Our weekly pick of Private Equity News and Trends

1. DIGEST 119
1
Billion Dollar Buyout of Chinese Gaming
Company
Performance Ranking Finds New Stars in
Endowment Universe
2
Exits Full Steam Ahead
3
Move over Berlin, Here Comes Helsinki for
Tech Startups
Two Dozen Billion Dollar Startups You’ve
Never Heard Of
4
Quote of the Week: Bold Asean Entrepreneurs Emerge
November 29, 2013

2. BILLION DOLLAR BUYOUT OF CHINESE
GAMING COMPANY
This week’s deal of the week is a PE-backed take private of Giant Interactive at USD 2.9 billion, based
on news from Reuters. It is not the biggest buyout of the week, the ITW industrial packaging unit at
USD 3 billion is the largest, but this one is interesting because it has the company’s chairman, and former CEO, Shi Yuzhu leading a consortium along with Baring Private Equity Asia to take the NY-listed
Chinese computer gaming group private. The 51 year old Shi Yuzhu is one of China’s wealthiest selfmade men, according to Forbes. He is an avid gamer himself, according to China Inc, whose skills in
marketing and technology development are often mentioned in media profiles.
PERFORMANCE RANKING FINDS NEW
STARS IN ENDOWMENT UNIVERSE
Many eyes in the financial media were on this
month’s press release from the American
National Association of College and University
Business Officers unveiling its preliminary results for endowment performance for the year
that ended on June 30. The news was that the
Ivy League endowments, which have long had
the reputation as smart money in alternative
asset management and savvy private equity
investors, are not doing as well as some of the
mid-sized college endowments.
This year the top spots in terms of performance were filled by mid-sized endowments
that outperformed the much larger Yale and
Harvard endowments, according to an in-
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3. depth feature article in Institutional Investor. Two of the best performers were Abilene Christian University in Texas and Spalding University in downtown Louisville, as revealed by NY Times in its own
special report on the topic. The NACUBO data comes from 461 US colleges and universities covered in
the NACUBO Commonfund Study of Endowments. Preliminary results indicate endowments returned
an average of 11.7 percent (net of fees) for the 2013 fiscal year (July 1, 2012 – June 30, 2013). The preliminary FY2013 return is a marked improvement over last year’s 0.3 percent return reported by Study
participants for FY2012. (Image Source: Spalding University)
EXITS FULL STEAM AHEAD
Silicon Valley just had its most lucrative quarter for exits in five years, according to Fast Company.
Overall, 2013 is on pace for a record number of VC-backed exits, with 144 year to date. Chinese companies are also taking advantage of the opportunity to go public with four IPOs in New York this year,
according to Forbes.
The entrepreneurial community expects continued momentum in the IPO market and M&A activity to
continue for the rest of 2013, according to the results of a recent poll conducted during KPMG’s SemiAnnual Venture Capital IPO Webcast. “Healthy investor appetite, a robust IPO pipeline, and the desire
for PE and VC firms to monetize their investments continue to drive a successful IPO market,” say the
KPMG analysts. The results (see graphic) reflect responses from over 900 venture capitalists, investors, entrepreneurs and professional advisors globally.
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4. MOVE OVER BERLIN, HERE COMES HELSINKI FOR TECH STARTUPS
GO4 Venture HTI Index by Deal value
Two years ago your DealMarket editor wrote a feature article for Informila about the hot tech startup
scene in Berlin. Now the excitement is moving to Helsinki and Sweden. The recent Slush 2013 venture
conference attracted more than 1,00 companies, and 5,000 people, including Rich Wong of Accel Partners, John Lindfors of Digital Sky Technologies, and Francesco de Rubertis of Index Ventures. Forbes
writes about the venture capital flowing to the Nordic city, the recent exits, and the tech companies to
watch for. Two of the best known startups in the current Finnish scene are Supercell and Rovio. Both
are gaming startups with Supercell making over USD 2.4 Million a day and Rovio claiming over EUR
152.2 million in sales, according to Arctic Startups.
All this is happening amidst a backdrop of solid investment activity in European VC European market, with the most recent being a huge expansion round for streaming music startup Spotify. It raised
a quarter of a billion dollars on a circa USD 4 billion valuation, according to WSJ. The analysts at
Go4Venture say that VC investment in Europe is up by 40% this year. The money is targeting Internet
investments, representing one-third the number of transactions, and 60% including if SaaS related
businesses are included. (Image Source: Go4Venture)
TWO DOZEN BILLION DOLLAR STARTUPS
YOU’VE NEVER HEARD OF
The chances of creating a billion dollar ventures are extremely slim, less than .7% (see Quote of the
Week: Odds), and yet there has been a rash of announcements in the last few months about 10 digit
valuations for (mainly) tech startups. Many of them are hardly known outside the sectors they are active in, and yet their valuations are high.
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5. Here are some of the companies to be
found in a report entitled, 24 billion-dollar
startups, by Business Review. Most are
based in Silicon Valley, a good 70% of
them.
•
•
•
•
•
•
•
•
Coupons.com
Theranos
zulily
Good Technology
MongoDB
Pure Storage
Evernote
Automattic
QUOTE OF THE WEEK - BOLD ASEAN
ENTREPRENEURS EMERGE
“ In my opinion, if you cannot raise money from professional investors, then don’t
start a company. It means there’s something wrong with your business model…VCs
all think alike. They’re Excel spreadsheet guys. If they cannot project your returns,
then they’re not going to invest.”
Who said it: Dr Gabriel Walter, cofounder of LED start up QEOS)
In Context: Walter is one of the growing number of technology entrepreneurs from Asean, the South
East Asian region that covers 10 nations (including Singapore, Malaysia, Philippines, and Myanamar).
Walter’s Malaysia-based optical semiconductor startup, which raised capital from local VC funds, currently holds the record for the world’s fastest lights source for optical telecommunications networking.
His comments illustrate that the relationship between VC and entrepreneurs is the same in Malaysia as
it is anywhere else in the world.
The quote above is from a recent VC conference in Singapore where the audience learned that the top
three cities for social media mobile usage are Bangkok, Manila and Jakarta and they are all located
in Asean, according to sources quoted in Digital News Asia. It is a regional market on track to become
the same size as the United States, and yet region appears to be wide open territory for VCs. Asean
only has about 20 active VC funds, while the United States has over 1,000. Even China has around 600
VC funds and India has 400, according to the same source. Walter was one of several entrepreneurs to
describe raising venture capital on a panel.
Where we found it: The Malay Mail Online
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6. The Dealmarket Digest empowers members of Dealmarket by providing
up-to-date and high-quality content. Each week our in-house editor sifts
through scores of industry and academic sources to find the most noteworthy news items, scoping trends and currents events in the global private equity sector. The links to the sources are provided, as well as an editorialized
abstract that discusses the significance of the articles selected. It is a free
service that embodies the values of the Dealmarket platform 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
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