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EU expansion to boost private equity – EVCA

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EUROPE – The expansion of the European Union at the start of May is being seen as providing a boost to the European venture capital and private equity business.

The European Venture Capital Association chairman Jean-Bernard Schmidt, broadly positive about the outlook for 2004, said: “In addition, the EU’s expansion on 1 May will provide opportunities for the whole industry.”

“The prospects for 2004 are encouraging – we see that investor confidence is returning, with a number of investments and exits completed in all the major economies. Fundraising is beginning to gain momentum as we go into a new cycle.

“On the entrepreneur side, there are fewer but better deals and the IPO and stock markets are picking up.”

“The European private equity and venture capital industry saw the start of a return to confidence in the second half of 2003,” EVCA said in a release. “Fundraising was slightly up on 2002 at almost 28 billion euros.”

It said investment activity stood at more than 23 billion euros, with a “strong showing” in the second half of 2003. There was a 55.6% decline in write-offs.

The association has expressed concern over the possible impact of current Basel II proposals on the industry. “This would result in a significant retreat by banks for private equity and venture capital funds due to the proposed changes in risk weightings for assessing business risk,” it says.

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