The Brief mergermarket’s Weekly Private Equity Round-Up 20 November 2009 | Issue 39 Editorial 1 The Noticeboard 2 Private Equity Opportunities 3 Deals of the Week 9 Pipeline 18 Statistics 21 League & Activity Tables 24 Top Deals 33 Investor Profile: Summit Partners LP 36 Notes & Contacts 38 The Week That Was..... The last seven days: private equity in review The global private equity industry saw three US$1bn+ the France-based soft drink maker and distributor, to Suntory transactions brokered over the past week – matching the Holdings, the Japanese drinks group, for US$3.4bn. The deal number recorded in the preceding week. A total of 28 private will enable Suntory to expand into new markets, something that equity-related transactions came to the market, worth a will no doubt be welcomed given the fact that the Japanese combined US$11.3bn. While deal volume was slightly down on beverages market has contracted in recent times. this year’s weekly mean of 31, the value figure was the second highest weekly amount witnessed so far in 2009. Certainly, the It is perhaps not surprising that the abovementioned assets apparent movement into the top end of the market bodes well were sold to trade buyers given the fact that cash-rich for the asset class, especially as such deals have, up until now, corporates are emerging as strong players in the global M&A become increasingly fewer and further between since the market. However, the third largest deal of the week saw Bain collapse of Lehman Brothers. Capital agree to acquire a 93.5% stake in Bellsystem24 from the Japan-based private equity arm of Citigroup for US$1bn, That the top three deals of the week were all exits is perhaps indicating that private equity houses are increasingly able, and all the more remarkable, indicating that private equity houses, willing, to participate in large-cap deals on both the buy and deprived of viable exit routes since the onset of the financial sell-side. crisis last autumn, are now enjoying better opportunities to realise investment returns and redistribute capital to back By Tom Coughlan, Remark to investors. In fact, taken together with small and mid-cap divestments, exits accounted for just over half of total private equity deal activity across the globe in the week and around 90% of collective valuations. Looking at the week’s top deals, the largest transaction to come to market saw BC Partners and Apollo Management agree to sell respective stakes of 35.3% and 29.1% in Unitymedia, the German-based cable network operator, to Liberty Global Inc, the US-based international cable operator, for a total consideration of US$5.2bn. The asset is a complementary strategic fit for Liberty and will allow the group to benefit from synergies in network operations and procurement. Also in Europe, the second largest transaction saw Blackstone and Lion Capital announce their exit from Orangina Schweppes, The Noticeboard People moves Date Title Story snapshot Source 13-Nov-09 Former Schering- US-based private equity firm Warburg Pincus has announced the appointment of Fred www.altassets.com Plough CEO joins Hasaan as Senior Advisor. Hasaan served as CEO of US-based pharmaceutical company Warburg Pincus Schering-Plough Corporation from 2003 to 2009, when the company was acquired by Merck & Co. In his new role at Warburg Pincus, he will offer strategic advice on new and existing investments. New funds Date Title Story snapshot Source 19-Nov-09 GIH's former PE Shailesh Dash, the former private equity chief of Kuwait-based Global Investment www.privateequityonline.com chief sets up Al House, has set up Al Masah Capital, an alternative asset management firm based in Masah Capital Dubai. The firm intends to offer private equity, real estate and hedge funds to investors globally and will launch its first private equity fund in April 2010 which will focus on social infrastructure and target US$700m. While the firm will primarily focus on the Middle East and North Africa (MENA) region, it will consider opportunities in South Asia and Turkey. It will also favour co-investment opportunities with regional investors. Khalil E Alaali, who has co-founded the firm alongside Dash, will be its Chief Placement Officer. 19-Nov-09 Acuity Capital London-based smaller companies investor Acuity Capital Management, which spun www.privateequityonline.com launching out of private equity firm Electra Partners in 2008, is launching a fund to invest in environmental environmental infrastructure projects focussing on organic waste recycling in the UK. The infrastructure fund Acuity Environmental Infrastructure Fund is targeting an initial £100m of equity to invest in 8-12 sites, with each site backed by at least a 10 year contract with a local authority or a company establishing a fixed volume of waste at a set price. The launch comes amid demanding organic waste recycling targets set by the British government for local authorities. 19-Nov-09 Belgium-based Gimv, the Belgian private equity firm, and Agri Investment Fund (AIF) have raised€ 60m www.altassets.com Gimv holds for the first close of Gimv Agri+ Investment Fund, their joint agriculture-focused fund. first close for The fund will be managed by the life sciences team of Gimv and will invest primarily in agriculture fund companies or projects that have the potential to strengthen the agriculture sector of the region. 16-Nov-09 Alterna Capital Connecticut-based private equity firm Alterna Capital Partners has closed its debut fund on www.privateequityonline.com closes first fund US$428m. The firm closed the fund early, ahead of its original US$1bn target. The vehicle on US$428m will invest in core capital assets, or non-traditional infrastructure investments such as power plants, railway, ships and other transport facilities, in line with the broader strategy of the firm. Miscellaneous Date Title Story snapshot Source 17-Nov-09 KCIC to open in Kuwait China Investment Company (KCIC) is opening its first office in China, which will be www.privateequityonline.com China and set up in operation in 2010 and aims to establish China-focused private equity vehicles and build China-focused PE closer ties with the Chinese government. It has not disclosed in which city the office will funds be based. Set up in 2005, KCIC manages more than US$450m in assets. In Asia, it invests primarily in sectors including Energy, Real Estate, Agriculture, Infrastructure and Financial Services. The firm’s debut fund, which has yet to be launched, will target US$300m and have a pan-Asian focus. It is reported that KCIC is planning to buy positions in fund management platforms across China in addition to launching its own funds. 2 The Brief: 20 November 2009 | Issue 39 Private Equity Opportunities - Asia-Pacific Bhushan Power and Steel will sell stake to part finance Jharkhand power and steel plant, JMD says Date Value Currency Value Sectors Companies Countries Intelligence grade (M) description 13-Nov-09 1,600 US$ Cost of Energy; Industrial products Baring Private Equity Asia; India Confirmed setting up a and services Axis Bank Ltd; Bhushan new power Power and Steel Limited and steel plant Bhushan Power and Steel, a private New Delhi, India-based energy and steel company will sell a minority stake after June 2010, Joint Managing Director, V.K Sharma said. Bhushan is planning to set up a power and steel plant in Jharkhand at a cost of INR80bn (US$1.6bn). Of the sum, INR15bn to INR20bn will come from a stake sale, INR30bn will be financed through internal accruals, and the remainder through debt, he said. For the equity portion, Bhushan is evaluating both an initial public offer and private equity routes and for the debt portion it is in initial talks with merchant bankers. It is willing to hear from advisors for both immediately, he added. Revenues for the year ended 2009 was INR 45bn, he said. Bhushan currently has an annual power generation capacity of 235 megawatts and steel manufacturing capacity of 1.4 million tonnes annually. These capacities are expected to double by June 2010, after which it will consider a stake sale, in hope of a better valuation, he explained. Once fully operational, the Jharkhand plant will have an annual power generation capacity of 900 megawatts (MW) and steel manufacturing capacity of three million tonnes annually. Construction will start by the end of 2010 and will take three years to complete. This plant is expected to generate annual revenues of INR120bn. The company has attained all the licenses relating to setting up of this new plant. It has also acquired 350 acres of the total 950 acres required for the plant, Sharma said. The company last raised US$250m via external commercial borrowings in three installments between 2007 and 2009. Axis Bank acted as both the advisor and the facilitator for this deal. In 2006 the company sold between 8 and 9% to Baring Private Equity Asia. The deal value was around INR1.5bn and Axis Bank advised. The remaining stake is held by the company’s Managing Director Sanjay Singal and his family, Sharma said. The company has six plants in India and a total of 12,000 employees. Revenues for FY 09/10 are expected to cross the INR60bn mark. It has a total debt of INR60bn. Close to 70% of its revenues are from domestic sales and the remainder from exports. HR Coils and CR Coils are its core products in terms of revenue generation, he said. Tantia Constructions retains PricewaterhouseCoopers to assist in INR2.5bn capital raise, VP says Date Value Currency Value Sectors Companies Countries Intelligence grade (M) description 15-Nov-09 54 US$ Maximum Construction; Business The World Bank; Asian India Confirmed capital to be Services Development Bank (ADB); raised Khaitan & Co,Microsec Financial Services; Pricewaterhouse (India); Tantia Constructions Tantia Constructions, the listed, Kolkata-based infrastructure company, has recently retained PricewaterhouseCoopers to assist in an INR 2.5bn (US$54m) capital raise, Vice President of Finance and Accounts Rohini Sureka said.