Private equity groups hint worst is over

Three of Europe’s biggest listed private equity groups on Friday reported drops in the value of their investment portfolios for the first half, while indicating they might be past the worst of the financial crisis.

SVG Capital, the biggest investor in UK buy-out house Permira, said its net asset value per share fell 18 per cent in the six months to June as it reported a net loss of £120.9m ($197.2m), against a £187.2m loss a year beforehand. SVG shares fell 9p to 129p.

However, it said currency movements were to blame for much of the fall in its portfolio and it had written up the value of some of Permira’s more defensive investments, including Acromas, Birds Eye Iglo, New Look and TDC.

Nicholas Ferguson, SVG’s chairman, said its portfolio had shown “signs of stabilisation” and was benefiting from “renewed stability”.

Lynn Fordham, its new chief executive, said the portfolio fell only 5 per cent in local currency terms, due to writedowns on more cyclical companies, such as Valentino, the Italian fashion group, and DinoSol, the Spanish supermarket group.

But she said there were “glimmers of hope” even at companies hit very hard by the downturn, such as Hungarian chemicals group Borsodchem. “It would be nice to turn the corner, but I remain cautious.”

She also threw cold water on speculation some of Permira’s portfolio companies could be poised for lucrative initial public offerings, saying she did not expect “major distributions” in the next 12 months.

In a separate announcement, HG Capital Trust, the listed arm of the eponymous mid-market buy-out house, reported a 6 per cent drop in its net asset value for the first half. HG said this was due to “further provisions against a small number of investments”, currency movements and a dividend payment.

“We think the recovery will be weak,” said Ian Armitage, HG chairman. “But ... we are going into a very good buyers’ market – one of the best on record.”

Eurazeo, the French investment house chaired by Michel David-Weill, former chairman of Lazard, reported a 10 per cent drop in its net asset value to €47.8 ($68.6) per share in June, down from €53.4 in December. The group slumped to an interim loss of €120.9m, against a profit of €241.7m the previous year.

But it said some of its biggest investments had strong revenue growth in the first half.