Greeting 2012

In the last two years, the German economy has shown what strength it has. All the signs are that the upswing will continue, albeit at a quieter pace of expansion. The economic recovery has also led to a significant upturn in the private equity market. According to the German Private Equity and Venture Capital Association (BVK), investments in the private equity market in 2010 were almost 60% higher than in the previous year at € 4.4 billion. This development is encouraging. However, it also sharpens the responsibility of all involved to avoid new exaggerations and to maintain the right sense of proportion.

As in previous years, majority shareholdings accounted for the lion's share of investments, which totaled €2.52 billion. However, private equity is also becoming increasingly important for minority shareholdings and the financing of small and medium-sized enterprises. Although many SMEs have succeeded in increasing their equity ratio despite the financial crisis, there is still a high demand for equity-related forms of financing. In particular, many companies will not be able to repay the follow-up financing for the standard mezzanine programs securitized on the capital market from their own funds or with the help of their principal bank. Here, private equity offers an important financing alternative.

Despite an overall revival in the market for growth and acquisition financing, early-stage financing remains at a low level. The financial and economic crisis has even exacerbated the lack of capital in the venture capital segment. The German government has already taken countermeasures and expanded its funding instruments. Within a short period of time, we have increased funding for the ERP Start-up Fund to more than €700 million.