Xeon Fund is the Private Equity fund of Xeon international launched last year in Luxembourg with the vocation to invest in the emerging markets of South and South East Asia.
Xeon International Private Equity  division is currently staging a roadshow to attract investors to SEACAP, a dedicated fund targeting industrial investments in fast growing medium sized enterprises.
“Investors are reacting enthusiastically at participating in promising investments in Asia and they are very keen on securing profitable opportunities in the medium term” says Giancarlo d’Elia – Chief Private Equity Officer at Xeon International. “Institutional and private investors are equally interested in SEACAP investment strategy and we have many requests to access SEACAP’s capital in the next few weeks”.

” The SEACAP Fund will tour in Singapore from the first week of February on.”, says Ronny Showkat, Group Managing Partner ME and Asia,” We have some important assets that are combining the best of both worlds as the fund is managed from Luxembourg, today’s second largest hub in the world for fund management , and it invests directly in the growing markets of South and South East Asia, today’s fastest growing economy. Investors in Singapore understand well the potential of the region and that is why we have set the priority to meet investors in this part of the world.”

Xeon International aims to create long-term business value for its clients and investors by offering a unique blend of result-oriented, risk sharing strategic value creation and implementation services. It operates within four functional areas: Private Equity – Corporate Finance – Growth Management Advisory and Family Office Services.

Our teams consist mainly of experienced managers with deep theoretical and practical knowledge of their areas of specialisation which ensures rapid comprehension of relevant strategic and operational issues and a solid implementation of solutions. We devise innovative and result-oriented ways to create business value for our clients and investors.

Mr. d’Elia, Xeon International Private Equity (XIPE) is the Private Equity company of Xeon International: which investment strategy has the company?

GDE: The investment strategy of XIPE is focused on fast growing mid-sized enterprises with a clear track record in mastering market growth issues.
The idea is to aim at implementing where deemed, profitable “buy and build” strategies and to create poles of specializations around our investment targets: this will provide to our investments a major leverage in view of the exit.

 What are the top three industries XIPE is targeting?

GDE: At present in the Emerging Markets of the Asia Pacific region. We look at investing in sectors such as:
- Manufacturing
- Consumer & Retail
- Healthcare
- Technology/Media
- Energy
but there are a number of other industries that will become palatable to Private Equity investors in the near future: from Education to Agricultural, from Renewable Energies to Financial and Business Services.

How do you assess the instability of the financial markets and the impact on the investor community?

GDE: The instability is a factor going to become endemic in our markets, so all investors are expected to come to terms with that.
As regards the impact on the Private Equity industry we reckon that it is less exposed to the volatility because of the long term approach of investors: this enables to avoid putting the focus on short terms profitability in favour of future growth: by the way this is one of the elements sometimes criticized by entrepreneurs in Emerging Markets who are typically “short term profit driven”.

What are the key success factors for Private Equity funds to succeed?

GDE: Allow me to summarize it as follows:
1. Working capital management
2. Strengthening management of the company
3. Financial and control system implementation
To that I would also add that an efficient capital allocation based on capital needs and priorities plays a primary role.

What’s your view on exit strategies?

GDE: We have a preference for pre-IPO companies, but we don’t limit our investment scope to those enterprises: in any case the IPO is one of the preferred exits for our investors.
In our target regions the typical exit strategies are IPOs and trade sales: in some markets strategic and trade sales are dominant given limited domestic IPO markets.
IPOs will continue to be the key exit strategy  in the Asia Pacific region, particularly due to falling capital controls in many markets allowing the capital to flow more freely.

Thank you and good luck for the future.

GDE: My pleasure.

The Private Equity Industry looks to investment again in 2010.

Last year proved to be an extremely challenging year for the Private Equity Industry. The asset class experienced a severe drop in deal flow volume in 2009, accompanied by a significant downward adjustment in valuations for their portfolio companies.

Additionally the Industry had to face the lowest levels of new fundraising since 2004.

“The reverse of fortunes in the previously buoyant debt markets and the changing relationship between private equity and banks has been at the root of the many issues affecting the industry”, says Yves Duponselle, CEO at Xeon international. “Not only has financing for new deals been an issue, but financial management for existing investments has also presented a major worry.” “While Banks have been focusing on bolstering their balance sheets, they have been unwilling to accept write-downs or forgive breaches of loan covenants set during more prosperous times, making it extremely challenging to restructure financing for existing portfolio investments”, commented Yves Duponselle.

“The total value for new private equity backed deals taking place in 2009 was $77bn, a 61% reduction from 2008” 

As a result of these challenging conditions, deal closing for private equity deals has fallen significantly.

Giancarlo d’Elia, CFO at Xeon International commented: “Adverse market conditions have also led to a reduction in the number of exits for private equity firms, a factor affecting the profitability of existing holdings, and a major contributor to the slow-down in the new fundraising market. With firms not being able to exit their portfolio companies at an acceptable level, many are now holding companies for longer periods than initially planned, leading to a significant drop in distributed capital for investors from exited investments in 2008 and 2009.”

The dynamic of the private equity market has changed, and as a result limited partners in funds have been far less keen to invest in new private equity vehicles. In 2009, private equity fundraising had its worst fundraising year since 2004, with only $246bn raised by 482 funds worldwide. This is 61% down on the $636bn raised in 2008, and 62% down on the record $646bn raised in 2007.

“The drop in fundraising can also be explained by the poor returns experienced by the industry since the onset of the financial crisis”, commented Giancarlo d’Elia. “Over a one-year period to June 2009 private equity returned –23%, with mega buyouts returning –31%. With deal-flow down, fundraising down, leveraged finance not available at the same rate as in the past, and the market for exits also suffering, the state of the asset class looks relatively bleak.” “However, while past performance is by no means an indication of future returns, if funds raised during the last period of economic downturn are examined, there is certainly evidence that funds raised during difficult periods can actually perform extremely well”, says Yves Duponselle.

“Nevertheless, we are seeing early signs of an improvement in fund performance, with the value of funds increasing between the first and second quarters of 2009 . The only metric still on a downward trend is fundraising, with the final quarter of 2009 setting a new low point” says Yves Duponselle. “ Our conversations with investors do show that although confidence is still a world away from the levels seen in 2007, there is reason to believe that the level of commitments will start to improve in 2010, with 51% of investors polled indicating that they would invest more capital in 2010 than 2009, and only 8% investing less.”

Xeon International aims to create long-term business value for its clients and investors by offering a unique blend of result-oriented, risk sharing strategic value creation and implementation services. It operates within three functional areas: Project Financing – Fund Management & M&A – Growth Management.
Our teams consist mainly of experienced managers with deep theoretical and practical knowledge of their areas of specialisation which ensures rapid comprehension of relevant strategic and operational issues and a solid implementation of solutions. We devise innovative and result-oriented ways to create business value for our clients and investors.