Capital Management's Ludger Vonnahme reckoning that around 18 funds will launch within the next two years for investment into DACH, targeting a combined €7bn (excluding Triton, which would skew figures). He said: "This is up by a factor of eight in terms of recent fundraisings, so it is a lot for the LP landscape to digest."

It will be very difficult for some, with others able to breeze through, said Pauls: "It will be a story of opposites. Some funds we have worked with recently have taken just six weeks, while others will take up to 16 months. Sometimes it is first-time teams racing through, while big brands take much more time."

This juxtaposition of circumstance can be prepared for by GPs who understand the nuances of their existing LP bases. It is unlikely, all speakers said, that previous loyalty is any indication of future re-upping. Augur, which recently raised a fund, had 70% of LP money from German institutions in its predecessor vehicle - this plummeted to under 2% in its latest fund.