Equity market continues to zigzag

Frankfurt (ots) -

- After late summer recovery, renewed drop in final quarter of
2012
- Fear of write-downs, increasing entry prices and worse exits
weigh on late-stage investors
- Early stage segment is stagnating but expectations are positive

The German Private Equity Barometer is continuing its zigzag
course. After declining in the second quarter and recovering in late
summer of 2012, it dropped again in the last quarter, this time
sharply. The business climate index for the German private equity
market, which is calculated jointly by the BVK, the German Private
Equity and Venture Capital Association, and KfW for Handelsblatt,
Germany's financial daily, dropped by 9.8 points to close at 32.5
points, almost 4 points lower than the long-term average. However,
the economic revival expected for this year gives cause for cautious
optimism over the further development of the market. It can be
assumed that private equity firms will also be able to benefit once
the economy starts picking up again.

The renewed decline of the German Private Equity Barometer in the
fourth quarter of 2012 was mainly caused by a drop in sentiment among
later stage investors (-16.2 points to 29.4 points). They deplore
higher entry prices and a renewed deterioration in exit
opportunities, and they fear increasing write-downs. Both the
sub-indicator for the current business situation and the indicator
for future business expectations have dropped in this market segment
- with much more pessimistic expectations for the future (-20.1
points) than for the present (-12.3 points).

In the early stage segment, the combination between a slight
deterioration in the assessment of the current situation (-2.1
points) and a slight increase in business expectations (+1.4 points)
has kept the relevant overall indicator almost unchanged (-0.4 points
at 36.9 points).

The positive business expectations give reason to hope that the
early-stage segment of the private equity market might stabilise
further. The forecast is for continuing high demand for venture
capital, high-quality investment proposals, positive entry prices and
good exit opportunities. In addition, fund managers appear to be in
greater demand again in the job market and early stage investors are
thus complaining about recruitment problems - a further sign that the
market is recovering.

BVK Managing Director Ulrike Hinrichs is particularly pleased with
the stable mood and the positive outlook in the early stage segment.
"Despite challenges in fundraising and exits, venture capital
investors are looking to 2013 as a year of opportunities. It is the
numerous investment options in the German innovation and start-up
landscape that are boosting early stage investors' confidence. In
contrast, the late stage investors' more cautious assessment reflects
the inconsistent forecasts for the European and global economy. In
the late stage segment, portfolio companies are much more strongly
dependent on the performance of the global economy and exports."

Dr Jörg Zeuner, Chief Economist of KfW Bankengruppe, assesses the
results of the current German Private Equity Barometer as follows:
"The private equity investors' positive assessments for the early
stage segment are encouraging, but unfortunately, considering the
overall assessment of the industry, this is not yet reason to
celebrate. We expect the economy to develop more positively in 2013
than late stage investors expect, so we expect the coming months to
provide positive signals for this market segment as well."

The current German Private Equity Barometer is available for
download at www.kfw.de/gpeb.

Pressekontakt:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM) Christine Volk
Tel. +49 (0)69 7431 3867, Fax: +49 (0)69 7431 3266,
E-Mail: Christine.Volk@kfw.de, Internet: www.kfw.de