DIGEST 152

September 05, 2014

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Booming: Exits Benefit Tech and Buyout Funds

Blockbuster Fundraising by Women-led VC Fund

Defying Dire Forecasts PE Industry Keeps Growing

Record for China Debt Capital Volume

Compuware Goes to PE for USD 2.5 Billion

Quote of the Week: Long Term Capital Targets India

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BOOMING: EXITS BENEFIT TECH AND BUY-OUT FUNDS

In the second quarter Europe saw a brisk level of exit activity with 92 tech exits, up from 54 deals tracked in Q1 2014 by techeu. At the same time, an IPO surge has aided the ability of private equity exit via both trade sales and going public, reports efinancialnews. European exits rose to USD 59.3 billion across 204 deals be-tween January and the end of June this year, up from USD 32.4 billion over 203 deals in the same period last year.

Large deals include Cinven and Carlyle Group’s USD 5.7 billion exit from cable operator Numeri-cable Group to telecommunications company Altice Group in April, CVC Capital Partners’ sold a printing product company for USD3 billion, and Oak Hill Capital Partners’ USD 3 billion exit from jet engine components maker Firth Rixson. These were traditional trade sales, according to efinancialnews.

BLOCKBUSTER FUNDRAISING BY WOMEN-LED VC FUNDOak HC/FT Fund announced this week it raised a USD 500 million led by Ann H. Lamont, Managing Partner, Andrew W. Adams and Patricia F. Kemp. Commenting on the press release long-time industry ob-server Dan Primack said it is the largest women-led fund ever. Since only about 4 percent of senior investing partners in US venture capital are women, according to data from Pitchbook (cited here), makes the fund’s announcement particularly newsworthy.

Oak HC/FT is a new fund but a proven team. The healthcare team includes Nancy Brown, Venture Partner, with healthcare industry experience, and Andrew Adams, a longtime PE investor with Medtech and healthcare experience. On the fintech team is Anil Aggarwal and Johnathan Weiner, the founders of Money20/20. The plan is to buy into US and European companies for growth and expansion. The firm is based in Connecticut.

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DEFYING DIRE FORECASTS PE INDUSTRY KEEPS GROWINGSince the financial crisis of 2008, observers and even insiders have been predicting a massive shake-out in the PE mar- ket, but it seems the notion was wrong. No matter how you look at it PE is big- ger than ever. Just take a look at the latest figures for PE assets under man- agement (AuM) and number of funds in the market. By the end of 2013, PE’s total AuM reached USD 3.7 trn, accord- ing to Preqin. A lot of that capital is so- called “dry powder”. Its analysts write in an August Spotlight that private equity industry’s AUM has risen steadily year on year since 2001 with no indication of a slowdown, as its graphic above illustrates. Cur-rent fundraising activity reinforces expectations that the upward trend will continue with Preqin’s latest fundraising report counting a record-breaking 2200 funds in the market, according to PEHub.

ITS A RECORD FOR CHINA DEBT CAPITAL VOLUMEChina Debt Capital Markets vol-ume stands at USD 426.7bn in 2014 so far this year, up 49% from USD 287.1bn issued in 2013 in the same period. It is the highest YTD total on record, according to dealogic. A vibrant DCM provides liquidity for leveraged buyouts, important for PE players in the region. There were 1,568 deals in 2014 (as of end of Au-gust). Chinese activity accounts for a record 81% of BRIC DCM volume, up 14 percentage points year-on-year, and eight percentage points higher than the previous record of 73% seen in 2009 YTD. Dealogic did not specify PE figures, but it did note that the construction sector dominates, with Real Estate/Property and Transportation behind it in terms of market share.

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COMPUWARE GOES TO PE FOR USD 2.5 BILLIONThis week’s deal of the week is a private equity buyout of publicly traded Compuware, a 40 year old Detroit-based IT company by Thoma Bravo. As announced by the company, the PE investor aims to focus the company on its core business of mainframe and performance enhancement software, and then to divest non-core activities. Thoma Bravo had already been working with the Compuware board on the spinoff of its subsidiary Covisint (and took it to a lucrative IPO). The Compuware valuation is USD 2.5 million. The company came into play as a result of a hedge fund investor who has a track record for instigating value creation through private equity among other techniques.

QUOTE OF THE WEEK: LONG TERM CAPI-TAL TARGETS INDIA“Quite a few pension funds from Western Europe and North America are exploring the opportunity to increase their exposure to India, as there are more brownfield assets available today and the sentiment has improved with more proactive actions being taken by the government.”

Who said it: Vikram S. Gandhi, Founder of Delhi-based VSG Capital Advisors

In context: Investment in India is picking up, not only in the startup sphere, but in other less sexy areas, such as existing ventures in commercial real-estate, roads, power plants, and Tech parks. It’s a segment that has seen about USD 35 billion invested over the past ten decade. These so-called brownfield invest-ments and are becoming popular with long-term capital investors, such as international pension funds and family offices, as well as other institutional investors, according to Gandhi, who is also a senior advisor to the Canada Pen-sion Plan, a leading PE direct investor and fund backer.

Where we found it: Business Standard

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