UBS records SFr1.8bn private equity loss

The Swiss bank wrote down its private equity holdings by SFr1.76bn loss last year, adding to a SFr1bn loss incurred in 2001.

UBS Capital, the private equity unit of Swiss-based UBS Bank, has reported a pre-tax loss in the final quarter of 2002 of SFr362m (E246m) as the bank continues to write down its private equity portfolio.


Overall, pre-tax losses in 2002 stood at SFr1.76bn (E1.2bn), an increase of 70 per cent on the SFr1bn that was written off in 2001. UBS head of communications Mark Branson said the bank could not rule out further negative contributions ‘over the next several quarters’.


In the fourth quarter 2004, the division made write downs of SFr389m across the portfolio in all regions although these were partially offset by SFr120m in capital gains from successful divestments. In November, the firm sold Dutch mobility aids manufacturer Welzorg to Industri Kapital.


Total unfunded commitments stood at SFr2.1bn on 31 December 2002, down from SFr2.7bn on 30 September 2002 and from SFr3bn on 31 December 2001. The firm is expected to continue to reduce its unfunded commitments in 2003.


UBS Capital has attributed the reduction in private equity valuations on the tough economic environment, described by Peter Wuffli, president of UBS, as “one of the most challenging years ever in the financial industry.” UBS Capital said it will continue to focus on managing its existing portfolio and capitalising on exit opportunities where they exist.


UBS reported a fourth quarter net loss of SFr101m and annual net profit of SFr3.5bn, down 29 per cent on 2001.


UBS Capital currently has a diversified private equity portfolio of almost 200 investee companies, which it plans to reduce via exits over the coming year. The fair value of its portfolio is SFr3.8bn, SFr1.8bn down on the value at 31 December 2001