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Highlights

Last year was a breakthrough year in terms of private equity deal flow, where our long-running efforts to be a leading investor in our focus sectors proved successful. We participated in an exceptional number of direct private equity investments, which were all co-investments with fund managers. The increase in deal flow from 2011 shows that our top-down market approach to sourcing deals is paying off. In 2012, direct investments outnumbered investments in funds  and most of these equity deals were in our focus sectors, in line with our strategy.

The overall private equity market saw some growth in 2012, and FMO’s own private equity investment volumes returned to the robust levels seen in the 2007-2008 pre-crisis period. FMO participated in a range of high-quality and high-impact private equity deals.

We completed 16 new direct investments and increased our exposure in 14 existing direct investments in companies. Most of our direct investments were in Africa, which remains the most important region for our private equity activities. We aim to maintain a well-diversified global portfolio, however, and are also active in Asia, Latin America and Eastern Europe.

While the majority of our private equity deals were in the Energy sector, we also invested in Financial Institutions and Agribusiness, Food & Water. Notable deals for 2012 included five renewable energy projects: a solar and a wind project in South Africa, both of which were part of the South African Government’s REFIT program aimed at boosting renewable energy in the country, two hydro-power projects in Latin America, and the first wind farm in Mongolia. We also closed our first private equity deal in Agribusiness.

FMO also made a direct investment with one of FMO’s fund managers in a bank in Nigeria, supporting its restructuring alongside a consortium of investors. We fully closed and partially disbursed our co-investment in a large refinery project in Egypt, which was initially closed in 2010 but later put on hold with the development of the Arab Spring.

FMO exceeded its targets for exits in 2012, with 27 private equity exits. These included a profitable exit from Pronet, a Turkish alarm services company, in which we co-invested with a local fund manager. Following a challenging exit environment in 2011, we saw the investment climate in emerging markets improving. Our global private equity portfolio proves to be sufficiently robust to generate a good flow of exit revenues year by year.

Commercial investors remained fairly risk-averse in 2012. Lingering effects of the credit crisis and financial industry regulation made mezzanine financing less prominent in our deal flow. This is the case for both Private Equity and our Financial Institutions lending business, as market-related factors such as Basel III regulation make it less attractive for financial institutions to issue Tier 2 capital.

New Contracts Equity per sector per region 2011 vs 2012 (€xmln)

2012Financial InstitutionsEnergyAgribusiness, Food & WaterDiverse SectorsTotal
Investment fundsOther
Africa305331028142
Asia302580063
Latin America & the Caribbean230160645
Eastern Europe & Central Asia39600449
Non-region specific5600011
Total1279055038310
2011Financial InstitutionsEnergyAgribusiness, Food & WaterDiverse SectorsTotal
Investment fundsOther
Africa0243603595
Asia373250065
Latin America & the Caribbean030003
Eastern Europe & Central Asia000011
Non-region specific01200012
Total374261036176