DealMarket DIGEST Issue 149 // 11 July 2014


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Read what's new and noteworthy in Private Equity this week.

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DealMarket DIGEST Issue 149 // 11 July 2014

  1. 1. DIGEST149 July 11, 2014 1 2 Speculation on Mega-buyout of Kuwait Fast Food Operator Influential but Lagging: Female Leadership in UK Private Equity M&A Wave Hits Asia/Pacific Tech Dealmakers Hit a High PE Pours Back the Money Quote of the Week: India’s Tech Goldrush 3 4
  2. 2. 2 SPECULATION ON MEGA-BUYOUT OF KUWAIT FAST FOOD OPERATOR This week’s deal of the week is the rumored buyout of Kuwait Food Co., a Middle Eastern food manu- facturer and restaurant operator (known as Americana) due to its potential size. According to a report in Bloomberg, Americana’s stock is up as a result of interest by PE giants such as KKR, TPG Capital, and at least four others show interest in acquiring shares held by the Al-Kharafi family. Americana is a 50 year old operator of franchises and food production in several regions, including CIS and MENA. It holds franchises for KFC, Darden, KrispyKreme, TGI Friday’s Inc. and Pizza Hut, as well as owning brand name packaged food businesses. It generates USD 3.1 billion in annual sales and USD 179 mil- lion in profit, with 63,000 employees. INFLUENTIAL BUT LAGGING: FEMALE LEADERSHIP IN UK PRIVATE EQUITY In the latest trends women in finance in the UK, there is good news and bad news. The good news is that the percentage of women selected for Financial News’ annual list of the 100 most Influential people in European finance hit a re- cord this year. The bad news, which comes from its sister publication Private Equity News, is that women in European buyout firms represent only 12% of the 1,133 investment professionals at. Other findings revealed that out of 411 partners at firms surveyed by Private Equity News, in- cluding non-investment positions such as CFO, only 34, or 8%, were women. PE compares “un-
  3. 3. 3 M&A WAVE HITS ASIA/PACIFIC favorably” and is lagging other industries, according to the report. In law and legal segment women represent 19% of partners across the UK’s law firms, according to research published last year by The Lawyer magazine. The report also said that amongst the FTSE 100 and FTSE 250 companies women also fared better, with 21.6% and 16.3% respectively, according to figures from BoardWatch which tracks women appointed to UK top company boards(see Graphic from BoardEx above). In the US, fe- male leadership is also at a high but not as high proportionally as the UK. According to Fortune, there are 24 women CEOs in the Fortune 500 and 27 in the Fortune 1000. M&A is on a high with deal volume in Asia-Pacific climbing by 67 percent over last year to USD378 bil- lion, according to prelimi- nary data from Thomson Reuters. It is the highest volume on record for the equivalent period. The WSJ is also reporting that the M&A boom has hit Asia Pacific. Its M&A figure was slightly lower at USD 367.7 billion (using dealgoic data) for the first half of the year. Capi- tal is available for dealmak- ing, and analysts believe the pace will continue, say experts cited in the report. Key drivers include govern- ment actions in several countries and buoyant share prices making strategic acquisitions easier. Aus- tralian M&A climbed 83% in the first half to USD 35.6 billion, driven mainly by PE activity. TPG was mentioned, in particular. Family groups in Asia Pacific countries are also quite active. TECH DEALMAKERS HIT A HIGH Technology-oriented dealmaking hit a high in this past six months, with M&A volume jumping by 55% (USD144.9bn) compared to the first half of last year (USD93.2bn), according to dealogic. It is the highest first half year volume since tech M&A peaked in 2000 at a whopping USD298.4bn. The number of deals is also up 13% compared to the same period last year, but it is far behind the 4,833 deals announced in 1H 2000, said dealogic. The US was the most targeted nation for all tech M&A deals, with USD89.6bn in 1H 2014, up 54% on USD 58.1bn in 1H 2013. Facebook’s acquisition of WhatsApp, announced on February 19th, was the largest US. China followed with USD 22.2bn, which is the highest half year volume on record, surpassing the USD 18.1bn announced in 2H 2013. The largest deal in China was the USD3.4bn price paid for a 20% stake in by Tencent Holdings. (Image source: Dealogic)
  4. 4. 4 PE POURS BACK THE MONEY Distributions and returns from private equity outfits to LPs climbed dramatically last year in compari- son to 2012 and 2011, with the returns recorded in Q4 of 2013 being the best in three years, according to Pevara, a database provider. It also said that sum of capital calls and distribu- tions by PE funds were lower in Q1 2014 than the preceding bumper fourth quarter last year. The graphs show that distributions have been exceeding capi- tal calls for more than two years now. The Pevara data is derived from real performance figures drawn from 2,300 GPs, as well as reporting by LPs. Pevara provided insight into exactly what kind of PE funds are doing well at the moment based on two model portfolios that it moni- tors. It is the portfolio heavily biased on North American buyout funds that is outpunching with aver- age returns higher than Pevara’s other model portfolio and average returns that higher than the entire market. Further analysis by Pevara also revealed underperformance of emerg- ing market returns, relative to developed markets and the average expectations of LPs. (Image source: Pevara)
  5. 5. 5 QUOTE OF THE WEEK: INDIA’S TECH GOLD- RUSH “There’s a lot of innovation to come and that can only happen if capital is made available. It’s encourag- ing to see that more capital is being made available to fund innovation at a time when these technology platform shifts are underway and as more young entrepreneurs take the risk of starting companies.” Who said it: Bejul Somaia, Managing Director, Lightspeed Ventures, India In context: With tech giants like Tata Consultancy, Infosys and Wipro driving a USD 100 billion-plus industry based on providing application development and IT infrastructure management, there is rich soil for start-ups that can leverage local know-how to create cloud computing and mobile technology startups, according to Bejul Somaia. He is the managing director of Lightspeed Ventures, one of several US VC outfits active in India. There are other big name and deep pocketed inves- tors active in India, such as Accel Partners, Intel Capital, Charles River and Se- quoia Capital. His optimism is buoyed by several startups, which were mentioned in the article, that are gaining momentum with international customers. There is clearly a new confi- dence in the Indian private equity and venture capital market. Investments increased by about 35% in first half of the year compared to the second half of last year, according to a report by EY that has been widely cited in the Indian press this week. About 60% of the tech deals done in the first half of the year were early stage investments, according to E27 news. (Image source: Lightspeed) Where we found it: Firstpost
  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 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, 2013 and 2014” by Corporate LiveWire.