DIGEST 155

September 26, 2014

1

2

3

US Racking Up Billion Dollar Buyouts

Smart Money: Elite University Endowments’ With Stellar Returns

Frenzied M&A Favors US Targets

Asian VC on Fire

Insight into Billionaires’ Balance Sheets

Quote of the Week: Huge Market Tipped for High Quality Worldphones4

2www.DealMarket.com/digest

US RACKING UP BILLION DOLLAR BUY-OUTS

There are several large sized buyouts underway around the world this week, but three of the largest are based in the US. One is a carveout of US Drug Store chain Walgreens’ in-home patient treatment services and clinical research unit, and two involve PE attempting to acquire publicly traded compa-nies, namely Tibco, the US-based software company and Shutterfly, photo sharing site. Reuters identi-fies Thoma Bravo and Vista Partners as potential buyers of Tibco, while Silver Lake seems to be lead on the Shutterfly deal, according to Reuters. Both Shutterfly and Tibco are survivors of the first dotcom boom & bust and while their share prices have been like roller coaster rides over the years (see five year charts above), they both have had good gross margins of late. (Image source: Yahoo Finance)

SMART MONEY: ELITE UNIVERSITY EN-DOWMENTS’ WITH STELLAR RETURNS

Improvements in the value of equities had a positive impact on endow-ments managed by elite universities in the US, such as Stanford, Har-vard, and Yale. All have a good proportion of the portfolio in PE funds and investments. Yale outperformed with a 20.2% return, according to Boston Globe, while Harvard and Stanford reported 15.4% and 17%, respectively. Interestingly, Harvard’s alumni magazine compared its endowment’s performance to two other Ivy League endowments and saw the Alma Mater come up short. Part of the reason, according to the article, was some ill-advised “specific” PE investments in the pre-finan-cial crisis period. Despite underperforming its own PE benchmark, the endowment, which is under new top management, aims to boost its ex-posure to PE in the coming year or so (as the chart from Harvard Man-agement shows here). Stanford said it would continue to invest globally, despite relative lagging performance of regions ex-USA.

3www.DealMarket.com/digest

FRENZIED M&A FAVORS US TARGETS

Unfriendly attempts to acquire rivals is at a record high at USD 560.1bn so far in 2014, more than four times the volume of USD 137.9bn in 2013 YTD and well over the previous record set back in 2007, the year before the financial crisis, according to dealogic. Deal size is up too. The US is the most targeted nation for global hostile M&A transactions with Europe in second place. Healthcare is the top sector by volume for hostile M&A transactions, followed by Telecom and Leisure & Recreation. The dealogic figures reported Include pending, completed, withdrawn, rejected deals and deals where the offer expired

ASIAN VC ON FIRE After a few years of slowing investment activ-ity and fundraising, venture capital throughout the Asia, but particularly in more emerging economies such as those in Northeast and South Asia, has increased significantly this year, reports Preqin. VC investment is up to USD 10.5bn, up significantly from USD 6.3bn for the same period in 2013. The money is flowing to expanding markets outside of Greater China, said the research firm.

The level of investment in buyout opportunities across Asia has also grown in 2014, with USS 29.6bn of investment so far in 2014 compared to USD25.7bn in the whole of last year. Preqin

4www.DealMarket.com/digest

INSIGHT INTO BILLIONAIRES’ BALANCE SHEETS

analysts say that the number of deals is slightly down but deal size across the region is a sign of confi-dence for PE in the Asian region. (Image source: Preqin)

Private equity investments in developed markets helped family offices in Europe and the US outper-form their benchmarks last year, according to a global study by Campden Wealth and UBS. The re-port surveyed 204 family offices in 40 countries around the world, including Africa and Latin America. The average size of AuM was USD 890 million. “While performance lagged slightly among developing economy family offices, our research attributed this largely to holdings of developing economy equities and fixed income, which last year were surpassed by the meteoric rise of developed economy equi-ties,” said Philip Higson, Vice Chairman, UBS Global Family Office Group in a statement.

Key findings• Performance: average for family office investment portfolios was 9%• Asset allocations: trend towards equities and away from fixed income • Co-investing: Four-fifths of family offices co-invested in 2013 with an average deal size of USD 119 mn; syndicated deals were smaller at USD 75 mn• Use of service providers: Over half of investment-related expenditures were allocated to external specialist firms. Those with > USD 1 billion under management allocated 35 basis points toward out sourcing, compared to an average of 58 basis points for smaller offices• Philanthropy: One-third of family offices have endowments of at least USD 10 million, many focused on healthcare and education sectors. European FO’s have the largest endowments, representing a figure greater than the rest of the world combined; they don’t necessarily manage the donations themselves. The US and Asia-Pacific are behind Europe but almost tied with each other.

5www.DealMarket.com/digest

NEW TREND: LPS SEEK LOCAL MANAG-ERS IN EMERGING MARKETS; PEIQUOTE OF THE WEEK: SILICON VALLEY UPSWING

“The MENA region presents a huge opportunity for new smartphone devices, with a huge margin of consumers in the mid and affordable smartphone seg-ments. Consumers today want the best feature-rich smartphone experience at desirable price points, without compromising on quality”

Who said it: John Scully

Context: It looks like Silicon Valley startups, the most promising ones, have

Lineups outside Apple stores in the US and Switzerland to buy the latest iPhone were in the news this week but another smartphone brand, Obi Mobile, is getting some buzz for its “affordable” Android smartphone targeted at the rest of the world. The company based in Singapore is launching its lower-priced smartphones in the Middle East this month, hoping for greater than one million units of sales, as it did in India, earlier this year. The new brand will soon enter other emerging market regions, including Latin America. The company is part of legendary marketer John Sculley’s (formerly of PepsiCo and Ap-ple) new venture Inflexionpoint, in which he is a part owner. The plan is to use Obi’s success in India and the Middle East to “create an international brand”, especially targeted at the feature-rich and trendy smartphone segment. The strategy is based on “effective brand building” and marketing for “superior mobile devices”. (Image source: Inflexionpoint)

Where we found it: Trader Arabia

www.DealMarket.com/digest

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

DealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 61,000 recurring users from154 countries, over 3,000 deals & service providers promoted or listed on the platform. DealMarket is an online platform enabling private eq-uity 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 plat-form 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 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 2012, 2013 and 2014” by Corporate LiveWire.