DealMarket Digest Issue 83 - 15th February 2013


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• Corporate Venture Grows in Importance
• Cleantech Predictions 2013
• Global Warming in Secondaries Market
• Taking a Little Private Time
• A Ten Billion Pound Telecoms Buyout in the UK?
• Highs and Lows for PE in Emerging Markets
• Quote of the Week: The Wine Industry Indicator

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DealMarket Digest Issue 83 - 15th February 2013

  1. 1. DIGEST 83SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 83 1 Corporate Venturing Grows in  Importance Cleantech Predictions 2013  • BNEF’s Views 2 Global Warming in Secondaries Market  Taking a Little Private Time  • Privcap’s M&A Trends in Technology in 2013 A Ten Billion Pound Telecoms  Buyout in the UK? 3 Highs and Lows for PE in Emerging  Markets  4 Quote of the Week: The Wine  Industry Indicator February 15, 2013
  2. 2. CORPORATE VENTURING GROWS IN IMPORTANCEIn venture capital circles it appears that corporate venture capital investors are gaining power andeffectiveness. We reported on it last year. And the word now is that they are more desirable to includein club deals than ever before and to reduce risk and share capital requirements. Nine of the 10possible IPOs this year identified by news provider CNN have corporate venturing backing, according toGlobal Corporate Venturing. Intel Capital is one of the groups that has emerged as a leader in thissegment. Here are some key datapoints from its latest newsletter, received by DealMarket Digest’seditor.• USD 352 million invested in 150 deals• 64 companies joined the Intel Capital portfolio • 57% of investments made outside North America• 35 companies exited the portfolio: 7 IPOs, 28 M&As• 3,500+ engagements between portfolio companies and Global 2000 customersSince 1991 Intel Capital’s track record• USD 0.8 billion invested in 1,276 companies in 54 countries • 201 IPOs and 317 M&AsCLEANTECH PREDICTIONS 2013Clean energy investment fell 11% in 2012, to USD 268.7 billion, the biggest year‐on‐year setback sinceBloomberg New Energy Finance has been tracking the figures (starting in 2004) but it predicts that themain influences that caused that reverse will unwind during 2013, leading to improved investmentfigures for 2013.BNEF 2013 Predictions of Changes Impacting Clean Energy1. Recovery in Clean Energy Investment2. Shale Gas Price to Change3. Financial Innovation Grows From a Trickle to… a Bigger Trickle4. Europe Focuses On Energy Market Reforms5. Technology, Environment ad Development In The Driving Seat6. China, Africa and Latin America To Drive Solar Growth7. Installations Becalmed but Financing Picks Up for Wind8. Boring Bioenergies Make Money9. Electric Vehicle Sales Show Sparky Acceleration10. Fuel Cells – A Ray of Light After Decades of Smoke1
  3. 3. GLOBAL WARMING IN SECONDARIESMARKETThere is a good article in Institutional Investor this week on secondary deals, describing how the growingmarket has developed and why there are more of such deals taking place these days. Secondarytransactions, the buying and selling of pre‐existing investor commitments to private equity and otheralternative investment funds, have regional variations and trends in pricing which are topics touched onin the article. There a several data points to take away, for example, Pantheon Ventures says that theglobal market is now estimated to be about USD25 billion a year, up from USD2 billion in 2001. TenEuropean funds raised USD11 billion last year to buy secondary stakes. And yet experts quoted in thefeature article say that there are still more deals in the market than there is capital.TAKING A LITTLE PRIVATE TIMEActivists will be competing with PE deal making professionalsmore this year than last years in several categories of thetechnology M&A market, says Jeffrey Liu of Ernst &Youngin an interview on Privcap. He says a lot more about trendsin technology M&A but we know how busy you are sohere are some of the key points that he expressed. Tech M&A Trends in 2013 Image source: Privcap• Unrepatriated cash held abroad by large profitable tech companies will drive foreign acquisitions • Take privates in the mid‐cap with low performing stocks and thin margins• Margin crunch and concentration on the core will lead tech companies of various sizes into  divestment of non‐performing consolidated divisions, improving supply of deals• Take privates targeting cash‐rich mature companies will be a trend. “They just may need a little bit of  private time to get their products, divisions, margins in order,” said Liu.• Need to scale drives consolidation in companies at the top end of the market • Internet hotter than ever with cloud, data and analytics, mobility creating growth. A TEN BILLION POUND TELECOMSBUYOUT IN THE UK ? This week’s deal of the week is the rumor that private equity firms are considering a GBP 10 billion  pound buyout of the UKs biggest mobile operator EE, reports Reuters. 2
  4. 4. EE, formerly known as Everything Everywhere, is the biggest mobile operator in the highly competitiveBritish market with more than 27 million customers. The PE firms mentioned include Apax, KKR, CVC,and Blackstone. India has a wealth of intellectual capital in biotechnology and healthcare to bedeveloped, and its government is aiming to create a framework to develop it, according to The HinduBusiness Line, which could be good news for private equity investors. As a reference, the article pointsout that Singapore’s Tamasek doubled its assets under management by investing in high tech industries.India could emulate such strategy for the kind of investment involved in growing it biotech sector into aUSD 100 billion one by 2025.DELL HIGHS AND LOWS FOR PE INEMERGING MARKETS Image source: beyond bricsPrivate equity in emerging markets has seen its share of global private equity fundraising quadruplefrom 5 per cent in 2003 to 20 per cent last year, reports beyond Brics. In its Chart of the week, FT looksat the highs and lows of private equity across the Brics and sub‐Saharan Africa over the past decade,courtesy of data compiled by the Emerging Markets Private Equity Association. Funds raised to invest inthese regions went from a few hundred million dollars in 2003, to many billions by 2007. China fundshave raised over USD 14 billion in 2008.3
  5. 5. Africa and Russia orientated private equity funds are smaller, but their growth was “still dramatic –from next to nothing to almost two billion in half a decade”, says the report. All fell together post‐2008, but China and Brazil stand out with strong rebounds – in 2011 they both managed to smash pre‐crisis fundraising records. QUOTE OF THE WEEK: GOOGLE’S LARRY PAGE ON 10X “It’s another good‐news, bad‐news year in  fine wine. While we are quite optimistic  about the future prospects in the US wine  business, a combination of events will  continue to hold back robust growth in  2013.” Who said it: Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report the SVB Wine Report.In Context: Wine sales forecasts are often a good indicator of growth and prosperity in an economy,just like low apartment vacancy rates, and rising housing prices indicate a booming economy. It is thekind of information that is useful for private equity investors, particularly those that invest in consumergood sectors and that is why we included it here, not to mention that some of our readers might beinterested in buying wine when prices are low. Silicon Valley Bank, which provides banking services tothe wine industry, released its Annual State of the Wine Industry Report this week to highlight trendsand issues facing the US wine industry. The SVB report says that economic uncertainty, slowingdomestic GDP, lack of economic leadership worldwide, aging [Baby] Boomers, not to mention thequantity of the 2012 harvest which will slow higher growths for wine market participants. It says tolook out for improved consumer demand only after improved hiring and better housing markets figuresappear. It concludes that the first half of 2013 will prove more difficult than most expect, but the backhalf of the year should see improvement.Where we found it: SVB4
  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.