DealMarket Digest Issue119 - 29th November 2013


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- Billion Dollar Buyout of Chinese Gaming Company
- Performance Ranking Finds New Stars in Endowment Universe
- Exits Full Steam Ahead
- Move over Berlin, Here Comes Helsinki for Tech Startups
- Two Dozen Billion Dollar Startups You’ve Never Heard Of
- Quote of the Week: Bold Asean Entrepreneurs Emerge

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DealMarket Digest Issue119 - 29th November 2013

  1. 1. DIGEST 119 1 Billion Dollar Buyout of Chinese Gaming Company Performance Ranking Finds New Stars in Endowment Universe 2 Exits Full Steam Ahead 3 Move over Berlin, Here Comes Helsinki for Tech Startups Two Dozen Billion Dollar Startups You’ve Never Heard Of 4 Quote of the Week: Bold Asean Entrepreneurs Emerge November 29, 2013
  2. 2. BILLION DOLLAR BUYOUT OF CHINESE GAMING COMPANY This week’s deal of the week is a PE-backed take private of Giant Interactive at USD 2.9 billion, based on news from Reuters. It is not the biggest buyout of the week, the ITW industrial packaging unit at USD 3 billion is the largest, but this one is interesting because it has the company’s chairman, and former CEO, Shi Yuzhu leading a consortium along with Baring Private Equity Asia to take the NY-listed Chinese computer gaming group private. The 51 year old Shi Yuzhu is one of China’s wealthiest selfmade men, according to Forbes. He is an avid gamer himself, according to China Inc, whose skills in marketing and technology development are often mentioned in media profiles. PERFORMANCE RANKING FINDS NEW STARS IN ENDOWMENT UNIVERSE Many eyes in the financial media were on this month’s press release from the American National Association of College and University Business Officers unveiling its preliminary results for endowment performance for the year that ended on June 30. The news was that the Ivy League endowments, which have long had the reputation as smart money in alternative asset management and savvy private equity investors, are not doing as well as some of the mid-sized college endowments. This year the top spots in terms of performance were filled by mid-sized endowments that outperformed the much larger Yale and Harvard endowments, according to an in- 2
  3. 3. depth feature article in Institutional Investor. Two of the best performers were Abilene Christian University in Texas and Spalding University in downtown Louisville, as revealed by NY Times in its own special report on the topic. The NACUBO data comes from 461 US colleges and universities covered in the NACUBO Commonfund Study of Endowments. Preliminary results indicate endowments returned an average of 11.7 percent (net of fees) for the 2013 fiscal year (July 1, 2012 – June 30, 2013). The preliminary FY2013 return is a marked improvement over last year’s 0.3 percent return reported by Study participants for FY2012. (Image Source: Spalding University) EXITS FULL STEAM AHEAD Silicon Valley just had its most lucrative quarter for exits in five years, according to Fast Company. Overall, 2013 is on pace for a record number of VC-backed exits, with 144 year to date. Chinese companies are also taking advantage of the opportunity to go public with four IPOs in New York this year, according to Forbes. The entrepreneurial community expects continued momentum in the IPO market and M&A activity to continue for the rest of 2013, according to the results of a recent poll conducted during KPMG’s SemiAnnual Venture Capital IPO Webcast. “Healthy investor appetite, a robust IPO pipeline, and the desire for PE and VC firms to monetize their investments continue to drive a successful IPO market,” say the KPMG analysts. The results (see graphic) reflect responses from over 900 venture capitalists, investors, entrepreneurs and professional advisors globally. 3
  4. 4. MOVE OVER BERLIN, HERE COMES HELSINKI FOR TECH STARTUPS GO4 Venture HTI Index by Deal value Two years ago your DealMarket editor wrote a feature article for Informila about the hot tech startup scene in Berlin. Now the excitement is moving to Helsinki and Sweden. The recent Slush 2013 venture conference attracted more than 1,00 companies, and 5,000 people, including Rich Wong of Accel Partners, John Lindfors of Digital Sky Technologies, and Francesco de Rubertis of Index Ventures. Forbes writes about the venture capital flowing to the Nordic city, the recent exits, and the tech companies to watch for. Two of the best known startups in the current Finnish scene are Supercell and Rovio. Both are gaming startups with Supercell making over USD 2.4 Million a day and Rovio claiming over EUR 152.2 million in sales, according to Arctic Startups. All this is happening amidst a backdrop of solid investment activity in European VC European market, with the most recent being a huge expansion round for streaming music startup Spotify. It raised a quarter of a billion dollars on a circa USD 4 billion valuation, according to WSJ. The analysts at Go4Venture say that VC investment in Europe is up by 40% this year. The money is targeting Internet investments, representing one-third the number of transactions, and 60% including if SaaS related businesses are included. (Image Source: Go4Venture) TWO DOZEN BILLION DOLLAR STARTUPS YOU’VE NEVER HEARD OF The chances of creating a billion dollar ventures are extremely slim, less than .7% (see Quote of the Week: Odds), and yet there has been a rash of announcements in the last few months about 10 digit valuations for (mainly) tech startups. Many of them are hardly known outside the sectors they are active in, and yet their valuations are high. 4
  5. 5. Here are some of the companies to be found in a report entitled, 24 billion-dollar startups, by Business Review. Most are based in Silicon Valley, a good 70% of them. • • • • • • • • Theranos zulily Good Technology MongoDB Pure Storage Evernote Automattic QUOTE OF THE WEEK - BOLD ASEAN ENTREPRENEURS EMERGE “ In my opinion, if you cannot raise money from professional investors, then don’t start a company. It means there’s something wrong with your business model…VCs all think alike. They’re Excel spreadsheet guys. If they cannot project your returns, then they’re not going to invest.” Who said it: Dr Gabriel Walter, cofounder of LED start up QEOS) In Context: Walter is one of the growing number of technology entrepreneurs from Asean, the South East Asian region that covers 10 nations (including Singapore, Malaysia, Philippines, and Myanamar). Walter’s Malaysia-based optical semiconductor startup, which raised capital from local VC funds, currently holds the record for the world’s fastest lights source for optical telecommunications networking. His comments illustrate that the relationship between VC and entrepreneurs is the same in Malaysia as it is anywhere else in the world. The quote above is from a recent VC conference in Singapore where the audience learned that the top three cities for social media mobile usage are Bangkok, Manila and Jakarta and they are all located in Asean, according to sources quoted in Digital News Asia. It is a regional market on track to become the same size as the United States, and yet region appears to be wide open territory for VCs. Asean only has about 20 active VC funds, while the United States has over 1,000. Even China has around 600 VC funds and India has 400, according to the same source. Walter was one of several entrepreneurs to describe raising venture capital on a panel. Where we found it: The Malay Mail Online 5
  6. 6. 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 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, brings together buyers, sellers, and PE advisors from around the world. PLACE gives access to deals (direct invest ments, funds, and secondaries), investors, and PE service providers. Searching and postingis free. (no commissions). PLACE PRO is the exclusive deal exchange platform made for engaged professionals and companies with a truly unique value added proposition. • DealMarketSTORE offers affordable access to industry-leading thirdparty 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 and 2013” by Corporate LiveWire.