DIGEST
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SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 14
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Buyout firms speed up fundraising • Accelerated pace compared to 2010
Alternatives Gain Importance for HNW Investors • Alt Assets become part of the portfolio core
EQT Raises New Fund • Hires former Google dealmaker for Internet buyouts
Family Offices Join US Cleantech Syndicate • More than a billion dollars to invest
Bill Gates Says Cute Cleantech Won’t Solve Energy Woes • It will take major investment and more innovation
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Quote of the Week • Amazon’s Web Service Shaking Up VC investment
July 7, 2011
LBO FUNDS SPEED UP FUNDRAISING It is taking less time to raise a private equity fund this year compared to last year, reports eFinancialNews. The articles says that according to Preqin data, final closes on funds in the second quarter took an average of 15.5 months to get their commitments, compared with the average of 20.4 months taken by funds raised in 2010. The total amount of capital raised has actually decreased, however, compared to the same period last year, with funds raising USD 127.6 billion since January across 264 funds, which is about USD 10 billion less than last year. The paper says that Preqin expects the the first half year total to increase by ten to twenty percent as data comes in. Image source: PREQIN
ALTERNATIVES MOVE TO THE CORE FOR HNW INVESTORS A feature article in Canada’s Advisor magazine reports that alternative asset investing is becoming part of the core of investment portfolios. Equity-based hedge funds and bond-based hedge funds are seen as a natural portion of the fixed income portfolio, reports Advisor. For large institutional investors like the Harvard and Yale endowment funds, alternatives are already the new core. The same shift is occurring among ultra-HNW individuals. Direct holdings and private equity are available but many choose publicly traded securities, including exchange traded funds, exchange traded notes and master limited partnerships. The reason is that despite the costs associated with these structures, the assurance of regulatory oversight and liquidity and access to global opportunities makes the expenses palatable. Infrastructure and public good projects are also part of this trend.
EQT RAISES NEW FUND - HIRES FORMER GOOGLE DEALMAKER Swedish buyout firm EQT Partners has raised EUR3.5 billion for its latest buyout fund and may increase the total amount it is targeting, according to Dow Jones Newswires this week. EQT, which is part-owned by the Wallenberg family, is aiming for a EUR 4.25 billion close for the fund. Elsewhere PE News reports that Anil Hansjee, Google's head of mergers and acquisitions for Europe, the Middle East and Africa has joined EQT Partners. The ex-Google manager will advise EQT on Internet investments, which is a new area for EQT. His position is part-time.
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FAMILY OFFICES TO INVEST USD 1.4 BILLION IN CLEANTECH SYNDICATE Reuters carries a story this week about Cleantech Syndicate, a consortium of 11 families that plan to invest USD 1.4 billion in cleantech companies and projects over the next five years, working with investment groups McNally Capital and Black Coral Capital. The syndicate’s structure enables the families and their own money managers to pool their knowledge and resources in making investment decisions. Black Coral, for example, makes investments on behalf of one family that was not named in the article. McNally and Black Coral will play a key role in bringing deals to the syndicate but other investors will also be working with the group.
BILL GATES: CUTE CLEANTECH WON’T SOLVE ENERGY WOES Considering all the PE and VC money that is flowing into alternative energy ventures, and the news about the Cleantech Syndicate above, an article about a Wired Business Conference in May caught our attention. From the podium, Bill Gates told attendees that solar power, energy efficiency, and other currently available clean-technologies, were “cute,” and not enough to solve the world’s energy and climate crisis. More innovation is needed and nuclear is part of the story, he reportedly said. His statements evoked a response published this week in Clean Edge. Trevor Winnie, senior research analyst, wrote that „cute“ is the wrong adjective for the solar industry, which grew from USD 2.5 billion industry in 2000 to USD 71.2 billion in 2010, according to Clean Energy Trends 2011 report (see graphic below). In the US, more than 100,000 people are employed in the solar industry, which is a workforce similar in size to the US steel industry’s. And wind energy is not a niche sector, either, writes Winnie. In March, wind became Spain’s main source of electricity for the first time – meeting 21 percent of the country’s demand for the month and beating out other sources like nuclear and hydro. Winnies says that technologies that exist today have the ability to make an impact, and deploying them at full scale is key to transitioning to a clean, low-carbon future. Image source: Clean Edge, May 2011 Trends Report
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QUOTE OF THE WEEK Quote of the week: “Jeff Bezos simply deserves to be held up with Steve Jobs as two of the most important people driving innovation in computing today.” Who said it: Mark Suster, a general partner at GRP Partners, in an article entitled, Understanding the changes in the software venture capital industry” on PE Hub. Context: How is Jeff Bezos, founder of online bookstore Amazon, on a par with Steve Jobs whose company’s revolutionary gadgets have been changing computing since the 1980s, portable music since the nineties, and cellphones in this decade? Suster says Bezos’ company’s web services platform enables software startups to reach critical mass with less capital than ever. He says that it is important for LPs and other investors to understand the reduction of capital requirements. Two computing trends, open source and cloud computing (such as the Amazon Web Service) are responsible for the change. Suster says, that Amazon changed his industry. It was that “little online book company”, he says and not Google, Microsoft, IBM, HP, Accenture, Cisco, or Salesforce.com or anybody else. And nine years after they launched AWS, there are still “no credible competitors.” Where we found it: PEHub
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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 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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