Weekly round-up: is history set to repeat itself?

Reporting live from the 2014 EVCA Symposium in Vienna, Greg Gille heard TPG partner emeritus Vinzenzo Morelli's summary of the tailwind currently enjoyed by European private equity practitioners: "Markets are incredibly stable, IPOs are back in full force, distributions are up and funds are significantly easier to raise compared to two years ago." Despite turning tides in sentiment, delegates were urged not to grow complacent, cushioned by a false sense of security. Astorg Partners president Xavier Moreno warned: "Today debt is coming back, growth is also returning, LPs are keen to pour more capital into the asset class... The same bubble will happen again: prices will rise and holding periods will shorten." The market may appear to be undergoing a renaissance, but is history set to repeat itself?

While venture fundraising has fallen across Europe since the dotcom bubble burst, global corporates are pumping more and more cash into direct investment. In Corporate venture: friend or foe, unquote" analysed the increasing competition posed by cash-rich corporates to cash-strapped VCs. According to Gerald Brady, head of UK relationship banking at Silicon Valley Bank: "Life sciences companies, hardware businesses or the energy and resources sectors are all capital intensive industries. You're looking at investments north of $50m. That's where the deep pockets of the corporates, the strategic connections and the value they bring definitely matter." Given the diminished coffers of traditional VCs, corporates appear to be a welcome addition to the wider ecosystem, particularly for investment-hungry start-ups.

Spanish mezzanine player Oquendo closed its second vehicle last week on its €150m hard-cap. Given the shortage of alternative lenders in the Spanish market, the hybrid instrument is expected to make its mark on the local market. But with local banks returning to the field with panache, particularly when it comes to leverage and terms, it seems the vehicle will have more of an impact in the growth equity and mezzanine spaces. "The return of bank appetite will make life complicated for unitranche and other alternative lenders focused on senior debt as banks are defending their position in the market," says Daniel Herrero, co-founder at Oquendo.

Last week, Clearwater Corporate Finance announced a merger with Danish firm Advizer and ImapLynx, based in Spain and Portugal, to form Clearwater International. unquote" caught up with CEO Mike Reeves in an exclusive Q&A regarding the merger, which Reeves considers a sign of increased confidence in cross-border M&A. "Interest from overseas acquirers is on the rise, notably from the US, with international buyers becoming more aggressive when looking to make acquisitions in the UK. They see the UK and Europe as a safe haven, operating in stable markets that are set for growth," says Reeves.

That's all from me this week but if you have any comments on this week's analysis, please send your thoughts to amy.king@incisivemedia.com.

You can continue to follow me and the rest of the unquote" team via @unquotenews for all the latest private equity and venture capital updates, and of course on unquote.com.

Amy King
News Editor, unquote"

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Industry
• Weekly