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DIGEST 97SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 97May 31, 201312Distressed-focused Funds Remain on theRadar; PreqinTop Buyouts of 2013Frontier Economics’ Study is PE Positive forEuropeGlobal PE Investment Up in AprilTechnology M&A Focus on Smaller DealsQuote of the Week: Growth InvestingWithout Borders34
1www.DealMarket.com/digestTOP BUYOUTS OF 2013DISTRESSED-FOCUSED FUNDS REMAINON THE RADAR; PREQINInterest in distressed private equity vehicles remains steady, according to Preqin. The interest is drive byslower global growth rates and stuttering economic recovery. This specific niche of the private equityuniverse is likely to continue to remain strong as economic uncertainty in the global markets continues,says Preqins Investor Intelligence service, which tracks the sentiment of 5,035 active investors in privateequity, of which 1,448 (29%) have either previously invested in distressed private equity vehicles, orexpressed a preference for doing so.Key findings• North America-based LPs make up the greatest proportion of distressed private equity investors, with69% based in the region.• LPs in Europe account for the second highest proportion of investors (19%), with Asia and investorsbased outside of these core regions accounting for the remaining 12%.• The top four investor types with an appetite for distressed private equity each account for a similarproportion of active investors in the fund strategy. Private sector pension funds and foundations eachaccount for 15% of LPs investing in distressed private equity vehicles. Endowments represent 14% ofactive investors and public pension funds a further 13%.Instead of a deal of the week, we decided to list the top buyouts of the year to date, thanks to someinformation we found in an article on PEHub.1 Warren Buffetts Berkshire Hathaway and 3G Capital agreed to pay USD 28 billion forH.J. Heinz Co. in February.2 (Pending.) Silver Lake Partners and Michael Dell offered USD 24 billion for Dell Inc. inFebruary3 Valeant Pharmaceuticals announced in May to buy Bausch & Lomb for USD 8.7 billion.The seller is a Warburg Pincus-led investor group4 Actavis agreed to buy Warner Chilcott for USD 8.4 billion in May.5 Bain Capital and Golden Gate Capital target BMC for USD 6.9 billion in May.
2www.DealMarket.com/digestFRONTIER ECONOMICS’ STUDY IS PEPOSITIVE FOR EUROPEA study by Frontier Economics outlines the positive contribution to EU economies in work commissionedby the European Private Equity and Venture Capital Association (EVCA). The report has a strong focus oninnovation financing and is based on secondary research, more of a review and compilation of existingdata and studiesHere are some of the findings:• As shown in the figure above, 30% of funds raised by the private equity industry between 2007 and2012 came from institutional investors (i.e. pension funds, insurance companies, academic institutions,and endowments and foundations).• Private equity contributes to the creation of up to 5,600 new businesses in Europe annually and attractssignificant investible funds into Europe, providing much needed risk capital for businesses.• Between 2007 and 2012, private equity invested almost EUR 250 billion in the 12 largest private equitymarkets in Europe, of which an estimated EUR 50bn was raised from outside Europe.• PE was linked to a 6.9% increase in earnings before interest tax, depreciation and amortization peremployee in large PE-backed companies.• Private equity-backed businesses between 2006 and 2011 are likely to be worth up to EUR 350 billion.Image source: Frontier
3www.DealMarket.com/digestGLOBAL PE INVESTMENT UP IN APRILThe latest global PE Investment report from Zephyr says that the value of global private equityinvestment rose in April to reach one of its “best results of the last 12 months”. Volume also advancedmonth-on-month. There were 278 transactions worth an aggregate USD 35 billion, a 12 per cent increaseby volume and 59 per cent better by value compared to the previous month. The value was 73 per centhigher than the same time a year ago when USD 20 billion was recorded. It was the third highest of thelast 12 months under review.TECHNOLOGY M&A FOCUS ON SMALLERDEALSAn article about Apple’s M&A strategy inBloomberg’s All Things Digital highlights atrend that sees technology industrystrategic buyers ready to do M&A but notnecessarily large deals. Apple’s acquisitionsin the past year or so number nine deals,but they’ve been so small they don’t haveto disclose them, according to All ThingsDigital. A study by E&Y on M&A this yearsays that concerns over conducting largetransformative deals dominate the M&Alandscape.Image source: Internet ZephyrImage source: Ernst&Young
4www.DealMarket.com/digestTechnology dealmaking grew by 58% year-on-year to USD 36.4b, according to Ernst & Young’s Globaltechnology M&A update: January – March 2013, in an article published in Lawyer Monthly. Theannounced mega deal to take Dell private for USD 24.4 billion was what caused the big jump. As thegraphic above shows, deal volume fell 12% YOY and 5% compared with the previous quarter to 661 deals.Aggregate disclosed value would have fallen by 48% if not for the Dell deal announced in February.QUOTE OF THE WEEK: GROWTHINVESTING WITHOUT BORDERS“Walls are coming down every day for being able to start a company fromanywhere.”Who said it: Jeff Horing co-founder of Insight Ventures in an article inTechCrunchIn Context: The optimistic and open minded quote above comes from one of thePE industry new generation of rising stars, Jeff Horing. His company InsightVentures, a growth capital investor, just announced raising a USD 2.75 billionfund. Horing was interviewed by TechCrunch about strategy, trends, and regionalscope. To date, Insight has raised USD 7.6 billion. His first fund raised USD 16million fifteen years ago. Horing said that Insight regularly sends its dealmakersto Europe and South America from its New York base. About 40 percent of theirinvestments are overseas. Some interesting investments that Insight has madeinclude Twitter, Zumba Fitness Franchise, and Tumblr. In other regions of theworld it has backed Privalia, Photobox/Moonpig, GFI and KabumWhere we found it: TechCrunch
DealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 61,000 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 LiveWire.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