1998-Paribas Annual Report - BNP Paribas

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Paribas PRINCIPAL INVESTMENTS (PAI) manages Paribas’
equity holdings in manufacturing and services companies.
With a portfolio of EUR 6.5 billion (FRF 42.5 billion), PAI
is widely recognized as one of the largest and most active
equity investors in Europe. ■ PAI’s portfolio has been
fundamentally refocused over the past several years –
PAI favors investments in medium-size businesses with
annual sales ranging from EUR 75 to EUR 750 million, and
actual or potential leadership positions in their respec-
tive sectors. ■ PAI’s investment strategy focuses on two
types of transactions – minority shareholdings and leve-
raged buy-outs (LBOs). ■ So as to anticipate changes and
directly identify the greatest number of potential oppor-
tunities, PAI has developed in-depth sector expertise.
PAI takes substantial equity stakes in the companies it
supports and closely monitors their development. ■ With
a long-term perspective, PAI aims to enhance the value
of the businesses in which it invests, to the benefit of all
their shareholders. ■ The leader in Europe, PAI is also
active through locally based teams in North America and
Asia.
P ARIBAS
PRINCIPAL INVESTMENTS
(PARIBAS AFFAIRES
INDUSTRIELLES-PAI)
1998: launch of an LBO fund
A key development of 1998 was the launch of
the PAI LBO Fund, dedicated to European LBOs.
The first closing of the fund – in which Paribas is
the largest investor, along with other international
institutions – took place in July 1998.
The PAI LBO Fund is a “Fonds Commun de
Placement à Risques” (FCPR) managed by PAI
Management, a company licensed by the COB,
the French stock exchange regulator, and staffed
by PAI’s European teams.
With this new fund, entities outside the Paribas
Group are for the first time offered the opportunity
to invest in deals benefiting from PAI’s
expertise in initiating and structuring private
equity transactions. Paribas has granted PAI
LBO Fund exclusive rights for all its European
LBO transactions.
In line with PAI’s forecasts, the number and
volume of LBO transactions posted strong
growth in 1998, and now represent a rapidly
expanding market. By the end of January 1999,
the PAI LBO Fund had invested EUR 300 million
in transactions detailed below.
The creation of the fund reflects Paribas’ strategic
ambition to develop PAI’s private equity business,
while adopting types of organization and
intervention similar to those of its major international
competitors.
Risks under control
PAI implements a risk monitoring and control
policy based on investment selectivity, geographical
and sector diversification, and ongoing
close monitoring of its equity holdings.
Reflecting this approach, PAI was able to weather
the impact of the crises which affected the