Transcript of "DealMarket DIGEST Issue 112 // 11 October 2013"
October 11, 2013
PE Outbid in Darling-Vion Mega Deal
PEI Identifies PE World’s Operational
Twitter IPO Offers Rare Insight into HNW In-
Lack of IPOs in Brazil offers PE opportunities
Raising Private Financing for the first time?
Some tips from PrivCo
Quote of the Week: Mobile Messaging VC
PE OUTBID IN DARLING-VION MEGA DEAL
This week’s deal of the week is about one that got away. Reuters reports that US-based food business
Darling International is to buy Dutch meat producer Vion’s ingredients division for EUR 1.6 billion. It
was a “blow to private equity firms bidding for the unit”, say the report, which explained that Darling
won a competitive auction to buy the business that attracted interest from private equity firms Advent,
Apollo, CVC and Permira as well as German trade buyer Saria and private equity firms. In a back-
ground section, Reuters said that Vion Ingredients is headquartered in the Netherlands. It employs
6,000 staff and produces gelatine, proteins and fats from slaughterhouse byproducts which are then
sold to the pharmaceutical, cosmetics, food, feed, tech, and energy.
PEI IDENTIFIES PE WORLD’S OPERA-
A lot of PE funds make the claim of adding value operationally.
According to PEI, they have been talking the talk, but its mission
was to find out who really can walk the walk. Its Operational Ex-
cellence Awards in 2013 answer that question again this year. In
the large cap category it recog- nizes 3i, Terra Firma and KPS,
along with nine others, including second-time winners Headland
Capital and Nordic Capital. In the Americas, 3i won the large-cap
category for its investment in moldings company Mold Masters,
which saw revenues grow 60 per- cent under the firm’s ownership.
In the EMEA region, the large-cap category went to Terra Firma for
its investment in residential landlord Deutsche Annington, which grew from a set of ten German Fed-
eral Rail housing portfolios into the largest privately owned residential landlord in Germany.
this is the second time that the awards were made to acknowl-
edge the achievements of the PE industry’s best-in-class opera-
tors. Entries were invited from three regions – Americas, Asia
and EMEA, then divided up into three distinct size categories,
according to the value of the original deal – large cap (greater
than USD500 million), mid-cap (USD50 million to USD500 million)
and small-cap (less than
USD50 million). Apparently
the nominations were so
numerous in the mid-cap
category that PEI had to split that category into two – lower mid-
market and upper mid-market. From the four groups, 36 finalists
emerged. Picking the 12 winners was no easy task for PEI’s three
regional panels of industry experts, but tough decisions were
made and votes were cast.
Two firms that won awards in last year’s competition took home
prizes once again: Headland Capital in the large-cap category in
Asia and Nordic Capital in upper mid-cap category EMEA. The rest are first time winners. The judges
included David Currie, former chief executive officer of SL Capital Partners; Wai Kay Eik of PwC’s Pri-
vate Equity Transaction Services group;the University of Chicago’s Steve Kaplan; Tim Kelly of Adams
Street Partners and Conor Kehoe of McKinsey’s European private equity practice.
TWITTER IPO OFFERS RARE INSIGHT
INTO HNW INVESTORS
Last week we wrote about the trend that sees
more family offices and high-net worth individu-
als participating in venture capital rounds before
mezzanine financing, and this week the Twitter
IPO filings provide some more insight into who
some of these typically low-profile investors cur-
rently are. Forbes and Reuters, as well as AllTh-
ingsDigital studied the SEC filings and did quite
a bit of research to find out more about who will
benefit from a Twitter IPO.
Reuters wrote about the “little known” Hollywood
media PE investment fund that ventured into
technology investing, a fund called Rizvi Traverse,
which holds a valuable stake in Twitter. It also re-
minded readers about another investor, pointing
to its exclusive interview with billionaire Prince Alwaleed Bin Talal Alsaud who told Reuters he had
invested USD 300 million in late 2011 and his long term view on
the stock. He said he did not plan to sell any shares in the public offering. Forbes wrote about the larg
A cooling economic growth rate, which affects valuations, and closed IPO market, which limits avail-
able capital for business to use for growth investments, is making PE more attractive in Latin America,
writes Euromoney in an article that discusses the latest research from Latin American Venture Capital
Association (Lavca). Noteworthy is that fundraising is up 100% over the same period last year, to USD
3.8 billion with final or partial closings for 36 separate funds raised in the first six months of 2013.
Furthermore, proceeds from exits were up 67% on the first half last year, to USD 1.5 billion (See Euro-
money graphic for more information).
Currency depreciations are affecting Brazils PE market, while Mexico is seeing fewer large cap deals.
At one time Brazil was the main target for PE dollars, and it still attracted 70% of the money in this
latest reporting period but Peru, Columbia, and Mexico are coming online.
LACK OF IPOS IN BRAZIL OFFERS PE
est shareholders, saying that two are billionaires, one newly-minted after his stake in the company
was revealed, namely Evan Williams who owns 12% of Twitter, and current chairman, Jack Dorsey,
who holds about a 4.7% equity stake, not including options. Director Peter Fenton also holds 31.6
million shares for Benchmark Capital. And AllThingsDigital contributed to the topic with a discussion
of the messaging startup’s revenues and losses, but also highlighted its earlier reports that revealed
the other “5% Stockholders”, which include, Rizvi Traverse, Spark Capital, Benchmark, Union Square
Partners and DST Global.
This week we discovered a useful article for entrepreneurs in PrivCo’s knowledge bank online. It is
useful if you are considering taking on a private equity investor and want to see the bigger picture. The
article is published by PrivCo, a business and financial information provider specialized in including
family owned, private equity owned, venture backed, and international unlisted companies. While the
private company financing overview is targeted at US-based business owners, much of it has a wider
value. It is the kind of info that can help business owners looking sell shares in their company to make
better decisions and manage risk. The tutorial includes detail on the types of funding available for en-
trepreneurs considering a private equity investment, as well as practical advice, such as, making sure
you adhere to regulatory frameworks early on. It says, for example, “Even to raise the most basic An-
gel Investor funding, it’s very important that private companies follow securities laws, make full writ-
ten disclosure to investors of the terms of the offerings and how risky the investment is…” And there
is the reminder to raise money primarily or solely from sophisticated investors, knows as “accredited
investors”. A concise history of Private Equity and Venture Capital, including the three boom and bust
cycles of PE, as well as details on the advantages and disadvantages of raising angel capital. Informa-
tion about term sheets, terminology, and evaluation criteria used in venture capital are also provided.
It is a great backgrounder for anyone new are coming back to PE.
QUOTE OF THE WEEK – MOBILE MESSAG-
ING VC TREND
“From South Korea-based KakaoTalk to Cypriot startup
Viber, mobile messaging apps are being used by millions
globally. And as mobile messaging startups continue to
proliferate, venture capital investors are stepping in to fund
Who said it: CB Insights
Context: In an excerpt from one of its latest VC funding
research reports, CB Insights said that financing for mobile
messaging startups has increased by 60% this year. The
segment is hovering up money, USD 212 million in 35 deals. Over half of that funding came in Q2’13,
as Snapchat, Kik Interactive and MessageMe all took financing rounds in the tens of millions from
prominent VCs including Benchmark Capital, Andreessen Horowitz and Union Square Ventures, it said.
Geographically, mobile messaging has evolved into a global, and rather fragmented, market. For ex-
ample, international markets including Japan, South Korea, Finland and Canada all saw at least one
mobile messaging venture deal over the past two years. Venture-backed mobile messaging startups in
the U.S. tend to reside in either Silicon Valley (40% of all deal activity) or SoCal (17%).
Where we found it: CB Insights
RAISING PRIVATE FINANCING FOR THE
FIRST TIME? SOME TIPS FROM PRIVCO
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Editor: Valerie Thompson, Zurich
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