Private equity in the Netherlands took a hit in 2012, with both investment and fundraising activity decreasing, a report by Dutch industry body NVP found.
Write-offs increased significantly last year: €247 million was written off from 45 portfolio company investments, compared to €22 million in write-offs from 14 companies in 2011. The big increase was due in part to some extra-large write-offs, but overall they were a sign that private equity portfolios “suffered” in 2012, according to the NVP.
Additionally, GPs in the country raised less capital — €1.3 billion compared to €2.3 billion in 2011. Deal flow also dropped to €1.3 billion in 2012 from €2.1 billion in 2011. Investments were made in 326 companies, 10 percent less than in 2011. Exit volume was halved: Dutch GPs divested €841 million out of 187 companies in 2012 compared to €1.6 billion from 128 companies in 2011.
The absence of large transactions compared to 2011 was the main reason for the reduced investment activity, the NVP said. In 88 percent of the deals, less than €5 million in equity was invested, indicating firms mainly invested in small and medium-sized enterprises. Relatively more follow-on investments were made, which suggests GPs focused their attention on strengthening portfolios while in 2011 they were focused on building portfolios, the NVP said.
While, 2012 was “not a bad year”, according to the NVP, the industry body remained sceptical about market improvements this year. “The number of transactions has stayed relatively stable and that is good news. It means that the SME-market, where the bulk of the activity happens, functions reasonably [well]. But despite several exits, there were hardly any large deals. Despite some announcements of large deals in 2012 to be effectuated in 2013, the question remains whether the market for large deals will recover in 2013,” the NVP said.
Although investment activity has slowed, some GPs still see the region as attractive. In March, EQT Partners appointed former IK Investment Partners executive Kristiaan Nieuwenburg as regional head for the Benelux and said it planned to build up “a significant local presence” in the region.
“Within Europe, from a buyout perspective, the Benelux area is still somewhat more attractive than some other parts of Europe. And compared to other countries, the political and economic situation is relatively stable,” Nieuwenburg told PEI at the time.
Earlier this year, two former Robeco executives, Peter Verleun and Ad van den Ouweland, said they plan to raise €100 million for MKB Multifunds I, a fund of funds with a social impact component that will back Dutch SMEs.