Hedge funds and Private Equity - PES

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68 What could you do with 72 billion euros? Well, with the right conditions it could significantly fund the enormous need for investment in R&D if we are to realise our Lisbon goals. Compared with funds raised in Europe in 2005 (€72bn), business enterprise R&D expenditure in Germany in 2005 was approximately 39 billion euros 23 . Number 50 50 50 50 50 50 50 €bn S1 2003 80 70 60 50 40 30 20 10 0 Private Equity: European trends in funds raised Source: EV CA/PWC/Thomson Financial 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Evolution of LBO Transactions in Europe S2 2003 S1 2004 Years S2 2004 S1 2005 S2 2005 23 http://epp.eurostat.ec.europa.eu/portal/page?_pageid=0,1136250,0_45572561&_dad=portal&_schema=PORTAL PE: funds raised
As mentioned earlier, PE-funds, in most cases LBOs, operate with heavy leverage of funds, according to David Bernard from Thomson Financial. To get the real picture of money/funds available for acquisitions from a LBO point of view, we must use a factor of 6, i.e. multiply the amount of funds raised by six. So in 2005the new funds available really amounted to 432 b Euros. All indicators tell us that this trend will continue in Europe. For funds raised, UK is top with €46bn or 64% of the total. France accounts for the next largest percentage at 16% (€12bn raised) and Germany is third with 4% (€3bn raised). Among the 7 biggest Member States in terms of funds raised by management location, the ranking is the following: €bn 80 70 60 50 40 30 20 15 10 5 0 UK 2.6 LBOs become dominant Funds raised by management location (2005) France Germany The Netherlands Looking at the total funds raised for private equity funds it is striking to see the dominance of LBOs. In Europe the proportion of buy-out investment made has continued to increase in recent years, reaching over 68% of amounts invested in 2005. In contrast the amount of venture capital investments only represents 5 %. This is more worrying bearing in mind our need for long-term investments to realise the Lisbon goals. Italy Spain Denmark Source: EV CA/PWC/Thomson Financial PE: Stage Distribution of Investments by Amount invested in 2005 4,8% 21,8% 5,2% 68,2% Buy-out Capital Expansion Capital Replacement Capital Venture Capital PE: funds raised by manager location Part I – Hedge funds and private equity funds – how they work 69
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HEDGE FUNDS AND PRIVATE EQUITY A CR
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FOREWORD Since the 1980s the financ
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At the same time the PES Group took
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84.57 7 447.586 4789.4785 55 7845 4
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12 The need for long-term investmen
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14 1. Hedge funds and private equit
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16 In a very low interest-rate land
Page 18 and 19: 18 The ECB has highlighted this cro
Page 20 and 21: 20 in the sustainable development o
Page 22 and 23: 22 Coherence, co-responsibility and
Page 24 and 25: 24 Transparency in practise Some ar
Page 26 and 27: 26 Ensuring more and better jobs An
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Page 32 and 33: 32 The first era of capitalism took
Page 34 and 35: 34 1. Hedge funds In the following
Page 36 and 37: 36 Hedge funds have a structure sim
Page 38 and 39: 38 Hedge funds have flourished in a
Page 40 and 41: 40 The European hedge fund industry
Page 42 and 43: 42 Institutional investors Current
Page 44 and 45: 44 - Funds of hedge funds (FOHFs) i
Page 46 and 47: 46 If we assume US mutual fund indu
Page 48 and 49: 48 the hedge funds themselves would
Page 50 and 51: 50 management fees? It is a fact th
Page 52 and 53: 52 These data notwithstanding, seve
Page 54 and 55: 54 1.11. Tendency of crowding Despi
Page 56 and 57: 56 Theory of money: “In modern ec
Page 58 and 59: 58 Country France Italy Spain Subje
Page 60 and 61: 60 Considering single strategy prod
Page 62 and 63: 62 2. Private Equity Funds Private
Page 64 and 65: 64 Buy-outs are typically majority
Page 66 and 67: 66 2.3 The legal frame The investme
Page 70 and 71: 70 And it highlights the comparativ
Page 72 and 73: 72 The figures provide a substantia
Page 74 and 75: 74 2.8 When targeting a company Whe
Page 76 and 77: 76 Domicile of the fund The choice
Page 78 and 79: 78 Specific economic function of Ve
Page 80 and 81: 80 Mortgaging the future to capture
Page 82 and 83: 82 Main conclusions: The total Euro
Page 84 and 85: 84 3. The European response - curre
Page 86 and 87: 86 Article 49 Within the framework
Page 88 and 89: 88 The purpose of this Directive is
Page 90 and 91: 90 As far as the hedge fund and Pri
Page 92 and 93: 92 The following are regarded as se
Page 94 and 95: 94 3. A Member State may entrust ma
Page 96 and 97: 96 Article 93 The Council shall, ac
Page 98 and 99: 98 Primarily, however, society must
Page 101 and 102: Social Europe versus capital market
Page 103 and 104: 1. Economic viability of private co
Page 105 and 106: as a rule without any influence fro
Page 107 and 108: Here is a quite well known “flow
Page 109 and 110: 2. Decent work and workers’ parti
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Page 113 and 114: usiness plan for Kion to employee r
Page 115 and 116: The combination of increased indebt
Page 117 and 118: The EU has in the past tried to com
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3.1 The attractiveness of public ut
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fulfilment of public service respon
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The importance of Europe’s transi
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4. Employees, pension fund investme
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unit of Tremont Capital Management)
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contractual issues e.g. Lock-in per
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As many jurisdictions require benef
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Expert Group claims - with striking
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The rising number of hedge funds ap
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time peak in 2005.” It is importa
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Box 2: The Amaranth case (2006) In
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gies, size and age. For instance, i
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Box 3: Complex leverage arrangement
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force a hedge fund to default on it
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Private equity - especially in the
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finance infrastructure through long
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84.57 7 447.586 4789.4785 55 7845 4
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154 But if we in Europe - and hopef
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156 2. Market transparency - a comm
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158 Considering the fact that a lar
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160 Furthermore investment banks ar
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162 3.3 Transparency and supervisio
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164 Recently in most European count
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166 The European Commission should
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168 The EC should also create a fra
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170 4. Private Equity Funds - focus
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172 to create incentives for longer
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174 policy are not being met. This
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176 Acquisitions by private equity
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178 5. Our immediate proposals In t
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180 rules on the disclosure of tota
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182 have rules here and we should p
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AA 1. Company description The Autom
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Autoteile Unger 1. Company descript
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Bulgarian Telecommunications Compan
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Deutsche Börse 1. Company descript
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DIS 1. Company description The DIS
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DT-Group 1. Company description DT
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share alternative. At that time the
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Frans Bonhomme 1. Company descripti
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Friedrich Grohe AG 1. Company descr
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their relations with TPG and CSFB a
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Gate Gourmet 1. Company description
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ISS Denmark 1. Company description
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2.2 Debt structure, alteration of c
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References Süddeutsche Zeitung 09.
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2.3 Management policies and shareho
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would have unlocked hidden reserves
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Peguform 1. Company description The
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Picard 1. Company description Picar
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Stork 1. Company description The in
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special members of the board of com
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EUR 5.1 billion private equity fund
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Telecom Italia Group 1. Company des
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2.3 Management policies and shareho
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from the tourism business, which is
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The consequences for jobs in Hambur
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2.4 Corporate governance and econom
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84.57 7 447.586 4789.4785 55 7845 4
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244 Bond A debt investment with whi
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246 Investment vehicle This term is
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248 of a security borrowed by the s
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