Stay up-to-date in the world of Private Equity & Venture Capital


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Stay up-to-date in the world of Private Equity & Venture Capital

  1. 1. DIGEST 81SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 81 1 TPG Capital in Billion Dollar Exit 1 Preqin’s Highs and Lows for 2012 2 What’s Hot Among Ultra-wealthy Investors 3 Private Equity’s Challenges for 2013 • Altius Associates Ten Largest PE Deals of the Year 3 2012 • Privco Research 4 Quote of the Week: The Attraction of US Buyouts February 01, 2013
  2. 2. TPG CAPITAL IN BILLION DOLLAR EXITThis week’s deal of the week is actually an exit for TPG Capital, which is reportedly selling CopanoEnergy to Kinder Morgan Energy Partners for USD 3.22 billion. According to reports online, TPG willachieve a 41 percent premium on its USD 300 million investments made in the gas and oil infrastructurecompany that operates in Texas and Oklahoma, if the deal goes through.PREQIN’S HIGHS AND LOWS FOR 2012 Image source: PreqinJanuary is the month to get the dealmaking and investment highlights of the previous year from theleading industry research teams. This week Preqin does not disappoint.The Highs• Preqin’s latest data shows that PE funds that closed in the final quarter of the year raised a similar amount to those closed in the previous quarter and it expects Q4 totals to increase by around 10- 20% over Q3 as further information becomes available.• A record 1,949 funds are currently on the road seeking an aggregate USD 797.1 billion (see graphic)• North American deal flow reached a post-Lehman high in 2012, with 2,866 buyout deals announced valued at USD 254.6 billion.• Quarterly infrastructure fundraising hits four-year high in Q4 2012 with a “significant” USD 11.9 billion raised by the eight unlisted infrastructure funds• PE real estate fundraising reaches highest quarterly total since Q3 2008 with twenty-eight closed- end real estate funds raising an aggregate of USD 22.6 billion, more than double the USD 10.7 billion raised in Q3 2012.1
  3. 3. The Lows• VC deals activity continued to slide in Q4 2012 with a 6% drop in the number and 5% decline in the value of deals in comparison to Q3 2012, and a 13% and 23% decline in number and value from Q2 2012. Between 2011 and 2012 the aggregate value of deals announced dropped by 22%.WHAT’S HOT AMONG ULTRA-WEALTHYINVESTORSAccording to the latest quarterly report Tiger 21, a club of wealthy investors, its members are shiftingportfolio assets more towards public and private equity than in previous quarters. Key Findings • Private equity allocation rose six percentage points from the fourth quarter of 2011 to 19%, and was up 10 points from a low of 9% in fourth quarter 2010. • Public equity allocation was up three percentage points to 24% from fourth quarter 2011. • Fixed income allocation eked out a one- point increase to 14% in the fourth quarter, remaining basically flat after having fallen seven percentage points in the second quarter of 2012. • Real estate allocation fell by three points from fourth quarter 2011 to 21%. • Hedge fund allocation was at 7%, down two points from fourth quarter 2011.The research is from TIGER 21 whose members collectively manage approximately USD 19 billion in investable assets. Members are entrepreneurs, CEOs, inventors and top executives with backgrounds in financial services, real estate, industrial and consumer goods, legal services, entertainment and medicine.2
  4. 4. PRIVATE EQUITY’S CHALLENGES FOR2013Altius Associates published the ten challenges currently facing the PE industry last week (via Zephyr’smandaportal). We selected five out of ten.The rest you can find in the report here.1. European buyout funds must find a profitable way to exit the boom year deals.2. US buyout funds facing high valuations. Rising purchase price multiples for high quality companies, which over the last year have hovered at around 9.0x earnings before interest, taxes, depreciation and amortization (EBITDA) and sometimes more will be a challenge.3. Secondary market players get more competitive - attractive opportunities are a challenge to find in an increasingly transparent and crowded market.4. Investor Relations has to rise to challenge of more demanding LPs - more information and greater transparency. GPs are now meeting face to face with significant LPS on a quarterly basis, with full portfolio reviews, including all major changes, cash flow statements and details of drawdowns, distributions and any valuation changes. Many GPS many have doubled their staffing in the last five years.5. The China challenge for PE investors is threefold - not all RMB private equity firms have experienced and professional teams, there is a risk that funds are raised by government bodies for political motives and competition is increasing as a result of large scale RMB fundraising.TEN LARGEST PE DEALS OF THE YEAR2012We found a good analysis of the top deals of the year on PrivCo this week, making it clear that 2012 wasa much better year for dealmaking than the ones that went before. Secondary sales kept activity levelsup and in the US market there was a return to the use of high debt levels in leveraged buyouts. Moreanalysis, as well as lists of top advisors and other private equity highlights of the year are in the linkabove. PrivCo publishes exclusive financial data on over 164,000 private companies, as well as over45,000 private company deal details.3
  5. 5. PrivCo’s Top 10 Largest Private-Equity Deals for 2012 (USD billion) EP ENERGY CORP (Headquarters: Houston, TX) Acquired By P.E. Buyers: 7.2 Apollo, Riverstone, Access Industries, Korea National Oil Corporation CEQUEL COMMUNICATIONS (St. Louis, MO) Acquired By BC Partners, 6.6 Canada Pension Plan Investment Board DUPONT PERFORMANCE COATINGS (Wilmington, DE) Acquired By 4.9 Carlyle FOCUS MEDIA (Shanghai, China) Acquired By Carlyle, Fountainvest, 3.7 China Everbright, CITIC Capital, Jason Nanchun Jiang HAMILTON SUNDSTRAND INDUSTRIAL (Windsor Locks, CT) Acquired By 3.5 Carlyle, BC Partners GETTY IMAGES (Seattle, WA) Acquired By Carlyle, Getty Images 3.3 management, the Getty Family TRANSUNION (Chicago, IL) Acquired By Goldman Sachs Capital Partners, 3.2 Advent PARTY CITY (Elmsford, NY) Acquired By Thomas H. Lee Partners 2.7 MCGRAW-HILL EDUCATION (New York, NY) Acquired By Apollo 2.5 USI INSURANCE (Briarcliff Manor, NY) Acquired By Onex Corporation 2.3QUOTE OF THE WEEK:THE ATTRACTION OF US BUYOUTS "More and more, North America is the pretty girl at the dance instead of the ugly stepsister... North America is really where the growth is. Its going to be a very exciting market in 2013.”Who said it: Cliff Roesler, a partner in Birmingham-based Angle Advisors-Investment Banking LLCIn Context: M&A dealmaking is expected to climb in the US this year for a number of reasons, uniqueto that region of the world. The article makes it clear that PE will play a big role in the M&A figures forthe year. In the above quote Roesler was talking about not only about general M&A but also some realopportunities he sees in the automobile sector.Where we found it: Crains Detroit4
  6. 6. The Dealmarket Digest empowers members of Dealmarket by providingup-to-date and high-quality content. Each week our in-house editor siftsthrough scores of industry and academic sources to find the mostnoteworthy news items, scoping trends and currents events in the globalprivate equity sector. The links to the sources are provided, as well as aneditorialized abstract that discusses the significance of the articlesselected. It is a free service that embodies the values of the Dealmarketplatform delivers: Professional, Accessible, Transparent, Simple, Efficient,Effective, and Global.To receive the weekly digest by email register on Valerie Thompson, ZurichDealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 35,000 recurring users from 154countries, and over 3,000 deals and service providers promoted or listedon the platform.DealMarket is an online platform enabling private equity buyers, sellersand advisors to maximize opportunities around the world – a one-stopshop for Private Equity professionals. Designed by Private Equityprofessionals for Private Equity professionals, the platform is easy to use,cost effective and secure, providing access, choice and control across theinvestment cycle.DealMarket’s offering includes• DealMarketPLACE, an unfiltered view of the global deal and advice marketplace, where searching is free and postings are the price of a cappuccino 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”by Corporate Newswire.