SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 75 - November 30, 2012: - Global M&A Down in November: Energy and Publishing Activity Robust - PE’s Growing Sustainability Focus - Apax Tops Website Ranking, JC Flowers Flops - Large Buyout for Springer Science in the Works? - VC Trends: Farming Innovations and Renewed Interest in Renewables - Post Arab Spring Dealmaking in Egypt - Quote of the Week: Sector Specialization in PE

1. DIGEST 75
SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 75
Global M&A Down in November:
1 Energy and Publishing Activity
Robust
2 PE’s Growing Sustainability Focus
• New Study
Apax Tops Website Ranking, JC
2 Flowers Flops
Large Buyout for Springer Science in
3 the Works?
VC Trends: Farming Innovations and
3 Renewed Interest in Renewables
Post Arab Spring Dealmaking in
4 Egypt
4 Quote of the Week: Sector Specialization
in PE
November 30, 2012

2. GLOBAL M&A DOWN IN NOVEMBER:
ENERGY AND PUBLISHING ACTIVITY
ROBUST
Image source: Merrill DataSite
M&A activity is trending downwards this month, according to the latest Mergermarket Monthly M&A
Insider from Merrill DataSite. What is more, the year is likely to end with lower global volumes than
last year, as the above graphic shows. Deal volume in 2012 is down by 29.7% to 3,853 deals, compared
to 2011’s total of 5,480 deals.
There are two sectors that have been driving activity of late. One is the energy and utility sectors
where the main driver is disposal of non-core assets by companies like Royal Dutch Shell, and Siemens.
The other sector highlighted is publishing, where M&A has also been steadier and more robust than
other industries, driven by the massive consumer shift to eBooks.
Key findings for Europe
• The deal volume was down for M&A in Europe, compared to last November. There was a slight
increase in deal size to EUR 95.7 million on average, which is 1.1% higher than 2011’s EUR 94.7
million average
• The decline is believed to be largely caused by “apprehensive investors sitting on cash reserves,
while avoiding risky or hasty deals”
• 254 European deals, worth EUR 18.6 billion, representing 5.1% of overall M&A activity for the year
to-date of EUR 368.7 billion
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3. PE’S GROWING SUSTAINABILITY FOCUS
The view on sustainability among PE industry players is increasingly positive with 92% of GPs expected
to focus more effort on social, environmental and governance (ESG) issues in the next 3 to 5 years, while
54% of GPs are already leveraging ESG management, according to a new survey by Malk Sustainability
Partners (MSP) and Environmental Defense Fund. An important driver is LPs and investors, with 69% of
fund managers noting that they have observed increasing concern about ESG issues from their investors
during the past 3 to 5 years. What is really interesting about the report is that ESG has gained some very
practical adoption drivers, such as cost savings, and a great potential to reduce risk management costs.
APAX TOPS WEBSITE RANKING, JC
FLOWERS FLOPS
Dow Jones editors ranked more than 20 private equity firms on their website quality and public
relations. A decent website shows that the GPs understand that there is a greater constituency than the
LP community to serve. Examples given include journalists, politicians, union officials, members of the
public or even potential investors, who seek websites with more than minimal information on them. Too
little disclosure feeds the notion that PE has something to hide, said the article. The editors were looking
for information about returns, investment techniques, senior management, portfolio companies, funds
raised, limited partners, individual contact details, office contact details and news releases.
Only US and European GPs were researched. The editors found a “wide divergence” in the quality of
website information. Apax Partners had the most complete disclosure, followed closely by TA Associates
and Bridgepoint. At the bottom came TPG, Hellman & Friedman and J.C. Flowers. Only Apax and Permira
published returns data and TA was the only firm to publish a full set of its investors. Several other firms
published summary information on the type or location of investors, without individual names.
The top seven and the bottom three are listed below:
Apax Partners — 15 Advent — 12 TPG — 6
TA Associates — 14 Permira — 12 Hellman & Friedman — 5
Bridgepoint — 14 EQT — 12 JC Flowers — 2
Angelo Gordon — 12
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4. LARGE BUYOUT FOR SPRINGER SCIENCE
IN THE WORKS?
The rumor has it that there is a USD 3.5 billion sale of Springer Science in the works, which is attracting
bids from big name buyout firms such as KKR, Carlyle, and Providence, as well as strategic buyers,
according to Bloomberg. The size of the transaction makes this secondary deal (EQT Partners is one of
the sellers), our pick for deal of the week. The article says that an IPO is also being mulled.
VC TRENDS: FARMING INNOVATIONS
AND RENEWED INTEREST IN
RENEWABLES
A couple of items in the past week highlighted the latest trends in venture capital investments. One
article showcased several startups backed by big name VCs with an in-depth profile of several including
AeroFarms, which won a show of hands poll at the showcase event. The startup’s technology utilizes
something called aeroponics: an approach similar to hydroponics, but which employs vertical growing
equipment. The article said that unlike some other greenhouse/hydroponic models, AeroFarms’
system requires no transplanting: seeds are planted, germinated, and grow to full-size in one place. It
says it uses about 90% less water than conventional farming and 30% less than typical greenhouse
operations. Productivity per square foot claims are even more impressive: 30 times that of
conventional farming (typical greenhouse production is approximately 5X greater production than
conventional farming).
Another trend is renewable energy investment, actually it is a resurgence, according to Frost & Sullivan,
with a lot more deals getting done than prior years. The actual deal sizes are shrinking, indicative of
newer less capital intensive technologies, rather than things like biofuels and solar cell manufacturing
which drove activity in the years 2006 to 2008. The market research firm estimates VC funding for
renewable energy will triple by 2020 due to positive regulatory policies, environmental support for
lower carbon footprint, and innovation. Europe and North America have been the hub of much deal
activity, "2011 was a stellar year for renewables deal-making with the number of deals rising by two-
thirds year-on-year, although total deal value went down by one-third," said Frost & Sullivan Financial
Analyst Vinod Cartic. He says Europe, in particular, followed by the Asia-Pacific region, led this trend
towards more but smaller deals.
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5. POST ARAB SPRING DEALMAKING IN
EGYPT
Egypt is in private equity news this week as a Cairo-based PE firm Citadel Capital teams up with Qatar-
based investors in a bid to supply ten percent of the domestic Egyptian market., according to Arabian
Business news. Citadel announced that the joint venture will be 51 percent owned by Qatari investors
and investment bank QInvest. It would build and own facilities needed for a floating gas storage and
regasification unit to deliver natural gas to high-volume end-users from the middle of next year. It is
Citadel’s second deal of this kind in Egypt as the country’s new government reforms its gas and energy
policies.
QUOTE OF THE WEEK:
SECTOR SPECIALIZATION IN PE
“…there are good times to invest in
financial institutions and there are bad
times to invest in financial institutions. And
if that's our mission for our firm, we're
going to find ourselves looking for the best
deal in a bad market. The best deal in
financial institutions at some point in time
might be not nearly as good as a mediocre
deal in media, for example.”
Who said it: Doug Londal, Managing Director, New Mountain Capital
In Context: In a round table interview on Privcap, Londal explains how his firm selects hot sectors and
markets to invest in. It is mainly about the how sectors are selected, rather than which sectors or
industries are considered desirable these days. Londal says it begins with a decision to back high cash
flow businesses, high growth businesses, and noncyclical businesses. Then the teams drill down into
sectors and sub-sectors. There is a huge trend towards specialization in recent years, but the expert
warns of tunnel vision and getting stuck being specialized when that type of company (his random
example was financial institutions) is out of favor, or the industry lacks momentum, or is in a phase of
consolidation rather than growth, which negatively affects valuations, markets, and M&A potential,
and that is the context of the above quote.
Where we found it: Privcap
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