Debt crisis weighs on the private equity industry
Since the beginning of the credit crunch in 2007, the private equity industry has faced much shorter economic and financing cycles. This volatility makes it difficult to evaluate and finance new exposures and to plan the optimal exit timing of some investments. The financing conditions in particular are causing problems for financial investors. For many, they were much more difficult than expected in 2011.
Nevertheless, around 46 percent of private equity companies expect to be able to increase the number of their investments in 2012. The expected increase in new commitments is explained by the fact that quite a few funds want to invest the money raised before the permitted investment period expires. They also try to demonstrate the best possible track record through their sales for the next fundraising.
The report paints a positive picture for Germany: 58 percent of the companies see Germany as an attractive target for investments in the next five years. By comparison, this figure was 52 percent in 2011 and only 22 percent in 2007. This has made the location much more attractive. Only 10 percent of the study participants have a negative impression of Germany — five years earlier, that figure was 36 percent. Accordingly, 80 of the 142 international private equity companies surveyed are already investing in Germany, and a further 23 are planning to do so in the next three to five years.
At the same time, companies are on the lookout for new growth markets. The international companies consider Asia an attractive destination (39 percent), followed by Latin America and Central and Western Europe (25 percent each). At 55 percent, German investors are even more attracted to Asia.
International investment companies see particular growth opportunities in the healthcare sector: 38 percent of respondents confirmed this. Technology and industrial production came in second, each with 27 percent. The picture is somewhat different for the German private equity industry: 66 percent are looking at targets in industrial production, 48 percent in consumer goods and 41 percent in the automotive industry. This is typical of German financial investors, who traditionally see great potential in SMEs.