DIGEST 176

March 13, 2015

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Mobile Internet Deals Ballooned to USD120bn in 2014

ASEAN Mid-Market Attracts Japanese CVC

Healthcare M&A Sizzles, Unabated

LPs Continue to Attack Fees

Venture Capital Goes from Silicon Valley to the Middle East

Quote of the Week: Confrontations with White Knights

Platform for fundraising & deal flow management

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MoBILE INTErNET DEALS BALLooNED To USD120BN IN 2014

ASEAN MID-MArKET ATTrACTS JAPANESE CVC

Another sign of the ASEAN region’s growing attraction for investment from private equity and venture capitalists popped up this week with the announcement of a new private equity platform run by Mit-subishi, CIMB, Malysia’s second largest financial services provider and one of ASEAN’s leading univer-sal banking groups, and the Development Bank of Japan.

The entity will provide growth capital and unique network to support the middle market in countries such as Indonesia, Malaysia, Singapore and Vietnam.

M&A, IPOs, and investment from private equity and venture capitalists drove USD 120 billion worth of trans-actions in the mobile Internet ecosystem (USD 32 billion early stage investments, USD 90 billion exits) in 2014, according to Digi-Capital, a corporate finance and man-agement consultancy.

The report breaks down investment activity by segment and there are many many segments. The largest areas to attract dealmakers were mCommerce and travel/transport. The IPO volume was twice the previous record from the year before. (Image source: Digi-Capital.)

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LPS CoNTINUE To ATTACK FEES

Healthcare M&A dealmaking has soared to USD 92 bn so far this year via 464 deals and is up 63% from the same period last year (USD 56.4bn via 392 deals), according to dealogic.

The spike comes amidst a booming global M&A market that has world-wide transactions already at the USD 593.4bn, the highest year to date total since 2007 (USD 677.1bn).

Americas is driving the increase in Healthcare M&A volume with USD 77.9bn via 219 deals so far in 2015, up 49% from 2014 and is the highest year to date volume on record. The total Americas targeted M&A volume was dominated by AbbVie’s pending USD 21.0bn acquisition of Pharmacyclics Inc, announced on March 4. Asia Pacific targeted Healthcare M&A volume is now higher than in EMEA.

HEALTHCArE M&A SIzzLES, UNABATED

Over half of investors in an alt assets survey by Preqin pinpointed management fees as the key way to align interests between PE fund managers and institutional investors. The past few years have seen institutional investors use direct and indirect ways to chip away at the complexity and cost of investing in alt assets. Fees are just one way to align interests, putting more of the PE partner’s own money into funds is another. Preqin says LPs are having some success, and average management fees for alter-native assets funds are falling steadily, particularly hedge funds.

Despite the quibbling over management fees, private equity is the most attractive asset class right now, with 59% of investors having an optimistic outlook on the asset class. It was closely followed by infrastructure investors, with 57% feeling positive about the asset class.

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VENTUrE CAPITAL GoES FroM SILICoN VALLEy To THE MIDDLE EAST Who are the seasoned VC firms that are seek-ing early stage deals in the largely untapped Middle East and Northern African technology ecosystem? The answer came this week from a reporter at WAMDA.

The list of VCs include Rocket Internet which although European is the biggest early stage investor, Fenox which opened offices recently, Lumia Capital (Series B funding for Jordan’s telly.com); San Francisco’s Rise Capital, Belgium’s Hummingbird Ventures and South Africa’s Naspers which invested USD 75 mil-lion in souq.com in 2014.

QUoTE oF THE WEEK: CoNFroNTATIoNS WITH WHITE KNIGHTS“The PEP team first showed up like a bunch of white knights and were very impressive … then they promptly turned hostile, which was quite confronting. But since then, the relationship has been a big success for us, them, and our other shareholders… “Who said it: Greg Pritchard, Managing Director Energy Development

In context: A rare first-hand account of what happens when a PE firm buys into a mid-cap listed company. At a private equity event in Sydney, Pritchard described the mutual learning curve and value creation possible in such a partnership. He said that the investor, Pacific Equity Partners, provided “ex-pertise” that was vital in growing the business from a market capitalization of USD 400 million to more than USD 1.2 billion with more growth to come but they also needed to learn about maintaining the standards for governance and transparency required of a listed company even if it is majority owned by

private equity. (Image source: Energy Developments).

Where we found it: Sydney Morning Herald

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The DealMarket Digest provides up-to-date and high-quality con-tent. Each week our in-house editor sifts through scores of indus-try and academic sources to find the most noteworthy news items, scoping trends and current events in the global private equity sec-tor. 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. To receive the weekly digest by email register on www.dealmarket.com.Editor: Valerie Thompson, Zurich

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