Deal market digest issue 103_12July 2013


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Deal market digest issue 103_12July 2013

  1. 1. DIGEST 103SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 103 July 12, 2013 1 2 PE Exits Hit a Two Year Quarterly High PE Targets Finnish Mobile Operator Bouncing Back: MENA Region’s Improving PE Market More Transparency on Family Office Wealth Alternatives Surpass Three Trillion Mark; Towers Watson Quote of the Week 3 4 5
  2. 2. 1 PE TARGETS FINNISH MOBILE OPERATOR PE EXITS HIT A 2-YEAR QUARTERLY HIGH The latest data from Preqin confirm that PE exits climbed in the second quarter of this year, to reach the highest quarterly value since Q2 2011. It was the second strongest quarter for private equity-backed exits since 2006.The aggregate value was USD 92 billion, the highest level since USD 128 billion was achieved in Q2 2011. Dealflow was less spectacular in the second quarter, says Preqin, with 606 deals announced globally totaling USD 62 billion, compared to the last quarter when 678 deals in valued at USD 86 billion were achieved. The value of North American buyouts took a hard drop, decreasing by more than half from the previous quarter as Asian deals hitting their lowest total value since Q3 2008. European is showing signs of a slight recovery measured by aggregate deal value. (Image source: Preqin) This week’s deal of the week is mobile communication sector transaction in Finland. According to Reuters, Apax, Bain Capital, EQT and Providence all submitted bids on Monday for DNA, a Finnish privately owned cellular operator, which could be worth about EUR 1.3 billion. DNA is Finland’s third- largest operator. The bid process should be complete next month.
  3. 3. 2 BOUNCING BACK: MENA REGION’S IMPROVING PE MARKET The private equity industry in the Middle East and North Africa (MENA) region continued recovered in 2012, according to a report in the Saudi Gazette, citing data from MENA Private Equity Association released this week. The mid-market is proving to be attractive for investors, despite a slower pace of fundraising for the region. Total number of investments grew to 91 deals from 84 year on year. Overall fundraising fell to USD 400 million, from USD 900 million the previous year, driven down by smaller fund sizes and global macroeconomic uncertainty, says the report. A sign of optimism is that total value of funds announced in 2012 increased compared to 2011, by USD 200 million. Other findings  Non-cyclical sectors such as oil and gas, healthcare, and education accounted for nearly 60 percent of investments in 2012.  UAE topped the list of the volumes in the GCC. Morocco, Lebanon and Egypt claimed the most deals by volume in 2012 (See graphic); Turkey emerged as a popular destination outside of MENA in 2012.  The number of exits completed during 2011 and 2012 increased compared to 2009 and 2010.  There is about USD 6.4 billion in dry powder available for investment. (Image Source MENA PE Association )
  4. 4. 3 TRANSPARENCY ON FAMILY OFFICES This week some new data about family offices was published by Wealthinsight, a British information provider. Its latest research provides some transparency into the wealth management market. It said that there are 16.8 million high net worth individuals globally, and more than 5,000 family offices managing their money, as of the end of 2012. It is pretty clear from the numbers (see points 4 and 5 below) that despite there being vast sums of wealth globally and a remarkably large number of estimated family offices, most of the world’s richest people are managing their money in other ways than by creating and using a family office support system. Key findings • Worldwide wealth held by individuals amounted to USD 195 trillion. • There were 16.8 million HNWIs in the world and worldwide HNWI wealth stood at USD 66 trillion. • Assets managed by worldwide wealth managers, private banks and family offices totaled USD 19.3 trillion. USD8.3 trillion of this was held in offshore centers. • There were more than 5,000 family offices operating globally, the majority of which were based in the US and Europe. This includes 2,700 single family offices (SFOs) managing approximately USD 1.7 trillion in assets and 2,300 multi-family offices (MFOs) managing USD 800 billion in assets. • Together, the global family office industry managed USD 2.5 trillion, which accounted for 13% of global wealth management assets under management (AuM) (USD19.3 trillion) and 3.7% of global HNWI wealth (US$66 trillion). • There were over 2,900 family offices in the US.
  5. 5. 3 ALTERNATIVE INVESTMENT CRESTS THE THREE TRILLION DOLLAR MARK Total assets managed by the Top 100 alternative investment managers globally reached USD 3.1 trillion in 2012, according to research produced by Towers Watson. Its latest Global Alternatives Survey revealed that real estate has the greatest share of the Top 100 alternative investment managers with 34% and over USD 1.0 trillion, followed by direct private equity fund managers (23% and USD 717bn), direct hedge funds (20% and USD 612bn), private equity funds of funds (PEFoFs) (10% and USD 315bn), funds of hedge funds (FoHFs) (6% and USD 176bn). Over the past ten years that Towers Watson has been doing this survey, it has seen allocations to alternative assets by a wide range of investors steadily increasing. “Not only has the appeal of alternative assets broadened to include insurers and sovereign wealth funds, but the range of alternative assets has also increased beyond the likes of real estate and private equity to include direct hedge funds, infrastructure and commodities,” said the report. The research shows that for the Top 100 managers, North America continues to be the largest destination for alternative capital (46%), with infrastructure as the only exception where more capital is invested in Europe. Overall, 37% of alternative assets are invested in Europe, 10% in Asia Pacific with 7% being investing in the rest of the world. (Image source: Towers Watson)
  6. 6. 4 “There are certainly other people interested in business technology now, and it’s certainly back in fashion. But the magnitude of the opportunity just far outstrips the resources that have been arrayed to fund and develop them. This is the biggest paradigm shift that Gaurav and I think we’ll ever see in our career. Almost every incumbent is threatened.” Who said it: Peter Wagner co-founder of Wing Venture Partners. In Context: Wagner made the above statement in an AllThingsD exclusive interview where he revealed some details about a new Silicon Valley VC fund he’s amassing to make early-stage investments in enterprise-focused companies. Wagner’s co-founder Guarav Garg, formerly of Sequoia, have been using their own capital since 2011to invest in startups like CloudPhysics, Instart Logic, Platfora and Shape Security, FireEye, MobileIron and Nimble Storage. The focus will be on building companies locally – no plans to do international deals - in cloud computing, mobile technology and working with data. Wagner spent 15 years at Accel before starting Wing Venture Partners. Where we found it: AllThingsD QUOTE OF THE WEEK
  7. 7. 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, 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 2013” by Corporate LiveWire. 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