DealMarket Digest Issue 93 - 2nd May 2013


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- Logistics Company’s Billion Dollar Buyout to Attract PE
- Google and Intel Dominate Corporate VC in 2013
- Record VC Activity in Europe; Latest Figures from Go4Venture
- Why Big Buyouts Lack Luster: Analyst‘s View
- Emerging Markets Dealflow Update
- Quote of the Week: Sellers’ Market

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DealMarket Digest Issue 93 - 2nd May 2013

  1. 1. DIGEST 93SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 93May 2, 201312Logistics Company’s Billion DollarBuyout to Attract PEGoogle and Intel DominateCorporate VC in 2013Record VC Activity in Europe; LatestFigures from Go4VentureWhy Big Buyouts Lack Luster:Analyst‘s ViewEmerging Markets Dealflow UpdateQuote of the Week: Sellers’ Market3
  2. 2. COMPANY’S BILLIONDOLLAR BUYOUT ATTRACT TO PEThis week’s deal of the week looks to be a buyout of Syncreon Logistics for about USD 1 billion, accordingto Bloomberg citing anonymous sources. The report says that PE bidders are the likeliest buyers, thoughlogistics firms including Deutsche Post AG may also take a look. Syncreon handles logitstics for the likes ofGeneral Motors and Dell Inc. It is based in Michigan and is active in 25 countries with about 12,000employees, according to a November press release, quoted in the article.GOOGLE AND INTEL DOMINATECOPORATE VC IN 2013A new report from Global Corporate Venturing says that Inteland Google are currently the most active investors in startupsand technology companies. German-based firms and financialinstitution-backed corporate venturing units were also busy.The first quarter also saw 222 investments in corporateventuring-backed companies worth USD 4 billion in the firstquarter. This compared with 231 investments in the fourthquarter of 2012 worth USD 3.6 billion, and 249 investmentsworth USD 5.2 billion in the first quarter of 2012. On the exitfront: there were 22 exits worth USD 1.4 billion which was adrop compared with 34 exits worth USD 6.3 billion in the fourthquarter of 2012.Image source: Global Corporate VenturingRECORD VC ACTIVITY IN EUROPE,LATEST FIGURES FROM GO4VENTURELate stage investment drove European VC to arecord level this month in terms of numberand value, according to the latest researchfrom Go4Venture.By contrast the M&A market as a whole isfairly lifeless, but there may be a fewglimmers of hope as strategic buyers snap upsuccessful startups.Image source: Go4Venture
  3. 3. trends:• Germany is Europes largest investment destination, and Russia is now third• More US investors targeting European ventures (6 out of 16 large transactions)• M&A exits slow in Europe, part of global trend for technology companiesWHY BIG BUYOUTS LACK LUSTERANALYST‘S VIEWDespite some high-profile mega-buyouts announced this year, the private equity industrys capacity forleveraged buyouts continues to decline. Some reasons for this trend are provided by SoberLook blog.• Difficulty finding the exit - reducing PE fund capacity for redeployment in new funds or in some casesfor recycling in existing funds.• Fundraising slowdown - even established managers have increasingly difficult time raising the sameamounts of capital they did in earlier funds. Large institutional investors have been cautious on privateequity due to liquidity constraints they encountered in 2008 as well as poor return expectations for thewhole sector.• Pensions are shifting from defined benefits to defined contribution pensions - slower growth indefined benefits accounts limits the overall demand for private equity, says SoberLook, makingfundraising for LBO shops enormously challenging in an already competitive environment.• Co-investment trend squeezes mega-fund managers- Major investors are less attracted to mega-fundand if they do invest in large LBO funds, they often demand to directly co-invest with these funds onbuyout deals, says SoberLook. Some years back when deals were too large for a single fund, LBO firmswould call each other to club on transactions. Now they call their investors to present co-investmentopportunities, but those investors have limits to how many deals they can do.
  4. 4. MARKETS DEALFLOWUPDATEInvestment activity in terms of the number of deals done increased in the first quarter of the year but dealsize shrunk, according to the latest figures from the Emerging Market PE Association (EMPEA). There were178 deals completed raising a total of USD 3.2 billion through 31 March, compared to 227 deals and USD4.9 billion in the first quarter of last year. There was also a huge dip in fundraising, according to EMPEA, 25funds raised USD 6.0 billion through 31 March, compared to 53 funds that raised USD 13.4 billion in thefirst quarter of 2012.“Over the last 15 months weve been a net seller," Black said. "Were sellingeverything in our portfolio thats not nailed down, and if it is nailed down,were refinancing it. Its almost biblical. Theres a time to reap and a time tosow. We’re harvesting.“Who said it: Leon Black who heads up PE industry giant Apollo GroupQUOTE OF THE WEEK: SELLERS MARKETIn Context: In a report from the recent Milken Global Conference,Black said this is a great time to be selling companies and equities.He expected credit and equity markets to keep rising as FederalReserve policy holds interest rates very low. The concern aboutovervaluations could be the reason why, despite the availability ofrelatively cheap money, there has been so little M&A activity this year.Where we found it: CNBC
  5. 5. DealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 52,000 recurring users from 154countries, and over 3,000 deals and service providers promoted or listedon the platform.DealMarket is an online platform enabling private equity buyers, sellersand advisors to maximize opportunities around the world – a one-stopshop for Private Equity professionals. Designed by Private Equityprofessionals for Private Equity professionals, the platform is easy to use,cost effective and secure, providing access, choice and control across theinvestment cycle.DealMarket’s offering includes• DealMarketPLACE, an unfiltered view of the global deal and advicemarketplace, where searching is free and postings are the price of acappuccino a day (with no commission).• DealMarketSTORE offers affordable access to industry-leading third-partyinformation 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 sharetheir deal flow more efficiently.DealMarket was voted the “Best Global Private Equity Platform for 2013”by Corporate Newswire.www.DealMarket.comThe Dealmarket Digest empowers members of Dealmarket by providingup-to-date and high-quality content. Each week our in-house editor siftsthrough scores of industry and academic sources to find the mostnoteworthy news items, scoping trends and currents events in the globalprivate equity sector. The links to the sources are provided, as well as aneditorialized abstract that discusses the significance of the articlesselected. It is a free service that embodies the values of the Dealmarketplatform delivers: Professional, Accessible, Transparent, Simple, Efficient,Effective, and Global.To receive the weekly digest by email register on Valerie Thompson, Zurich