We are pleased to bring you the second issue of Acanthus Alert. The last twelve months have been very busy at Acanthus not only with high volumes of client work but also our move to larger offices, recruitment, moderating panels at private equity conferences, editorial activity and research.

We were delighted to have been short listed for the EVCA/Real Deals European Boutique of the Year Award at the second European Private Equity Summit and Awards dinner organised by EVCA, INSEAD and Real Deals.

As we approach summer, we continue to experience brisk activity levels. We are working with a number of clients on current and forthcoming fund placements and have an active pipeline of corporate advisory business. In addition, we continue to work with private equity investors on their investment strategies, including a current assignment involving Central and Eastern Europe.

Furthermore, in December 2004, Acanthus began an involvement with a new private equity based charity called the European Venture Philanthropy Association (EVPA) which aims to work with charities in order to enable them to become stronger and more sustainable (For more information please refer to the EVPA website).

In January 2005, the EVPA organised a fund raising trek to climb Mount Kilimanjaro. One of our partners, Armando D'Amico, participated on behalf of Acanthus. The trek was organised both to promote awareness of and raise funds for the EVPA itself as well as a new water supply pipeline to serve a local village in Tanzania. The initiative was a great success: not only did the group of 17 successfully reach the top but more importantly current estimates put the total amount raised by all participants at approaching €300,000.

Emerging managers in Europe: why bother?
In a Private Equity News article published in February 2004 Acanthus pointed out the merits and perils of investing in emerging private equity managers. This is an area of particular interest to Acanthus as many of its mid market fund placement clients are emerging managers now but hopefully the stars of the future.

Investors welcome the newcomers
In August 2004 Acanthus was further widely quoted in Private Equity News on the subject of emerging managers - "Private equity managers are playing in a Darwinian market - strong new funds will continue to attract investor money, starving their older and weaker competitors".

Investors clamour for information
A survey carried out by Acanthus on GP/LP relationships in preparation for moderating a panel at Super Return 2005 and reported on Private Equity News, revealed some interesting conclusions. On balance GPs thought they were providing more information than LPs thought they were receiving...

Acanthus is often asked to moderate panels at conferences on private equity. We are very happy to do this and believe that to moderate a panel discussion in such a way as to make the discussion challenging, interesting and controversial requires much preparation. We therefore invest a considerable amount of time and resources into preparing for any panels we moderate. During the year Acanthus moderated the following panels:

Super Return 2004 (Munich, February 2004)
What are the most critical issues facing VCs and how have they re-adjusted strategically & operationally to the post-bubble environment?

Private Equity Analyst Conference 2004 (New York, September 2004)
Starting a Lucrative New Managers Program

Capital Creation 2004 (Cannes, September 2004)
Understanding the different investment approaches of Fund of Funds, Corporate Offices, Pension Funds, Endowment Offices and Family Offices to ensure you are targeting your Fund at the right investors

Super Investor 2004 (Paris, November 2004)
Comparing & Contrasting The Views Of European & US LPs On The Asset Class: Examining Commitment Size, Manager Selection & Return Expectations

German investor conference (Frankfurt, November 2004)
Investor tastes, investor needs - recent experiences of a Placement Agent

Central and Eastern Europe Private Equity Forum (London, November 2004)
Where does CEE fit in? The LP's perspective on CEE in a global investment context

Super Return 2005 (Frankfurt, February 2005)
Examining alignments of interest between client and provider: What are the current levels of satisfaction in LP/GP relations?

In preparation for the Super Return panel Acanthus surveyed a significant number of LPs and GPs in order to ascertain what each party in the investment process needed from the other. Whilst there was considerable agreement that close communications were essential to a fruitful relationship there was some disagreement on what should be communicated.

• Whilst all parties were aligned on the value of good quarterly reports and informal communications, LPs put more emphasis than GPs on being kept well informed on major events such as changes in strategy, succession issues, departures and changes in the split of carry.
• On the other hand LPs generally put less value than GPs on the IR function and even less on GPs general PR activity (sponsoring conferences, speaking, marketing etc)

The LP’s message seems to be "get on with business, don’t change your strategy or team and don’t waste your energies with other stuff". For GPs it comes down to commitment, or in the words of one GP "Cheques! The only lasting commitment".

A full summary of this survey is available upon request.