DealMarket Digest Issue76 - 7. December 2012


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- Big Bang Year-End for European VC Investment
- Perception, PR and Italy’s PE Market
- European Buyout Funds Find the Exits
- Cleantech Predictions for 2013
- Two More Highly Valued Internet Startups Secure Funding
- US Online Brokerage Targeted by Buyout Funds
- Quote of the Week: India PE Backslides

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DealMarket Digest Issue76 - 7. December 2012

  1. 1. DIGEST 76SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 76 1 Big Bang Year-End for European VC Investment • Go4Ventures’ Latest Analysis 1 Perception, PR and Italy’s PE Market • Unquote Looks at Italy European Buyout Funds Find the 2 Exits Cleantech Predictions for 2013 2 • Kachan Consulting Looks Ahead Two More Highly Valued Internet 3 Startups Secure Funding 4 US Online Brokerage Targeted by Buyout Funds 4 Quote of the Week: India PE Backslides December 07, 2012
  2. 2. BIG BANG YEAR-END FOR EUROPEANVC INVESTMENTThe volume of European venture financing climbed for the third month in a row, putting the total for2012 ahead of 2011 by a good 25%, according to the latest Go4Venture newsletter. Despite a worryingflat-lining in VC exits, October proved to be a record month for investments, says Go4Venture. Therewere seven deals of greater than EUR 20 million.The current drivers• VCs are investing in later and larger rounds in order to achieve the kind of absolute returns that will enable them to stay relevant in the eyes of increasingly cautious LPs• US-based VCs are providing the financial firepower for large and growth stage VC transactions in Europe, namely Accel Partners, Canaan Partners, Redpoint Ventures, Stripes Group. Many of the newly funded companies were initially funded by European-based funds such as A Plus Finance, Balderton, CM-CIC, Creathor Venture, Eden Ventures, Idinvest and Index Ventures.• Growth equity financing is the hot trend in Europe rather than early stage venturePERCEPTION, PR AND ITALY’S PEMARKETA report on the Italian PE market was published by unquote this week suggesting the region has apublic relations problem. Investors are apparently concerned about investing in Italy, despite thecountrys relatively good long-term track record of returns.1
  3. 3. Much of the uncertainty is perception, argues one local industry insider. Italy tends to get grouped together with southern European neighbors such as Spain or even Greece. But the economies are not comparable, say industry insiders quoted in the report. Its primary surplus is one of the highest in Europe and the country has a “reasonably stable banking system” that has not needed outside help. High public debt is the nation’s real problem. As a result of the public perception, fund managers in Italy have to improve communication, transparency and professionalism, said the report. Perhaps the PE industry should take a look at how appealing the Italian tourism Image source: Tourism in Italy website board makes travelling, winemaking tours, dining, and hiking.EUROPEAN BUYOUT FUNDS FIND THEEXITSEuropean VC may be having trouble finding the exit as reported by Go4Ventures above, but PE fundsare on a roll. This week Charterhouse and CVC started the process of selling their energy-metering firmIsta, in what reporters are saying may be one of the biggest private equity transactions in Germany nextyear with a price tag of up to about EUR 3 billion, according to Reuters. Elsewhere, a single issue of PEIdaily newsletter, reported several mid-market PE exits, including Avista Capital Partners sale of AnthonyInternational for USD 603 million, rumored to be a 2.1x return multiple. Dunedin sold one of its portfoliofirms for a 3x multiple, as while High Road also made an exit, as did EQT sold Gambro. Norwest alsoexited an agricultural processing company for USD 1 billion, according to PEI.CLEANTECH PREDICTIONS FOR 2013December is always the month when consultants, bloggers, and magazine editors publish theirpredictions for the upcoming New Year. This week cleantech consulting firm Kachan & Co. offered itspredictions about cleantech venture investment. It says to expect investment to decline even furtherthan it did. This year’s estimated 680 billion is down by more than 25% from 2010 and 2011 volumes.The consultancy also said there are some long-term risks coming in solar, wind, electric vehicles andelsewhere. At issue is the lack of cost-efficient grid-scale power storage technology which is essential tosmooth out intermittent power production (due to weather, seasons etc.) inherent in wind and solarpower generation.2
  4. 4. Other predictions include a return of the combustion engine due to innovations which will put electric vehicle markets at risk, and a bold forecast for progress in clean coal tech. All in all there are thirteen predictions for cleantech in 2013 from Kachan. Image source: Kachan and Co.TWO MORE HIGHLY VALUED INTERNETSTARTUPS SECURE FUNDING This week two large rounds were announced for Internet platform providers, specifically Evernote and 1stdibs (first dibs). Evernote, which runs a notes-recording and publishing platform, confirmed that it raised USD 70 million in a deal that valued the web-based notes company at a billion dollars, according to TechCrunch. The Series D round for the software company is meant to fund international expansion that will include China, some M&A activity, and the development of business-oriented accounts, as well as better technical and customers support features.Elsewhere, the high-end antiques marketplace 1stdibs raised USD 100 million this year from BenchmarkCapital, Spark Capital, and Index Ventures, according to PE Hub. The investors hope that 1stdibs canincrease profits by improving the underlying technology and business processes. Today the platformconnects buyers and sellers and they transact offline, and handle things like logistics themselves. Thefounders say the plan to add support for logistics and payments and other services for the high endmarket niche that the 11 year old web service company has successfully established.3
  5. 5. US ONLINE BROKERAGE TARGETED BYBUYOUT FUNDSThis week’s deal of the week is the bid to acquire Knight Capital Group. The USD 1.1 billion buyout hasattracted at least two buyers, both are private equity-backed, namely Getco, which is backed byGeneral Atlantic Partners, and Virtu, a rival trading company backed by Silver Lake Partners and nowCerberus Capital Management , according to press reports.QUOTE OF THE WEEK:INDIA PE BACKSLIDES "There are too many India-focused private equity funds. It is like a cottage industry. There will be a shake-up” Who said it: Sameer Sain, co-founder of Everstone Capital, an India-focused private equity firm with assets worth over USD 1.6 billion In Context: Sain was quoted in an article reporting declining LP allocations to Indian PE funds and a fall in the number of private equity investments in the region this year. Activity was down by 25% and India now lags compared to Brazil and Russia. Indian private equity investment deals are valued at USD 3.98 billion in the second part of the year, down from USD 5.2 billion in the first half of the year. Three reasons were given by Sain for the current trend in India - negative headlines on local political and regulatory situation, unimpressive return on investments and a precarious global economy. Where we found it: India Times4
  6. 6. The 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, ZurichDealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 35,000 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 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 2012”by Corporate Newswire.