Apax Partners LLP Chief Executive Officer Martin Halusa said he doesn’t expect the single European currency to break up as the British private-equity firm stepped up the pace of investments last year.
The firm, based in London, spent 2.7 billion euros ($3.4 billion) last year, up from 2.2 billion euros in 2010, according to its annual report released today. The company reaped 2.1 billion euros from selling assets in 2011, down from 3 billion euros in the year-earlier period.
“The economic fundamentals of the core euro zone countries remain strong,” Halusa wrote. “A collapse of the euro is extremely unlikely. The more likely scenario is the emergence of a more unified political entity. This will be a painful process, but I am sure that in the longer term this market of 350 million consumers will return to being an economic powerhouse.”
Apax, which is raising a 9 billion-euro leveraged buyout fund, has sought to diversify its investments away from Europe, which accounts for 57 percent of its funds, and into the U.S. and Asia. The firm invested in U.S. wound-care specialist Kinetic Concepts Inc. and Shanghai-based restaurant chain Golden Jaguar last year. It also bought France Telecom SA’s Orange Swiss mobile-phone unit for 1.6 billion euros in December.
Private-equity firms have led about $63 billion of acquisitions in Europe this year, down from $115 billion in the same period last year, according to data compiled by Bloomberg. There were about $200 billion of such transactions at the peak of the buyout boom in 2007. Buyout firms like Apax pool money from investors including pension plans and endowments with a mandate to spend it within five to six years and return it with a profit after about 10 years.
Apax, which has raised a little less than half of the amount it’s seeking for its latest fund, said fundraising is tough as an increasing number of firms chase a diminishing amount of money.
“Many of our investors have had less capital to invest this time round, because they are still feeling the effects of the downturn,” Halusa said. “Others, such as banks, have been prevented from investing in private equity for regulatory reasons. At the same time we are faced with a very competitive market in which many of our peers are competing for the same shrinking pool of capital.”
Permira Advisers LLP and Cinven Ltd., two London-based competitors, are already raising funds. CVC Capital Partners Ltd. is preparing to seek as much as 10.75 billion euros later this year, people briefed on the matter said in May.