Study: German PE market perking up

Investor optimism seems to be on the rise after a challenging 2013, with healthcare particularly in vogue. 

Improved business prospects, lower company valuations and more readily available finance all add up to a rosier outlook for the German private equity market ­in 2014, according to a new study by Frankfurt-based law firm CMS Hasche Sigle. 

The firm’s survey of 40 private equity firms found that confidence in the availability of buyout loans has risen 15 percent since its previous survey four months ago. In fact, confidence is now at its highest level since the survey began in 2010. The outlook is now 7.32 points on average, on a 1-10 scale where 1 is “bad” and 10 “excellent”.

Optimism over financing terms is also improving, with 14 percent more respondents reporting improved conditions. “The banks are extremely keen to offer acquisition financing and often go a considerable way to accommodate investors’ wishes,” Dr Tobias Schneider, partner at CMS Hasche Sigle, said in a statement. 

The survey’s participants suggested that portfolio companies’ prospects generally stagnated during 2013. However, the picture seems to have improved this year, with optimism up 7 percent. The survey suggests that while company valuations remain ambitious, the investor community doesn’t feel prices have yet become excessive. As a result, the appetite for acquisitions is still strong.

Healthcare is currently the most attractive sector to investors, according to the survey, enjoying an 11 percent rise in popularity since the previous survey. Then came food, electronics, and services – the most popular sector last year. 

“The steady stream of technical advances and demographic change in particular are turning the healthcare sector into an exciting investment arena,” said Dr Joachim Dietrich, partner at CMS Hasche Sigle. 

The outlook seems less rosy for cleantech, however. It is now the least popular of the 15 sectors covered by the survey.