Dealmarket Digest-07

DIGEST

07

SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 07

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Banking on the Bubble

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Secondaries Set For Growth to 2012

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Alphaville’s Global Private Equity Series

• Spectacular exit valuations for PE-backed technology companies

• Preqin puts the global secondary market under the microscope • High demand ensures growth

• Professional coverage of Global Emerging Markets

Refinancing LBO Debt • An eight hundred billion dollar mountain to move

Investors turn to the Bottle • Wineries and breweries in the scope of buyout firms

Quote of the Week • Bin Laden and the five hundred euro note

May 12, 2011

BANKING ON THE BUBBLE Three large technology exit valuations this week will deliver hefty returns for PE investors. Yandex, a Russian web search provider filed for a NASDAQ IPO with a valuation upwards of USD 6 billion. Part owners are hedge fund Tiger Global Management and Russian private equity house Baring Vostok, according to AltAssets. LinkedIn, social networking, is also set for an IPO, valuing the company at USD 3.35 billion. It is backed by Bain Capital Ventures, Sequoia Capital, Greylock Partners and Bessemer Ventures, but the VC investors will not be cashing out right away, according to VentureSource blog.

And last but certainly least; this week Microsoft’s acquisition of Skype is a USD 8.5 billion in cash deal.

According to WSJ, private equity investors will make a hefty profit. Venture capital firms Silver Lake Partners, and Andreessen Horowitz , are mentioned, as well as eBay Inc. Canada Pension Plan Investment Board, and JoltID, a firm owned by the founders of Skype.

In a related story, the WSJ profiled Niklas Zennstrom, one of the founders of Skype, highlighting the Swedish entrepreneur-turned-VC’s investments and describing his reserved manner especially when it comes to publicity. True to form, the profile was written without his participation despite him being a founding member of The Wall Street Journal Europe’s Technology Leaders Council.

SECONDARIES SET FOR GROWTH Preqin's latest secondaries report 2011 Preqin Private Equity Secondaries Review is out with detailed information and profiles for buyers, sellers, intermediaries, transactions, funds, performance, fund of funds, and pricing. It concludes after conducting both primary and secondary research that there are more potential buyers and sellers than ever before, and further growth of secondary market deal will take place in the coming two years.

ALPHAVILLE ON GLOBAL PRIVATE EQUITY FT Alphaville will be providing professional coverage of this week’s annual Global Emerging Markets Private Equity Conference in Washington, DC . Follow the series here.

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GIVING LPS THEIR DUE DILIGENCE It is taking longer to raise private equity funds these days and one of the main reasons is that limited partners are taking the time to do a thorough due diligence process. In an article that gives a rare detailed view on what LPs are looking for from the point of view of a fund manager that just closed a USD 3.5 billion fund, Fortune reports that LPs are no longer concerned about getting shut out of a fund if they refuse to commit immediately. This more rigorous form of scrutiny has been ongoing in recent months, and will last at least another year, the article concludes.

REFINANCING LBO DEBT The causes and chances of refinancing a wall of debt associated with private equity transactions undertaken in the years prior to the 2008 financial crisis are discussed at length in a feature article in this month’s PEI. The chances are better than they have been, and this is the case in North America and in Europe. Liquidity is on the increase, but much depends on the location of the target company, its debt to equity ratio, and the financial health of the company seeking loans.

Alternative financing beyond the traditional investment bank lenders may be required, such as high yield bonds, club deals, primary funds, and state-backed business development funds.

QUOTE OF THE WEEK Who: Financial News staff writer “The €500 note found sewn into the clothing of Osama Bin Laden was more likely to have been pragmatic than fanatic.”

Context: A 500 euro note found sewn into the clothing of Osama Bin Laden was “more likely to have been pragmatic than fanatic” suggests Financial News. Last year the UK withdrew sale of the 500 euro note because of evidence linking it to money laundering. It is the highest value denomination in circulation in the world and is apparently used by criminals involved in cash-generating activities, and also by people that need to have cash on hand in case the have to make a quick getaway. It seems.

Ironically, the €500 note was already known in the underworld as a “Bin Laden”, according to the report. The article did not explain how it came to be known by that name.

Where we found it: efinancialnews.com

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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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