DealMarket DIGEST Issue 118 // 21 November 2013


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Our weekly pick of Private Equity News and Trends

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DealMarket DIGEST Issue 118 // 21 November 2013

  1. 1. DIGEST 118 1 Venture Capital Evolution: Intel Capital Goes Public 2 Asian-Pacific Family Office Trends: Private Equity and Real Estate Rising 3 Billion Dollar Bid for Dutch Software 4 How Much is Really Going Into Secondaries? Two Dozen Billion Dollar Startups You’ve Never Heard Of 5 KPMG Enters Venture Capital World to Tap Big Data Trend Quote of the Week: Beating The Odds November 21, 2013
  2. 2. VENTURE CAPITAL EVOLUTION: INTEL CAPITAL GOES PUBLIC It used to be that corporate venture investors did not even disclose private company investments, except in special cases. Now they regularly announce such deals. Intel’s corporate venturing unit is going further, standing out above other corporate VCs, not only in terms of dealmaking but also in what it does to help portfolio companies meet customers, network, and get some media attention. A case in point is the Intel Capital’s annual conference for portfolio companies, which once was a very exclusive clubby event but is now a very public affair. Its most recent gathering was professionally produced. It had 1,000 participants including CEOs, entrepreneurs, venture capitalists, industry executives, customers, partners, press and Intel Capital’s portfolio company leaders (See a video of the kickoff fireside chat) . As a result of that kind of effort, one journalist said that Intel is now in a category with Andreesen, Horowitz, one of the new generation of game-changing VC firms in Silicon Valley. Andreesen Horowitz, for example, employs a staff of 66 to provide assistance in design, marketing, human resources, and promotion through its blog magazine. We can assume Intel Capital has the budget for this kind of thing because it has been generating returns. It leads corporate VCs with the most M&A and IPO exits in 2013, and did well last year too, according to CB Insights. Recent notable exits of Intel’s corporate venture arm include YuMe, which went public in August and energy management startup JouleX, acquired by Cisco for USD 107 mn. It is also an investor in many upcoming tech IPOs, according to CB Insights. The developments at Intel Capital and its more public profile is another sign that venture capital is changing, evolving into something less intransparent. We have written about this trend here. 2
  3. 3. ASIAN-PACIFIC FAMILY OFFICE TRENDS: PRIVATE EQUITY & REAL ESTATE RISING Asia-Pacific’s wealthiest investors are allocating more money into direct investments and away from capital markets, says a new report from survey entitled Growing Towards Maturity: Family Offices in Asia-Pacific Come of Age. Those surveyed (25 family offices completed an extensive questionnaire) are attracted to private company and real estate investments, rather than equity and bond markets. The APAC region is similar to European trends where direct investing has also been rising in the last few years, according to the analysts. Key Findings • Real estate accounts for 16% of allocations this year, compared with just under 9% in 2012 . • Allocations to venture capital and direct private equity grew to 15%, compared with 4% in 2012. • Equity market allocations down by 7% to 14% of total assets. • Hedge fund investing down by 50%. • Cash holdings among family offices were still strong in all countries, but particularly in Hong Kong. • The analysts said that it is not surprising that APAC family offices are attracted to private equity because many of the wealthiest own family businesses. • Asia’s wealthy families are more optimistic about investment prospects than a year ago. • Hong Kong and Singapore are prominent wealth centers in Asia-Pacific, and are where the majority of family offices are being set up – more than 75% of those established in the last 10 years in the region have been launched in the two cities. 3
  4. 4. In a separate report reflecting an increase in wealth in APAC, UBS said that the number of billionaires is increasing fastest in APAC, faster than any region worldwide. It increased by 13 percent, year on year. Asia has also had 18 more billionaires, the largest number of additional names this year. (See graphic from the Wealth Census from UBS for a trend line.) BILLION DOLLAR BID FOR DUTCH SOFTWARE This week’s private equity deal of the week is one reported by Reuters, which involves a USD 1.6 billion bid for Dutch software firm by the internationally active buyout house, Advent . The plan is to take private UNIT4, which is traded on the Amsterdam stock exchange. The plan is to invest for expansion of UNIT4, which is a profitable cloud computing company that competes with Oracle, and employs more than 4,000 people. HOW MUCH IS REALLY GOING INTO SECONDARIES? Private equity firm Ardian said on Wednesday it had spent USD 4.3 billion on acquiring stakes in buyout funds since September last year, according to Reuters. This large figure for just one fund manager in the market makes it clear that there is still some dealmaking underway. It also shows that there is not a lot of certainty in the trend figures announced by Setter Capital and Cogent Partners who track dealmaking in the secondary market. Is dealmaking declining or growing? It is not clear. On the one hand, industry insiders are saying things like, “Assets seem pretty sticky in owners’ hands todays sellers”, implying that sellers have the attitude of holding because they believe they can get a higher price and higher NAV in the future, according to a new PEI Secondaries Whitepaper. On the other hand, some of the world’s most experienced secondary investors are raising massive new funds in anticipation of a healthy dealflow, according to PI Online. There is also the fact that there are growing number of secondary deal platforms, more than four at our last count, which suggests there is quite a bit of activity underway. 4
  5. 5. KPMG ENTERS VENTURE CAPITAL WORLD TO TAP BIG DATA TREND Hoping to be able to capture the next big technology-driven disruption in banking and finance, some banks, credit card companies, and even consulting companies are allocating 100s of millions to venture capital direct investing. This kind of corporate venturing used to be the territory of high tech companies and life science companies, but now even consultancies like KPMG is getting into the venture game. KPMG Capital launched last week with the aims to “accelerate innovation in data and analytics (D&A) that will help clients of member firms unlock tangible value from their data”. KPMG is betting big on big data, some USD 100 million will be invested. It is not based on the idea that the digital realm is redefining how banking will be done, according to Global Corporate Venturing magazine in a reports that looks at other recent entrants, such as Citi Ventures and American Express Ventures. QUOTE OF THE WEEK - BEATING THE ODDS “It’s really hard, and highly unlikely, to build or invest in a billion dollar company. The tech news may make it seem like there’s a winner being born every minute — but the reality is, the odds are somewhere between catching a foul ball at an MLB game and being struck by lightning in one’s lifetime. Or more than 100x harder than getting into Stanford. ” Who said it: Aileen Lee, founder CowboyVC Context: Lee’s venture firm has done some research on the characteristics of billion dollar exits for venturebacked companies. She says the chances of a consumer oriented Internet venture achieving a billion dollar valuation was 0.07 percent. She came up with a profile of the typical entrepreneurial team, mid 30s, track record of working together, and based in San Francisco, but she warns strongly that it is not that simple, to simply tick the boxes, and that is where the above quote came in. Where we found it: CowboyVC blog 6
  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.