Goldman Sachs put out a research report yesterday titled “Where have all the LBOs gone,” which focused on this year’s dearth of large take-private acquisitions. Basically, there has not been a single U.S. take-private valued at more than $5 billion in 2014, and overall take-privates for U.S. targets has totaled just $3 billion (compared to a $75 billion annual average between 2004 and 2013). Yes, that $3 billion figure feels a low, particularly given that Thoma Bravo just agreed to buy Compuware for $2.5 billion, but clearly there’s been a major slowdown.
One obvious explanation is rising public equities valuations. Not only do private equity firms not want to be caught at the market peak as they were in 2007, but they also have less available capital than they did back then. Not in terms of aggregate dry powder, but in terms of individual fund sizes. In other words, any big take-private would represent a much larger portfolio percentage than it would have in years past. And that only is exacerbated by the overall reticence to club deals (which outweighs the increase in co-investment interest).
The larger issue, however, seems to be that strategics have finally begun to step up after years on the sidelines. This matters because strategic capital is always cheaper than sponsor capital. Got to wonder if this is tied into the fact that I rarely hear CEOs talk about “uncertainty” anymore… possibly because everyone now believes that our federal government is so stuck that there actually is great certainty as to future laws on taxes, immigration, etc. (i.e., the same as today’s laws). Perhaps private equity firms are simply holding back until CEOs collectively freak out ahead of the next presidential election.
• Past life: peHUB yesterday reported that it’s on the block, alongside other Thomson Reuters trade products like Buyouts and Venture Capital Journal. When peHUB contacted a Thomson Reuters spokesman for comment, he originally replied that the company does not comment on “rumor or speculation.”
So let’s recap: Thomson Reuters is seeking to sell off media assets and, at the same time, impugning the work of the very journalists who produce those assets. Classy. Oh, and for what it’s worth, the peHUB report is correct.
• Recommended reading: Yesterday’s most consequential tech announcement had nothing to do with watches. Instead, it was IBM saying that it will use bitcoin’s block-chain technology to build a distribution platform for the Internet-of-Things. As I’ve previously written, the real promise of bitcoin is the underlying technology itself, rather than its various applications for stored value or payments. And this appears to be the first time that a large tech company is putting serious resources behind trying to achieve that promise. Read more over at Gigaom.
• Where in the World? Be sure to get your ticket for today’s Boston Block Party, which follows the 4th Annual Tech Gives Back event (currently underway, with thousands of techies and VCs working on community service projects around the city). And be sure to use the promo code PRIMACK to save 25%. Hope to see you there.
THE BIG DEAL
• Microsoft (Nasdaq: MSFT) is in talks to acquire Mojang, the Swedish gaming company responsible for Minecraft, as first reported by the WSJ. The deal could be valued at more than $2 billion. Read more.
VENTURE CAPITAL DEALS
• FieldAware, a Planto, Texas-based, has raised $24 million in new equity and debt funding. Summit Bridge Capital led the round, and was joined by OpenView Venture Partners, Atlantic Bridge Partners and Oyster Capital Partners. Silicon Valley Bank provided the debt financing. www.fieldaware.cm
• 365 Data Centers, an Emeryville, Calif.-based colocation provider, has raised $16 million in Series B funding from existing shareholders Crosslink Capital and Housatonic Partners. The company also secured a $55 million credit facility from Fortress Credit Corp. www.365datacenters.com
• FlightCar, a San Mateo, Calif.-based platform that lets users rent out their own cars from airport parking garages, has raised $13.5 million in new VC funding from GGV Capital. www.flightcar.com
• LightCyber, an Israel-based provider of breach detection and response solutions, has raised $10 million in new VC funding. Battery Ventures led the round, and was joined by return backers Gillot Capital and Marius Nacht (founder of Check Point Software). www.lightcyber.com
• Watchfinder, a British pre-owned watch resale marketplace, has raised $10 million from Piton Capital and Beringea. www.watchfinder.co.uk
• Avelas Biosciences, a San Diego-based medical diagnostics company focused on improving oncologic surgeries, has raised $7.4 million in Series B funding. Backers include Avalon Ventures, Torrey Pines Investment and WuXi PharmaTech Investments. www.avelasbio.com
• Webinar.ru, a Russian provider of web-based videoconferencing software, has raised $7.3 million in Series A funding. Intel Capital and the European Bank of Reconstruction and Development co-led the round, and were joined by Flint Capital and return backer VTB Capital. www.webinar.ru
• AWhere, a Wheat Ridge, Colo.-based provider of a big data platform for agriculture, has raised $7 million in Series A funding. Elixir Capital led the round, and was joined by Aravaipa Ventures. www.awhere.com
• Elastic Path Software Inc., a Canadian provider of ecommerce revenue solutions for brands, has raised C$5.35 million in VC funding. BDC Venture Capital IT Fund led the round, and was joined by Yaletown Venture Partners. www.elasticpath.com
• Telogis Inc., an Aliso Viejo, Calif.-based provider of cloud-based software solutions for companies with mobile assets, has raised an undisclosed amount of VC funding from Fontinalis Partners. www.telogis.com
PRIVATE EQUITY DEALS
• 4moms, a Pittsburgh-based maker of juvenile products that incorporate robotics in their designs, has raised an undisclosed amount of private equity funding from Castanea Partners. The company previously raised funding from such firms as Bain Capital Ventures. www.4moms.com
Argon Medical Devices, a Plano, Texas-based portfolio company of RoundTable Healthcare Partners, has acquired Promex Technologies LLC, a maker of soft-tissue biopsy products. No financial terms were disclosed. www.argonmedical.com
The Carlyle Group and CVC Capital Partners reportedly are among those interested in South Korean cinema chain Megabox, which is being auctioned off for around $580 million by a consortium that includes Macquarie Group and Korea’s National Pension Service. Read more.
Neuberger Berman Private Equity has formed Marquee Brands LLC, an acquisition platform focused on consumer brands. It will be led by president Michael DeVirgilio (ex-Kenneth Cole exec) and chief operating officer Cory Baker (ex- Julian Wolf). No word on how much Neuberger Berman is committing to the strategy. www.marqueebrands.com
PAI Partners and Waterland Private Equity are among the final bidders for Median Kliniken, a German health rehab center operator that is being sold for around $1 billion by Advent International and Marcol, according to Reuters. Read more.
TA Associates has acquired Idera Inc., a Houston, Texas–based provider of application and server management software. Sellers include Austin Ventures. www.idera.com
TransFirst, a Hauppauge, N.Y.-based payment processing company owned by Welsh Carson Anderson & Stowe, is drawing acquisition interest from suitors that include CVC Capital Partners and Total System Services (NYSE: TSS), according to Bloomberg. A deal could be valued at around $1.6 billion. TransFirst had filed for a $100 million IPO back in July. Read more.
JSC Detsky Mir, a Russian maker and retailer of children’s merchandise, has raised an undisclosed amount of private equity funding from the The Russia-China Investment Fund. Read more.
• Alibaba Group already has covered its IPO, which is being offered at between $60 and $66 per share, according to Reuters. At the high end of its range, this would be the largest IPO ever. Read more.
• Arysta LifeScience, a Japanese agricultural chemical company owned by Permira, has filed for a $100 million IPO. Earlier reports suggest that the offering is designed to value Arysta at around $4 billion. The company plans to trade on the NYSE under ticker symbol ARYS, with Morgan Stanley and J.P. Morgan serving as lead underwriters. It reports a $93 million net loss on around $1.51 billion in revenue for 2013. www.arystalifescience.com
• Euronav NV, a Belgium-based provider of shipping and offshore services for the transportation and storage of crude oil, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol EURN, which is the same ticker it currently trades under on the NYSE Euronext Brussels. Deutsche Bank Securities is serving as lead underwriter. www.euronav.com
• Xenon Pharmaceuticals, a Canadian developer of drugs for orphan indications, has filed for a $51.75 million IPO. It plans to trade on the Nasdaqc under ticker symbol XENE, with Jefferies and Wells Fargo serving as lead underwriters. Shareholders include Lipoterx Ltd. (11.4% pre-IPO stake), InterWest Partners (8.8%) and Fidelity Investments (6.9%). www.xenon-pharma.com
• The Carlyle Group and Onex Corp. have sold their remaining shares in Allison Transmission (NYSE: ALSN), which they originally acquired in 2007 from GM. Each firm invested around $763 million in the original buyout, and ultimately generated around $2.4 billion in returns. www.allisontransmission.com
• Morgenthaler Private Equity has sold Enginetics Corp., a maker of 3-D formed components and formed and welded assemblies for commercial aircraft engine platforms, to Standex International Corp. (NYSE: SXI). No financial terms were disclosed. BlackArch Partners managed the process. www.enginetics.com
• San Miguel Corp., a Philippines-based conglomerate, said that it is considering a takeover offer for British snack-maker United Biscuits. The Blackstone Group and PAI Partners have been working to either sell or list United Biscuits by year-end, at a reported enterprise value of around £2 billion. www.unitedbiscuits.com
• América Móvil (Mexico), Oi (Brazil) and Telefónica (Spain) are working on a joint offer for TIM Participações, the Brazilian operations of Telecom Italia, according to the NY Times. Any bid is expected to value TIM at north of $14 billion. Read more.
• Dollar General Corp. (NYSE: DG) is preparing to go hostile in its bid to buy Family Dollar Stores (NYSE: FDO). Read more.
FIRMS & FUNDS
• CenterOak Partners has launched as a new Dallas-based private equity firm focused on making control investments of between $20 million and $70 million in mid-market companies. It is led by Randall Fojtasek, co-founder and former co-CEO of Brazos Private Equity Partners. Other ex-Brazos execs on the CenterOak team include Michael Salim, Lucas Cutler, Jason Sutherland and William Henry. www.centeroakpartners.com
• Stripes Group, a growth equity firm focused on the tech and consumer products markets, has closed its third fund with $500 million in capital commitments. www.stripesgroup.com
MOVING IN, UP, ON & OUT
• Hyun Chang and Michael Meagher have joined Golub Capital as New York-based managing directors, with a focus on mid-market sponsor coverage. Chang previously was an executive director in J.P. Morgan’s financial sponsors group, while Meagher was a director in Deutsche Bank’s financial sponsors group. www.golubcapital.com
Justine Gordon has joined AlpInvest as a New York-based managing director, with a focus on secondary and co-investment opportunities in the energy and infrastructure markets. She previously was a managing director with Guggenheim Infrastructure. www.alpinvest.com
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