AltAssets Private Equity News

M&A activity in IT sector plummets in first quarter

Sergei Balashov — Fri, 17 May 2013 16:27:32 +0000

M&A activity in the IT sector declined significantly in the first quarter of the year with the total value of deals more than halving, according to a recent study.

The value of merger and acquisition deals slumped to $17.4bn from $45.3bn in the previous three months, while the volume fell two per cent to 802 deals, a report from investment bank Berkery Noyes showed.

There were only two deals worth more than $1bn during the period compared to four in the last quarter of 2012.

The average revenue multiple of the acquisitions dropped to 1.6 times from 1.8 times in the previous quarter and the median EBITDA multiple decreased to 8.3 times from 9.5 times.

The largest acquisition was the $1.5bn buyout of corporate information database Cerved Group by private equity firm CVC Capital Partners.

Permira made two deals during the quarter by acquiring customer experience management specialist Angel.com and speech and text analytics company UTOPY.

Both deals were add-on acquisitions for its portfolio company Genesys Telecommunications Laboratories.

The $100m acquisition of Genesys represented a multiple of 3.8 times to its revenues.

The largest deal in the health and pharmaceutics IT segment was the acquisition of clinical trial management software company BioClinica $105m by JLL Partners.

Cross Equity Partners bags 9.3x return from Schwab exit

Sergei Balashov — Fri, 17 May 2013 16:14:23 +0000

Swiss private equity firm Cross Equity Partners has exited its stake in shock absorption systems maker Schwab for a return of 9.3 times by selling it to Paris-based Faiveley Transport Group.

The firm also said that the investment produced an impressive IRR of 70 per cent.

The company produces and markets buffers and couplers for goods and passenger rolling stock.

Its customers include Swiss Federal Railways, Deutsche Bahn, Australia’s ÖBB and the National Railway Company of Belgium.

Since the acquisition by Cross in January 2009, Schwab has achieved a significant increase in turnover – which reached €98m last year – and profitability, the firm said in a statement.

Cross Equity Partners managing partners Michael Petersen said, “As a leading pan-European business, Schwab’s logical next step is to take its successful products into new and emerging markets in the global arena, such as China, Brazil, India and Russia, with Faiveley as a strong partner.”

Idinvest’s Electranova Capital invests in Forsee Power Solutions

Mike Didymus — Fri, 17 May 2013 15:58:59 +0000

Electranova Capital, a private equity fund managed by Idinvest Partners in association with French energy supplier EDF, has invested in battery specialist Forsee Power Solutions.

Founded in 2011 by Christophe Gurtner and René de Gaillande, Forsee Power provides storage solutions for renewable energy projects and electric vehicles.

Christophe Gurtner, CEO of Forsee Power Solutions, said, “The investment by Idinvest Partners via Electranova Capital in conjunction with EDF is a recognition of Forsee’s expertise and vision in developing these new markets.

“More importantly, it will enable us to substantially boost our resources, strengthen our teams, and build business synergies, while also combining our forces in order to bolster the growth potential we offer our customers.”

Forsee is already working with EDF on a number of R&D and sustainable transport projects.

Nicolas Chaudron, partner at Idinvest Partners, added, “The energy storage sector has been central to our investment strategy for a long time. We are delighted that Forsee Power Solutions has chosen us to provide it with development support.

“In our opinion, this company has rapidly set itself apart with a high quality leadership team, strong growth, and the desire to become an international market player.

“What is more, our relationship with EDF will enable Forsee to speed up its development by quickly building strong technical and commercial ties with one of the energy sector’s world leaders.”

Venture-backed PTC Therapeutics files for new IPO after six-year hiatus

Mike Didymus — Fri, 17 May 2013 15:32:11 +0000

Venture capital-backed biopharmaceutical business PTC Therapeutics has filed to raise $85m in an IPO six years after scrapping a previous listing.

The business, which boasts investors including Credit Suisse First Boston Equity Partners, Vulcan Ventures and Brookside Capital Partners, has hired JP Morgan and Credit Suisse as joint bookrunners.

PTC filed to go public in March 2006, before withdrawing the offer the following year after seeing an uptick in its financial position, CEO Stuart Peltz said at the time.

The new filing does not necessarily mean the firm will raise $85m, but it must provide a figure for the purpose of calculating fees associated with the listing.

A prospectus filed with the US Securities and Exchange Commission showed PTC plans to list on the Nasdaq Global Market exchange under the PTCT ticker.

Credit Suisse currently owns14.8 per cent of the company according to the filing, with HBM Healthcare Investments controlling 12 per cent and Vulcan nine per cent.

Celgene European Investment Company, Delphi Ventures and Section Six Partners are all listed as stockholders controlling at least five per cent of the business.

The company focuses on developing orally-administered drugs which target post-transcriptional control processes in DNA.

Its lead product treats patients with genetic disorders arising from a type of mutation known as a ‘nonsense mutation’, such as Duchenne muscular dystrophy and cystic fibrosis.

The prospectus warns potential investors that the company had incurred “significant losses” since inception, with an accumulated deficit of more than $290m at the end of March 2013.

It said it expected to continue to incur significant expenses and increase operating losses for the next few years due to initiating and completing clinical trials for its lead product.

In the same space, biopharmaceutical research group Quintiles raised $947m in its IPO on the New York Stock Exchange earlier this month.

The clinical trials company is backed by private equity firms Bain Capital and TPG Capital, which invested in January 2008, taking a stake from One Equity Partners.

They joined an investor group consisting of sovereign wealth fund Temasek and Quintiles founder and CEO Dennis Gillings. The deal valued the company at around $3.8bn.

The UK’s 3i Group is also a minority investor, holding a seven per cent stake.

Banking, Belgium lead private equity activity in April

Benjamin Chambers — Fri, 17 May 2013 15:18:52 +0000

Banking ranked as one of the most valuable sectors in terms of private equity investment in April, with $8.832bn invested, compared to $174m the previous month, according to data compiled by Zephyr and Bureau van Dijk exclusively for AltAssets.

Transport also had a good result with investment leaping from $ 824m in March to $5.874m.

Indeed, private equity investment in most sectors rose in April, the only notable exceptions being machinery, equipment, furniture and recycling, which went from having one of its best results in March with $5.425bn recorded, to $944m. Utilities also fell, from $2.869bn the previous month to $77m.

While it had a relatively poor result by value, the machinery, equipment, furniture and recycling sector did quite well in terms of volume with 40 transactions, marginally down on 41 in March.

From a regional perspective, Belgium took top spot as the most valuable target country for private equity investment during April with $ 8.746bn recorded, thanks almost entirely to the Royal Park Investments transaction, and in monetary terms was the country’s best result of the last 12 months.

The US ranked second with USD 7,526 million, a slight dip from March’s $7.896bn, and Germany was placed third with $4.787 bn, again, the country’s highest result of the last 12 months.

Elderly residence provider stockholders back TPG Capital take-private

Mike Didymus — Fri, 17 May 2013 15:01:53 +0000

US buyout house TPG Capital has moved a step closer to a $278m takeover for elderly residence provider Assisted Living Concepts after the majority of the company’s stockholders backed the deal.

More than 80 per cent of the voting power of ALC’s common stock backed the sale to the buyout house for $12 per class A share and $12.90 for each class B share.

The deal had previously been unanimously approved by the company’s board of directors.

ALC and its subsidiaries operate 210 senior living residences comprising more than 9,300 resident units across 20 states.

The deal is expected to be completed in the summer.

Earlier this year fellow private equity giant The Carlyle Group acquired Monarch Place Piedmont, a 149-unit assisted living community in Oakland, California.

Equity for the investment came from the firm’s dedicated $2.25bn real estate investment fund, Carlyle Realty Partners VI.

Natixis extends PE assets to more than €5bn with Euro Private Equity buy

Mike Didymus — Fri, 17 May 2013 14:48:23 +0000

French investment bank Natixis has expanded its private equity business by picking up a controlling stake in Switzerland-based fund of funds Euro Private Equity.

EPE has about €1bn under management, bringing Natixis’ private equity assets to more than €5bn through the 51 per cent stake purchase.

The firm runs its private equity operations through teams including Seventure Partners, which handles venture capital, growth capital arm Naxicap Partners and fund of funds Eagle Asia Partners.

Earlier this year Naxicap Partners was said to be eyeing a take-private deal for NYSE Euronext Paris-listed Thermocompact in a deal that would value the metallic surface coating specialist at close to €50m.

Naxicap first invested in Thermocompact in 1995 and subsequently sold its shares in the business to newco Thermo Technologies, in which Naxicap, Parisian private equity firm EPF Partners and the founding families own 69, 22 and nine per cent stakes respectively.

Charles River Ventures invests $15m in smartwatch maker Pebble

Sergei Balashov — Fri, 17 May 2013 13:01:19 +0000

Charles River Ventures has invested $15m in Series A funding in Pebble, which makes e-paper smart watch that connects to iPhone and Android smartphones.

The funding will help the company expand its engineering team and increase production to meet customer demand.

Pebble has recently collected more than $10m via Kickstarter, breaking the crown funding website’s fundraising record.

Pebble founder Eric Migicovsky said, “The tremendous response we received from Kickstarter backers validated our belief in the value of a smart watch as a wearable computer, but also in the value an open platform brings to truly personalizing the watch to their daily activities.

“This new investment will help us build out the Pebble development ecosystem and deliver on Pebble’s extraordinary potential.”

Back in February 2012 Charles River closed its 15th fund on $375m, far ahead of its $325m target.

Earlier this year the firm participated in a $30m Series B round for DataGravity.

Bankas Snoras sells leasing unit to LHV Pank, RAZFin for $27.5m

Sergei Balashov — Fri, 17 May 2013 12:39:10 +0000

Bankrupt Lithuanian bank Bankas Snoras has agreed to sell its leading unit Snoro Lizingas to Estonian bank LHV Pank and Lithuanian investment firm RAZFin.

Under the terms of the sale, which has been approved by the bank’s creditors committee, LHV and RAZFin will pay LTL74m ($27.5m).

The deal is expected to be completed before the end of July.

Bankruptcy administration Neil Cooper said, “Signing the share purchase agreement is a very important step towards the completion of the sale process and we have welcomed the buyers’ reliability and transparency during this process to date.

“This sale represents a good outcome for the creditors of Bankas Snoras.”

RAZFin is controlled by the Rakauskai family and Vilnius-based private equity and investment banking firm Zabolis Partners.

Zabolis currently has assets of €200m, most of which is in real estate investments. The firm plans to allocate a further €50m primarily in retail, food and financial companies over the next two years.

Institutional investors grow focus on risk management

Benjamin Chambers — Fri, 17 May 2013 12:11:01 +0000

Pronounced correlation effects and increases in allocation to real assets should prompt institutional investors to depart from risks models that are based on historic returns in the “new normal” investment environment.

Organisational changes will also be driven by consensus among institutional investors that risk monitoring and management should be independent of the investment function, according to the latest bfinance Risk Management Survey.

The survey polled institutional in Europe, the US and Middle East and found that the focus on risk management and mitigation has increased exponentially since the beginning of the financial crisis and continues to grow with more than two thirds (69 per cent) of investing institutions viewing risk management as ‘Very Important’ in the fund manager selection process and 47 per cent as ‘Essential’ in the design and implementation of portfolio investment strategy.

The quest for diversification is set to dominate risk management strategies in 2013. Significant emphasis is expected to be placed on tail risk measures and maximum loss, bfinance said.

In all, 65 per cent of institutional investors are using unsophisticated systems to monitor risk leading to a significant under estimate of risk at portfolio level. In addition, the resources allocated to risk management are not keeping pace with the need for heightened risk monitoring. Assuming a threshold cost of $250k for a sophisticated risk system, 72 per cent of respondents have not invested sufficiently.

Asset price collapse, volatility and contagion are seen as the most likely headline investment risks over the next 12 months. As a result, more than 90 per cent of investors said they wished to preserve the independence of risk monitoring and risk management from the investment function within their organisations.

The increasing interest of investors in real assets and absolute return strategies is raising additional challenges for pension fund risk departments, it said.

Toby Goodworth, head of the risk management at bfinance, said, “The collapse of Lehman Brothers and continued market uncertainty resulting from the European sovereign debt crisis has drawn attention and scrutiny to the discipline of risk management. Faced with unexpected tail losses, high cross-asset correlations and illiquidity, investors have continued to rely more heavily on risk management, and the corresponding development of risk systems and processes. Our new survey underpins this trend and arguably proves that the focus on risk management at all levels of the investment process is greater than ever before.”