DIGEST 147

June 27, 2014

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Disrupting Banking European Style

UK Fruit Drinks Bottler Mulls Billion Dollar Buyout

M&A : Contrarian Solar Deal VC Bounces Back, Again

Family Offices Team Up to Outsource Direct Investment

Quote of the Week: Fintech Trendsetter? Look at Sweden

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DISRUPTING BANKING EUROPEAN STYLE

There has been a spate of significantly sized VC funding rounds for European financial technology startups of late, according to TechCrunch, not to mention the fact that leading banks like UBS, Bar-clay’s, HSBC and more, are investing in startups to capture fintech innovation, according to The Tally. TechCrunch said that globally, fintech investment has more than tripled over the past three years, citing Accenture data, adding that fintech has increased at more than four times the rate of overall VC investment. The DealMarket Digest spotted this trend back in Jan 2013 and revisited in Jan 2014. See the UK’s Edge and Disrupting Financial Services. (Image source: Fintech 50 2013)

UK FRUIT DRINKS BOTTLER MULLS BILLION DOLLAR BUYOUT Refresco Gerber, the bottling group whose customers include Innocent, the maker of fruit drink calo-rie bombs, and Sunny D, is rumored to be seeking bids from private equity firms and at the same time considering a stock market flotation, according to Skynews. The GBP 1 billion valuation attributed to the company makes this the buyout of the week. Refresco is PE-backed and is likely to entertain bids from Blackstone and KKR, says the report. It has been reporting impressive top line growth and im-proving margins, while reducing losses.

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M&A: CONTRARIAN SOLAR DEAL

VC BOUNCES BACK, AGAIN

Elon Musk, a high-profile tech entrepreneur, announced acquiring Solveo, a photovoltaic panel manu-facturer, for USD 350 million to vertically integrate into SolarCity, a residential and commercial plant developer, according to a BW article. He’s the largest shareholder of SolarCity and its chairman. It’s a contrarian move and we like to capture those here at DealMarket Digest. Musk is best known as the founder and CEO of Tesla Motors, but he’s also behind SpaceX—a space launch vehicle company, and he co-founded PayPal. Solar panel manufacturing went from boom to bust in the past six or seven years, particularly in the US and Europe. China seems to have won that market for now. Overall investment in renewable energy has been falling since 2011 (see BNEF graphic) M&A in renew-able energy sectors is expected to pick up this year, according to PwC, quoted in this report.

Venture capital fund returns are a rising tide, making gains across most time horizons, according to the latest news from the US-based National Venture Capital Association (NVCA) which uses data as of December 31, 2013 from the Cambridge Associates Venture Capital Index. Exit activity, strategic acqui-sitions and IPOs are buoying the figures. The short term returns are improving, although not outper-forming the standard indexes that Cambridge Associates uses. However, the 10-, 15- and 20-year ven-ture capital performance horizons are looking good compared to the benchmarks, and this has been a trend now for several quarters, according to the report. It is not that long ago that observers and even

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FAMILY OFFICES TEAM UP TO OUT-SOURCE DIRECT INVESTMENT

insiders were saying that the VC model is “dead” or “broken”, and that the glory days were over, but as DealMarket Digest noted earlier this year the speculation was premature. There have been 48 North America-focused venture capital funds that have reached final close in 2014, raising an aggregate USD 9.5bn, according to Preqin. These figures indicate that 2014 is well on its way to match 2013’s fundrais-ing statistics of 139 funds closed with an aggregate amount of USD 21bn raised. (Image source: Venturebeat)

According to Bloomberg, family offices are taking a new approach to direct investing, using a direct investment model that emerged from private equity. Limited partners or institutional investors pool talent, resources, and money to execute and manage direct investments & co-investments to basically outsource such dealmaking. The Wigmore Association was given as a family office example.

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It is a collaboration of seven leading family offices, including HQ Trust (Germany), The Myer Family Company laboration of seven leading family offices, including HQ Trust (Germany), The Myer Family Company (Australia), Northwood Family Office (Canada), Pitcairn (US), Progeny 3 (US), SandAire (UK) and Turim Family Office and Investment Management (Brazil). The benefits of investing together to make investments is that fees are lower and families can better understand the business they invest in, says the report. Individuals from Family Offices can work together to divide the work of due dili-gence by interest and expertise.

QUOTE OF THE WEEK: FINTECH TREND-SETTER? LOOK AT SWEDEN“ Sweden introduced paper money to Europe 353 years ago. Now it’s the first country to get rid of it again. Even homeless people accept credit-card payments.”

Who said it: Dominique Senequier, Founder and President, Ardian

In context: In the latest issue of the Frankfurt School’s magazine, Sonnemann, the entire editorial is devoted to the encroachment into traditional banking busi-ness areas by financial technology startups. Sweden is on the leading edge when it comes to replacing cash with cloud-based services. Pfeil says that only 2.7 percent of the country’s transactions are settled using banknotes and coins. It’s 9.8 percent in the EU, and 7.2 percent in the US. Startups mentioned in the ar-ticle include Klarna (a mobile PayPal competitor), Seamless & Payex (payment by SMS), and iZettle which provides its tiny mobile credit card reader technology to businesses, as well as churches, homeless people, and other organizations. SEB, Swedbank and Nordea, three of the country’s four largest banks, have simply stopped handling cash altogether in the majority of their branches, says the report. Another quote : Swedes don’t use cash to pay for anything costing more than EUR 2.30.

Where we found it: Sonnemann

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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 notewor-thy news items, scoping trends and currents events in the global private eq-uity 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:  Pro-fessional, 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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