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DIGEST 103SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 103
July 12, 2013
PE Exits Hit a Two Year Quarterly High
PE Targets Finnish Mobile Operator
Bouncing Back: MENA Region’s Improving
More Transparency on Family Office Wealth
Alternatives Surpass Three Trillion Mark;
Quote of the Week
PE TARGETS FINNISH MOBILE OPERATOR
PE EXITS HIT A 2-YEAR QUARTERLY HIGH
The latest data from Preqin confirm that PE exits climbed in the second quarter of this year, to reach the
highest quarterly value since Q2 2011. It was the second strongest quarter for private equity-backed exits
since 2006.The aggregate value was USD 92 billion, the highest level since USD 128 billion was achieved in
Dealflow was less spectacular in the second quarter, says Preqin, with 606 deals announced globally
totaling USD 62 billion, compared to the last quarter when 678 deals in valued at USD 86 billion were
achieved. The value of North American buyouts took a hard drop, decreasing by more than half from the
previous quarter as Asian deals hitting their lowest total value since Q3 2008. European is showing signs of
a slight recovery measured by aggregate deal value. (Image source: Preqin)
This week’s deal of the week is mobile communication sector transaction in Finland. According to
Reuters, Apax, Bain Capital, EQT and Providence all submitted bids on Monday for DNA, a Finnish
privately owned cellular operator, which could be worth about EUR 1.3 billion. DNA is Finland’s third-
largest operator. The bid process should be complete next month.
BOUNCING BACK: MENA REGION’S
IMPROVING PE MARKET
The private equity industry in the Middle East and North Africa (MENA) region continued recovered in
2012, according to a report in the Saudi Gazette, citing data from MENA Private Equity Association
released this week. The mid-market is proving to be attractive for investors, despite a slower pace of
fundraising for the region. Total number of investments grew to 91 deals from 84 year on year. Overall
fundraising fell to USD 400 million, from USD 900 million the previous year, driven down by smaller fund
sizes and global macroeconomic uncertainty, says the report. A sign of optimism is that total value of funds
announced in 2012 increased compared to 2011, by USD 200 million.
Non-cyclical sectors such as oil and gas, healthcare, and education accounted for nearly 60 percent
of investments in 2012.
UAE topped the list of the volumes in the GCC. Morocco, Lebanon and Egypt claimed the most deals
by volume in 2012 (See graphic); Turkey emerged as a popular destination outside of MENA in 2012.
The number of exits completed during 2011 and 2012 increased compared to 2009 and 2010.
There is about USD 6.4 billion in dry powder available for investment. (Image Source MENA PE
TRANSPARENCY ON FAMILY OFFICES
This week some new data about family
offices was published by Wealthinsight, a
British information provider.
Its latest research provides some
transparency into the wealth
It said that there are 16.8 million high net worth individuals globally, and more than 5,000 family
offices managing their money, as of the end of 2012. It is pretty clear from the numbers (see points 4
and 5 below) that despite there being vast sums of wealth globally and a remarkably large number of
estimated family offices, most of the world’s richest people are managing their money in other ways
than by creating and using a family office support system.
• Worldwide wealth held by individuals amounted to USD 195 trillion.
• There were 16.8 million HNWIs in the world and worldwide HNWI wealth stood at USD 66 trillion.
• Assets managed by worldwide wealth managers, private banks and family offices totaled USD 19.3
trillion. USD8.3 trillion of this was held in offshore centers.
• There were more than 5,000 family offices operating globally, the majority of which were based in
the US and Europe. This includes 2,700 single family offices (SFOs) managing approximately USD 1.7
trillion in assets and 2,300 multi-family offices (MFOs) managing USD 800 billion in assets.
• Together, the global family office industry managed USD 2.5 trillion, which accounted for 13% of
global wealth management assets under management (AuM) (USD19.3 trillion) and 3.7% of global
HNWI wealth (US$66 trillion).
• There were over 2,900 family offices in the US.
ALTERNATIVE INVESTMENT CRESTS THE
THREE TRILLION DOLLAR MARK
Total assets managed by the Top 100 alternative investment managers globally reached USD 3.1
trillion in 2012, according to research produced by Towers Watson. Its latest Global Alternatives
Survey revealed that real estate has the greatest share of the Top 100 alternative investment
managers with 34% and over USD 1.0 trillion, followed by direct private equity fund managers (23%
and USD 717bn), direct hedge funds (20% and USD 612bn), private equity funds of funds (PEFoFs)
(10% and USD 315bn), funds of hedge funds (FoHFs) (6% and USD 176bn). Over the past ten years that
Towers Watson has been doing this survey, it has seen allocations to alternative assets by a wide
range of investors steadily increasing. “Not only has the appeal of alternative assets broadened to
include insurers and sovereign wealth funds, but the range of alternative assets has also increased
beyond the likes of real estate and private equity to include direct hedge funds, infrastructure and
commodities,” said the report.
The research shows that for the Top 100 managers, North America continues to be the largest
destination for alternative capital (46%), with infrastructure as the only exception where more capital
is invested in Europe. Overall, 37% of alternative assets are invested in Europe, 10% in Asia Pacific
with 7% being investing in the rest of the world. (Image source: Towers Watson)
“There are certainly other people interested in business
technology now, and it’s certainly back in fashion. But the
magnitude of the opportunity just far outstrips the resources
that have been arrayed to fund and develop them. This is the
biggest paradigm shift that Gaurav and I think we’ll ever see
in our career. Almost every incumbent is threatened.”
Who said it: Peter Wagner co-founder of Wing Venture Partners.
In Context: Wagner made the above statement in an AllThingsD exclusive interview where he
revealed some details about a new Silicon Valley VC fund he’s amassing to make early-stage
investments in enterprise-focused companies. Wagner’s co-founder Guarav Garg, formerly of
Sequoia, have been using their own capital since 2011to invest in startups like CloudPhysics, Instart
Logic, Platfora and Shape Security, FireEye, MobileIron and Nimble Storage. The focus will be on
building companies locally – no plans to do international deals - in cloud computing, mobile
technology and working with data. Wagner spent 15 years at Accel before starting Wing Venture
Where we found it: AllThingsD
QUOTE OF THE WEEK
DealMarket launched in 2011 and is growing fast. Just one year after
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DealMarket’s offering includes
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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 2013”
by Corporate LiveWire.
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Editor: Valerie Thompson, Zurich