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03 March 2009

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With the debt markets still closed and the likes of Barclays PE stating that it expects to invest around half as much in 2009 as it did in the previous year, it was no surprise to see that this month's dealflow was predominantly located in the expansion sector. Private equity houses are readjusting their investment strategies to meet current trading conditions. Take the case of AXA PE, which had sought to divest its stake in the Spotless Group; instead the investment house has opted to proceed with a capital replacement deal and upped its stake in the business

As predicted by sector experts, activity at the buyout level has almost disappeared with only three taking place in recent weeks. Indeed, the largest buyout was IRDI-ISCO Private Equity's purchase of Bernard Dumas from Arjowiggins for just EUR10m. On a more positive note however, according to the Q4 2008 unquote" Private Equity Barometer produced in association with Candover, the French market now leads Europe in terms of buyout volume.

On the back of that research, Q1 2009 is looking promising, with a number of deals nearing completion. While waiting for the Caceis deal to advance, Barclays PE has recently taken control of Compin in an LBO deal which, at the time of going to press, is pending approval from authorities. Four banks provided EUR70m of debt for that transaction.

Also on the upcoming deal radar is 21 Centrale Partners' buyout of Prezioso, a coatings solutions company for metallic surfaces. Meanwhile, Siparex has taken a 17% stake in management consulting partnership Greenwich Consulting (set to be renamed TwentyOne), while Evolem has staged an MBO of Brisach, a decorative fireplace manufacturer. At a time when a number of portfolio companies are having issues with their banking covenants, it is encouraging to see that French private equity houses have the confidence to keep investing.

Yours sincerely, Francois Rowell

Editor, France unquote"

Tel: +44 20 7004 7524

francois.rowell@incisivemedia.com.