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Monthly European Technology Venture Capital Bulletin - July 2008
02/09/2008. Source:Go4Venture.
 The Go4Venture's Headline Transaction Index (HTI) for July 2008 confirms the indication observed at the back end of Q2: the market is in good health at the later stage end of the market, making up for the decline in the funding of early stage companies. The total monthly amount invested was €346.8m, a notable 38 per cent higher than €251.7m invested in the same period last year, and Go4Venture tracked 16 large transactions in July, an absolute record for the HTI.
Note that because our HTI focuses on deals reported in the press, it is disproportionately focused on larger deals, masking the extent of the slowdown at early-stage.
With the market shift to later-stage, VCs are flirting with private equity (PE). Reciprocally, PE is reaching out to technology as it has been one of the few areas relatively underserviced. In July, there was considerable activity with no less than two take privates amongst the PE players in tech. These deals included:
- Permira is planning to acquire a 51% stake in NDS, News Corp's quoted conditional access software subsidiary, in a $3.6bn transaction. In the process, Permira will pay a 27% premium compared to the share price of NDS prior to the announcement.
- Hellman & Friedman is buying AIM-listed general insurance software business SSP Holding for £198mn (190 pence per share) including assumption of debt. This represents a 19% premium compared to the company's closing share price of 160 pence per share on June 17th, the day before takeover talks were disclosed.
- AXA Private Equity has acquired a majority stake in Altares Group, a French provider of business-to-business information with €54mn in revenue. Altares resulted from the merger of BIL Legal Information Database and Dun & Bradstreet France.
- The Gores Group is to acquire a 51% interest in Siemens Enterprise Communications (SEN). Terms of the deal were not disclosed. Gores and former parent Siemens (who will retain a 41% stake) will each invest €175mn in SEN. Interestingly Gores will combine SEN with two of its portfolio companies: network equipment and security solutions provider Enterasys, and call centre software company SER Solutions.
Examples of VCs starting to play the PE game include:
- Sofinnova acquired the Sagem mobile business of Groupe Safran, beating other mobile handset manufacturers to the post. It appears one of the reasons for the acquisition is that Sofinnova is able to transfer some of the staff to two of its portfolio companies, Esmertec and Purplelabs.
- Isis Equity Partners has completed the £10mn buyout of The Television Consultancy, a provider of content production and PR services. The investment will be used to expand TVC's digital department and its virtual press office platform, DNA. Isis has previously invested in a number of marketing services businesses, including RLA Group and Occam DM.
- Advent Venture Partners (AVP) appointed Mike Chalfen as general partner to develop the growth capital part of AVP's business. Some of you may remember Mike from his days at Apax Partners between 1996 and 2006.
All this activity contrasts with the US National VC Association (NVCA) distress call following the announcement of the complete drought in IPOs of VC-backed businesses in Q208. This month, the M&A figures were released, showing that in the second quarter, the number of M&A exits for VC-backed (US) companies was down to 50 from 87 compared to the second quarter last year, with value (where reported) falling to $2.4bn from $4bn last year. Many industry commentators see this as a strong challenge to VCs. We see this more as a challenge to the late-1990s VC model, when making money was easy.
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Go4Venture is a London-based independent corporate finance advisory firm focused on providing equity private placement and mergers & acquisition (M&A) services to Europe’s leading technology companies and their investors. Clients include: Growth companies; VC funds; Buyout funds; and IT corporates. More details can be found at www.go4venture.com.
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