March 28, 2014
African Private Equity Players Are Confident
as Track Records Deepen
Billions for Secondary Buyout of Florida Digi-
tal Media Company
Asia Pacific PE-backed M&A Highest on
Family Offices Expect High Returns for PE
and Real Estate
M&A Quarterly Trends: Up in the Middle East
and Down in Europe, Nordics and CEE
Quote of the Week: An Enviable Funnel
AFRICAN PRIVATE EQUITY PLAYERS ARE
CONFIDENT AS TRACK RECORDS DEEPEN
Strong PE fundraising and brisk dealmaking in
the extraction sector are the two big trends in
the African PE market in 2013, according to the
latest survey by Deloitte.
Confidence in PE in Africa is increasing. Kenya
figures prominently by number of deals, as does
South Africa, followed by Nigeria. Track records
are deepening, growth is strong, risks are man-
ageable and LPs continue to rate the region
highly amongst their emerging market options,
The extractive industries had the highest value
of reported deals in Sub Saharan Africa in 2013.
Three large energy deals accounted for 63% of
the year’s total reported investment. In 2011, the
top three deals by value only accounted for 43%
of the year’s total, and were spread across three
different sectors. The largest deal done in 2012
barely topped USD 200m, said the report.
The largest deal in this sector was a USD 1.53bn
transaction, involving Helios Investment Part-
ners alongside BTG Pactual in a 50/50 joint ven-
ture with Petrobras International Braspetro B.V.,
a subsidiary of Petrobras, to explore and produce oil and gas in Africa, through a specialized invest-
ment vehicle. Measured by the number of deals, the manufacturing and financial sectors recorded the
highest number of transactions (13 each), followed by agribusiness (12), TMT (7) and infrastructure (6).
The Deloitte survey is based on 42 GP survey responses and three responses from Limited Partners.
(Image source: Deloitte).
BILLIONS FOR SECONDARY BUYOUT OF
FLORIDA DIGITAL MEDIA COMPANY
This week several mega deals that we’ve selected in the past for our private equity buyout of the week
item are still in the news ( Compuware, Gates Global and Safeway) as acquirers try to win bidding
wars. What is new this week is a USD 2.5 billion buyout of Catalina Marketing by Berkshire Partners,
according to Reuters. Catalina Marketing is a St. Petersburg, Florida company that provides loyalty and
digital media services solutions for consumer retail companies, has been owned by Hellman & Fried-
man since 2007. It reportedly paid USD 1.7 billion for the company.
FAMILY OFFICES EXPECT HIGH RETURNS
FOR PE AND REAL ESTATE
ASIA PACIFIC PE-BACKED M&A HIGHEST
Asia Pacific private-equity-backed mergers and
acquisitions (which includes Entries, Exits & Port-
folio transactions but excludes add-ons) were up
a whopping 185 % compared to the same period
last year ( up from USD 9.6bn in 2013 YTD to USD
27.4bn in 2014 YTD). It is the highest YTD on record,
according to Dealogic. China is the most targeted
nation for Asia Pacific deals. South Korea and Ja-
pan follow. The most targeted sector is Real Estate,
followed by Food and Beverage and Professional
Services. One large deal drove Real Estate sector
and China volume, specifically when a consortium
of investors, including financial sponsor CDH China Holdings Management, of Greenland Holding
Group, was acquired by Shanghai Jinfeng Investment for USD 10.7bn. The sale of a PE-backed Korean
beer brewing company to ABInBev drove the Food & Beverage sector and South Korea volume. (Image
Family offices recently polled by Complementa and Bayerischen Finanz Zentrum expect modest re-
turns of between zero and five percent for their entire portfolios, but for private equity and stocks
their expectations are much higher. According to their latest family office survey of 75 family offices in
Germany, Austria, and Switzerland, the most important investment objective of more than half of the
family offices surveyed (65 percent), is the preservation of capital, in addition to a constant cash flow
adjusted for the inflation rate. Asset managers surveyed said they favored stocks, with 25 percent of
respondents giving them the greatest allocation. The cash portion of the portfolio has averaged 9.6
percent. In addition, the respondents favor real estate, allocating 16 percent to it, and 10 percent to
private equity. Other allocations are much smaller, e.g. hedge funds 3.5 % and commodities 2.3 %.
M&A 4TERLY TRENDS: UP IN THE MIDDLE
EAST & DOWN IN EUROPE, NORDICS & CEE
Zephyr recently released first quarter Mergers and Acquisitions (M&A) figures for 2014, revealing that
deals targeting companies based in Western Europe declined for the third consecutive quarter and
volume slipped to the lowest recorded since Q3 2012. A similar trend was evident in the Nordics in the
last available quarterly report (Q42013) where value fell by 17 per cent in Q4 2013 as a result of fewer
big ticket deals announced during the quarter.
A bright spot was the Middle East, with the value of deals targeting companies there increasing by a
whopping 57 per cent in Q1 2014 to USD 3.06 billion up from USD 1.94 billion in Q4 2013. The volume
increase was boosted by three very large transactions, which accounted for 57% of the total. In Cen-
tral and Eastern Europe (CEE) M&A failed to continue the momentum achieved in the previous quarter,
which marked a two-year high.
QUOTE OF THE WEEK - AN ENVIABLE
“We have consciously dedicated substantial resources to building out our
investment platform so that we can select from an even larger and in-
creasing set of investment opportunities.”
Who said it: André Frei, Partner and Co CEO Partners Group (Switzerland)
In Context: Partners Group announced its annual figures this week, re-
porting a healthy performance and
growth for the year 2013, which is
the source of the quote above. Frei’s
statement refers to the remarkably
privileged deal flow and selection
process that Partners Group has in
place. For example, it screened 764 PE direct deals last year and
it also screened USD 69.6 in billion in secondary PE transactions.
The graphic here illustrates its enviable deal flow funnel in 2013.
According to its annual report, a highly selective investment ap-
proach means a 97% decline rate on all investments screened.
Partners Group is one that can be given the label smart money investor. It has become a major player
in private equity, as an institutional investor, as direct investor, and as debt finance provider in the past
decade or so. It clearly sees its main business line as being PE and the figures back up that claim,
specifically it has EUR 20.1 billion in private equity, EUR 4.9 billion private real estate, EUR 3.0 billion
private infrastructure and EUR 3.4 billion private debt. It is worth noting Partners Group has EUR 31.6
billion in assets under management and a head count that is trending towards 1000 professionals em-
ployed around the globe. (Image source: Partners Group)
Where we found it: Partners Group website
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Editor: Valerie Thompson, Zurich
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