MGPE’s own buy-out nears?

After much rumour and angst it looks like Morgan Grenfell Private Equity will soon have bought itself out from parent Deutsche Bank

Although no one at the private equity firm was prepared to comment on today’s rumours, others in the market felt that recent signals from the firm made a deal being finalised very soon likely. As a senior source at another mid-market private equity firm commented: “there’s been a fair bit of heart searching and some frank talk too [at MGPE]: you’re going to see a leaner operation after the buy-out.”

This was a reference to the ongoing departure of various staff from the firm but the same source was quick to add: “the Whitbread deal they’ve just done couldn’t have come at a better time as it helped remind people that they’re not a bunch of amateurs.”

MGPE sold a portion of the portfolio of pubs it acquired from Whitbread to Enterprise Inns for £262.5m late last month [see PEO story 22/05/01 – MGPE sheds part of pub portfolio ]. This was at a time when many were still pointing to the massive paper losses the firm incurred after accepting EM.TV shares in exchange for its stake in Formula One company SLEC. The subsequent collapse in EM.TV’s share price left MGPE with a loss of over £250m. Other sources are also predicting that the firm, like many others who were busy buyers in 2000, are currently sitting on some significant further losses too.

How a separate MGPE would relate to its erstwhile parent remains open to debate. It had been assumed that the firm was going to work alongside Deutsche’s DB Investors [which manages the banks massive industrial holdings] and DB Capital [which is the private equity business the bank took on when it acquired Bankers Trust]. Post buy-out it’s being predicted that MGPE CEO Graham Hutton and his team will be keen to put as much water as possible between the firm and Deutsche.