The Brief mergermarket’s Weekly Private Equity Round-Up 2 October 2009 | Issue 32 Editorial 1 The Noticeboard 2 Private Equity Opportunities 3 Deals of the Week 9 Pipeline 19 Statistics 27 League & Activity Tables 30 Top Deals 39 Investor Profile: Advent International Corporation 42 Notes & Contacts 45 The Week That Was..... The last seven days: private equity in review The third quarter of the year witnessed 392 private equity producer and seller of electric energy, capacity and ancillary related deal come to the market across the globe, worth a services, for US$1.50bn. collective US$31.27bn. In volume terms this stands as the Twelve months on from the onset of one of the worst financial most active quarter of 2009 so far with activity up by 1.3% on crises in history it would appear that the asset class is slowly Q2 figures. While valuations were slightly down on the first beginning to find its feet. Deal making at the top end of the two quarters of the year, it is notable that several significant market is still understandably subdued although the recent flurry transactions came to the market. of large cap deals is encouraging. The gradual improvement in Interestingly, three of the top five transactions of the third the economic environment has meant that the deal drivers are quarter were announced in September, indicating that private also beginning to shift. Fewer distressed driven deals are being equity’s appetite for large cap deals is returning as the debt brokered although non-core asset disposals by larger coporates financing and general economic environment improves. The are likely to continue to provide opportunities. Nevertheless, largest deal was seen in the TMT sector in the Benelux region investors are arguably now looking to take a longer term where a consortium of investors led by Silver Lake Partners strategic approach with renewed emphasis on value creation acquired a 65% stake in Skype Technologies, the Luxembourg and less focus on financial engineering. based internet communications company, from eBay Inc for US$2.03bn. The second largest private equity deal over the By Tom Coughlan, Remark timeframe also involved a TMT target company and saw The Carlyle Group selling of a 60% stake in kbro, the Taiwan based cable television operator, to Taiwan Mobile Company for a consideration of US$1.73bn Despite the abovementioned deals being announced in Europe and Asia respectively, it is noteworthy that the bulk of Q3 activity was in fact seen in the United States. Indeed, some 145 deals worth US$12.31 were brokered, accounting for 37% of overall global private equity deal flow and 39% in terms of valuation. The most significant deal in this space was announced in August and saw LS Power Group agree to acquire five peaking and three combined-cycle generation assets from Dynegy, the The Noticeboard People moves Date Title Story snapshot Source 30-Sep-09 CapMan hires CapMan, the Nordic private equity firm, has announced that Teuvo Salminen will join the www.capman.com Energy specialist firm as an Advisor. Salminen joins CapMan from Pöyry Group, a consultancy firm focused on the energy industry, where he held a variety of executive level positions since 1985. Salminen has been on CapMan’s Board of Directors since 2001 and Vice Chairman since 2005. 30-Sep-09 Advent hires oil Global private equity firm Advent International has announced that Tom Ehret will join www.adventinternational.com and gas veteran its Operating Partner Programme to advise on its oil and gas investment activity. Ehret previously served as CEO to Acergy S.A and he is still on the Acergy board. Acergy is one of the largest offshore engineering and construction contractors to the global oil and gas industry. 29-Sep-09 KKR joins treasurer Global private equity firm Kolhlberg Kravis Roberts & Co. has appointed Jonathan R. Levin www.kkr.com ahead of public as Treasurer and Head of Investor Relations. Levin will oversee the firm's balance sheet, listing including the US$3.3bn in net assets the firm is expected to receive following the merger and public listing of KKR and KKR Private Equity Investors. New funds Date Title Story snapshot Source 29-Sep-09 Quantum closes Houston-based private equity firm Quantum Energy Partners has closed its fifth fund on www.quantumep.com fifth fund on US$2.5bn. The fund will target opportunities in the US$100m to US$400m in the energy US$2.5bn industry, in line with the firm's traditional strategy. Quantum has more than US$5.7bn under management and its latest fund represents a 90% increase from its last fund raised in 2006. Miscellaneous Date Title Story snapshot Source 1-Oct-09 Hellman & San Fransico-based Hellman & Friedman has closed its largest fund to date on US$8.8bn, www.privateequityonline.com Friedman raises exceeding its US$7bn target. The firm also confirmed that Philip Hammarskjold will US$8.8bn and succeed Brian Powers as chief executive, while Powers will replace founder Warren reshuffles Hellman as chairman. Patrick Healy will serve as deputy chief executive. management 30-Sep-09 American Capital US-based private equity firm American Capital has announced the closure of its Frankfurt www.americancapital.com closes Frankfurt office, a part of American Capital's European Capital Financial Services Limited (ECFSL). office ECFSL, an investment company targeting equity, mezzanine and senior debt investments in Europe, will continue to manage the Frankfurt assets out of its London offices. 2 The Brief: 2 October 2009 | Issue 32 Private Equity Opportunities - Asia-Pacific Sterling Construction appoints Euromax Capital for capital raise, source says Date Value Currency Value Sectors Companies Countries Intelligence grade (M) description 23-Sep-09 20.4 US$ Funds sought Construction Euromax Capital; Sterling India Strong evidence Construction System Sterling Construction, a privately owned, Mumbai-based engineering company, has mandated Euromax Capital to raise around INR1bn (US$20.4m), said a source close to the development. The company intends to raise the capital via a convertible issue to private equity funds, he added. It would be unlikely to opt for a stake sale to raise the US$20.4m as that could mean an equity dilution of about 40-50%, he added. Sterling has an order book size of more than INR10bn (US$204m) against which it will be issuing debt to fund its business, the source said. Its annual revenue forecast is INR1.2bn (US$24m) for the fiscal ending 31 March 2010. Sterling Construction produces clean-technology houses and would likely attract the interest of green energy funds, the source said. Given the boom expected in the space and the industry’s current nascent stage, the company offers high growth opportunities until 2015, he said. Funds, such as IDFC PE, Actis, ICICI Ventures and Monsoon Capital are funds that might be interested, said a buy-side private equity banker. The company could command valuations inbetween 12-15x price to earnings (PE), or higher, if the order book is executed faster, he added. Bijal Doshi, director at Euromax Capital, acknowledged the firm has been mandated but declined further comment. Maneesh Pharmaceuticals to look at private equity for expansion purposes, director says Date Value Currency Value Sectors Companies Countries Intelligence grade (M) description 24-Sep-09 244 US$ Revenues Medical: Pharmaceuticals Maneesh Pharmaceuticals India Confirmed year ending Pvt. Ltd Mar-09 Maneesh Pharmaceuticals, a privately owned, Mumbai-based generic formulations company, would consider approaches from private equity investors, said Gauri Sapte, director of business development. The company would look at raising between US$25m and US$50m, she said. The company is interested in talking to financial advisors from October onwards, she added. The stake to be offered would depend on the investor but it would be a minority stake, she said. Maneesh registered revenues of US$244m for the year ending March 2009 and has 3,200 employees, said Sapte. The company intends to raise the funds for its organic expansion plans, said Sapte. It had envisaged certain expansion plans last year which were stalled by the economic downturn, she said. It is now looking to invest in brand promotion and registration of its drugs in developed markets and research and development, she said. The company had intended to go for an IPO, according to previous media reports. When asked about the IPO plans, Sapte said that the company was looking at it seriously in 2007 but is in no hurry to do so now. It would revisit the plan later but has no timeline in mind, she added. Maneesh was looking to raise capital last year, but the deal did not go through because of differences in valuation and a downturn in the market, said a banker familiar with the company. Companies like Maneesh, having a diversified platform and geographic reach, are valued at 2 to 3x sales. The company’s intended IPO, although stalled for now, would be the eventual plan, he added. The company was active in acquisitions and joint ventures in 2006 and 2007, said Sapte. It is currently focused on organic growth, she added. The company is strong in gynecology, antibiotics, anti-infectives, and tuberculosis. 3 The Brief: 2 October 2009 | Issue 32 Private Equity Opportunities - Asia-Pacific Bullseye Group receives buyout approaches; would consider merger or trade sale, CEO says Date Value Currency Value Sectors Companies Countries Intelligence grade (M) description 25-Sep-09 10.7 AU$ Revenue Media National Australia Bank Australia Confirmed Limited; Thomson Playford Cutlers; Bullseye, WHK Camerons Bullseye Group, a private Australian digital advertiser has received buyout approaches and would seriously consider merger or trade sale talks with Australian or international players.