Post on 19-Mar-2018
Technische Universität München
Ort, Datum
Anlass
Current German Legislation on Improvingthe Financing Environment for German Enterprises
3rd Norface Seminar on „Entrepreneurial Finance“Berlin, May 21st, 2007
Univ.-Prof. Dr. Christoph Kaserer
Lehrstuhl für Finanzmanagement und Kapitalmärkte &Center for Entrepreneurial and Financial Studies (CEFS)Technische Universität München
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Nr. Name HauptsitzVerwaltetes Kapital in Mio. US-$
1 Carlyle Group, The Washington, DC 45.8002 Goldman, Sachs & Co. New York, NY 42.5773 Blackstone Group, L.P. New York, NY 41.3634 Kohlberg, Kravis, Roberts & Co. (AKA: KKR) New York, NY 36.5675 Texas Pacific Group Fort Worth, TX 26.1786 Warburg Pincus, LLC New York, NY 23.0107 Permira Advisers Limited (FKA: Schroder Ventures Europe) London, UK 22.3528 HarbourVest Partners LLC Boston, MA 22.1969 Bain Capital Boston, MA 22.069
10 Providence Equity Partners, Inc. (FKA: Providence Ventures) Providence, RI 20.63911 Apax Partners Worldwide London, UK 20.20612 Oaktree Capital Management, LLC Los Angeles, CA 17.80813 Apollo Management (FKA: Apollo Advisors L.P.) Purchase, NY 17.50014 3i Group PLC London, UK 17.37415 Cinven, Ltd. London, UK 17.30816 CVC Capital Partners London, UK 15.95417 DLJ Merchant Banking Partners New York, NY 15.40018 Welsh, Carson, Anderson & Stowe New York, NY 12.84419 EQT Partners AB Stockholm, Sweden 12.71920 PAI Partners (FKA: PAI Management) Paris, France 12.474
Largest PE Firms worldwide by capital under management (2006)
No. Name LocationCapital undermanagementin US$ mm
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Largest European PE Firms by capital under management (2006)
Nr. Name HauptsitzVerwaltetes Kapital in Mio. US-$
1 Permira Advisers Limited (FKA: Schroder Ventures Europe) London, UK 22.3522 Cinven, Ltd. London, UK 17.3083 3i Group PLC London, UK 16.8924 Apax Partners Worldwide London, UK 16.1145 CVC Capital Partners London, UK 15.9546 EQT Partners AB Stockholm, Sweden 12.7197 PAI Partners (FKA: PAI Management) Paris, France 12.4748 BC Partners London, UK 11.9459 Bridgepoint Capital, Ltd. (FKA: NWEP & NatWest Ventures Ltd) London, UK 9.830
10 Candover Investments PLC London, UK 7.98211 Terra Firma Capital Partners, Ltd. London, UK 6.26912 Carlyle Group, The Washington, DC 6.24913 Doughty Hanson & Co, Ltd. London, UK 6.20314 Partners Group Baar-Zug, Switzerland 5.81115 ATP Private Equity Partners Copenhagen, Denmark 5.47816 Nordic Capital (AKA: NC Advisory) Stockholm, Sweden 5.11817 Charterhouse Capital Partners LLP London, UK 5.05218 AXA Private Equity Paris, France 4.98419 Montagu Private Equity, Ltd. (FKA: HSBC Private Equity Ltd.) London, UK 4.92120 Coller Capital London, UK 4.866
No. Name LocationCapital undermanagementin US$ mm
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Largest VC Firms worldwide by capital under management (2006)
Nr. Name HauptsitzVerwaltetes Kapital in Mrd. Euro
1 The Carlyle Group Washington, USA 36,852 CSFB Private Equity London, UK 24,133 Warburg Pincus New York, USA 22,464 Panorama Capital Menlo Park, USA 19,975 Bain Capital Boston, USA 18,806 Apax Partners London, UK 16,647 J. & W. Seligman New York, USA 14,978 3i Group London, UK 11,759 Permira London, UK 11,00
10 Adams Street Partners Chicago, USA 10,5711 General Atlantic Greenwich, USA 8,3212 Investcorp New York, USA 8,3213 TA Associates Boston, USA 8,3214 New Enterprise Associates Baltimore, USA 7,0715 AXA Private Equity Paris, Frankreich 7,0016 Oak Investment Partners Westport, USA 6,9917 AIG Capital Partners New York, USA 6,6918 J.H. Whitney & Co. Stamford, USA 6,1119 OrbiMed Advisors New York, USA 5,2420 Advent International Boston, USA 4,99
No. Name LocationCapital undermanagementin US$ bn
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Largest European VC Firms by capital under management (2006)
Nr. Name HauptsitzVerwaltetes Kapital in Mrd. Euro
1 CSFB Private Equity London, UK 24,132 AlpInvest Partners Amsterdam, Niederlande 20,003 Apax Partners London, UK 16,644 3i Group London, UK 11,755 Permira London, UK 11,006 AXA Investment Managers Private Equity Paris, Frankreich 7,007 UBS Capital London, UK 4,588 Montagu Private Equity London, UK 3,209 HgCapital London, UK 3,11
10 CapMan Group Helsinki, Finland 2,2011 WestLB Equity Investments Düsseldorf, Deutschland 1,7012 Baring Private Equity Partners London, UK 1,6613 Credit Agricole Private Equity Paris, Frankreich 1,5314 Gilde Investment Management Utrecht, Niederlande 1,5015 Royal Bank of Scotland, Equity Finance Group Edinburgh, UK 1,4716 AGF Private Equity Paris, Frankreich 1,3017 Société Générale Asset Management Paris, Frankreich 1,2018 TVM Capital München, Deutschland 1,1619 GIMV Antwerpen, Belgien 1,1520 Palamon Capital Partners London, UK 1,11
No. Name LocationCapital undermanagementin US$ bn
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Zielland des Kapitals
25,2%
16,3%
5,2%11,8%
9,1%
6,4%
6,1%
5,4%
14,4%
Sitzland des Managements
50,7%
15,5%
6,4%
5,7%
5,7%
4,1%2,2%4,7%
5,0%
GroßbritannienFrankreichSchwedenDeutschlandSpanienNiederlandeItalienDänemarkÜbrige
Private-Equity-Investitionen 2005Volumen: EUR 47 Mrd.
Zielland des Kapitals
25,2%
16,3%
5,2%11,8%
9,1%
6,4%
6,1%
5,4%
14,4%
Sitzland des Managements
50,7%
15,5%
6,4%
5,7%
5,7%
4,1%2,2%4,7%
5,0%
GroßbritannienFrankreichSchwedenDeutschlandSpanienNiederlandeItalienDänemarkÜbrige
Private-Equity-Investitionen 2005Volumen: EUR 47 Mrd.
Private Equity Investment in Europe
Source: EVCA (2006)
Country of management Country of destinationPrivate Equity investment 2005Volume: EUR 47bn
United KingdomFranceSwedenGermanySpainNetherlandsItalyDenmarkother
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Private Equity Fundraising in Europe
Source: EVCA (2006)
Herkunftsland des Kapitals
28,9%
23,7%16,4%
9,1%
6,2%
5,4% 4,6%
5,6%
Sitzland des Managements
63,6%13,0%
16,0%
4,0% 3,4% GroßbritannienUSASonstiges EuropaFrankreichDeutschlandAsienNiederlandeÜbrige
PE-Fundraising 2005Volumen: EUR 71,8 Mrd.
Herkunftsland des Kapitals
28,9%
23,7%16,4%
9,1%
6,2%
5,4% 4,6%
5,6%
Sitzland des Managements
63,6%13,0%
16,0%
4,0% 3,4% GroßbritannienUSASonstiges EuropaFrankreichDeutschlandAsienNiederlandeÜbrige
PE-Fundraising 2005Volumen: EUR 71,8 Mrd.
Country of management Country of originPrivate Equity fundraising 2005Volume: EUR 71,8bn
United Kingdom
USAother EuropeFranceGermanyAsiaNetherlandsother
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Private Equity Investment in Europe
Source: EVCA (2006), Eurostat
Volkswirtschaftliche Bedeutung von Private Equity
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
Großbritan
nien
Schwed
enDäne
markNiede
rlande
EU (15 Lä
nder)
Frankrei
chSpa
nien
Eurozo
neNorw
egen
Portug
alIta
lien
Finnlan
dSch
weizDeuts
chlan
dIrla
ndBelg
ienPole
nÖste
rreich
Griech
enland
-4
-2
0
2
4
6
8Investitionen(Sitzland)/BIP Investitionen(Zielland)/BIPPortfolio/Marktkap. PE-Umfeld (rechte Skala)
Economic Significance of Private Equity
Investment(Mgmt)/GDPPortfolio/Market Cap.
Investment(Dest.)/GDPPE Environ.(right scale)
United
King
dom
Sweden
Denmark
Netherl
ands
EU 15Fran
ceSpa
inEuro
zone
Norway
Portug
alIta
lyFinl
and
Switzerl
and
German
yIre
land
Belgium
Poland
Austria
Greece
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Equity Ratios in Europe
Source: BACH-Datenbank, Eurostat
0
10
20
30
40
50
Spanien
Finnland
Belgien
Frankre
ichNied
erlan
dePor
tugalSch
weden
Dänem
ark
Italie
nDeu
tschlan
d
Sweden
Denmark
Netherl
ands
France
Spain
Portug
al
Italy
Finlan
d
German
y
Belgium
Small companies
Mid-sizecompanies
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Equity Ratios in Germany
1996 1997 1998 1999 2000 2001 2002 2003
Deutsche BundesbankKleine Unternehmen 4,1 3,0 8,4 8,1 4,3 4,2 5,8Mittlere Unternehmen 15,9 16,4 19,3 19,7 20,1 20,8 22,7Große Unternehmen 26,1 26,4 27,2 27,0 26,7 27,4 28,5Alle Unternehmen 16,2 17,5 18,4 18,6 19,5 21,0 21,9
KfW-BilanzdatenbankKleine Unternehmen 14,1 13,9 15,4Mittlere Unternehmen 14,9 16,0 18,1Größere Unternehmen 25,5 25,4 26,3Alle Unternehmen 15,0 15,3 17,1
SmallMid-sizeLargeAll companies
SmallMid-sizeLargeAll companies
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Importance of Geographical Distance (Martin et al. 2005)
1 2 3 4 5 6
Beteiligungs-unternehmen
GrößererBallungsraum
Kapitalgeber des Venture-Capital-Gebers
Andere Venture-Capital-Geber
Andere Finanzgeber des Beteiligungsunternehmens
Forschungsinstitute
Sehr wichtig unwichtig
Wichtigkeit der geografischen Nähe für Venture-Capital-Geber (Duchschnittswert)
Deutschland (n=107)
Großbritannien (n=60)
1 2 3 4 5 6
Beteiligungs-unternehmen
GrößererBallungsraum
Kapitalgeber des Venture-Capital-Gebers
Andere Venture-Capital-Geber
Andere Finanzgeber des Beteiligungsunternehmens
Forschungsinstitute
Sehr wichtig unwichtig
Wichtigkeit der geografischen Nähe für Venture-Capital-Geber (Duchschnittswert)
Deutschland (n=107)
Großbritannien (n=60)
Importance of close distance forVenture Capital firms (mean)
Portfolio company
Investors
Other VC firms
Other external sources of capital for portfolio company
Research institutes
Large urban area
Highly important UnimportantGermany (N=107)
United Kingdom (N=60)
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Employment Effects after Buyout Transactions
Source: CEFS (2005)
3,4%
2,8%
1,6%
-3,8%
7,1%Buyout in Familienunternehmen
Secondary Buyout
Going-Private-Buyout
Spin-off-Buyout
Turnaround Buyout
2,4%
3,4%
2,8%
1,6%
-3,8%
7,1%Buyout in Familienunternehmen
Secondary Buyout
Going-Private-Buyout
Spin-off-Buyout
Turnaround Buyout
2,4%2,4%
All buyout target companies
Buyout in family firms
Secondary Buyout
Going private buyout
Spin off buyout
Turnaround buyout
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Median Return (IRR) and Risk of Private Equity Investments
Source: CEFS (2005)
0
5
10
15
20
25
0 10 20 30 40 50 60
Standard deviation in %
Ret
urn
in % All funds
VCBuyoutBenchmark
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Median Return (PME) of Private Equity Investments
Source : CEFS (2005)
PME mean
-0,5
0
0,5
1
1,5
2
All funds VC Buyout
Kaplan/Schoar 2005
Kaplan/Schoar 2005 value-weighted
Kaserer/Diller 2004 Sample Liq.
Kaserer/Diller 2004 Sample I
Kaserer/Diller 2004 Sample II
Kaserer/Diller 2004 Sample Liq. Value-w.
Kaserer/Diller 2004 Sample I value-w.
Kaserer/Diller 2004 Sample II value-w.
Phalippou/Zollo 2005
Phalippou/Zollo 2005 value-w.
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Valuation and Financial Structure in European LBOs
Source: Standard&Poors (2006), Thomson Financial, Eurostat, CEFS
-2
0
2
4
6
8
10
1Q98
3Q98
1Q99
3Q99
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
Purchase Price Multiple Debt Multiple EU 25 GDP Growth in %Euro 10yr rate in % Leverage
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Valuation and Financial Structure in German LBOs
Source: Standard&Poors (2006), Thomson Financial, Eurostat, CEFS
0123456789
10
2001(5)
2002(6)
2003(9)
2004(18)
2005(13)
2006(12)
Purchase Price Multiple EuropePurchase Price Mult. Germany
Debt Multiple EuropeDebt Multiple Germany
Leverage GermanyLeverage Europe
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Valuation and Financial Structure in European LBOs
Source: Standard&Poors (2006), Thomson Financial, Eurostat, CEFS
0
5
10
15
20
25
30
35
40
45
50
1Q98
3Q98
1Q99
3Q99
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5P/E Frankfurt (left scale)
P/E London (left scale)
Equity Multiple (right scale)
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Taxation of Carried Interest
(Source: EVCA (2006a))
• 25% of capitals gains subject to income tax withholding period of at least 2 years• (Maximum tax 40%), therefore Carried Interest istaxed at max. 10% with at least 2 years holdingperiod
• Taxation as ordinary incomeUnited Kingdom
• Tax rate dependent on region (Kanton) (Maximum tax rate between about 24 % and 42 %)
• Taxation as ordinary incomeSwitzerland
• 18 %• Capital gains taxSpain
• max. 52 %• Taxation as ordinary incomeNetherlands
• max. 39,33%• Structure of Carried Interest rules tendingtowards capital gains and/or dividends. No taxationof capital gains, if shares are held longer than 6 months and do not represent a substantial amount(10%). Otherwise taxation as ordinary income
Luxembourg
• 12,5 %• Capital gains tax under certain conditionsItaly(Fondo Chiuso)
• 27 %• Capital gains taxFrance
Relevant tax rateTaxation of Carried InterestLand
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VAT on Management Fees
• No VAT, SGECR (Art. 20.1.18 (n)) of Spanish VAT Law.Spain(Source: Local company and tax law, EVCA (2006c))
• No VAT, Appendix to Art. 153 KAG i.c.w. Art. 18 Ziff. 19 f) of the Swiss VAT Law of 2 Sep 1999.
Switzerland(KAG)
• No VAT (EVCA 2006c).Netherlands
• No VAT (EVCA 2006c).Italy(SGR)
• No VAT, Art. 261 C 1°f) Code Général des Impots.France(FCPR)
• No VAT, Art. 38 of SICAR-Law in conjunction with Art. 44, § 1 d) of the LuxembourgVAT Law.
Luxembourg(SICAR)
• No VAT on additional share of profit of the general partner (EVCA 2006c).United Kingdom(LimitedPartnership)
• Yes. Exception § 4 Nr. 8 h UStG not applicable to Private Equity Funds.• Preliminary distribution of profits to managing shareholders is qualified as specialcompensation, if this payment results in a lower net income
Germany (GmbH & Co. KG)
VAT on management feesCountry
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Recommendations for Taxation
Guaranteed tax transparency for Private Equity Funds. These funds may be structured in different legal forms as corporations or partnership.
Exemption from taxation for all services rendered between the fund as separate assets and its management companies, which will be comparable to EU-regulated OGAW / UCITS
Continuation of tax rules regarding Carried Interest with an internationally competitive tax rate
Amendment to § 8 Abs. 4 KStG (resp. § 8c KStG-E) to allow loss carry forward.
Tax exemption for capital gains resulting from Seed- or Start-up-financing for a closely defined group of young technology companies and for specified holding periods
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Recommendations for Company Law
Amendment and revision of UBGG
Minimum capital requirement of EUR 1 million.
Object of the company: Direct or indirect equity investments (including fund-of-funds) and mezzanine capital
Restriction of each single investment to 30% of the fund’s assets (but not applying to the first three years from the funds’s vintage year)
Permit investments in listed companies, if at least 5% (2%) of nominal capital is acquired
Holding period restriction for investments (e.g. 12 years)
After 5 years no single shareholder should own more than 40% of the fund
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Recommendations for Sector Supervision
Registration (certification) of Private Equity Funds combined with
Registration of fund managers
Implementation of (voluntary) commitment of funds and fund managers to industry-wide common rules of conduct and continuing education
Supervision by central supervisory authority
Fund shares may be marketed to qualified investors only (e.g. minimum investment EUR 125k; EUR 10k in the case of fund-of-funds)
Revision of rules regarding a Pension Fund’s ability to invest in alternative assets
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Technische Universität München
Center for Entrepreneurial and Financial StudiesTU München | Arcisstrasse 21 | 80333 München Tel: +49 89 289 25483Web: www.cefs.de
www.ifm.wi.tum.deEmail: contact@cefs.de
Univ.-Prof. Dr. Christoph KasererTel: +49 89 289 25489Email: christoph.kaserer@cefs.de