Every cloud ..

20 May 2009

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Following the cancellation of the Preziozo buyout and the Giannoni sale in May, buyout news is equally bleak this month. The drop in the volume of buyouts has been dramatic, with only the MBI of Capitaine Fracasse taking place. Adding to the gloom, the EU Commission's proposal for an Alternative Investment Fund Managers Directive, which will affect a number of buyout houses, was greeted with disdain. AFIC itself backed critics of the legislation calling it inappropriate, disproportionate and discriminatory. This news alone should be enough to incite despair but, as they say, every cloud has a silver lining

The good news of the month in deal terms comes slightly lower down in the market: The volume of expansion deals this month was the highest this year so far, with 14. Additionally, an unusually high amount of these transactions were structured with debt, demonstrating that banks are indeed still open for business, albeit on a much smaller scale. With GPs seeking to strengthen their current portfolio, this sector of the market is currently showing no signs of slowing down.

Also on a positive note, while the buyout sector might have had limited activity this month, the Q1 unquote" Barometer, composed in association with Candover, demonstrates that the French buyout market has outperformed all the other European markets in terms of value and came a close second behind the UK in terms of volume. The fact that the French private equity market is, on a relative scale, weathering the economic crisis far better that its European counterparts, that French banks are on the whole in good health and still providing some debt, puts the French buyout market in the best position to take a leading role in the European recovery. With the Idex and Arjowiggins deals nearing completion, there are already a couple of significant buyouts on the horizon.

Yours sincerely,

Francois Rowell

Editor, France unquote"

Tel: +44 20 7004 7524

francois.rowell@incisivemedia.com.