Transcript of "DealMarket DIGEST Issue 107 // 06 September 2013"
September 06, 2013
Zephyr and Unquote Reveal Lower M&A and
Exit Activity, Despite Headline Deals
Private Equity Deals Are Creating a Record
Year for Investment Bankers
Growth in Crowdfunding Usage Evidenced by
Increasing Specialization and International-
Turkey’s Deal Activity at a High Despite Sum-
Euro VC On a Roll With a Greater Momentum
Than Current US Activity
Quote of the Week: Turning the Tables on the
Elevator Pitch for Startups4
ZEPHYR & UNQUOTE REVEAL LOW M&A &
EXIT ACTIVITY, DESPITE HEADLINE DEALS
PRIVATE EQUITY DEALS CREATE RECORD
YEAR FOR INVESTMENT BANKERS
It might look like Europe’s exit activity is on the
increase because of the high level of press cov-
erage of M&A deals, but Unquote says the real
numbers tell a different story. The value and
volume of divestments is far below the previous
years, according to unquote’s data. The num-
ber of exits recorded in the first seven months
of 2013 is down compared to 2012 and to the
high figure of 2011 when the total reached EUR
103bn across all of Europe in exits. The unquote
analysts say that the level of activity is unlikely
to change in the latter half of the year - because
August to November period is traditionally qui-
eter. The analysts say that they find these
figures “surprising” as it feels as though 2013 has been rife with disposals. The reason the divest-
ment deals are getting attention is they are yielding sizable returns, “reopening routes once believed
to be closed and taking place in neglected geographies”. Elsewhere the Western European news from
Zephyr says that the summer lull brought M&A value down to 12-month low. However PE activity was
stronger. The value of investment in the region remained fairly level, falling back by just two per cent
over the previous four week period from EUR 4,763 million. Value was up 7 per cent year-on-year,
outperforming the EUR 4,360 million recorded in August 2012, according to Zephyr, the M&A database
published by Bureau van Dijk. In the Middle East the four week levels of both volume and values de-
clined by 16% and 17% respectively, according to Zephyr, as did activity in the North American market.
Investment banks have made more than USD
10.2 billion from Private Equity transactions so
far this year (to August 28th), according to dea-
logic data, as reported by efinancialnews.
It is the highest level since the same period in
2007 when revenue was USD 13.4 billion, mainly
due to the US PE market, says eFinancialNews.
That means that 2013 could end up being “one of
the most profitable for investment banks work-
ing on private equity deals” if the rest of the year
has a similar level of activity.
GROWTH IN CROWDFUNDING USAGE EVI-
DENCED BY INCREASING SPECIALIZA-
TION AND INTERNATIONALIZATION
• The highest full-year figure was also recorded in 2007 at USD 17.7 billion. Fee income this year to
date is up 36% on the same period in 2012.
• Private equity deal income has increased 47% in Europe compared to the same period last year, to
USD 2.3 billion. There was a 34% increase in the Americas, to USD 7.4 billion, and 18% increase in
Asia Pacific, to USD 500 million. (Revenue by location is based on where the fee payer is located, says
• JP Morgan reaped the highest amount of income from these deals, followed by Goldman Sachs, and
• Fees have been driven by high levels of activity from some of the largest buyout firms in the US.
Apollo Global Management is ranked first by fees paid, Carlyle Group second and Bain Capital third.
CVC Capital Partners, is the only European firm on the list, after a flurry of deal activity so far in 2013.
Crowdfunding is gaining momentum, at least
based on the newsflow around the topic. It is
becoming more specialized, and it is going inter-
national. For example, the model is spreading to
China, according to Mashable, where Funding-
Dream is currently launching its new crowd-
funding platform, joining two existing platforms,
DreamMore and Demo Hour. FundingDream
is differentiated as it is registered in the US, is
open to donations and project creation from any-
where. As for specialization, a couple of articles
in the past four weeks on CNBC.com show the
trend. In mid-August CNBC published a feature
about a new platform for raising capital to fund
smaller medical device innovations, called
B-a-MedFounder. The platform expects that the projects are seeking amounts in the range of USD
70,000 to USD 100,000. The article says that B-a-MedFounder is one of several, including MedStartr
and HealthFundr, in the health sector. But unlike those sites, B-a-MedFounder is focused exclusively
on obtaining financing for smaller medical device projects.
Another article on CNBC.com reports the five figure fundraising on Kickstarter for Tribesports, a
social networking website where sports enthusiasts can interact. It sounds a bit like the Nike+ social
network that it runs in partnership with Apple, but this one is different because it wants its users to
help build a “community powered sports brand” that is “transparent”, with customers able to input in
TURKEY’S DEAL ACTIVITY AT A HIGH
DESPITE SUMMER SEASON
Investment banking activity in Turkey is “riding
high”, despite a summer of political unrest, ac-
cording to Reuters. Investment bankers expect
to be even busier in the coming months as
investors size up the country’s growing middle
class and consumer-oriented economy. Turkey
was the eighth most targeted nation in Europe
in the first half of 2013, with the value of merg-
ers and acquisitions involving Turkish compa-
nies reaching USD10 billion (GBP 6.42 billion),
up 15 percent from a year ago, according to
Thomson Reuters data.
Other Key Facts About Turkey’s M&A Market:
• High-profile deals include Commercial Bank of Qatar’s acquisition of majority stake in Alternatif
bank for USD 460 million and Malaysian state-run investment fund Khazanah Nasional acquisition
of 90 percent of Aciba
dem Sigorta, a health insurance company.
• Turkey’s attraction is the “appealing” fundamentals, and the government has also courted investors
from Asia and the Middle East
EURO VC ON A ROLL WITH A GREATER
MOMENTUM THAN CURRENT US ACTIVITY
The normally conservative analysts at Go4Ven-
ture are upbeat in their Monthly Bulletin July
2013, saying that the summer month was an
“awesome” one for investment. They contrast
this M&A activity, which “remained soft”. Two
IPOs suggest an improvement in the market,
at least in London, with strong stock per-
formance of Wandisco and Blur Group. The
month of July 2013 was the “largest month
ever on record”, mainly due to a EUR 300 mil-
lion late stage financing for Amsterdam-based
Mobileye, a car driving automation technology company originally from Israel. The Go4Venture results
are in line with what is happening in the US as reported in the MoneyTree™ Report from Pricewater-
houseCoopers (PwC) and the National Venture Capital Association, which shows a 12 percent value
Context: We hope you don’t mind that we chose a quote that highlights
the innovation of one of DealMarket’s latest clients. We are proud of
our clients, like Capital on Stage, who are spearheading the evolution
QUOTE OF THE WEEK: TURNING THE
TABLES ON THE ELEVATOR PITCH FOR
“We wanted to create a physical event where investors would be in the
spotlight, explaining more about who they are as a person and how
they can help besides just providing a cash injection to startups. ...
Also, at entrepreneur-related conferences participating investors typi-
cally remain somewhat anonymous…”
Who said it: Arjen Strijker, Founder of Capital On Stage
of global private equity and want to highlight it here. In this interview with David Teten, Arjen Strijker
describes how his conference turns the table on the way a founder of a startup can get closer to VCs
when fundraising. It is different from other conferences, because Capital on Stage flips the traditional
pitching model. As readers know typically a startup pitches for money at a rate of one investor per
week or even per month. At Capital on Stage, twenty investors present themselves in five minute ele-
vator pitches – no powerpoint allowed to an audience of qualified startup founders. Their presentations
give valuable insight to any founder looking to raise private capital. The quality of the audience is high.
Only 20 venture capitalists and up to 200 tech startup founders (ready for funding above seed-stage)
receive an invitation. Investors are selected up front, and exclusively invited via word of mouth, mostly
via existing VCs in the network. Startup founders apply using an automated format, based on DealMar-
ket technology. The rules of engagement are one founder per company and founder needs to provide
proof of actually being ready to get funded. Besides that, they are all screened on having an existing
company, product, and/or team in place. Access is not granted to someone with just “an idea” – if they
allowed that, then the entire world population would qualify.
Where we found it: Forbes
increase of cumulative investments to June 2013 compared to the same period last year. Go4Venture
says that that European venture is actually growing much faster than the US , but readers are cau-
tioned to keep in mind that Europe’s growth is up from much lower base than the US market which is
approximately 4x to 5x larger.
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