In August 2011, London was burning and the most powerful economy in the world had just been subjected to a humiliating ratings downgrade.
Twelve months on, and collective rage has given way to collective rapture as the UK’s capital basks in the glory of an Olympic job well done. And the US, well, the US is still deemed a bad risk – although now a former private equity bigwig, Mitt Romney, is on the cusp of attempting the world’s biggest turnaround.
A year has also proved an awfully long time in private equity – for those on the fundraising trail, agonisingly so. A host of former stalwarts now teeter on the brink of obscurity, while others have risen phoenix-like from the ashes.
In France, AtriA Capital Partenaires’ future hangs in the balance following the defection of Thibaut de Chassey and Edouard Thomazeau, which triggered a keyman clause last year. Naxicap’s intervention has handed a lifeline to the five executives who transferred with the portfolio, but no new fundraising ambitions are yet on the cards.
De Chassey and Thomazeau, meanwhile, were quick to reassert themselves on the scene, sneaking ahead of their former employers in the directory with new firm Atlon Capital Partners. News on a proposed €200m fund, however, has been thin on the ground,
Elsewhere, Duke Street Capital is among those to have thrown in the fundraising towel – for now, at least – progressing instead with a precarious deal-by-deal model. Despite two recent exits, pushing 4x apiece, AAC Capital UK has also called time, joining a host of others in workout mode including Advantage Capital and Spirit.
Private equity’s spirit of reinvention is evidently alive and well, however, with run-off outfits Arle, Alchemy and Caird all determinedly fighting their way back into the running, while defunct Cognetas has defiantly re-emerged as new firm Motion Equity Partners.
Indeed, those that have already taken on their fundraising demons – and won – talk of survivor guilt, but it is hard to believe that their overwhelming reaction is not one of relief. In the UK, Isis Equity Partners racked up £350m and was three times oversubscribed, while Lyceum Capital, targeting £275m, is said to be well on its way.
In the Nordics, Procuritas exploited its 9x Dackia disposal to secure €200m, while Nordic Capital is unlikely to struggle too greatly following the superlative double that was Nycomed and Point International. And in Germany, DBAG has stormed to ¤700m while ECM has hit its €230m hard cap.
Meanwhile, a string of IPOs demonstrating exit diversification to LPs mean BC Partners has shaken off fiascos at Foxtons and Fitness First to become the only home-grown mega house to have yet crossed the line. Although private equity darling Advent International shouldn’t have too many problems, at Cinven, Apax and in particular Permira, things are starting to get a little uncomfortable.
Ego, as much as management fee requirements, mean there is a threshold that must be crossed. It remains to be seen whether the morale-crushing mdistraction that must be endured in the meantime is a price that will prove worth paying.
There is little doubt, however, that those firms limbering up for their own marathon slog are unlikely to be cheered by the exploits of those that have gone before. No wonder so many, Gresham, Dunedin and Graphite among them, have put off the pain with extensions.
Nonetheless, August Equity, Darwin, RJD, Palatine and Baird – attempting its first foray since splitting with its tarnished German team – are among those UK firms that are preparing to hit the road.
Exponent, meanwhile, will be ruing its failed attempt to get Trainline away ahead of launch, while HgCapital is also preparing to pounce now that its team has been given a post-Armitage overhaul by new chief executive Nic Humphries.
Clearly for some, the challenges are greater than for others. Former Barclays semi-captive Equistone must convince LPs that a new name and structure will not impinge on returns; Doughty Hanson must deal with the tragic loss of co-founder Nigel Doughty; PAI with a legacy of LP activism; and Lion Capital with the double whammy of portfolio pain and the departure of key personnel. Axa Private Equity, of course, faces uncertain ownership prospects, but that has failed to dampen investor appetite so far.
Elsewhere, Altor, FSN Capital, Reiten & Co, Norvestor, Capiton, Capvis, Halder, Activa, Egeria, Palamon and GMT are all poised to face the fundraising fates which will separate the survivors from those that succumb.
Indeed, as industry insiders begin to talk sadly, but seriously, about the demise of private equity pioneer 3i, perhaps it can be said that the only certainty remaining is uncertainty.
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