DealMarket DIGEST Issue 138 // 25 April 2014


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DealMarket DIGEST Issue 138 // 25 April 2014

  1. 1. DIGEST138 April 25, 2014 1 2 3 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 in 2014 PE and Bank Bid For US Money Manager Quote of the Week: Avoid the Scale Fail
  2. 2. 2 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.
  3. 3. 3 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.
  4. 4. 4 QUOTE OF THE WEEK - AVOID THE SCALE FAIL “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 next level. 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.
  5. 5. The DealMarket Digest empowers members of Dealmarket by providing up-to-date and high-quality content. Each week our in-house editor sifts throughscoresofindustryandacademicsourcestofindthemostnotewor- thynewsitems,scopingtrendsandcurrentseventsintheglobalprivateeq- uitysector.Thelinkstothesourcesareprovided,aswellasaneditorialized abstract that discusses the significance of the articles selected. It is a free servicethatembodiesthevaluesoftheDealmarketplatformdelivers: Pro- fessional, 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, over 3,000 deals & service providers promoted or listed on the platform. DealMarket is an online platform en- abling private equity buyers, sellers and advisors to maximize op- portunities around the world – a one-stop shop for Private Equity professionals. Designed by Private Equity professionals for Private Eq- uity professionals, the platform is easy to use, cost effective and se- cure, 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 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 and 2013” by Corporate LiveWire.