Closed for Christmas

01 November 2008

Tweet
Facebook
LinkedIn
Google plus
Send to

Shock news stories about the global economy have subsided. Global stock markets are down - the DAX has now fallen below 4,200 points - and the economic freeze is reaching beyond the automotive industry, which was the first to call for protective measures from governments. In Germany, any hopes that consumer spending might pick up again after high energy prices dampened enthusiasm to spend, were dashed by signs that Germany may be entering recession, which came just months after claims that Germany could decouple and continue on its growth path

The private equity industry is therefore currently holding fire. There are few deals being done, and the most sizeable - BC Partners' acquisition of SGB Group - was mostly financed with equity, as most banks have closed their books until after Christmas. In addition to these buy-side financing obstacles, dealflow is being hampered by the difficulty of getting good prices for an asset on the sell-side. However, at the time of writing Invest Equity has announced that it has signed an agreement to sell Austrian technical energy infrastructure services company Powerlines Group to Gilde Buy Out Partners. This is symptomatic of the kind of asset that can still be financed, with infrastructure and energy continuing to be hot topics. With winter well and truly here, the industry is digging in and moving carefully to weather the harsher climate.

At the Deutsche unquote" Awards on 30 October in Munich, the atmosphere was one of guarded confidence. Some put the current malaise down to psychology, while others stated they would wait it out and move carefully if a good opportunity presents itself. The general consensus was that in these tough times the priority is working with incumbent portfolio companies to protect them during the downturn. It is going to be a long and hard winter, and the industry will wait to see if Christmas offers some cheer.

Yours sincerely,

Mareen Goebel

Editor, Deutsche unquote"

Tel: +44 20 7004 7462

mareen.goebel@incisivemedia.com.