Dealmarket Digest 19

DIGEST

19

SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 19

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PE Funds In UK Bank Buyout • JC Flowers and Virgin Money, backed by Carlyle

Volatility Spurs Fears About M&A Debt • Mega buyouts in the debt pipeline

Buyout Fund Buys PE Social Network • Revolution invests in CapXG

India’s PE Industry Grows • Mega buyouts in the debt pipeline

Indian Dealmaking Climbs in August Financial News’ Top 10 PE Investors • Three out of ten top FoFs backers are Swiss

Quote of the Week • Making fun of VC stereotypes

September 08, 2011

PE FUNDS EYE UK BANK BUYOUT Carlyle Group and JC Flowers are in the running to acquire the UK bank Northern Rock, reports the WSJ. Carlyle is reportedly backing Virgin Money as is The Universities Superannuation Scheme, the U.K.'s pension fund for universities. JC Flowers funds and its investors, including the Chinese state fund, China Investment Corp are said to be in a position to provide cash for the deal. The U.K. government privatized Northern Rock in February 2008 following the near-collapse of the bank in September 2007 from funding problems.

VOLATILITY MIGHT MAKE PE DEBT EXPENSIVE Some of the summer’s largest PE deals might have difficulty raising debt required to complete their deals, reports the Financial Times. PE groups have debt transactions in the pipeline tied to several large sized M&A transactions, such as Apax Partners’ USD 6.3 billion purchase of Kinetic Concepts, a mega buyout and the largest leveraged transaction agreed since the financial crisis. Banks committed themselves to underwriting the financing for these deals earlier in the summer, but a volatile market might mean that they have to higher interest and fees to entice investors, says the FT..

BUYOUT FUND BUYS PE SOCIAL NETWORK Revolution Capital Group, a Los Angeles based private equity firm, announced a majority investment in the Capital Exchange, or CapXG, a social networking site for investment banks, private equity firms, hedge funds, M&A professionals, and lending institutions.

INDIA’S PE INDUSTRY GROWS The PE industry in India is coming of age, reports the Hindu Business newspaper. It says that over the past six years, PE/VC investment has touched nearly USD 50 billion, which is a significant proportion of the total investment into India. In comparison, capital raised through IPOs during this period, was somewhat less, totalling USD 31 billion.

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INDIAN DEALMAKING CLIMBS IN AUGUST As many as 107 transactions were struck last month, or over three deals a day, says VC Circle. Deal activity in India improved for the month of August as compared to July, with the total value of M&A activity moving up. At the same time PE deal value fell due to the absence of large sized transactions.

Total PE & M&A deals stood at USD 3.2 billion across 107 deals in August, as compared to USD 2.34 billion across 93 deals in July.

FINANCIAL NEWS RANKS TOP 10 PE FUND OF FUNDS INVESTORS Three of the top PE firms in Europe are Swiss. These fund of funds investors have the ability to influence and drive the market, according to FN. The top 10 investors are listed here, from one through ten; Partners Group, Pantheon Ventures, AlpInvest Partners, Axa Private Equity, LGT Capital Partners, ATP Private Equity Partners, Altos Associates, Capital Dynamics, SL Capital Partners, and Access Capital Partners.

QUOTE OF THE WEEK

“Seeing my seven year old son pitch his company at a $20 million pre-money valuation to me was tough to take. I thought I would at least get a family discount.”

Who said it: Ryan McIntyre, Partner, Foundry Group Context: The quote was made in a press release about a spoof video clip on YouTube from a small Colorado venture firm called Foundry Group. In the clip McIntyre’s son plays a (very) young entrepreneur pitching his startup company. The video toys with stereotypes about VCs and startups. It’s meant to promote a book, “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist”, written by Brad Feld and Jason Mendelson of Foundry Group and prolific PE industry bloggers. It’s almost as funny as Dealmarket’s spoof clip.

Where we found it : Foundry Group’s website

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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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