Germany's buyout backlash?

The German government has appeared to send a worrying message to buyout firms operating in the country in advance of a new private equity law which is currently being drafted and is scheduled to become effective on January 1, 2008.

In an interview with Financial Times Deutschland, the country's deputy finance minister, Barbara Hendricks, said the law would positively impact those firms which have a beneficial effect on the German economy, while penalizing those that did otherwise.

Hendricks reportedly said that the goal of the legislation would be to strengthen the positive effect of the private equity market on ?financing small and mid-size companies and start-ups.? The most obvious interpretation of this is that early-stage investors in the country will receive favorable treatment.

Such indications have been welcomed by the Bundersverband Deutscher Kapitalbeteiligungsgesellschaften (BVK), the German Private Equity and Venture Capital Association. In its most recent official statement on the proposed law, BVK board member Professor Wilhelm Haarmann said: ?Thanks to the government's resolution, private equity will get the chance to finally have internationally competitive environmental conditions and, moreover, there will be prerequisites for positive economic effects on financing innovation, growth and succession.?

However, investors in larger German companies may not be awaiting the new rules with such eager anticipation following the FT interview. Hendricks intimated that the law would penalize any company violating German trade laws (HGB), which requires the manager of a company to act in that company's interests.

Moreover, she appeared to point the finger specifically at Texas Pacific Group, the US buyout firm that acquired German bathroom fittings manufacturer Friedrich Grohe for €1.5 billion ($1.9 billion) in 2004 and has since applied controversial cost-cutting measures. The deal was believed to have formed part of the inspiration for the infamous speech made by then German vice chancellor Franz Muentefering in April 2005, when he compared private equity firms to locusts.

In June this year, German business daily Handelsblatt reported that the government was considering a tax on private equity funds domiciled in the country in order to help subsidize tax cuts for German companies. Although the report was later denied by the government, it will have left GPs pondering whether the government is for or against them. The latest reports will only add further to the confusion.

Connecticut looks at hedge funds
The attorney general of Connecticut has launched an investigation into hedge fund fraud. Connecticut is home to many hedge funds, as well as to occasional instances of fraud. According to a report, attorney general Richard Blumenthal has been spurred to investigate the hedge fund industry in part because of a June court decision that reversed an earlier requirement forcing many hedge funds to register with the Securities and Exchange Commission. In September, Blumenthal announced his office's intention to crack down on so-called naked short selling, an illegal tactic some hedge funds have been accused of using. The announcement came in the wake of the collapse of hedge fund Amaranth Advisors. To date Blumenthal's office has not identified any instances of fraud among hedge funds.

FASB issues pension standard
The Financial Accounting Standards Board, the US standardssetting body for the financial accounting and reporting profession, has issued a new standard intended to bring greater transparency to a company's financial position with regard to its defined benefits plan. Specifically, companies must now state to what extent a plan is overfunded or underfunded; the status of a plan at the end of a company's fiscal year; and changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. The standards is part of Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans.

CapMan bolsters fund admin team
Nordic private equity firm Cap-Man has named Annica Hillman as deputy head of the fund administration team. Hillman joined the firm in 2003 from Slottsbacken, where she was chief financial officer and controller. She is based in CapMan's Stockholm office. Established in 1989, CapMan now has a team of roughly 100 professionals in Helsinki, Copenhagen, Oslo and Stockholm. The firm has roughly €2.6 billion in total capital in private equity and real estate vehicles. The firm's back office team is led by Martti Timgren, legal counsel and head of fund administration. Prior to joining CapMan, Timgren was a partner at Bützow Nordia Advocates.

Paris manager hires communications pros
Access Capital Partners, a Paris-based European fund of funds manager, has hired two professionals to fulfill marketing and investor relations and communications roles. Erin Sarret has been hired as marketing director. She was previously a European business development consultant for law firm Nixon Peabody. Before that, Sarret spent three years at Triao, a Paris-based placement agent. Cecile Croissant was named investor relations and communications director. She joins the firm from Paris-based Fondinvest Capital, a private equity fund-of-funds manager. Access Capital was founded in 1999 and currently has roughly €1.3 billion in funds under management in separate buyout and technology funds of funds. The firm has 23 professionals.

JF Lehman adds IR professional
New York private equity firm JF Lehman & Co has hired Lisa Steffens as director of investor relations. Steffens was risk consultant and project manager for the Shaw Group, a construction services firm. Before that she worked at Deutsche Bank and Goldman Sachs. Before entering the banking industry, Steffens was an intelligence analyst with the Central Intelligence Agency. JF Lehman has an investment focus on the defense, aerospace and maritime sectors. The firm has completed roughly 11 investments with an aggregate value of $1.5 billion.