DealMarket Digest_Issue 43

DIGEST

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SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 43

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BCG Analyzes Global PE Market and Size 2012

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Outlook for US IPOs Depends on Upcoming Social Media Floatations

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• New study by KCSA

Stockholm Rising as a European Tech Hub Mega Deals Drive Increase in PE Dealmaking in February •

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Zephyr report

Vista Partners in $2billion Buyout of UK Financial Software Co. Quote of the Week: Powerful Women

March 23, 2012

BCG ANALYZES GLOBAL PE MARKET AND SIZE 2012 Dealmarket commissioned BCG to research and analyze the shape and size of the PE and M&A global markets, including data about family offices and corporate acquirers, as well as fundraising and dealmaking trends.* The report has as an extensive section on PE transactions. One of the more interesting set of figures is a comparison of deals done to deals abandoned. The authors point out that the number of abandoned transactions is “considerably” large. Over past five years, each year about fifty percent of deals are abandoned, due to lack of financing or failure to acquire. (See graphic). BCG used data from VentureXpert and Zephyr to arrive at the figures.

Key Findings • PE transactions reached an all-time high in 2007, currently rebounding from low in 2009 • Majority of deals made in VC segment • Buyouts are leading by deal volume • 76% of all PE transactions conducted from 2007 to 2011 were smaller than USD 200m, representing 9% of total deal volume • Deal activity and volume clearly dominated by developed markets: Europe most volatile • PE fundraising still significantly below all-time high in 2007 at -52% • USD 255 billion in funds raised in 2011 • Family offices and Endowments with significant "outstanding dry powder" USD 500 billion

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* Disclosure: the author of this basis works on behalf of Dealmarket to write, select, and edit the Dealmarket weekly News Digest. Dealmarket and its management do not influence the content selection or contents of the newsletter.

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OUTLOOK FOR US IPOS DEPENDS ON UPCOMING SOCIAL MEDIA FLOATATIONS Legal experts in the US are predicting another turbulent year for the US IPO market, but the prospects are good for PE backed companies. PE-backed companies are expected to dominate the US-based IPO landscape in 2012, according to 84 percent of attorneys surveyed by KCSA. "The pipeline of private equity backed IPOs remains robust and we anticipate seeing continued strong activity from this group of issuers as sponsors look for exit opportunities for their investments," noted Craig Marcus, Partner, Ropes & Gray LLP.

The report also said that a European economic recovery would contribute positively to the recovery of the IPO market in the US.

Key survey results • 92 percent of securities attorneys think the IPO market in 2012 will be relatively flat when compared with 2011 • 93 percent of the lawyers surveyed believe the most anticipated IPO in 2012 will be Facebook.

• Although many of the attorneys expressed concerns that the IPO market may be experiencing a social media bubble, 72 percent said that Groupon was last year’s most anticipated IPOs. • 84 percent say there is strong demand for foreign companies to access U.S. capital markets and list on the major U.S. exchanges.

• There was a 22 percent drop off in positive sentiment toward Chinese-based company issuances, due to concerns about corporate governance. But 78% of respondents named China as a continuing strong driver of U.S.-based IPO issuance in 2012 versus 100 percent in the 2011 survey.

• Attorneys who were surveyed are seeing some novel deal structures to get offerings into the market including: UP-C (14%); UP-REIT (14%); Dual class share offerings (32%).

KCSA Strategic Communications, a leading integrated communications firm specializing in financial public relations, investor relations, social media and creative marketing service, conducted an indepth survey of 50 securities attorneys whose firms advised on 70 percent of the initial public offerings listed on major U.S. exchanges during 2011.

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STOCKHOLM RISING AS A EUROPEAN TECH HUB The FT has a story pitching Stockholm as Europe’s new tech hub to rival Berlin, Paris and London. The Swedish capital does not have the kind of money flowing that London does, but US venture capital firms have invested nearly USD 200m in Swedish tech companies in the last year and USD 308m in 2010, more than twice the average amount invested between 2002 and 2008, and more than rival hubs in France and Germany, according to data from Thomson Reuters, says the FT. Talent is Stockholm’s key commodity, like Berlin (your Dealmarket Digest editor recently wrote an article for Informilo on Berlin as a tech hub). The article lists several highly valued startups, citing a billion dollar valuation for Spotify, the music challenger to iTune, also Klarna, with an USD 800 million valuation for its online payments service. Klarna is backed by General Atlantic of the US and DST Global, the Russian backer of Facebook, Twitter and Groupon, and has a valuation of close to USD 800 million. The recent exits include Qliktech, which listed on Nasdaq with a 30 per cent rise in share price since IPO and Microsoft’s acquisition of Skype for USD 8.5bn last year.

MEGA DEALS DRIVE INCREASE IN PE DEALMAKING IN FEBRUARY Private equity dealmaking saw a massive increase this month, from USD 8.5 billion to USD 20.6 billion, the highest it has been since October 2011, reports Zephyr. The figure is also up on the year-ago period, when value stood at USD 19.9 billion. Interestingly, writes Zephyr, the volume of deals was actually down on the previous month, falling from 291 to 235, and indeed was the lowest it has been for the last two years. This suggests that although fewer deals were done, the value of individual transactions has increased.

A case in point, four deals with a value of >USD 1billion took place, the highest of these being the USD 7.1 billion buyout of US oil and gas business EP Energy by Access Industries.

VISTA PARTNERS IN $2BILLION BUYOUT OF UK FINANCIAL SOFTWARE CO. It was widely reported this week that the UK based software company, Misys, is to be acquired by Vista Partners for USD 2 billion. The deal will combine Misys with Kondor, a vendor of trade and risk management software firm that was cleaved out of Thomson Reuters, reports Reuters. If the transaction goes through Vista will have won out over CVC, another buyout shop, and the Swiss software company Temenos. This is the second USD 2 billion dollar software deal involving private equity this month. The other was the take-private of Quest, also a financial software company, as reported by Bloomberg, among others.

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QUOTE OF THE WEEK: POWERFUL WOMEN “We want women who want to be on the Most Powerful Women's list”.

Image source: Levo League

Who said it: Amanda Pouchot co-founder of women’s networking and social job search startup Levo League.

In Context: Pouchot was quoted in a report on the successful seed financing of her startup company Levo League in the US. Investors include several high profile businesswomen as angel investors, and endorsers. In the quote, Pouchot is referring to the Fortune “Most Powerful Women” rankings in the quote. The Levo League is a kind of LinkedIn for professional women. Its backers are Facebook's Sheryl Sandberg, Susan Lyne, the chairman of discount designer fashion website Gilt Group and creator of Desperate Housewives, and serial entrepreneur Gina Bianchini who ran Ning, and is now an executive in residence at Andreesen, Horowitz and founder of MyBell, a social media startup.

Their site invites women to “connect with women like you. Learn from the most powerful women in their fields. Land your dream job.”

Co-founder Caroline Ghosn, whose father is the Carlos Ghosn who heads up Nissan/Renault and Pouchot worked with Pouchot on PYP (Pretty Young Professionals), an earlier startup with similar goals to Levo, but "infighting led to a split from two other partners", says the article. Ghosn and Pouchot have convinced 100 companies, including AOL (AOL), Pfizer, and Teach for America, to post job openings on their site. The companies pay a fee, but job-seekers and other visitors use Levo for free.

Where we found it: CNN

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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.

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Editor: Valerie Thompson, Zurich

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