Now in their fourth year, our European Private Equity Awards have grown to become probably the most eagerly awaited polls of the industry, about the industry. We quite deliberately offer no short list and neither is there a panel of judges: we just want votes, and this year we received over 10,000 of them. Also, for the first time, the 2003 awards have been expanded to include sections dedicated to the US and Asia. Readers of both PrivateEquityOnline.com and Private Equity International were able to submit their preferences in as many or as few categories as they wished, and we were rewarded with a record turnout.
To view the results please click below:
Progress in a turbulent year
In our introduction to the 2002 Awards, we drew attention to a number of emerging themes that were creating some discomfort for various parties involved in private equity. Among them were calls for general partners to provide more information on their investments; the need for more pragmatic (i.e. lower) return expectations on the part of limited partners; and the pressure on funds in the venture space in particular to find a way of adapting to life after the technology crash.
No one can claim that these issues have gone away – instead they are feeding debates that are still raging. How do GPs reconcile their own view that short-term performance is misleading with investors’ demands for transparency? What is now a realistic IRR target or (better) forecast cash multiple, and is it enough simply to out-perform the public markets by a few hundred basis points? Is there a future at all for European venture investors as they struggle – seemingly in vain – to match the performance of their counterparts in the US?
The search for answers goes on, but the context of that search has changed somewhat. In 2002, depressed stock markets, poor corporate results and a low growth environment in most of Europe meant that private equity was part of a general malaise from which it seemed impossible to escape. When the prospect of a long war in Iraq arose and threatened stability in the entire Middle East, the mood darkened further in the opening half of 2003.
But by the end of the year, prospects had changed markedly. The war (or at least what was its initial phase) was much shorter than anticipated and stock markets recovered. During the course of 2003, the UK’s FTSE 100 climbed almost 14 percent – its first annual rise since 1999. Strong growth and improved company results helped lift the US out of a period of troubled introspection brought about by accounting scandals, and companies once again turned their thoughts from preservation to expansion. All this meant that, by the time 2004 arrived, hopes were high of better times ahead.
So who were the main beneficiaries of a turbulent year? The buyout market saw a flight to quality as institutions flocked in numbers to stable teams with solid track records. This led to the emergence in Europe of so-called “brand names”, and foremost among them was Permira, the UK-based pan-European buyout house that enjoyed an extraordinarily successful year. In closing Europe’s largest-ever private equity fund at €5.1 billion, the firm planted an indelible imprint on 2003 and claimed no less than five of our awards (six if you include its European managing partner Damon Buffini’s individual award for Personality of the Year).
But it would be wrong to interpret this as a ringing endorsement for buyout funds generally – a number of them struggled to hit targets in what was once again a fairly tough year for fundraising. Instead, country and sector-specific funds were the main beneficiaries of the increasing sophistication and maturity of some institutional investors seeking greater diversification within their private equity allocation. This resulted in successful fundraising campaigns for the likes of Sweden’s Altor Equity Partners and Switzerland’s CapVis Equity Partners – and also well-earned plaudits for their placement agents, Helix Associates and Monument Group for the former and MVision for the latter.
Last year we noted a tendency for the majority of awards to go to UK-based individuals and organisations in every type of category except deals – where Continental Europe seemed to be dominant. In 2002, it was the €3.7 billion buyout of Legrand in France taking the honours as buyout of the year. This trend was reinforced this year by Italy’s Seat Pagine Gialle, which at €5.65 billion became Europe’s largest-ever private equity deal, being voted buyout of the year.
On the exits front, 2003 became the year when the IPO reappeared on the radar screen. Following a prolonged period of dominance for trade sales and secondary buyouts, Apax Partners and Hicks, Muse, Tate & Furst proved that the stock market was once more receptive to large, good quality assets when floating Yell for £2.14 billion and delivering an impressive return to investors.
But although the market had a new feel about it by the end of 2003 as the economic climate changed, there was nothing new about the choices of our voters in many categories. The likes of SJ Berwin, Royal Bank of Scotland, EQT and Gilde Investment Management were among a host of firms picking up awards in their respective categories for the third year in succession. It seems natural to conclude that an elite group of firms have become the acknowledged leaders in many areas of European private equity – it is up to these firms’ competitors to convince our readers that it is time to knock them from their mantle at this time next year.