media centre: press releases 
private equity deals and fundraising a light in markets gloom 24/09/2008 The demise of Lehman Brothers and the last minute rescue of Merrill Lynch have led to more troubles in global stock markets, potentially another blow to hard pressed business.
But one sector is showing surprising resilience, in turn boosting the order book at Birmingham and London law firm Martineau.
Martineau corporate partner Kavita Patel explains: "As banks around the world look to retrench, the private equity scene is a bright spot for businesses looking to raise cash.
"The effect of the last few months has been to shave price expectations down to the point where many private equity backers find it very attractive to invest in good businesses.
"And the other side of the coin is that companies with a good story to tell can find capital to enable them to deliver on their growth strategies.
"We have advised on a string of significant private equity investments and funding transactions in recent weeks. Our focus on national markets in these areas continues to pay off for us."
One sector that can tell a particularly good story is 'Clean Tech', comprising knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing energy consumption, waste, or pollution.
"We have advised on many deals involving such businesses in recent months and there is no sign of a slackening of interest, whether from businesses looking for growth capital or from financial backers" said Ms Patel.
Two examples of such deals involving venture capital trust (VCT) group Foresight are cited by Ms Patel - a further investment of £5m in plastic bottle recycler Closed Loop and a £3m cash injection in Lynwood, which makes such products as park benches from off cuts of plastic products.
Foresight has invested heavily in businesses in this sector, having raised £22m last year for a fund specifically targeting improvements in the environment.
Ms Patel said: "Sustainability and recycling have such a priority now that a strong business model in this sector can find itself with guaranteed revenues, making it very attractive to equity investors."
Ms Patel, a legal specialist in fund raising and venture capital trusts, has also been involved in fund raising and rationalisation by VCTs themselves.
Such deals have included £16m being sought by the ISIS managed Baronsmead VCTs and the mergers of various VCTs including the £40m deals involving the Bluehone AIM VCTs and Enterprise VCT with Foresight 3 VCT.
"Mergers of funds with similar investment philosophies make real commercial sense and create significant benefits for investors" she said.
Martineau Partner Andrew Stilton sees the private equity investment scene flourishing amongst the gloom in the months ahead: "We have no reason to doubt that things will be tough generally especially for businesses burdened by debt.
"But directors looking to grow their firms should not give up hope. In this era of much tighter bank finance, private equity can be good news.
There are investors who are prepared to come in at the lower valuations that we have now. Naturally, this is because they can see the prospect of returns, but there is room for negotiation on terms and the benefits of the investment are mutual."
For further information please contact Kavita Patel on
kavita.patel@martineau-uk.com
|
