Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

DealMarket DIGEST Issue 123 // 10 January 2014


Published on

Our weekly pick of Private Equity and Corporate Finance News

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

DealMarket DIGEST Issue 123 // 10 January 2014

  1. 1. DIGEST 123 1 2 M&A Trend: Global Wealth Management Sector Dealmaking Heats Up Preqin Says… Highs Hit for Fundraising, Dealmaking, and Exits ’13 Billion Dollar Brazil Healthcare Buyout 3 PE Returns Record Amount of Cash in 2013 Tech Stocks’ IPO Pops Were Tops in 2013 4 Quote of the Week: PE Most Desired Gig on Wall Street January 10, 2013
  2. 2. M&A TREND: GLOBAL WEALTH MANAGEMENT SECTOR DEALMAKING HEATS UP Mergers and acquisitions in the global wealth management industry were up in 2013 which is attributed to lower valuations as regulatory pressures put the costs squeeze on wealth managers. There were over 60 deals worth USD 760 billion in this segment of the financial industry in 2013, according to Scorpio Partnership in a press release. The average price paid for acquisitions as a proportion of assets under management was 1.22 percent this year, down from 1.98 percent in 2012 and 4.81 percent in 2009, says Scorpio. Reuters reports that private equity groups active in the market include Permira, which acquired Deutsche Bank’s Tilney wealth management arm, as well as Bestinvest, and Carlyle Group, which acquired Diversified Global Asset Management and TCW. Scorpio expects the pace of new deals to remain high in 2014 driven by the same forces that affected dealmaking in 2013. The report has the 2013 activity, but also tracks a total of 236 wealth deals which took place from 2008. PREQIN SAYS... HIGHS HIT FOR FUNDRAISING, DEALMAKING & EXITS ’13 End of year tallies from Preqin reveal that PE raised the largest amount of capital globally since the financial crisis of 2008. Global private equity fundraising throughout 2013 totaled USD 431bn, 13% up on 2012 levels. The previous high point was when USD 688bn was raised by funds closed in 2008. Preqin’s research shows that this growth in capital raised has been led by strong fundraising activity for North America- and Europe-focused funds, while funds focused on Asia and other regions have seen a significant drop in fundraising levels. Another Preqin study revealed that the aggregate value of PE-backed buyout 2
  3. 3. deals also hit a high with 2,830 private equity-backed buyout deals announced throughout 2013 representing an aggregate value of USD 274bn, the highest value since USD 661bn worth of deals were announced in 2007 (See chart). Preqin said that PE “buyout firms have had their strongest year of dealmaking since before the global financial crisis…though this the number of deals taking place has actually fallen by 11% from the year before”. BILLION DOLLAR BRAZIL HEALTHCARE BUYOUT This week’s deal of the week is a rumored proposed USD 1.2 billion take private of Brazil-based Fleury SA. Several PE groups are bidding for the hospital and medical service providers, which Bloomberg describes as the worst performing stock in its category in recent times. PE bidders include Carlyle Group and KKR. The report says that Gavea Investimentos and Apax Partners have also looked at Sao Paulo-based Fleury. This healthcare deal is interesting because with one single transaction, Brazil out-punches US sector activity for 2013. It says a lot about the low level of healthcare industry activity in the US and the PE view that there are better opportunities in faster growing emerging BRIC countries. According to S&P Capital IQ Global Markets Intelligence, the entire US leveraged buyout market for healthcare sector generated only USD 1 billion in transactions in 2013 (see graphic), the lowest turnover in the last 13 years. The numbers in 2014 for the US healthcare sector could be quite different compared to last year, that is, if Carlyle is successful in its bid to acquire a diagnostic unit from Johnson & Johnson for USD 4 billion. The rumored mega-buyout was reported by Reuters last week and is expected to reach a closing in mid-January. (Image source: Fleury; Graphic source S&P) 3
  4. 4. PE RETURNS RECORD AMOUNT OF CASH IN 2013 This issue of DealMarket Digest record-breaking year for the PE making and fundraising are up, so The WSJ is reporting that private more than USD 120bn to their limited ous year’s record of USD 115bn, acAssociates, which advises investors Buyout groups returned USD 60.8bn year, according to the report which search. Strong capital markets were returns generated via initial public Debt refinancing was enabled by low was that PE -backed companies sold loans in 2013 to deliver cash back to USD 64.2bn of 2012, according to the WSJ report. The article concludes in 2014 as private equity funds still from. is full of news this week about a industry. Not only exits, LBO dealare cash returns to limited partners. equity firms are expected to return partners in 2013, topping the previcording to estimates by Cambridge on allocations to the asset class. to investors in the first half of this cited Cambridge Associates rethe enabling force, particularly offerings of portfolio companies. interest rates last year. The result USD 66.2bn worth of bonds and shareholders, eclipsing the record data provider S&P Capital IQ LCD in that this kind of activity will continue have many assets they need to exit TECH STOCKS’ IPO POPS WERE TOPS IN 2013 since 2009 (46%). Dealogic says that US technology IPOs and the highest average one-day return since 2000 with a performance of 41% gains, the highest average one-day return since 2000 (91%) and up from an average of 30% in 2012. This is great news for PE and VC investors who are planning on floating portfolio companies. It is not just the US that is doing well, although it is tops in performance compared to the other regions. The global technology IPO average one-day return for 2013 stands at 37%, which was a better capital market performance than 2012. The global figure is up by 12% over 2012 numbers, highest average one-day return 4
  5. 5. Other findings • US Technology IPO volume reached USD 6.7bn representing 31 deals. The figure is down compared to the USD 20.3bn (32 deals) raised in 2012. • Technology ranks third in the US IPO sector ranking so far this year, behind Oil & Gas (USD 9.5bn via 17 deals) and Healthcare (USD 9.5bn via 51 deals) • Best performing in 2013 was Benefitfocus Inc’s USD 150m IPO. It recorded a 1-day return of 102%, • Twitter Inc’s USD 2.1bn IPO was the largest US Technology IPO of 2013, and recorded a one-day return of 73% • Goldman Sachs leads the global Technology IPO bookrunner ranking in 2013 YTD with a 19.6% mar ket share, followed by Morgan Stanley and Deutsche Bank with 18.2% and 14.5%, respectively. QUOTE OF THE WEEK - PE MOST DESIRED GIG ON WALL STREET “The most desirable places to work aren’t the big banks, but rather private-equity firms such as the Carlyle Group and hedge funds like Fortress Investment Group… Who said it: John Ricco of Atlantic Group, an executive search firm In Context: Today, the most desirable places to work are private-equity firms, such as the Carlyle Group, and hedge funds while major investment banks, such as Goldman Sachs and Morgan Stanley, are moving more jobs out of New York to lower-cost cities such as Salt Lake City and Tampa, says John Ricco in an interview with Crains. Although he is upbeat about the prospects for financial industry professionals in 2014, he says that the employment situation on Wall Street is nowhere near what it was prior to the financial crisis in 2008. Another recent study confirms Ricco’s view of the job market. Private equity employment is outgrowing hedge funds and investment banking for employment growth, according to Job Search Digest. It says that “overall, since January 2008, private equity industry employment is up about 1.5 percent, while over the same period hedge fund industry employment is still down 1.7 percent and investment banking industry employment is still down 4.5 percent”. Readers interested in switching to a career in PE can look at efinancialnews, which has a good tip sheet on the skills and talents required. (Image source: Crains) Where we found it: Crains NYC 5
  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 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 Editor: Valerie Thompson, Zurich DealMarket DealMarket launched in 2011 and is growing fast. Just one year after launch, DealMarket counts more than 61,000 recurring users from 154 countries, and over 3,000 deals and service providers promoted or listed on the platform. DealMarket is an online platform enabling private equity buyers, sellers and 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, 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 is the exclusive deal exchange platform made for engaged professionals and companies with a truly unique value added proposition. • DealMarketSTORE offers affordable access to industry-leading thirdparty 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.