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DIGEST 94SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 94May 10, 201312Consumer Internet DominatesEurope’s VC Ecosystem: ClippertonOther findings from the reportBMC Software Acquired by PE TeamChina’s IPO Backlog to Spur M&APE Fundraising Down by 17% : PEIResearchQuote of the Week: Outliers andRisking Stupid Investments3
1www.DealMarket.com/digestCONSUMER INTERNET DOMINATESEUROPE’S VC SMALL BUT THRIVINGECOSYSTEM: CLIPPERTONEuropean tech startups have received USD 1.4bn so far this year (first quarter of 2013), which is roughlyfour times less than what was invested in the US, according to Clipperton Finance. The Europeanecosystem for innovative company financing is covered in a new research based newsletter fromClipperton, leveraging data provided from Digimind. Intel leads worldwide as the top investor.Other findings from the report• Information technology dominates the European scene with two thirds of overall investment value inQ1 2013. Within IT, Consumer Internet is the number one investment segment in Europe;• UK is the top investment destination, followed by France and Germany at comparable levels;• The value per deal analysis shows some signs of polarization. There were only a few largertransactions of >USD 50 million• A good level of activity in Seed and in the USD 1 to 5 million range, while Series B and Series C rounds(USD 5 to 30 million ) are scarce;• Consumer Internet deals are growing in value, but exhibit a low median value per deal ($1.7m);• Cleantech start-ups seem to be experiencing a “severe financing crunch but Q1 2013 was much betterthan the end of 2012.Image source: Go4VentureBMC SOFTWARE ACQUIRED BY PE TEAMThis week’s deal of the week looks to be the take private of BMC Software by a private equity group madeup of Bain Capital and Golden Gate Capital Corp, according to an exclusive in Reuters. The deal is worthabout USD 6.55 billion.
2www.DealMarket.com/digestCHINA’S IPO BACKLOG TO SPUR M&AThere are more than 7,500 PE-backedcompanies in China, according Finance Asiamany of which may now seek trade or M&Asales as a way to exit rather than try to list inChina, Hong Kong and New York. The IPOflow reached a peak of around 350transactions, but PE equity funds invested attriple that rate. As a result, there are nowmore than 7,500 unexited private equitydeals in China.Your DealMarket editor notes that AsiaPacific represents only 16.7% of global IPOscompared to 51.5% in the US according toRenaissance Capital. IPOs may start again,but it will never be like it was say insiders.Foreign acquirers are likely to step in toacquire some of the ventures. Leverage willlikely be involved. Some of those deals mayinvolve trade sales to other PE funds, as anumber of funds have recently raised capitalto deploy in Asia and are well placed to takeadvantage of the opportunity, despite thechallenges.PE FUNDRAISING DOWN BY 17%: PEIRESEARCHThe top 50 PE fund managers have raised 17% less capital over the past five years, down to USD 586billion, compared to a five year period starting in 2007, according to an article in FT. com reporting on astudy of the 300 biggest companies by PEI. The image above shows the top 10 funds by size globally.Image source: PEI
3www.DealMarket.com/digestInvestment activity in terms of the number of deals done increased in the first quarter of the year but dealsize shrunk, according to the latest figures from the Emerging Market PE Association (EMPEA). There were178 deals completed raising a total of USD 3.2 billion through 31 March, compared to 227 deals and USD4.9 billion in the first quarter of last year. There was also a huge dip in fundraising, according to EMPEA, 25funds raised USD 6.0 billion through 31 March, compared to 53 funds that raised USD 13.4 billion in thefirst quarter of 2012. The article says that in 2007 there were 18 megafunds alone, which raised morethan USD 182 billion from investors. Other notable news is that Asia now equals Europe in terms of thenumber of private equity groups in the top 300, with 53 in each region. The US continues to dominate,however, with 171 of the largest 300 groups, including 18 of the top 20. Some PE firms have not returnedto the fundraising trail including Lehman Brothers and ABN Amro, and London-based CandoverInvestments.“It’s in the nature of venture capital and start-up investing thatthere are always stupid investments. The problem is that younever know which ones are which. I get these things as wrong asanybody else. But if you’re afraid to make any investments thatmight be stupid, you’ll never get any big winners—because the bigoutlier winners tend to look crazy at the start.”Who said it: Marc Andreesen, co-founder and general partner ofAndreessen Horowitz.QUOTE OF THE WEEK: SELLERS MARKETIn Context: In an interview with an editor of Harvard Business Review, Marc Andreessen talks about thecomplex challenges in current technology investments, the hazards of missing a good investment, andhow large tech companies sometimes initiate takeover talks just to “screw up” the business of a startupcompany for 18 months. The tech entrepreneur turned venture capitalist at Andreessen Horowitz, aMenlo Park venture capital fund, has lots more to say on preparing for IPOs, handling compliance, leanstartups, cloud computing, and how software is changing almost industries far beyond what wasforeseen as recently as a decade ago. (Image Source: Forbes Video Wochit Tech)Where we found it: HBR
DealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 52,000 recurring users from 154countries, and over 3,000 deals and service providers promoted or listedon the platform.DealMarket is an online platform enabling private equity buyers, sellersand advisors to maximize opportunities around the world – a one-stopshop for Private Equity professionals. Designed by Private Equityprofessionals for Private Equity professionals, the platform is easy to use,cost effective and secure, providing access, choice and control across theinvestment cycle.DealMarket’s offering includes• DealMarketPLACE, an unfiltered view of the global deal and advicemarketplace, where searching is free and postings are the price of acappuccino a day (with no commission).• DealMarketSTORE offers affordable access to industry-leading third-partyinformation and services on demand; and• DealMarketOFFICE is a state-of-the-art deal flow management tool,helping Private Equity investors to capture, store, manage and sharetheir deal flow more efficiently.DealMarket was voted the “Best Global Private Equity Platform for 2013”by Corporate Newswire.www.DealMarket.comThe Dealmarket Digest empowers members of Dealmarket by providingup-to-date and high-quality content. Each week our in-house editor siftsthrough scores of industry and academic sources to find the mostnoteworthy news items, scoping trends and currents events in the globalprivate equity sector. The links to the sources are provided, as well as aneditorialized abstract that discusses the significance of the articlesselected. It is a free service that embodies the values of the Dealmarketplatform delivers: Professional, Accessible, Transparent, Simple, Efficient,Effective, and Global.To receive the weekly digest by email register on www.dealmarket.com.Editor: Valerie Thompson, Zurich