Private Equity: The German Experience

640 Pages·2011·2.739 MB·English

by  Paul Jowett, Francoise Jowett (auth.)

Private Equity
The German Experience
Paul Jowett and Francoise Jowett
Private Equity
Also by Paul Jowett and published by Palgrave Macmillan
PARTY STRATEGIES IN BRITAIN (with David Butler)
THE ECONOMICS OF INFORMATION TECHNOLOGY (with Margaret Rothwell)
PERFORMANCE INDICATORS IN THE PUBLIC SECTOR (with Margaret Rothwell)
RIVALRY IN RETAIL FINANCIAL SERVICES (with Margaret Rothwell)
Private Equity
The German Experience
Paul Jowett and Francoise Jowett
© Paul Jowett and Francoise Jowett 2011
Softcover reprint of the hardcover 1st edition 2011 978-0-230-53776-7
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First published 2011 by
PALGRAVE MACMILLAN
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ISBN 978-1-349-35942-4 ISBN 978-0-230-30866-4 (eBook)
DOI 10.1057/9780230308664
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10 9 8 7 6 5 4 3 2 1
20 19 18 17 16 15 14 13 12 11
Contents
List of Figures vi
List of Tables viii
Preface ix
Acknowledgements xi
The Interview Partners xii
1 Introduction 1
2 Minority Participations: 1965–1975 10
3 The Failed Venture Capital Experiment: 1976–1991 15
4 The Early Shoots: Genes Ventures, Matuschka/TVM, & 24
HANNOVER Finanz
5 The First Phase: From Venture Capital to LBOs 52
6 The Second Phase: 3i, CVC, Bain, and Matuschka 76
7 The Third Phase: Trial and Error with LBOs 108
8 The Schroders’ Story of the 1980s 159
9 The 1984–1991 Experience in Retrospect 178
10 The Fourth Phase: Frustrating Times 1992–1994 184
11 East German Adventures 247
12 The Fifth Phase: Retrenchment & Spin-offs: 1995–1996 275
13 The Sixth Phase: The Tsunami Begins 300
14 The Seventh Phase: 2001: The Collapse and Its Aftermath 377
15 The Eighth Phase: The Booming Market: 2004–2007 426
16 The Ninth Phase: The Fall 480
17 What Did Private Equity Ever Do For Germany? 501
A Note on Sources 506
Notes 510
Index 531
v
List of Figures
4.1 Klaus Nathusius 26
4.2 Cover story of Der Spiegel: World Power – Deutsche Bank 31
4.3 Reinhard Pöllath 39
4.4 Albrecht Hertz-Eichenrode 47
5.1 Robert Osterrieth 55
5.2 Robert Osterrieth’s Memo to Nick Ferguson Proposing 65
a German LBO Fund
5.3 Thomas Matzen 70
6.1 Mitt Romney and Bill Bain 86
6.2 Overview of the Matuschka Group 94
7.1 Raimund König 110
7.2 Dietmar Scheiter 112
7.3 Markus Trauttmansdorff 116
7.4 Otto van der Wyck 118
7.5 Stefan Zuschke 129
7.6 Thomas Pütter 141
7.7 Albrecht Matuschka 145
7.8 The Crash of the Leifeld Investment 151
7.9 Rolf Dienst 155
9.1 Overview of Private Equity Office Openings & 179
Team Changes
9.2 Sources of Private Equity Transactions, 1984–1991 180
10.1 Martin Halusa 214
10.2 Chris Peisch 227
10.3 Eberhard Crain 230
10.4 Tombstones for Cinven & Thomas CJ Matzen in 235
Germany
10.5 Finding a New Home for the MatCap Portfolio 239
10.6 The MatCap Portfolio of Companies 242
10.7 The Bain & Company Structure for Managing the 244
MatCap Portfolio
11.1 The East German Investment Trust Portfolio 268
13.1 Jens Odewald 320
13.2 Norbert Stelzer 322
13.3 Sources of Private Equity Transactions, 1992–2000 345
14.1 Ralf Huep 398
15.1 Thorsten Langheim 441
vi
List of Figures vii
15.2 Der Spiegel Coverstory: The Greed of the Big Money 452
15.3 Stern Coverstory: The big feast – why we are all locusts 453
16.1 Sources of Private Equity Transactions, 2001–2009 491
17.1 Sources of Private Equity Transactions, 1984–2009 503
List of Tables
4.1 Private Equity Transactions in 1980–83 49
5.1 Private Equity Transactions in 1984 54
5.2 Private Equity Transactions in 1985 59
6.1 Private Equity Transactions in 1986 91
6.2 Private Equity Transactions in 1987 100
7.1 Private Equity Transactions in 1988 136
7.2 Private Equity Transactions in 1989 153
7.3 Private Equity Transactions in 1990 157
9.1 Private Equity Transactions in 1991 182
10.1 Private Equity Transactions in 1992 204
10.2 Private Equity Transactions in 1993 210
11.1 Private Equity Transactions in 1994 258
12.1 Private Equity Transactions in 1995 282
12.2 Private Equity Transactions in 1996 291
13.1 Private Equity Transactions in 1997 303
13.2 Private Equity Transactions in 1998 311
13.3 Private Equity Transactions in 1999 350
13.4 Private Equity Transactions in 2000 354
14.1 Private Equity Transactions in 2001 404
14.2 Private Equity Transactions in 2002 406
14.3 Private Equity Transactions in 2003 416
15.1 Private Equity Transactions in 2004 443
15.2 Private Equity Transactions in 2005 457
15.3 Private Equity Transactions in 2006, A–L 461
15.4 Private Equity Transactions in 2006, M–Z 468
15.5 Private Equity Transactions in 2007, A–L 472
15.6 Private Equity Transactions in 2007, M–Z 476
16.1 Private Equity Transactions in 2008, A–L 482
16.2 Private Equity Transactions in 2008, M–Z 485
16.3 Private Equity Transactions in 2009 497
viii
Preface
A journalist writing from the standpoint of April 2010, when we sub-
mitted our manuscript to Palgrave Macmillan, might well have been
tempted to entitle this book: “The rise and fall of private equity in
Germany”. There would have been a certain symmetry to the story
that followed; perhaps too long on the rise and too short on the fall.
But while such a title would make good copy for a newspaper, for
a book it would risk being an ill-judged epitaph. The aptness of the
journalist’s title surely fades over time. As writers of a book, we hope
for a longer period of circulation. Even at its nadir, during the dol-
drums of 2009, the small cap segment of private equity was alive and
kicking. Only in large cap and mid cap were the private equity markets
temporarily choked off by the widespread collapse in credit.
Private equity’s fall from grace after the Lehman Brothers bankruptcy
was perhaps in large part both inevitable and predictable. Any industry
which enjoys a period of run-away success is bound to hit a speed-
bump at some point or another.
Has our story been influenced unduly by being written during the
period of melt-down? We think not. A few members of the industry
suggested that the industry’s fall-out would mark a fitting end to our
book. But we cannot believe that the crisis of 2009 marks the begin-
ning of the end for private equity. Far more likely, private equity will
regain its poise, and chart once more a course of growth and develop-
ment. The industry has been written off many times before, and no
doubt will be written off many times again in the future.
A more accurate title for our book might have been: “The cyclical
development of private equity in Germany during the period
1984–2009”. That would hardly have made for catchy copy, although it
would have given a better flavour for the real picture. While writing up
our verdict on private equity’s first phase from 1984–1991, we pondered
how the industry managed to survive to the second. Much went wrong
during those early years, and large sums of money were lost. Investors
could have been forgiven for shunning the sector thereafter. Similarly,
the bursting of the dotcom bubble in 2001, which undermined venture
capital in such spectacular fashion, could have bequeathed a similar fate
to private equity. That it didn’t was more by luck than design. For in the
minds of many, confusion between the two remained deep rooted.
ix