April 25, 2014
Quick Growing Mid-Market in Sub-Saharan
Africa Drives PE Fundraising
World’s Millionaires Are Online
M&A Fever Hits Pharma Industry
Money Magnets: Top 10 VC Fundraisings
PE and Bank Bid For US Money Manager
Quote of the Week: Avoid the Scale Fail
QUICK GROWING MID-MARKET IN SUB-
SAHARAN AFRICA DRIVES FUNDRAISING
There are a good number of mid-size companies in Sub Saharan Africa, a region that counts 75 coun-
tries, growing at a rapid pace, according to an interview with a Carlyle executive in FN, who highlighted
Export Trading, which has been growing above 35% per annum over the last four years, and J&J
Transport, which has also been growing at around 30% per annum over the last five years. Carlyle just
raised a new USD 569 million fund for the region, one of more than 100 distinct funds it manages, and
its LP were keen to tap into momentum implied by the growth rates, which are much more rarer in
established economic regions.
WORLD’S MILLIONAIRES ARE ONLINE
A remarkably high percentage of high net worth individuals are using online platforms for investment
and money management activities extensively, according to a study released by SEI, NPG Wealth Man-
agement and Scorpio Partnership. The research, entitled The Futurewealth Report 2014 said that 92%
of the world’s wealthy are using digital solutions “extensively”. The graphic shows some of the activi-
ties they undertake, such as portfolio evaluation and market reviews, as well as getting information
about stocks and bonds. The context of the survey is an attempt to figure out the factors that enhance
wealth management transactions for 3,025 of the world’s wealthy with an average worth of USD2.9
million (47% in Asia Pacific, 34% US, and 17% Europe). The frequency of online usage, from daily to
monthly, varies widely among the survey respondents, with those under 49 using their online accounts
the most and for a wider range of information and decision-making purposes.
M&A FEVER HITS PHARMA INDUSTRY
In the last week there has been an eye pop-
ping 168 billion dollars in M&A deals rumored
and/or announced by some of the world’s
largest pharmaceutical companies, as well as
wannabe giants. Rumors that Pfizer will bid
around USD 100 billion for rival AstraZeneca
were reported on the weekend. On Monday,
Canadian drugmaker Valeant Pharmaceuti-
cals International said it had teamed up with
Bill Ackman, a hedge fund manager, to bid
Allergan, which makes Botox, according to
news sources. The value of the deal is USD
40 billion. In addition, Novartis’ announced an
acquisition of GSK’s oncology unit for up USD 16 billion. In turn GSK will by its vaccines business for
USD 7.1 billion, plus royalties. Separately, Novartis said it will sell off its animal health division to Eli
Lilly for about USD 5.4 billion. (Image Source: Bloomberg)
MONEY MAGNETS: TOP 10 VC FUNDRAIS-
INGS IN 2014
It is not that long ago that industry observers were saying the venture capital business model is dead
but a few months of remarkable IPO activity and some big deals by Facebook, Google, and co has put
VC back onto the LP radar, which means that fundraising is getting easier. Several large VC funds
were raised in recent months. Eight VC firms raised more than 7.3 billion in the past quarter. Just
who raised the most was reported in Huffington Post. The answer is Technology Crossover Ventures,
Founders Fund, and Andreesen Horowitz, to name a few. (See the full list in the above graphic). The
Accel brand has not lost its appeal in this new cycle. It raised two giant VC funds, and another estab-
lished firm, DFJ, also raised two funds. The list has a relative newcomer on it, Raine Partners which-
was raising its second fund in the first quarter. Compare that to Lightspeed, which closed its tenth
fund this year. It is also worth noting California is the location of all of the top 10 fundraisings.
QUOTE OF THE WEEK - AVOID THE SCALE
“Revenue grows faster than talent. Discuss… Founders find they can’t keep relying on the original
team to step into every breach. They need to recruit professionals; they need to introduce systems.
And so the founders move from heroes to systems and professionals.”
Who said it: James Allen, Senior Partner, Bain & Co Founders Mentality Blog
In Context: Bain & Co runs workshops in Mumbai and Shanghai, among
other locations, on business management. Its Founders Mentality series,
for example, teaches founders how to navigate the typical phases that they
will encounter when trying to scale their talent and their organizations. Bain
says there is the time of heroes. As a founder-led company scales in its
first phase, the leadership team closes most of the gaps in its organization
through heroics. Everyone works 80 hours a week, some marriages suffer,
but during this time of heroes, a winning company is born and legendary sto-
ries of heroes become the foundation of the culture. It’s a familiar story. “But
then the head of sales burns out and fails miserably to manage a salesforce.
The IT manager fails spectacularly at managing the rollout of a big enterprise-management software
project,” says Allen. At this point PE will often have a chance to buy into the company and take it to the
Regardless of the corporate finance background activity, Bain says that it is also crucial at this point to
hire the right executives, choose a black sheep over a bureaucrat and employ people that can embrace
chaos. More ideas and rationale can be found in the article. It is worth reading for anyone growing a
business or interested in understanding why some business fail to scale.
Where we found it: From a Time of Heroes
RUSSELL INVESTMENT ATTRACT PRIVATE
EQUITY AND BANKS
One of Canada’s largest banks is competing with PE firms to acquire Russell Investment for USD 3 bil-
lion, according to the Globe & Mail. The size of the deal makes it this week’s buyout of the week. Rus-
sell is a US money manager running about USD 250-million of assets and has other businesses, such
as index management and pension consulting. The potential buyers expect the business to generate 15
per cent of earnings or more for the acquirer. The area of asset management has a seen a lot of M&A
as both that largest PE firms and banks look to add assets under management.
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