SMALL BUT PERFECTLY FORMED

If Zurich-based mid-market private equity firm Capvis is a measure of the attractiveness of Switzerland's private equity market, then all seems well. In March this year, the firm wrapped up its Fund III on €600 million – easily surpassing a €500 million target.

Rolf Friedli, a partner at Capvis, relates that the firm had big ambitions for the fundraising, which ended up being realised. “In Fund II we had 25 LPs, in Fund III there were 40. We wanted to develop a global and more diversified investor base including endowments and family offices, which bring strong entrepreneurialism.”

In this respect too, Capvis achieved its goal: this type of investor accounted for 15 percent of the total capital raised, having not featured at all in the firm's previous fund.

Aside from adding to its investor base, another evolution at Capvis has been its increasing presence in the neighbouring German market. This was illustrated, for example, by its recent acquisition of Bad Mergentheim-based safety technology company BARTEC for an undisclosed sum. Says Friedli: “We have a very good standing in Switzerland based on our long track record, we've been here 15 years. A few years ago we moved into Germany and it helps us that we are seen as a ‘Swiss investor’. Also we have a certain focus on succession deals, and they account for about 20 to 25 percent of the German market.”

Nor is Capvis the only Swiss investor to be looking over the border for opportunities. Corestate Capital, the private equity real estate investor also based in Zurich, closed a €486 million fund for investment in the German residential market in June this year. The company was formed in 2006 by the former heads of Cerberus' German real estate operations, Ralph Winter and Thomas Landschreiber, who saw an opportunity to re-focus on smaller, midmarket deals.

Not that these examples indicate a lack of faith in the ability of the Swiss market to deliver deal flow. Says Corestate managing director Christian Schulte Eistrup: “As we continue to grow we may expand into new products in Germany or neighbouring markets, maybe Switzerland.

But we need to build up our expertise first.”

While these two funds have expanded out of Switzerland, there is also movement the other way.

German mid-market funds to have completed deals in Switzerland include Munich-based Afinum Management (which has a Zurich office) and Frankfurt-headquartered ECM Equity Capital Management.

Meanwhile, UK-based pan-European funds Barclays Private Equity and CVC Capital Partners both have a presence in Zurich.

In Geneva, Switzerland's second significant private equity hub, internationally renowned venture capital firm Index Ventures has its base. Midmarket funds Leman Capital and Argos Soditic are also Geneva residents.

3i, also a mainstay of the Swiss private equity market, is about to inadvertently add to the ranks of GPs based in the country. According to limited partner sources, Cross, a team comprising former 3i Switzerland professionals, is currently seeking to raise its debut fund.