F&C Private Equity Trust has shrugged off turbulence from the Eurozone crisis and the squeeze on bank funding to bring in more cash from the sale of its investments.
The Edinburgh-based trust revealed that the “run rate” of its cash “realisations” in 2012 was ahead of 2011 when proceeds were £37 million. That was up on the £23m of realisations in 2010.
Hamish Mair, head of private equity funds at F&C, said vendors’ selling prices are becoming more realistic. “Whereas once they might have said a business was worth £100m they may now consider £60m,” he said.
“Realisations are a good indicator of the health of the business portfolio. People are buying companies, including the quoted corporate sector seeking to buy growth. And often when private equity has been holding companies for four years or so those businesses are improved, and debts will have been paid down.”
Mair, speaking ahead of F&C Private Equity Trust’s interim results next month, said European private equity activity was down 50 per cent year-on-year in value terms. But he said there were “definite buying opportunities”, citing a mid-size business market that was “of relatively greater importance, but remains inefficient and therefore attractive”.
Mair said mid-market private equity deals – where enterprise values of the businesses being bought and sold were between ¤25m and ¤500m – dominate the scene, with deals of more than ¤1 billion being a rarity.
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