DealMarket DIGEST Issue 107 // 06 September 2013


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DealMarket DIGEST Issue 107 // 06 September 2013

  1. 1. DIGEST107 September 06, 2013 1 2 3 Zephyr and Unquote Reveal Lower M&A and Exit Activity, Despite Headline Deals Private Equity Deals Are Creating a Record Year for Investment Bankers Growth in Crowdfunding Usage Evidenced by Increasing Specialization and International- ization Turkey’s Deal Activity at a High Despite Sum- mer Season Euro VC On a Roll With a Greater Momentum Than Current US Activity Quote of the Week: Turning the Tables on the Elevator Pitch for Startups4
  2. 2. 2 ZEPHYR & UNQUOTE REVEAL LOW M&A & EXIT ACTIVITY, DESPITE HEADLINE DEALS PRIVATE EQUITY DEALS CREATE RECORD YEAR FOR INVESTMENT BANKERS It might look like Europe’s exit activity is on the increase because of the high level of press cov- erage of M&A deals, but Unquote says the real numbers tell a different story. The value and volume of divestments is far below the previous years, according to unquote’s data. The num- ber of exits recorded in the first seven months of 2013 is down compared to 2012 and to the high figure of 2011 when the total reached EUR 103bn across all of Europe in exits. The unquote analysts say that the level of activity is unlikely to change in the latter half of the year - because August to November period is traditionally qui- eter. The analysts say that they find these figures “surprising” as it feels as though 2013 has been rife with disposals. The reason the divest- ment deals are getting attention is they are yielding sizable returns, “reopening routes once believed to be closed and taking place in neglected geographies”. Elsewhere the Western European news from Zephyr says that the summer lull brought M&A value down to 12-month low. However PE activity was stronger. The value of investment in the region remained fairly level, falling back by just two per cent over the previous four week period from EUR 4,763 million. Value was up 7 per cent year-on-year, outperforming the EUR 4,360 million recorded in August 2012, according to Zephyr, the M&A database published by Bureau van Dijk. In the Middle East the four week levels of both volume and values de- clined by 16% and 17% respectively, according to Zephyr, as did activity in the North American market. Investment banks have made more than USD 10.2 billion from Private Equity transactions so far this year (to August 28th), according to dea- logic data, as reported by efinancialnews. It is the highest level since the same period in 2007 when revenue was USD 13.4 billion, mainly due to the US PE market, says eFinancialNews. That means that 2013 could end up being “one of the most profitable for investment banks work- ing on private equity deals” if the rest of the year has a similar level of activity.
  3. 3. 3 GROWTH IN CROWDFUNDING USAGE EVI- DENCED BY INCREASING SPECIALIZA- TION AND INTERNATIONALIZATION Other findings: • The highest full-year figure was also recorded in 2007 at USD 17.7 billion. Fee income this year to date is up 36% on the same period in 2012. • Private equity deal income has increased 47% in Europe compared to the same period last year, to USD 2.3 billion. There was a 34% increase in the Americas, to USD 7.4 billion, and 18% increase in Asia Pacific, to USD 500 million. (Revenue by location is based on where the fee payer is located, says eFinancial News). • JP Morgan reaped the highest amount of income from these deals, followed by Goldman Sachs, and Credit Suisse. • Fees have been driven by high levels of activity from some of the largest buyout firms in the US. Apollo Global Management is ranked first by fees paid, Carlyle Group second and Bain Capital third. CVC Capital Partners, is the only European firm on the list, after a flurry of deal activity so far in 2013. Crowdfunding is gaining momentum, at least based on the newsflow around the topic. It is becoming more specialized, and it is going inter- national. For example, the model is spreading to China, according to Mashable, where Funding- Dream is currently launching its new crowd- funding platform, joining two existing platforms, DreamMore and Demo Hour. FundingDream is differentiated as it is registered in the US, is open to donations and project creation from any- where. As for specialization, a couple of articles in the past four weeks on show the trend. In mid-August CNBC published a feature about a new platform for raising capital to fund smaller medical device innovations, called B-a-MedFounder. The platform expects that the projects are seeking amounts in the range of USD 70,000 to USD 100,000. The article says that B-a-MedFounder is one of several, including MedStartr and HealthFundr, in the health sector. But unlike those sites, B-a-MedFounder is focused exclusively on obtaining financing for smaller medical device projects. Another article on reports the five figure fundraising on Kickstarter for Tribesports, a social networking website where sports enthusiasts can interact. It sounds a bit like the Nike+ social network that it runs in partnership with Apple, but this one is different because it wants its users to help build a “community powered sports brand” that is “transparent”, with customers able to input in designing products.
  4. 4. 4 TURKEY’S DEAL ACTIVITY AT A HIGH DESPITE SUMMER SEASON Investment banking activity in Turkey is “riding high”, despite a summer of political unrest, ac- cording to Reuters. Investment bankers expect to be even busier in the coming months as investors size up the country’s growing middle class and consumer-oriented economy. Turkey was the eighth most targeted nation in Europe in the first half of 2013, with the value of merg- ers and acquisitions involving Turkish compa- nies reaching USD10 billion (GBP 6.42 billion), up 15 percent from a year ago, according to Thomson Reuters data. Other Key Facts About Turkey’s M&A Market: • High-profile deals include Commercial Bank of Qatar’s acquisition of majority stake in Alternatif bank for USD 460 million and Malaysian state-run investment fund Khazanah Nasional acquisition of 90 percent of Aciba dem Sigorta, a health insurance company. • Turkey’s attraction is the “appealing” fundamentals, and the government has also courted investors from Asia and the Middle East EURO VC ON A ROLL WITH A GREATER MOMENTUM THAN CURRENT US ACTIVITY The normally conservative analysts at Go4Ven- ture are upbeat in their Monthly Bulletin July 2013, saying that the summer month was an “awesome” one for investment. They contrast this M&A activity, which “remained soft”. Two IPOs suggest an improvement in the market, at least in London, with strong stock per- formance of Wandisco and Blur Group. The month of July 2013 was the “largest month ever on record”, mainly due to a EUR 300 mil- lion late stage financing for Amsterdam-based Mobileye, a car driving automation technology company originally from Israel. The Go4Venture results are in line with what is happening in the US as reported in the MoneyTree™ Report from Pricewater- houseCoopers (PwC) and the National Venture Capital Association, which shows a 12 percent value
  5. 5. 5 Context: We hope you don’t mind that we chose a quote that highlights the innovation of one of DealMarket’s latest clients. We are proud of our clients, like Capital on Stage, who are spearheading the evolution QUOTE OF THE WEEK: TURNING THE TABLES ON THE ELEVATOR PITCH FOR STARTUPS “We wanted to create a physical event where investors would be in the spotlight, explaining more about who they are as a person and how they can help besides just providing a cash injection to startups. ... Also, at entrepreneur-related conferences participating investors typi- cally remain somewhat anonymous…” Who said it: Arjen Strijker, Founder of Capital On Stage of global private equity and want to highlight it here. In this interview with David Teten, Arjen Strijker describes how his conference turns the table on the way a founder of a startup can get closer to VCs when fundraising. It is different from other conferences, because Capital on Stage flips the traditional pitching model. As readers know typically a startup pitches for money at a rate of one investor per week or even per month. At Capital on Stage, twenty investors present themselves in five minute ele- vator pitches – no powerpoint allowed to an audience of qualified startup founders. Their presentations give valuable insight to any founder looking to raise private capital. The quality of the audience is high. Only 20 venture capitalists and up to 200 tech startup founders (ready for funding above seed-stage) receive an invitation. Investors are selected up front, and exclusively invited via word of mouth, mostly via existing VCs in the network. Startup founders apply using an automated format, based on DealMar- ket technology. The rules of engagement are one founder per company and founder needs to provide proof of actually being ready to get funded. Besides that, they are all screened on having an existing company, product, and/or team in place. Access is not granted to someone with just “an idea” – if they allowed that, then the entire world population would qualify. Where we found it: Forbes increase of cumulative investments to June 2013 compared to the same period last year. Go4Venture says that that European venture is actually growing much faster than the US , but readers are cau- tioned to keep in mind that Europe’s growth is up from much lower base than the US market which is approximately 4x to 5x larger.
  6. 6. The Dealmarket Digest empowers members of Dealmarket by providing up-to-date and high-quality content. Each week our in-house editor sifts throughscoresofindustryandacademicsourcestofindthemostnotewor- thynewsitems,scopingtrendsandcurrentseventsintheglobalprivateeq- uitysector.Thelinkstothesourcesareprovided,aswellasaneditorialized abstract that discusses the significance of the articles selected. It is a free servicethatembodiesthevaluesoftheDealmarketplatformdelivers: Pro- fessional, Accessible, Transparent, Simple, Efficient, Effective, and Global. To receive the weekly digest by email register on Editor: Valerie Thompson, Zurich DealMarket DealMarketlaunchedin2011andisgrowingfast.Justone yearafterlaunch, DealMarket counts more than 61,000 recurring users from 154 countries, andover3,000dealsandserviceproviderspromotedorlistedontheplatform. DealMarketisanonlineplatformenablingprivateequitybuyers,sellersand advisors to maximize opportunities around the world – a one-stop shop for Private Equity professionals. Designed by Private Equity professionals for Private Equity professionals, the platform is easy to use, cost effective and secure, providing access, choice and control across the investment cycle. DealMarket’s offering includes • DealMarketPLACE , an unfiltered view of the global deal and advice mar ketplace, where searching is free and postings are the price of a cap puccino a day (with no commission). • DealMarketSTORE offers affordable access to industry-leading third- party information 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 share their deal flow more efficiently. DealMarket was voted the “Best Global Private Equity Platform for 2012 and 2013” by Corporate LiveWire.