1. DIGEST 90
SEE 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. 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 shows
Image source: Renaissance Capital that the US has raised the most proceeds from IPOs this year.
PE FUNDRAISING TRENDS IN FIRST
QUARTER: 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 private
equity, says the report, with 76% of investors planning to commit either the same amount of capital or
more 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 the
favorite for PE capital. Distressed private equity fundraising decreased significantly in Q1 2013, with eight
funds closed raising an aggregate USD 1.6bn, compared to 13 funds that raised USD14.2bn in Q1 2012.
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3. CHINESE FUND INVESTS IN DETROIT
ELECTRIC CAR COMPANY
Detroit Electric, a US-based 100+ year old
manufacturer of electric vehicles, has
raised capital from Hong Kong private
equity firm, according to Dow Jones LBO
Wires. This is the latest example of how
PE is going global.
The report says Detroit Electric is the first
deal by the Associates, founded by a
former Carlyle Group executive. The fund
aims to make lifestyle and socially
responsible investments. The company's
first commercial model is an upscale one.
It is a two-seater sports car that retails for
USD 135,000. Image source: Detroit Electric
PE INVESTORS TARGET SCANDLINES IN
A $ 1.8 BILLION BUYOUT
Reuters reports that ferry group Scandlines is attracting takeover bids from PE funds. It is a USD 1.8 billion
deal, making it this week’s deal of the week. The company is currently owned by PE investors and those
that may have shown interest in Scandlines from them include Apollo, Axa Private Equity and Nordic
Capital. However, it is not clear if they were among the bidders, said the report.
FAMILY OFFICES LOOK TO INCREASE PE
HOLDINGS, INCLUDING GOING DIRECT
The majority of family offices are convinced of the industry's merits, according to a recent poll conducted
at an industry event in March, according to a report in unquote. The poll was conducted by Investec Family
Office Intelligence. It revealed that nearly 60% are considering investing in private equity. This is inline
with 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 monitor
them. Direct deals are attractive because they allow the family office to retain control over how capital is
allocated, said experts in the report. If the family office can see dealflow and make decisions on a case-by-.
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4. case basis, it creates a choice about whether or not to invest in funds, with management fees and
lockups, or directly in viable in companies. The report says that family offices account for roughly 2% of
investors in private equity, but roughly 4% of private equity secondaries sales
QUOTE OF THE WEEK: CAREER CHOICES
IN PE
“In 2012, financial professionals were much better off, on average, in terms of compensation when
working for a private equity firm than for a venture capital firm… At the principal level, an individual
working in private equity could expect to earn approximately USD 450,000 a year, while his peer in
venture capital would expect, on average, approximately USD 210,000 per year in total
compensation.”
Who said it: Brendan Kennedy, general partner Privateer Holdings
In context: Kennedy was quoted in an article about his recently founded private equity firm that is
targeting investments in the legalized marijuana trade in the US market. He estimates the market for
cannabis to be USD 50 billion. There are huge hurdles to overcome with the legal of cannabis status in the
US, according to the article. Colorado and Washington have legalized possession. Eighteen states allow
medical marijuana even though the federal government still considers it illegal. (Image source: Privateer
Holdings). Kennedy sees lots of potential in the professionalization of the trade in the coming years.
Where we found it: Upstart Business Journal
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5. 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 www.dealmarket.com.
Editor: Valerie Thompson, Zurich
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