DealMarket Digest Issue 90 - 12th April 2013


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- Global IPO Trend
- PE Fundraising Trends in First Quarter: Preqin
- Chinese Fund Invests in Detroit Electric Car Company
- PE Investors Target Scandlines in a $1.8 billion Buyout
- Family Offices Look To Increase PE Holdings, Including Going Direct
- Quote of the Week: Career Choices in PEices in PE

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DealMarket Digest Issue 90 - 12th April 2013

  1. 1. DIGEST 90SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 90 1 Global IPO Trends PE Fundraising Trends in First Quarter: Preqin 2 Globalizing PE: Chinese Fund Invests in Detroit Electric Car Company PE Investors Target Scandlines in a $1.8 billion Buyout Family Offices Look To Increase PE Holdings, Including Going Direct 3 Quote of the Week: Career Choices in PE April 12, 2013
  2. 2. GLOBAL IPO TRENDS New research from Renaissance Capital, an investment advisory firm, reports an upsurge in IPO filings this past quarter. Twenty companies filed to go public in the past three weeks, eight of which published their prospectuses the week ending April 5, according to an article in CFO. The numbers reflect an increase in IPO activity, at least in the pipeline. It was the highest number of prospectus filings since the week of March 19, 2012. Data from PwC, cited in the CFO article confirms the trend. As has been said elsewhere in earlier editions of this newsletter, there is pent-up demand and supply for IPOs. According to Renaissance Capital external pressures and economic crisis had “virtually froze” the IPO market from the between 2009 and 2011. The risks in banking and finance have not been fully resolved but Image source: Pension Pulse Blog they are largely known, which is having a positive effect on the IPO sentiment, it said. The heat map at the top of the infographic showsImage source: Renaissance Capital that the US has raised the most proceeds from IPOs this year.PE FUNDRAISING TRENDS IN FIRSTQUARTER: PREQIN More PE funds are on the fundraising trail than the same period last year. As of April 2013, there are 1,914 private equity funds on the road aiming to raise USD 797 billion, an increase compared to January 2012 when 1,845 funds were seeking USD 758 billion, Image source: Prequin according to the latest research from Preqin. The outlook for continued robust fundraising looks good for the rest of the year, according to the report. The majority of institutional investors still remain positive towards privateequity, says the report, with 76% of investors planning to commit either the same amount of capital ormore to private equity funds in 2013 than 2012. A further 10% expect to return to the asset class in 2013,having made no new commitments in 2012, says Preqin. Buyout funds continue to dominate as thefavorite for PE capital. Distressed private equity fundraising decreased significantly in Q1 2013, with eightfunds closed raising an aggregate USD 1.6bn, compared to 13 funds that raised USD14.2bn in Q1 2012.1
  3. 3. CHINESE FUND INVESTS IN DETROITELECTRIC CAR COMPANYDetroit Electric, a US-based 100+ year oldmanufacturer of electric vehicles, hasraised capital from Hong Kong privateequity firm, according to Dow Jones LBOWires. This is the latest example of howPE is going global.The report says Detroit Electric is the firstdeal by the Associates, founded by aformer Carlyle Group executive. The fundaims to make lifestyle and sociallyresponsible investments. The companysfirst commercial model is an upscale one.It is a two-seater sports car that retails forUSD 135,000. Image source: Detroit ElectricPE INVESTORS TARGET SCANDLINES INA $ 1.8 BILLION BUYOUTReuters reports that ferry group Scandlines is attracting takeover bids from PE funds. It is a USD 1.8 billiondeal, making it this week’s deal of the week. The company is currently owned by PE investors and thosethat may have shown interest in Scandlines from them include Apollo, Axa Private Equity and NordicCapital. However, it is not clear if they were among the bidders, said the report.FAMILY OFFICES LOOK TO INCREASE PEHOLDINGS, INCLUDING GOING DIRECTThe majority of family offices are convinced of the industrys merits, according to a recent poll conductedat an industry event in March, according to a report in unquote. The poll was conducted by Investec FamilyOffice Intelligence. It revealed that nearly 60% are considering investing in private equity. This is inlinewith another survey we covered earlier in the DealMarket Digest.The unquote survey found that only 54% plan to invest through a fund manager and the majority 59.5%has plans to back businesses directly. Not all family offices are set up for direct deals, says the report,highlighting the need for a variety of skills to do the due diligence, make the investments and monitorthem. Direct deals are attractive because they allow the family office to retain control over how capital isallocated, said experts in the report. If the family office can see dealflow and make decisions on a case-by-.2
  4. 4. case basis, it creates a choice about whether or not to invest in funds, with management fees andlockups, or directly in viable in companies. The report says that family offices account for roughly 2% ofinvestors in private equity, but roughly 4% of private equity secondaries salesQUOTE OF THE WEEK: CAREER CHOICESIN PE“In 2012, financial professionals were much better off, on average, in terms of compensation whenworking for a private equity firm than for a venture capital firm… At the principal level, an individualworking in private equity could expect to earn approximately USD 450,000 a year, while his peer inventure capital would expect, on average, approximately USD 210,000 per year in totalcompensation.”Who said it: Brendan Kennedy, general partner Privateer HoldingsIn context: Kennedy was quoted in an article about his recently founded private equity firm that istargeting investments in the legalized marijuana trade in the US market. He estimates the market forcannabis to be USD 50 billion. There are huge hurdles to overcome with the legal of cannabis status in theUS, according to the article. Colorado and Washington have legalized possession. Eighteen states allowmedical marijuana even though the federal government still considers it illegal. (Image source: PrivateerHoldings). Kennedy sees lots of potential in the professionalization of the trade in the coming years.Where we found it: Upstart Business Journal3
  5. 5. 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 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 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 Newswire.