Private Equity Holding (PEH), the Zug-based listed private equity investment firm, has announced a cumulative net loss of SFr88.9m (E60.5m) for the nine month ending December 31 2001, pointing to difficult market conditions for venture capital and private equity investment.
PEH said consolidated shareholders’ equity declined from SFr1.36bn to SFr1.13bn during the period. During the final quarter of 2001, portfolio write-downs and new fund reports meant that fair value per share dropped approximately five per cent to Fr259.7. The firm added that compared to the evolution in the previous quarters since April 1, the decline in fair value had slowed “significantly”.
Nevertheless PEH predicted that in terms of market climate, things were likely to get worse before they get better. The firm said in a statement: “Although it seems that the greater part of reevaluations have already taken place, we believe that some additional adjustments will be necessary before a rebound in the private equity industry can be expected. Our outlook with regard to the mid-term development remains cautiously optimistic.”
PEH is in the middle of a transitory period, aiming to restore market confidence in the integrity of the business following disputes regarding corporate governance which last year led to the replacement of Vontobel Private Equity by Swiss Life Equity Partners as manager of PEH’s investment portfolio. Since then a number of significant steps have been taken to rebuild the market’s trust in the firm including the introduction on 1 January 2002 of a performance-related fee structure. 1 On December 2001, chairman Marinus Keijzer took up the new role of Delegate of the Board of Directors with additional corporate executive responsibilities.
PEH is also in the process of implementing a revised cash flow plan after significantly overcommitting to new investment at the height of the recent venture investment boom. According to a spokesperson at PEH, the question of how to finance overcommitments of around SFr1bn was another dominant issue at the firm during much of last year. Following the appointment of Swiss Life Equity Partners, Swiss Life/Rentenanstalt put into place a SFr500m credit facility to cover ongoing financing needs. So far SFr200m has been drawn down, with the remaining SFr300m set aside for selective follow-on investments.
New investments are not foreseen at present. PEH is fully invested with total commitments amounting to SFr2.14bn. The firm currently holds investments in 84 funds and 37 companies.