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The year that was 2010: Greek debt and green shoots

John Bakie
21 December 2010

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As the end of 2010 approaches, it will likely be remembered as a year of considerable uncertainty. Fear of a double-dip recession, major debt crises, a fragile economic recovery and the return of mega-buyouts are among the major developments affecting the private equity industry over the past 12 months.

All this week, unquote” takes a look back at the key events in the year that was 2010.

April

April was the month when fears over sovereign debt issues became a reality, with news that investors had lost confidence in Greece's ability to repay its debts. While other countries also relied on credit to balance their books, Greece's combination of high tax evasion and generous pensions made its case worse than most, and the country was at risk of complete financial collapse, prompting emergency meetings of European Union finance ministers.

Following a number of large deals in the previous month, the lower mid-market took to the stage in April, with a swathe of deals in this segment. The exit market also saw positive signs, with Astorg Partners selling a stake in French oil field services company Geoservices, in a deal that valued the firm at over $1bn.

May

The Greek debt crisis came to a head in May, with the European Union eventually agreeing a bail out package for the country. However, harsh cuts in public spending prompted riots, and the fears over some of Europe's weaker economies refused to go away.

In another positive month for exits, travel reservation specialist Amadeus was listed, raising €1.45bn, making it the largest IPO in Europe since the financial crisis began.

Despite a few big hitters, including KKR's €700m buyout of helicopter specialist Inaer, smaller deals again dominated the market in many European regions.

June

After a dire year for fundraising in 2009, June 2010 saw some green shoots emerging for those hoping to launch new vehicles, with several funds closing successfully. HitecVision Asset Solutions raised €420m, while Polaris Private Equity Fund III closed at €365m.

However, it seemed debt markets had not made a significant recovery, with the bulk of activity still taking place at the lower end of the market. Markets players said debt financing was starting to become available at reasonable, but usually only for the very best companies with reliable revenue streams.

In a further worrying sign for the private equity industry, KBC was forced to cancel its plans to sell its KBC Private Equity subsidiary. The bank was required to sell the private equity arm as part of its government bailout deal, but struggled to find a buyer.