Botts & Company, the mid-market buy-out firm, has become the latest private equity firm to close a German office, despite making three times its investment with the sale of Yxlon, a German industrial testing company, for €39m ($47m).

An investor in Botts & Company's funds said the firm had closed its one-person representative office in Munich because it was uncomfortable with the economic situation in the country. Banks have reined in their lending, the rate of corporate insolvencies has gone up and mid-market buy-out firms are struggling to find good-quality targets for investment.