SG moves into German leveraged

In keeping with a current trend among European banks, SG is setting up a leveraged finance operation in Frankfurt in the hope of more LBO business coming out of Germany.

SG, the corporate and investment banking division of French bank Sociéte Générale, has hired former Merrill Lynch managing director Claus Peter to help establish a German leveraged finance operation for the bank.


Claus Peter, who previously headed up Merrill Lynch’s German leveraged finance operations in Frankfurt and has been involved in German leveraged finance since the early 1990s, will develop the firm’s operations in Germany, reporting to London-based René de Laigue, the bank’s global head of leveraged and acquisition finance.


The move by SG follows earlier initiatives in the UK, France and Spain, where the bank has already established leveraged finance operations. This year, the leveraged division has acted on deals including Legal & General Ventures'  sale of UK seafood business Young’s Bluecrest to management for £137m, LGV and Royal Bank Private Equity’s E400m-plus secondary buyout of French casino operator Moliflor Loisirs from PPM Ventures and 21 Invest’s acquisition of Spanish-based Logic Control in January.


SG is aiming to become one of the major European players in the leveraged finance market, although competition will be fierce as many firms are looking to make similar moves. In September, Michael Johnson was hired by Commerzbank Securites (CommSec) to develop the bank’s financial sponsors group. CommSec was the lead arranger on Germany’s second-largest leveraged deal this year, the E1.66bn acquisition of Haarman & Reimer. Financing for KKR’s E1.7bn acquisition of Siemens industrial portfolio was provided by a group comprising CIBC World Markets, HVB, and JP Morgan plc.


Earlier this year, Royal Bank of Scotland named Jochen Koenig to replace former head of leveraged Michael Föcking, who had left the bank to set up a mezzanine business at EQT Partners.   


However, while banks have underscored their commitment to the German market, overall LBO activity, given the size of its economy, has been slow for years, and has further contracted amid the current market downturn. Recent data from the Centre for Management Buyout Research (CMBOR) showed that German LBO activity in 2001 fell by more than halve, from E15.1bn to E7bn.