June 06, 2014
Momentum: A Strong Global Secondary
M&A Momentum Expected until 2016 in US
Online Media Venture Switches PE Investors
Maturing: Asia and Africa Dealmaking
Back on Track: European Buyout Resurgence
Quote of the Week: Angel Guide
MOMENTUM: A STRONG GLOBAL
SECONDARY MARKET FORECASTED
The secondary market for LP commitments to PE contin-
ues to be strong. A research note from Preqin indicates
that there are 27 private equity secondary funds currently
in the market seeking an aggregate USD 23bn, illustrating
a “healthy investor appetite” for fund that seek to acquire
slices of LP portfolios that are being sold off these days.
Last year, 21 such funds were raised. Preqin said that it
expects the fundraising momentum for dedicated secondary
vehicles to continue through 2014. Another indicator of the
continued appeal of secondary PE portfolios, is the recently
announced plan by private equity giant KKR and NASDAQ to
develop a secondary exchange to buy and sell limited part-
ner commitments in PE funds. Unlike the existing ones like
SecondMarket or PEQX, it will be targeted at institutional
investors with a million or more dollars to invest. KKR has
a large PE business. Of its USD 102.3 billion in assets under
management as of the end of March, more than half or USD
60.5 billion is invested in private equity and real estate funds, while about USD 30 billion in credit, ac-
cording to Reuters.
M&A MOMENTUM EXPECTED UNTIL 2016
US companies and private equity firms polled
by Deloitte in its first comprehensive M&A
market report see M&A activity holding strong
for the next 24 months. Deal size is expected
to increase by 79% of respondents, while 40 %
expect a pick-up in deal flow. The survey asked
2,182 executives at US companies and 318
executives at private equity firms to gauge their
expectations, experiences, and plans for M&A in
the coming year.
PE executives said they plan to accelerate di-
vestments of portfolio companies with 64 per-
cent of the respondents anticipating strategic
sales within the next 12 months. The greatest
concern express in the survey was the failure to
integrate acquired companies. Elsewhere, dealogic reported that consumer M&A volume broke its
2008 YTD record. The global volume stands at USD 26.6bn in 2014 YTD, up 89% from the same time
ONLINE MEDIA VENTURE SWITCHES PE
On Tuesday Internet Brands announced that KKR is to buyout its shares held Hellman & Friedman and
JMI Equity, all private equity investors for USD 1.1 billion. The size makes it the buyout of the week.
Your DealMarket Digest editor notes that it was one of only a few of deals of that size this week. Inter-
net Brands has already completed several acquisitions since taking on a PE investment in 2014. More
are likely now that KKR is involved. The company hosts websites for business and runs branded sites
in auto (carsdirect.com), health, legal and home/ travel segments. It has 1,600 employees and is head-
quartered in El Segundo, Calif. KKR’s track record in in technology includes Go Daddy, Mitchell, Aceco
TI, Visma, Fotolia, and Ipreo.
MATURING: ASIA & AFRICA DEALMAKING
This week KKR reportedly made a USD 200 mn
investment in an Ethiopian Fairtrade rose farm-
ing venture. TPG invested USD 100 mn in an Indian
eCommerce venture last month. Both were good
sized investments in growing businesses. The deal-
flow news is coming from emerging markets, but
they still represent a small portion of the overall
PE volume. Nevertheless, the private equity sec-
tor in emerging economies is said to be maturing,
according to a report in Pensions & Investments.
The number of managers with a track record is in-
creasing; other strategies besides top-line revenue
period in 2013 (USD 14.1bn) and is the highest
since 2008 YTD (USD 142.5bn). Cosmetics &
Toiletries is the most targeted subsector within
Consumer M&A, with $9.4bn in volume via 25
The data provider notes that Apple’s USD 3.0bn
bid for Beats Electronics is the second largest
Consumer M&A deal this year. (Image source:
Deloitte and dealogic)
growth, such operation efficiency and M&A, are starting to be more common. Emerging markets-fo-
cused private equity funds attracted around 8% of global PE investments in recent years, and only 12%
of the dollars raised in 2013, down from 21% a year earlier and the lowest level since 2009, according
to data from the Emerging Markets Private Equity Association. (Image source: EMPEA)
A new report from legal advisory firm White & Case describes details of the resurgence in European
private equity activity based on MergerMarket data. Growth
in PE dealmaking is linked to the IPO boom and also the
number of exits, loosening up capital for re-investment. It
says that exit volumes in 2013 more than doubled 2009
levels with 24 European IPO exits in 2013. Southern Europe
had a fair chunk of that activity (30 percent), while the
UK accounts for more than a quarter of European buyout
volume and value. Pension funds and family offices have
stepped up their buyout involvement. The most favored
sectors are “Industrials and chemicals” businesses with 24
percent of buyout volumes and 18 percent of value in 2013.
The report authors were not over the top bullish on Europe,
noting that mega deals are not back yet, but the trend is
that deal size range is in- creasing, driven in part by use of
a “new US-European funding hybrid”, which has sprung up from a converging of global debt markets.
BACK ON TRACK: EUROPEAN BUYOUT
QUOTE OF THE WEEK: ANGEL GUIDE
“The founder is more important than the idea, yes. Because ideas are really a multiplier of execution,
and how the founder executes on that idea is really critical, so we will almost always take a world-class
founder with a moderate business plan, as opposed to a great business plan but with a founder who
Who said it: David S Rose, Founder and CEO of GUST
In context: In the interview where we sourced the quote, David Rose is explaining
the view of dealflow, selection criteria, and metrics to be considered for success-
ful venture capital investing. He says that early stage investing has to be done long
term with a view to having at least 20 or 30 or more companies in the portfolio.
Most will fail. He does not try to make VC more or than it is, pointing out it is a
combination of “art and science and experience and the market”. He’s written a book about his theories
and experience, which has actually become a NY Times Bestseller, suggesting that there are a lot of
people interested in becoming a business angel, and they are thirsty for advice.
Where we found it: Motley Fool
The DealMarket Digest empowers members of DealMarket by providing
up-to-date and high-quality content. Each week our in-house editor sifts
abstract that discusses the significance of the articles selected. It is a free
fessional, Accessible, Transparent, Simple, Efficient, Effective, and Global.
To receive the weekly digest by email register on www.dealmarket.com.
Editor: Valerie Thompson, Zurich
DealMarket launched in 2011 and is growing fast. Just one year after
launch, DealMarket counts more than 61,000 recurring users from
154 countries, over 3,000 deals & service providers promoted
or listed on the platform. DealMarket is an online platform en-
abling private equity buyers, sellers and advisors to maximize op-
portunities around the world – a one-stop shop for Private Equity
professionals. Designed by Private Equity professionals for Private Eq-
uity professionals, the platform is easy to use, cost effective and se-
cure, providing access, choice and control across the investment cycle.
DealMarket’s offering includes
, brings together buyers, sellers, and PE advisors
from around the world. PLACE gives access to deals (direct invest
ments, funds, and secondaries), investors, and PE service providers.
Searching and postingis free. (no commissions). PLACE PRO
exclusive deal exchange platform made for engaged professionals
and companies with a truly unique value added proposition.
offers affordable access to industry-leading third-
party information and services on demand; and
is a state-of-the-art deal flow management tool,
helping Private Equity investors to capture, store, manage and share
their deal flow more efficiently.
DealMarket was voted the “Best Global Private Equity Platform for 2012,
2013 and 2014” by Corporate LiveWire.