ABN AMRO seeks to quash PE unit rumours

ABN AMRO Capital, the private equity arm of ABN AMRO focused on European and Australian mid-market buyouts, yesterday held a media briefing to address persistent rumours about the bank’s long-term commitment to the business.

Senior management of ABN AMRO used a press briefing in Amsterdam to deny rumours concerning the ownership structure of the private equity unit and possible plans to seek external funding. Wilco Jiskoot, chairman of ABN AMRO’s Wholesale Clients corporate and investment banking division and a member of the bank’s managing board, said: “We see [ABN AMRO Capital] as a core part of ABN AMRO going forward.”

Addressing a group of assembled journalists in the bank’s HQ, Jiskoot and Gerben Kuyper, global head of ABN AMRO Capital, said the rumours may have arisen partly as a result of discussions that had come to light regarding the possible combination of its portfolio of Dutch IT-related investments with a third party, fuelling speculation that larger-scale divestment opportunities might also be under consideration.

ABN AMRO Capital last year announced a similar combination of its French IT investments with the private equity interests of La Poste, the French postal company, to form a new venture called Xange. 

Questions about the bank’s commitment to private equity also arose in June 2004, when a portfolio of German investments was sold to three members of the management team – Pieter Davidson, Christophe Namenyi and Henk Droege – to form new company DDN Capital Partners.

Jiskoot said ABN AMRO Capital would remain committed in the long term to its buyout operations in the Netherlands, the UK, France, Spain, Italy, Sweden and Australia. ABN AMRO Capital also has operations in Hong Kong, Chicago and Sao Paolo.   

In addition to its principal focus on mid-market buyouts, ABN AMRO Capital also has dedicated early-stage investment teams for media and telecoms, life sciences and IT.  

Jiskoot said ABN AMRO Capital would in future report directly to himself as chairman of Wholesale Clients, rather than to the Wholesale Clients executive committee. It is a move that the bank claims will allow more autonomy for investment and exit decisions.        

In addition, Jiskoot said ABN AMRO Capital would be submitting separate results for the first quarter of 2005. Until now, its results have been part of consolidated figures produced by the Wholesale Clients division. This was to ensure “greater transparency of earnings” in keeping with International Financial Reporting Standards.

At the briefing, the bank also revealed that ABN AMRO Capital’s net profit last year increased to €271 million ($357 million) from €104 million in 2003.  

Commenting on ABN AMRO Capital’s intentions in 2005, Kuyper said it aimed to be a “net investor rather than net divestor”. In 2004, the firm achieved a near-symmetry of 13 new investments and 12 exits, but Kuyper said that “having achieved a lot of exits in 2004, many of those businesses remaining in the portfolio are growing quite nicely and it’s not yet appropriate to seek exits – though everything has its price.” He revealed that the bank seeks a minimum return on its deals of 1.8 times capital invested.

ABN AMRO Capital is currently raising a A$300 million private equity fund in Australia, its first in the country. Aside from in the UK and France, where it also manages funds, the business invests directly from the bank’s balance sheet.