DealMarket Digest_Issue 55

DIGEST

55

SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 55

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Indian PE Fund Makes Money in Hollywood European Companies Using US Debt Billion Dollar Healthcare and Energy Deals UK VC Fund Finds the Exit CleanWeb Investment on the Rise • VC trend

Quote of the Week: GS Billions and Cleantech

June 15, 2012

INDIAN PE FUND MAKES MONEY IN HOLLYWOOD In private equity, it is more common to hear of European and US funds targeting Indian deals, but there are a few that go the other way. Global Entertainment Partners (GEP) is a USD 100 million private equity fund and media portfolio that invests in Hollywood productions for more than a dozen Indian LPs, and it is doing well, according to A. V. Shankardass, U.K.-based film financier profiled in an article in TheHindu.com. He pits Hollywood against Bollywood and claims that the investment potential are returns of 30 per cent in Hollywood.

The two major films which GEP part-financed were box office hits, Mission Impossible 4: Ghost Protocol and Captain America: The First Avenger. The key advantage that Hollywood has over Bollywood according to the fund’s manager is its professionalism and transparency, including finance, film production and marketing, which breeds more profitability on the whole, he said.

EUROPEAN COMPANIES USING US DEBT There have been quite a few articles on the improved debt and financing conditions in the US and Canada, compared to Europe. The trend is ongoing, according to the WSJ, and European companies borrowed some USD 14.4 billion (about USD18 billion at current rates) in the US leveraged-loan market this year, more than double the USD 6.7 billion for all of 2011, according to data from S&P Capital IQ LCD. This year’s volume is the highest amount since 2007 when full-year loan volume was USD12.2 billion, according to S&P.

BILLION DOLLAR HEALTHCARE AND ENERGY DEALS Two deals this week look poised to be the biggest of the past seven days, one is in the trendy oil and gas sector and the other in the healthcare market. The Term Sheet reports that Apax Partners and JMI Equity are set to acquire Paradigm Ltd., which develops software solutions for oil and gas exploration and production. The deal is valued at USD 1 billion. The other larger deal is EQT Partners buyout of BSN Medical, a German bandage maker, from fellow PE firm, Montagu Private Equity, for EUR 1.8 billion. EQT offered more than strategic buyer Kimberly Clark, Wendel Investments and a joint bid from BC Partners and CVC Capital Partners.

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UK VC FUND FINDS THE EXIT DN Capital, a UK venture fund has just had seven exits in two years, according to Unquote UK. The latest is the Thomson Reuters acquisition of its portfolio company, Apsmart, a mobile solutions startup. The GP also sold Endeca to another big name strategic buyer, Oracle, for USD 1 billion, and it sold Datanomic a few months previously, also to Oracle. Datanomic was the third exit for Fund II and allowed the VC to announce it had paid back the vast majority of invested capital in the vehicle, generating a 30% gross IRR. These kind of returns are going to help to dissipate the long held notion that European VC cannot deliver returns comparable to the US technology market. The exits are from DN Capital’s second fund. The PE firm was founded in 2000 by Nenad Marovac and Steve Schlenker as Digital Networks and backs early-stage business and growth opportunities in the software, ecommerce and digital media sectors.

CLEANWEB INVESTMENT ON THE RISE A new category of VC investment seems to be gaining some momentum and joins the list of some of the ones that were hot in the recent past, like Web 2.0, mobile media, social networking and big data.

It is called the CleanWeb, according to The Cleantech Blog. The article provides a good overview of this category of innovation and technology, with several references to recent articles to back up the report. Cleanweb is at the intersection of IT and cleantech, or energy efficiency and computing. This GigaOm article provides a list of the types of business models that fall under CleanWeb. The graphic above from cleanwebhack.com shows Cleanweb themes or types of business models. Very often the business model is that of a software or web services that directly or tangentially result in lower consumption of energy, and correspondingly lower emissions. There is also a good presentation on the topic on Slideshare, which says that 18% of cleantech investments fall into that category.

As an example of the degree of innovation possible, the article makes a comparison between the current most powerful computer (the 10.5 petaflop Fujitsu K), which consumes the equivalent of a small town’s worth of power, but a similarly capable machine two decades from now would probably only consume as much electricity as a standard household toaster. The expert quoted says that if the reader doubts that this degree of improvement can be achieved in 20 years, then consider that the MacBook Air — if operated at the efficiency of 1991 computers — would fully discharge its battery in merely 2.5 seconds.

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QUOTE OF THE WEEK: GS BILLIONS AND CLEANTECH “GS to invest or finance $40 billion in clean tech over next decade.

Details in new sustainability report�.

Who said it: @Goldman Sachs In Context: Goldman Sachs started to use Twitter about a month ago and one of its first announcements was that it plans to invest USD 40 billion over the next decade into renewable energy projects. Several media sources picked up the tweet, including Reuters, which reported that the investment bank sees the profit opportunities of the same dimension as those of emerging markets back in 2001. GS has already invested USD 4.8 billion in clean technology companies globally, and co-invested more than USD 500 million in that area. Investments and financings are expected in the areas of solar, wind, hydro, and biomass energy plants, as well as energy efficiency and environmental technologies. The article quoted a somewhat skeptical view that the storied investment bank was investing the money in order to improve its public profile and image, after in the face of recent negative media and shareholder sentiment.

In Context: @Goldman Sachs

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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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