DealMarket Digest_Issue 78

DIGEST

78

SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 78

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Five Trends in PE for France Top Tech Predictions for Businesses Preqin Says Buyouts Bounced Back in 2012

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The UK’s Edge in Financial Technology Innovation

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What’s Better than Consumer Internet for VCs? Quote of the Week: Fabrice Grinda Streamlined Spending

January 11, 2013

FIVE TRENDS IN PE FOR FRANCE In a report that singled out the emerging team at AXA Private Equity, its expansion and establishment in the secondary sector, unquote reviewed the very quiet year of PE activity in France. The five trends and events s of the year in PE in France from unquote are listed below.

Zephyr figures for M&A activity in France for 2012 also show a decline of activity by volume, the lowest in three years. (See Zephyr Graphic) Unquote’s View on France Election year: Like the US, France had an election year with a new government in place. The result of more left wing win will not be “as devastating as expected”, but the drawn-out uncertainty and the various U-turns on several key issues encouraged PE players to keep activity to a minimum.

Lacklustre dealflow: Dealflow fell by nearly a third compared to the previous year to 208 deals, and overall value took an even steeper dip to EUR 8.1 billion, less than half the previous year's total. France came in third in Europe for overall dealflow.

Image source: Zephyr

Tough fundraising: For the fourth year in a row, French GPs invested more than they raised, and fundraising figures for the whole of 2012 are likely to settle at a historically low level.

Few large buyouts: There were no deals greater than EUR 1 billon mark but a couple of large-cap deals could be reported: Lion Capital acquired eyewear retailer Alain Afflelou from Bridgepoint, Apax France and Altamir Amboise in a deal believed to be valued at nearly EUR 800 million, and AXA Private Equity did a EUR 850 billion MBO of Fives Group.

AXA Private Equity goes large: closed a good number of mid-market deals and raised two funds.

According to unquote data, the French GP completed 17 transactions worth a combined EUR 2.4 billion across Europe.

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TOP TECH PREDICTIONS FOR BUSINESSES In the last issue we provided some summaries of predictions for 2013 and in this issue we continue with the top Tech predictions that affect IT departments, from Ruth Cheesley, founder of Virya.

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Image source: Virya Technologies website

Cloud-Based Phone Calls Further Enhancements to the Shopping Experience SEO Gets Personal Social Signals Take Priority (affecting search engine rankings) Open Source is King Responsive Website Design (frameworks such as the Twitter Bootstrap and Foundation 3 will be adopted as best practice for website design).

7. Rising Apprenticeships

PREQIN SAYS BUYOUTS BOUNCED BACK IN 2012

Preqin’s latest report says that North American contributed strongly to a global dealflow transaction volume that reached a post-Lehman high in 2012. Globally, Preqin recorded 2,866 buyout deals, valued at USD 254.6 billion. It is close to the 2011 level of activity, and a 14 percent increase in the number of buyout deals in 2010. According to Anna Strumillo, Manager Buyout and Venture Capital Deals at Preqin, North America witnessed a strong 2012, recording a post-2008 high for the year of 1,590 buyout deals valued at an aggregate USD 152.3bn. She also said that European deal levels remained low in 2012. However, the USD 24.5bn of European deals announced during Q4 2012 is a 76 percent increase from the previous quarter, an encouraging indicator for 2013.

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THE UK’S EDGE IN FINANCIAL TECHNOLOGY INNOVATION The UK has got to be one of the leading locations for banking and finance innovation. It is not our aim today to theorize why it is more entrepreneurially innovative in this sector than say Switzerland, for example, rather here’s a summary of some recent financings. In the first week of the New Year, iwoca raised GBP 2 million from Beyond Digital for its online merchant financing startup, according to PE Hub. Other startups that are attracting investors include Zopa, Funding Circle and Crowdcube, according to BBC Online.

WHAT’S BETTER THAN CONSUMER INTERNET FOR VCS? PE Hub has a feature on the less spectacular side of technology investment, enterprise software and networking. The article points out that consumer Internet companies capture the headlines and attention but that the exits have been strong, with enterprise representing 70 percent of venture exits in the last two years, and a value of USD 500 million. These exits have “also outperformed” consumer Internet ventures post-IPO. “Of the top 10 largest IPOs in the last 2 years, all the enterprise companies in that bracket are trading above their offering prices,” reported PE Hub. The article concludes that despite the reduction in spending among businesses, growth is predicted for enterprise sector innovators driven by the increasing expansion of computing power and the growth of big data.

QUOTE OF THE WEEK: FABRICE GRINDA STREAMLINED SPENDING “Very few successful entrepreneurs have the courage to start over… Once you have a site with 150 million unique visitors per month and a fully-fledged team which can do almost anything, starting without either is daunting. The same applies to material comfort”.

Image source: Fabrice Grinda’s Musings blog

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Who said it: Fabrice Grinda, Internet entrepreneur and angel investor, co-founder OLX, a free local classified site. He was an important player in two other successful tech ventures prior OLX. In Context: In an article entitled “The Very Big Downgrade”, successful entrepreneur, Fabrice Grinda, describes how he reduced his monthly expenses to a tenth of his previous spending pattern. According to his report, he shed a house in Bedford, an apartment in New York and sold his McLaren. He gave 75 percent of his non-financial material possessions to charity and most of the rest to his friends and family. He will keep spending down by staying in hotels in London, Paris or New York. Even with that expense, he said, his monthly expenses would be more than a fifth of what they most recently were. In the meantime, “unburdened by the trappings of success and traditional societal constraints”, Grinda stepped down from his post at OLX and plans to start a new venture, and perhaps start VC fund.

Where we found it: Entrepreneur Country

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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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