Where there's a will, there's a way

01 January 2008

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Motivated by the industry's relentless urge to complete more deals, private equity professionals and their bankers are scrambling to find new ways around the obstacles they face. The credit crunch has shaken up the leveraged finance world, but crises are both fertile grounds for innovation and a great opportunity for newcomers to make their mark.

Club deals among lenders are one obvious solution to minimise risk exposure on any given deal. Lehman Brothers, General Electric and Lloyds TSB teamed up for the £600m financing of Oak Hill's £945m secondary buyout of Firth Rixon, while EQT's take-private of Swedish company Securitas Direct required a collective effort by SEB, RBS, Bank of Scotland, Dresdner Kleinwort and two mezzanine providers. There are also reports across all segments that this risk mitigation strategy is being widely adopted by banks. There have even been suggestions of banks refusing to begin negotiations on a deal without a guarantee by the equity provider that other banks are already involved.

There are indication that some ambitious banks are seeking to make the most of these troubled times by underwriting deals which are neglected by more cautious, established lenders. Landsbanki, which has been spearheading the growth of asset-backed lending in the UK, has now entered the French market by partnering with Societe Generale to finance OFI Private Equity's merger of Flexitallic and Siem Supranite, and doubling TCR Capital-backed Locatel's capex facility. One commentator said this was reminiscent of the previous market downturn in 1992, when some lenders were forced out of the market and new ones moved in.

Another interesting opportunity, the credit for which goes to Candover, is illustrated in the debtless buyout of Alma Consulting from Apax. Candover spotted this fast-growing company which had been recapped just before the summer and made an unsolicited offer that Apax couldn't refuse. A little additional mezzanine and capex were provided, but no new senior debt.

Finally, this will be my last edition of France unquote". I have thoroughly enjoyed covering this vibrant market and meeting so many of the fascinating characters that populate it. I am moving into commodities, another big story in this fast-growing world. In the capable hands of my successor, who will no doubt shortly be in touch with you, this journal will continue to be the most detailed and comprehensive source of French private equity news.

Yours sincerely

Julien Hall

Editor, France unquote"

Tel: +44 20 7004 7524

julien.hall@incisivemedia.com.