LONDON (07/07/2000) - What a difference a year makes. In the middle of 1999, the European Internet scene had barely tasted investor enthusiasm, Boo.com Group Ltd. was one of the world's coolest companies, and Bernard Arnault's Europatweb had 500 million euros (US$477 million) to spend on whatever Net play struck its fancy.
Today, European entrepreneurs are cautious rather than congratulatory, Boo is long gone, and Europatweb has 480 million euros tied up in local investments.
Europatweb's money is now at the whim of an IPO (initial public offering) market that has forced the fund itself to cancel a public offering. Far from the heady days of high-fashion thoroughbreds such as Boo, the latest Europatweb investment was a stake in the growth-market workhorse Liquidation.com.
Europatweb also holds a stake in Standard Media International, which publishes the Industry Standard.
Europatweb said this week that, like the companies it invests in, it is shuffling to adjust to the new climate, and that it expects to announce a new strategy soon to revive the hopes of local entrepreneurs.
A series of reports on Europatweb has emerged in the last several weeks. Among other moves, the fund canceled its public offering in late June -- an offering that was intended to replenish its fast-depleting coffers. Roughly 96 percent of the original fund has been invested, and the floatation was expected to raise an additional 500 million euros. Arnault's advisers say there are no plans to resurrect the offering before the end of summer, and industry analysts speculate that Europatweb is seeking an alliance with other Internet investors.
A company spokesman said Friday that Arnault would replenish the funds from his own finances if necessary.
"We can raise money from Group Arnault, which is the personal holding of Mr.
Arnault," said a spokesman for Europatweb, who asked not to be named. "An IPO was important for us, because it was a new means to extend the operation, but today we have another strategy." The company is expected to make a statement in the coming weeks about how it will make investments, now that the first fund is nearly exhausted.
Red flags are not evident at Europatweb, however. In June the fund took stakes in two high-profile London-based companies, Flutter.com and Peoplesound.com. In addition to the 11.6 million euros it invested in Liquidation.com, Europatweb paid 7.3 million euros for a piece of Marketo.com, a service for small businesses.
In late June, Europatweb also invested in the gaming site Alaxis.com and the online customer support company Webhelp.fr. Promoting itself as more than just a European investment vehicle, the company introduced a new management team for its international operations, including a finance director, a technical director, a director of incubation and company specialists in Brazil, Japan, Italy, Germany, Spain and the U.S.
"They wanted to get companies within their stable to work together, to have a fairly holistic view," says Bruno Heese, vice president of business development for Peoplesound.com. "(This is) less a VC (venture capital) fund approach and more an operating holding company approach. I think they've taken a number of steps toward that."