UK plans billion-mark venture deals

Two German venture capital deals each worth in excess of DM500m (pounds 192m) are set to be consummated in next three months in what venture capitalists hope will be the year that German business wakes up to the attractions of equity-funded management buyouts, writes Richard Halstead.

The forthcoming deals, which are believed to involve units of large diversified German industrial companies, will be the first attempts by the country's captains of industry to dispose of some of the more non-core elements of their organisations.

Leading venture capitalists hope they will contribute to a dramatic increase in the value of deals done in Germany from a figure of $2.1bn recorded in the first half of 1996. By comparison the UK, with an economy about half the size of Germany's, accounted for deals worth $18.7bn in the same period.

"There have been false dawns in the German venture capital market before, but this time all the signs are that it could take off with a headline- grabbing deal," said Eric Cooper, chairman of LGV-Candover Gmbh, a joint venture set up last year between Legal and General Ventures and Candover to find buyout prospects in Germany.

He added that the combination of economic problems, losses reported by large companies and the increasing belief in delivering shareholder value were driving bosses and their bankers to consider other ways of financing their businesses. Even if no mega-deal surfaces the market for smaller buyouts will increase this year, he said.

NatWest Ventures has also set up a German venture capital operation under the direction of Fritz Vroemen, a Dutch venture capitalist who has been doing business in the nascent German buyout market for five years. "Germany cannot isolate itself from the international equity market forever," he said.