Marika Svärdström, founder and principal of Carbon Capital Ventures
Investment in clean technologies has more than tripled in value since 2004, when interest in the sector took off – from $1.8 billion to an expected $6 billion-plus in 2008. And cleantech investment is still growing despite the global economic crisis.
Figures from National Venture Capital Association (NVCA) in the US show that while venture cap investment fell from $7.7 billion to $7.1 billion, a decline of 7%, between quarter two and three last year, investment in cleantech actually increased by 14% (from $800 million to $1 billion).
The world still needs energy and investing in fossil fuel-based energy production carries risks of its own as illustrated by the recent see-saw prices of fossil fuels. The fundamental market drivers for cleantech, and clean energy in particular, have not changed and will continue to push policy, innovation and investment.
• Rising energy prices. While oil prices have come down substantially from their historic highs last summer they remain above their historic average. Long-term oil prices are expected to continue to climb, and as the costs of fossil fuel energy are rising the cost of clean energy is falling.
• Concerns over climate change and energy security. Climate change concerns have gone from debate to action. The European Union was first to introduce a mandatory emissions trading scheme in 2005. Regardless of the price of a barrel of oil, Western industrialised countries are dependent on outside energy supplies, with US importing 70% of its oil needs and Europe 55% of its oil and gas needs.
• Rapid growth of emerging economies. The explosive demand for resources in emerging markets, in particularly China and India, puts stress on natural resources and the ecosystem.
• Favourable policies and regulation. Several US and EU states have given mandates to their utilities to generate a certain percentage of electricity from renewable energy.
• Technology breakthroughs and access to capital. Wind power technology has reached market maturity and become a market for large players such as GE, Siemens, and Mitsubishi. Solar power energy is experiencing tremendous growth, with a range of competing technologies and business models.
There are many indications that cleantech and clean energy in particular will remain high on the agenda of governments and provide opportunities for investors and entrepreneurs despite the economic downturn.
First on the policy side, the $700 billion Emergency Economic Stabilization Act passed in the US included several tax breaks and incentives for renewable energy and clean technologies. President-elect Barack Obama has pledge to spend $150 billion over 10 years to promote wind, solar, biomass and other renewable energy resources. With the US consuming nearly 25% of the world’s energy, once the federal government starts putting effective price signals in place, the pace of cleantech innovation is likely to accelerate.
Another encouraging sign came in the form of GE’s announcement in October of the results and expectations from its environmental business. Despite the economic downturn GE expects 2008 revenue from energy efficiency products to increase by 21% to $17 billion since last year and its annual investment in cleaner R&D to surpass $1.4 billion, an increase of $300 million over last year.
Furthermore, at a sector level there have been signs of inflated valuations, with solar being the most notable example. That is now disappearing, corrected by the economic crisis.
When analysing cleantech opportunities it is important to consider that cleantech is a new theme, with markets that are not yet mature. A long-term perspective is critical.
The challenges and how to overcome them
Many cleantech companies are small and lack the finances and competences to grow their business. Surviving the credit crunch will be a challenge for many. Companies selling technology that will earn a quick return in fields such as energy efficiency will be most resilient. Capital-intensive businesses such as energy production are going to have a tougher time in the economic downturn.
In the absence of external funding, improving and managing cash flow is going to be critical and may require a change of business strategy and model. For example, a client of Carbon Capital Ventures in the biogas sector was financed by one of the troubled banks until early October when the bank informed it that there would be no loan. The search for a new loan provider or investor proved very challenging during the months that followed. While continuing the fund raising, the company re-defined its business model and strategy, from a capital-intensive build-operate-and-transfer model to a model of selling technology licenses and charging service fees.
The CEO says that it has been the toughest couple of months in his career. Despite leading a company that is well recognised in its field, with patented technology, operations in Europe and Asia and an order book of over €130 million, raising the necessary funds to grow the business proved to be very difficult. In addition to re-defining the business model, the company turned to customers to ask for upfront payments and to suppliers to negotiate later payment dates.
With a stronger focus on operations and short term cash flow the company is confident that it is able to grow, and to large extent organically, in the coming year. The CEO also points out that these changes may not necessarily be bad but may indeed prove to be positive for the company and its investors in the long run.
What to watch for
Cleantech is not one industry – it comprises a range of sub-sectors among which include solar and wind power generation, bio fuels, energy efficiency, materials, water and transport. Cleantech addresses markets that differ significantly in size, maturity, value chains, investment requirements and different business models. When investing in cleantech, regulatory uncertainty and technology risks are among the main pitfalls.
As an investor it is critical to identify niche sectors, and develop expertise and a strong network of contacts in each cleantech sub-sector. A mixed expertise of technology, politics and economics are required, and an ability to stay ahead of current trends.
As technologies and markets mature different market developments should be expected. Take for example the solar industry, where large established silicon solar companies are competing with each other on driving down costs and scaling up manufacturing. At the same time new solar technologies and business models are emerging, threatening the incumbents to potentially change the competitive landscape entirely.
Notes for investors
• Competing technologies in markets that are not yet mature. For example, FirstSolar, a solar thin-film technology company that has experienced exponential growth between 2006 and 2008 of $135 million to $1.2 billion and is threatening incumbent crystalline silicon solar companies.
• New innovative business models that will accelerate market growth. Historically, business model innovations that make the consumption of a new technology easier, cheaper, more accessible or more convenient have been the best predictor of success in emerging industries. For example SunEdison, a solar financing company, is eliminating the high upfront costs for residential installations by converting each solar power installation into a fixed income security, making it affordable to put up solar panels for consumers.
• Established players focusing on integrating along the value chain in fragmented industry sectors. Acquisition activities. For example SunPower has gone from being a manufacturer of cells to providing installation and financing, strengthening its competitiveness, improving cost control and direct customer relations.
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Carbon Capital Ventures (www.carboncapitalventures.com) provides market insights and advisory services to investors and entrepreneurs operating and interested in cleantech. We provide clients with insightful and robust analysis that enable them to make informed investment decisions. We work closely with entrepreneurs of portfolio companies to help them accelerate the growth of their business.
Carbon Capital Ventures has developed a unique network of technical and commercial experts that provides us access to technology experts in cleantech niches, leading research institutes and incubators, and a leading international business school. We also actively network with VC and PE firms in Europe and US investing in clean technology.
Through this we offer our clients a unique combination of competences in clean technology, policy and market regulation, and business strategy effectively applied to identify outstanding opportunities, successful business models and effective strategies.
Wednesday, December 31, 2008
The Angel Investor : Introduction
ANGEL INVESTORS NUMBER in the hundreds of thousands and are proliferating at a rapid rate. these affluent individuals provide entrepreneurs and new ventures with needed venture capital, especially when more traditional sources of capital, such as investment banks and larger money management venture capital firms, are not willing to get involved.
Angel investors have been major engines of the booming New Economy. Angel investors generate new ideas, contribute innovative technologies to the marketplace, and inject much-needed vitality into complacent industries. new Ventures occasionally grow into major corporations, such as Microsoft, Dell, America Online, Netscape, and others.
We cannot underestimate how astute many of these investors are. They are self-made millionaires. Over and above their homes and cars, they typically have net worth of $1 million to $10 million, having been extremely successful investors in the public as well as the private market. In most cases, they bank on their own judgment to once again select venture like the one that made them wealthy.
To minimize the confusion about which capital sources are angel investors, I’m going to define some other sources of funds for private companies:
Venture investment can range from riskier seed, R&D, and start-up funding at the earlier stages through bridge, acquisition, merger, and turnaround investments at later stages in the development of the venture. Obviously, ventures at the riskier end of the spectrum offer potentially higher returns if they meet their projections.
Typically, seed defines a company in the idea stage, when its process are being organized. R&D is typical of the financing of product development for early-stage but more developed companies, start-up designates a venture completing its product development and initial marketing. At the less-risky end, bridge designates a venture requiring short-term capital to reach stability. Acquisition and merger refer to a company's need for capital to finance an acquisition. Turnaround denotes a venture that needs capital to change from an unprofitable to a more profitable circumstance.
Angel investors have been major engines of the booming New Economy. Angel investors generate new ideas, contribute innovative technologies to the marketplace, and inject much-needed vitality into complacent industries. new Ventures occasionally grow into major corporations, such as Microsoft, Dell, America Online, Netscape, and others.
We cannot underestimate how astute many of these investors are. They are self-made millionaires. Over and above their homes and cars, they typically have net worth of $1 million to $10 million, having been extremely successful investors in the public as well as the private market. In most cases, they bank on their own judgment to once again select venture like the one that made them wealthy.
To minimize the confusion about which capital sources are angel investors, I’m going to define some other sources of funds for private companies:
- Institutional investor: A corporation, financial institution, or other organization (e.g., venture capital firm) that uses money raised from another party to provide capital to a private business owned and operated by someone else.
- Friends and family investor: An individual who uses his own money to provide capital to a private business owned and operated by a family member, work colleague, friend or neighbor.
- Informal investor: An individual (not an institution) who uses his own money to provide capital to a private business owned and operated by someone else.
Venture investment can range from riskier seed, R&D, and start-up funding at the earlier stages through bridge, acquisition, merger, and turnaround investments at later stages in the development of the venture. Obviously, ventures at the riskier end of the spectrum offer potentially higher returns if they meet their projections.
Typically, seed defines a company in the idea stage, when its process are being organized. R&D is typical of the financing of product development for early-stage but more developed companies, start-up designates a venture completing its product development and initial marketing. At the less-risky end, bridge designates a venture requiring short-term capital to reach stability. Acquisition and merger refer to a company's need for capital to finance an acquisition. Turnaround denotes a venture that needs capital to change from an unprofitable to a more profitable circumstance.
Tuesday, December 30, 2008
VCs focus on capital efficiency in new deals
Livemint - Delhi,Delhi,India
This year saw a reining in of valuations, on the rise since 2006, when venture and private equity (PE) investing returned to India in a big way, ...
Livemint - Delhi,Delhi,India
This year saw a reining in of valuations, on the rise since 2006, when venture and private equity (PE) investing returned to India in a big way, ...
Prospects, hurdles for 2009 in Nigeria Technology sector
Ernest NdukweAccording to BusinessDay, by October 2008, Nigeria's telecom sector had chalked up 58.9 million subscribers,up from under 500,000 in 2001. As at October this year, the country had hit a teledensity mark of 42.13 percent.Industry authorities describe the country as one of the fastest growing in the world as regards to telecoms.
The telecom sector has created tens of thousands of jobs directly and indirectly and many locals have picked up technology skills. Electronic banking and electronic payment systems are riding on the back of the new telecom infrastructure and delivering service through the mobile phone portal.
A lot of valuable man hours are saved daily as people can now get valuable business and other information by making a phone call, as against in the past when on account of poor communication people had to travel long distances just to get the same information.
Ernest Ndukwe, the executive vice chairman of the Nigerian Communications Commission (NCC) recently warned telecommunications operators across the country to optimise their networks in order to cope with the volume of traffic expected during the Christmas and New Year festivity periods.
Ndukwe stressed that broadband was the next frontier that needed to be conquered.
"Some of the mobile operators have begun offering services on the 3G platform and subscribers are now able to transmit data across huge wireless bandwidths. Some of the companies have rolled out WiMAX services which are providing broadband services across major cities like Abuja, Lagos and Port Harcourt.
Ndukwe said it was because of the importance placed on extending broadband services to all parts of the country that the commission initiated the State Accelerated Broadband Initiative (SABI) which from implementation would cover all the 36 state capitals across Nigeria and many of the urban and semi urban centres.
"The rationale behind the SABI project is to provide wireless broadband services in Nigerian cities so as to stimulate demand for Internet services and increase usage, and most importantly, this project is to drive broadband to home at affordable levels", he said.
He said that the Wire Nigeria, (WIN) project being facilitated by the commission to ensure provision of optic fibre cable backbone infrastructure across the country, would also compliment the SABI.
"The idea behind the WIN project is to provide a national backbone infrastructure which will allow multiple operators to hook on at any point to deliver quality broadband transmission services across the country," he said.
For their part, Information and Communication Technology (ICT) experts say that in order to benefit fully from the Internet, Nigeria needs to continuously improve its connectivity infrastructure in order to achieve affordable broadband connections. This is even as emerging market trends show that the most significant factor enabling broadband growth is the existence of alternative infrastructures, in particular cables.
Ndukwe kalu, President, Nigerian Internet Regulation Association (NIRA) observed that Nigeria had done fairly well in the area of ICT but advised that there was the need to take sufficient advantage of the massive wealth generation opportunities which local IT development offers.
He said: "In terms of telecoms, there are two verticals we need to look at here, voice and data. For voice, we have done exceptionally well recording 57 million active lines out of a population of 140 million people. That ratio far exceeds the United Nations Organisations (UNO) ratio for telecommunications penetration."
"For data, statistics show Nigeria has one of the lowest broadband usage levels in Africa with less than 10, 000 subscribers. We are a stage worse than what it was in telecoms in 2001", he added.
Internet domain name, after a long and difficult journey, the Nigerian Internet Registration Association NIRA is set to deliver on a key component of its mandate. Come January 1, 2009 NIRA would commence automated and commercial service. Nigerians all over the world and others interested in the .ng open domain would be able to register .ng domains with instant results. Registrations would be possible through any of the NIRA accredited 29 registrars.
The registrars with online payment systems offer instant domain registrations with domains visible one hour later. Apart from the patriotic appeal every Nigerian has every reason to go for a .ng domain. .ng domains would be one of the cheapest cctlds or gtlds in pricing. Also as a virgin domain many brand names are all available for proper name registration. All these make the .Ng domain a key domain of choice.
Pioneer Accredited Registrars appointed for .ng Registry, after a pains taking evaluation process by the Registrar Accreditation committee, the Executive Board has approved the appointment of the first and only set of 29 Pioneer Registrars for the .ng Registry.
The Registrar Accreditation committee headed by the NIRA VP Mary Uduma had received 35 completed applications for the Pioneer Accreditation process. While all 35 were given provisional accreditation after due assessment only 29 could meet all the set criteria for final accreditation. Of these three had primary office locations outside Nigeria, pricelsy, Senegal, UK and the US.
Electricity, the poor electricity supply in Nigeria is proving a major impediment to the operation and growth of Information Technology and other businesses in the country. This makes it difficult to survive at home or to compete in the global arena. The necessary generation of alternative power adds about 30 percent to the cost of doing business in Nigeria. The three tier of government, federal, state and local have agreed to release $5 billion for the completion of the National Integrated Power Project (NIPP). When this is done, we can have some of the power projects completed in 2009. This should improve generation by about 20 percent. Peak power generation for 2008 was about 3,500 megawatts. Experts estimate that power generation could increase by about 1,000 megawatts in 2009. Government says generation should hit 6,000 megawatts in 2009 by industry experts say it would not likely exceed 4,500.
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Business Standard - Mumbai,Maharashtra,India The sharp fall in markets has also delayed exit opportunities for PE investors. These are the views of the President & CEO of IDFC Private Equity Group, ... See all stories on this topic |
Saturday, December 27, 2008
Representing the private equity and venture capital industry in ...
African Venture Capital Association is a not-for-profit entity founded to promote, develop and stimulate private equity and venture capital in Africa.http://www.avcanet.com
Venture Capital & Angel Investors
Venture Capital & Angel Investors: "Wall Street's Affect on Early-Stage Venture Capital and Angel Investing
Watch this short video of 7 VCs and Angel Investors discussing how the turmoil on Wall Street will be affecting their strategy on making early-stage investments.
Watch the video clip here.
Details on this Venture & Angel Event in NYC Wall Streets Affect on VC"
Watch this short video of 7 VCs and Angel Investors discussing how the turmoil on Wall Street will be affecting their strategy on making early-stage investments.
Watch the video clip here.
Details on this Venture & Angel Event in NYC Wall Streets Affect on VC"
Friday, December 26, 2008
Nigerian investors should begin to seek alternative ways of investing, Investors Told
Mr. Olumide Oyetan, a director with the Stanbic IBTC Asset Management suggested that Nigerian investors should begin to seek alternative ways of investing their monies for better returns as the bearish trend in the market continues unabated. According to him, "the benefit of alternative investments is to enhance total return and diversification of investments."
The alternative areas of investments he said are; Private Equity/Venture Capital, Credit/Structured Notes, Emotional Assets (Coins, Jewellery, Fine Art & Wine, etc) and Timber/Farmlands and Oil & Gas. Other options with high returns are "derivatives or physicals such as managed futures, commodities, currencies, hedge fund strategies, trading in volatility, carbon emissions, and weather derivatives among others."
He however cautioned that, attention should be paid to correlation of the asset classes and the fund manager's skill in search of the elusive alpha. According to him, "accessing alternative investments through Standard Bank Group/Stanbic IBTC Asset Management Limited can assure of access to attractive pipeline of Private Equity deals through Stanbic IBTC Bank."
The alternative areas of investments he said are; Private Equity/Venture Capital, Credit/Structured Notes, Emotional Assets (Coins, Jewellery, Fine Art & Wine, etc) and Timber/Farmlands and Oil & Gas. Other options with high returns are "derivatives or physicals such as managed futures, commodities, currencies, hedge fund strategies, trading in volatility, carbon emissions, and weather derivatives among others."
He however cautioned that, attention should be paid to correlation of the asset classes and the fund manager's skill in search of the elusive alpha. According to him, "accessing alternative investments through Standard Bank Group/Stanbic IBTC Asset Management Limited can assure of access to attractive pipeline of Private Equity deals through Stanbic IBTC Bank."
Saturday, October 25, 2008
Friday, October 10, 2008
PRIVATE-EQUITY FUNDING ON RECORD PACE
While public financial markets are in crisis, U.S. private equity firms continue to stockpile capital and have picked up the pace of their fundraising.
U.S. private equity firms raised $222.6 billion in 264 funds during the first three quarters of 2008, 11 percent ahead of the $200.4 billion raised by 298 funds in the same time last year.
That is in contrast to the halfway point of this year, when fundraising lagged slightly behind last year's pace. There's also been a slowdown in buyout fundraising. The full-year fundraising record of $313 billion was set in 2007.
Limited partners have been saying that they intend to invest in private equity at a steady pace through the current downturn. Many of these investors have learned their lesson after the venture bubble burst in 2000.
Distressed firms, which are calculated in the buyout/corporate finance category, are seeing strong interest from investors, with 18 funds raising $37.9 billion so far this year, up 28 percent from $29.5 billion raised by 16 funds at this point last year, according to the report. Distressed firms raised a record $48.2 billion in 2007.
U.S. private equity firms raised $222.6 billion in 264 funds during the first three quarters of 2008, 11 percent ahead of the $200.4 billion raised by 298 funds in the same time last year.
That is in contrast to the halfway point of this year, when fundraising lagged slightly behind last year's pace. There's also been a slowdown in buyout fundraising. The full-year fundraising record of $313 billion was set in 2007.
Limited partners have been saying that they intend to invest in private equity at a steady pace through the current downturn. Many of these investors have learned their lesson after the venture bubble burst in 2000.
Distressed firms, which are calculated in the buyout/corporate finance category, are seeing strong interest from investors, with 18 funds raising $37.9 billion so far this year, up 28 percent from $29.5 billion raised by 16 funds at this point last year, according to the report. Distressed firms raised a record $48.2 billion in 2007.
Friday, October 3, 2008
CONGRESS PASSES BAILOUT BILL
Treasury’s $700 billion rescue plan for financial markets passes 263-171, winning approval from the same House which rejected it four days ago.
Going forward now, Treasury will have immediate authority to invest $250 billion and little trouble getting a second installment of $100 billion. But Paulson will be subjected to much greater oversight than he first proposed, and a future Congress could potentially deny any funding beyond the first $350 billion authorized in the legislation.
Taxpayers are promised a greater chance to gain some equity interest in the companies benefiting from the government aid. And new restrictions are imposed on executive pay and severance packages for those firms that sell more than $300 million in securities to the government.
Treasury official admit that it will take several weeks to begin to put the program into effect. And together with Federal Reserve Chairman Ben Bernanke, Paulson is exploring how best to use new auction mechanisms to not only guide the government’s investments but also shed new light on the real value of assets suppressed to “fire sale" prices after the collapse of the U.S. housing bubble.
Treasury will also have to sell bonds to raise the money, meaning Paulson’s early investments may be limited to just $50 billion a month. And for this reason, the real future of the initiative could rest on whomever succeeds President Bush in January.
Going forward now, Treasury will have immediate authority to invest $250 billion and little trouble getting a second installment of $100 billion. But Paulson will be subjected to much greater oversight than he first proposed, and a future Congress could potentially deny any funding beyond the first $350 billion authorized in the legislation.
Taxpayers are promised a greater chance to gain some equity interest in the companies benefiting from the government aid. And new restrictions are imposed on executive pay and severance packages for those firms that sell more than $300 million in securities to the government.
Treasury official admit that it will take several weeks to begin to put the program into effect. And together with Federal Reserve Chairman Ben Bernanke, Paulson is exploring how best to use new auction mechanisms to not only guide the government’s investments but also shed new light on the real value of assets suppressed to “fire sale" prices after the collapse of the U.S. housing bubble.
Treasury will also have to sell bonds to raise the money, meaning Paulson’s early investments may be limited to just $50 billion a month. And for this reason, the real future of the initiative could rest on whomever succeeds President Bush in January.
Tuesday, September 30, 2008
GroFin Private Equity to inject $125m in Africa
A PRIVATE equity fund plans to put money in risk capital investments and other business support to five African countries.
The GroFin Africa fund has so far raised $125m at its fund’s first closing.
This represents the largest fundraising success by GroFin in a single fund to date, a fact that highlights appetite for investors for Africa. The fund would invest between $100,000 and $1m in seven countries including Uganda, Ghana, Kenya, Nigeria, Rwanda, Tanzania and South Africa. It expects to raise $160m by November.
The economic, political and social reforms coupled with several years of high growth that have taken place across many African economies, made it a “very attractive growth finance environment.
GroFin specialises in integrating the much-needed risk finance with business development support.
This helps fill a void between micro-finance and private equity as very few financiers target the emerging growth finance asset class. The fund will target growth finance opportunities in all sectors like consumer goods services, logistics /transport, private education, manufacturing and agribusiness.
The fund was created by GroFin, a leading growth finance fund management company specialising in risk capital and business support for small-and-medium businesses in emerging markets.
The GroFin Africa fund has so far raised $125m at its fund’s first closing.
This represents the largest fundraising success by GroFin in a single fund to date, a fact that highlights appetite for investors for Africa. The fund would invest between $100,000 and $1m in seven countries including Uganda, Ghana, Kenya, Nigeria, Rwanda, Tanzania and South Africa. It expects to raise $160m by November.
The economic, political and social reforms coupled with several years of high growth that have taken place across many African economies, made it a “very attractive growth finance environment.
GroFin specialises in integrating the much-needed risk finance with business development support.
This helps fill a void between micro-finance and private equity as very few financiers target the emerging growth finance asset class. The fund will target growth finance opportunities in all sectors like consumer goods services, logistics /transport, private education, manufacturing and agribusiness.
The fund was created by GroFin, a leading growth finance fund management company specialising in risk capital and business support for small-and-medium businesses in emerging markets.
Monday, September 29, 2008
$700 Billion Bailout Bill has failed in the House
Treasury’s $700 billion Wall Street bail out plan collapsed in the House, sending a upset through financial markets.
Republican defections proved critical to the massive government intervention, which was rejected 228-205. In spite of bipartisan appeals from the leadership, anti-Wall Street sentiment and the huge scale of the proposed government intervention proved too much for Treasury to prevail.
Democrats more than delivered a majority of their caucus, and House Speaker Nancy Pelosi (D-Calif.) held the vote open to bring her numbers up to 140 votes for the package. But Republicans never topped 70, and the final GOP split was 133 against the bill and only 65 for the measure.
After the vote, Republicans claimed that the Democratic leadership had been warned that fewer than 60 Republicans would vote for the bill. Democrats denied the claim, saying they never would have brought the bill to the floor if they had been told there was so little Republican support.
Republican defections proved critical to the massive government intervention, which was rejected 228-205. In spite of bipartisan appeals from the leadership, anti-Wall Street sentiment and the huge scale of the proposed government intervention proved too much for Treasury to prevail.
Democrats more than delivered a majority of their caucus, and House Speaker Nancy Pelosi (D-Calif.) held the vote open to bring her numbers up to 140 votes for the package. But Republicans never topped 70, and the final GOP split was 133 against the bill and only 65 for the measure.
After the vote, Republicans claimed that the Democratic leadership had been warned that fewer than 60 Republicans would vote for the bill. Democrats denied the claim, saying they never would have brought the bill to the floor if they had been told there was so little Republican support.
Citigroup Agrees to Buy Wachovia's Banking Operations
Citigroup Inc., the biggest U.S. bank by assets, will acquire banking operations of Wachovia Corp. for about $2.16 billion after shares of the North Carolina lender collapsed under the weight of overdue mortgages.
The all-stock deal equals about $1 a share for the Charlotte-based bank, ranked sixth by assets in the U.S. All depositors will be protected, according to the Federal Deposit Insurance Corp., which helped broker the takeover by Citigroup. The New York-based bank plans to cut its own dividend in half and raise $10 billion in capital as it takes on Wachovia's senior and subordinated debt.
The purchase gives Citigroup about 3,300 branches and offices in 21 states. Wachovia will continue to own the A.G. Edwards Inc. brokerage and the Evergreen mutual-fund family.
The all-stock deal equals about $1 a share for the Charlotte-based bank, ranked sixth by assets in the U.S. All depositors will be protected, according to the Federal Deposit Insurance Corp., which helped broker the takeover by Citigroup. The New York-based bank plans to cut its own dividend in half and raise $10 billion in capital as it takes on Wachovia's senior and subordinated debt.
The purchase gives Citigroup about 3,300 branches and offices in 21 states. Wachovia will continue to own the A.G. Edwards Inc. brokerage and the Evergreen mutual-fund family.
Wednesday, September 24, 2008
Warren Buffet is backing Goldman Sachs in in $7.5 Billion Fundraising
Goldman Sachs Group Inc. won the backing of Warren Buffett, the world's preeminent stock-picker, as the Wall Street firm seeks to raise cash from investors whose faith in the investment-banking business model has been shaken.
The bank soared 11 percent to $138.17 in German trading today. For Goldman, the endorsement came at a price. Berkshire Hathaway Inc., led by the 78-year-old billionaire, is buying $5 billion of perpetual preferred stock with a 10 percent dividend. Berkshire also gets warrants to buy $5 billion of common stock at $115 a share at any time in the next five years. The common stock closed yesterday at $125.05, providing Buffett with an instant paper profit of $437 million.
In addition to raising money from Buffett, Goldman said it plans to sell at least $2.5 billion of common stock to the public. It will be the firm's first common stock offering since 2000. No details of the planned offering were disclosed in a statement released by the New York-based company yesterday.
The bank soared 11 percent to $138.17 in German trading today. For Goldman, the endorsement came at a price. Berkshire Hathaway Inc., led by the 78-year-old billionaire, is buying $5 billion of perpetual preferred stock with a 10 percent dividend. Berkshire also gets warrants to buy $5 billion of common stock at $115 a share at any time in the next five years. The common stock closed yesterday at $125.05, providing Buffett with an instant paper profit of $437 million.
In addition to raising money from Buffett, Goldman said it plans to sell at least $2.5 billion of common stock to the public. It will be the firm's first common stock offering since 2000. No details of the planned offering were disclosed in a statement released by the New York-based company yesterday.
Tuesday, September 23, 2008
Thursday, September 18, 2008
First Reserve Corp. has completed its C$3.7 billion buyout of CHC Helicopter
First Reserve Corp. has completed its C$3.7 billion buyout of CHC Helicopter Corp. (NYSE: FLI), a provider of helicopter services to the global offshore oil and gas industry. Morgan Stanley led the debt syndicate.
The Arrangement was approved by CHC’s shareholders at a special meeting held on April 29, 2008, and was approved by the British Columbia Supreme Court on May 1, 2008. Under the Arrangement, 6922767 Canada Inc. acquired all of CHC’s outstanding Class A Subordinate Voting Shares and Class B Multiple Voting Shares for cash consideration of CDN$32.68 per share.
It is expected that the CHC Class A Subordinate Voting Shares and Class B Multiple Voting Shares will be delisted from the TSX and the NYSE (in respect of the Class A shares) later this week.
Also, on September 15, 2008, CHC’s cash tender offer (the “Offer”) for all outstanding CHC’s 7 3/8% senior subordinated notes due 2014 (the “Notes”) and the related consent solicitation expired. CHC indicated that approximately US$392 million principal amount of the Notes was validly tendered to the Offer. All Notes validly tendered were purchased by CHC and submitted to the trustee for cancellation. As a result of CHC’s purchase of the tendered Notes, the amendments to the Notes indenture contemplated by the consent solicitation have become operative.
CHC intends to apply to the relevant securities regulatory authorities to cease to be a reporting issuer in each of the jurisdictions in Canada where is it currently reporting.
The Arrangement was approved by CHC’s shareholders at a special meeting held on April 29, 2008, and was approved by the British Columbia Supreme Court on May 1, 2008. Under the Arrangement, 6922767 Canada Inc. acquired all of CHC’s outstanding Class A Subordinate Voting Shares and Class B Multiple Voting Shares for cash consideration of CDN$32.68 per share.
It is expected that the CHC Class A Subordinate Voting Shares and Class B Multiple Voting Shares will be delisted from the TSX and the NYSE (in respect of the Class A shares) later this week.
Also, on September 15, 2008, CHC’s cash tender offer (the “Offer”) for all outstanding CHC’s 7 3/8% senior subordinated notes due 2014 (the “Notes”) and the related consent solicitation expired. CHC indicated that approximately US$392 million principal amount of the Notes was validly tendered to the Offer. All Notes validly tendered were purchased by CHC and submitted to the trustee for cancellation. As a result of CHC’s purchase of the tendered Notes, the amendments to the Notes indenture contemplated by the consent solicitation have become operative.
CHC intends to apply to the relevant securities regulatory authorities to cease to be a reporting issuer in each of the jurisdictions in Canada where is it currently reporting.
Wednesday, August 20, 2008
2008 Black Enterprise Top Private Equity
- MacFarlane Partners
San Francisco, CA
Capital Under Management* 20,100.000 - Fairview Capital Partners Inc.
West Hartford, CT
Capital Under Management* 2,600.000 - Vista Equity Partners
San Francisco, CA
Capital Under Management* 2,000.000
Number of Funds: 2 - MayfieldGentry Realty Advisors L.L.C.
Detroit, MI
Capital Under Management* 953.000
Number of Funds: 1
Total Number of Portfolio Companies: 1 - UrbanAmerica L.P.
New York, NY
Capital Under Management* 520.000
Number of Funds: 2
Total Number of Portfolio Companies: 2 - Pharos Capital Group L.L.C.
Dallas, TX
Capital Under Management* 500.000
Number of Funds: 3
Total Number of Portfolio Companies: 3 - ICV Capital Partners L.L.C.
New York, NY
Capital Under Management* 443.000
Number of Funds: 2
Total Number of Portfolio Companies: 2 - SYNCOM Venture Partners
Silver Spring, MD
Capital Under Management* 410.000
Number of Funds: 2
Total Number of Portfolio Companies: 2 - Smith Whiley & Co.
Hartford, CT
Capital Under Management* 270.000
Number of Funds: 3
Total Number of Portfolio Companies: 3 - Ascend Venture Group L.L.C.
New York, NY
Capital Under Management* 150.000
Number of Funds: 2
Total Number of Portfolio Companies: 2 - Opportunity Capital Partners
Fremont, CA
Capital Under Management* 135.000
Number of Funds: 4
Total Number of Portfolio Companies: 4 - Black Enterprise Greenwich Street Corporate Growth Management L.L.C.
New York, NY
Capital Under Management* 91.000
Number of Funds: 1
Total Number of Portfolio Companies: 1 - 21st Century Group L.L.C.
Dallas, TX
Capital Under Management* 80.000
Number of Funds: 1
Total Number of Portfolio Companies: 1 - Meridian Management Group Inc.
Baltimore, MD
Capital Under Management* 50.000
Number of Funds: 3
Total Number of Portfolio Companies: 3 - United Enterprise Fund L.P.
New York, NY
Capital Under Management* 41.000
Number of Funds: 1
Total Number of Portfolio Companies: 1
* In Millions of Dollars to the nearest thousand. As of Dec. 31, 2007 Prepared by B.E. Research.
Wednesday, August 13, 2008
West Africa's positive developments for private equity
West Africa region, often known as the place of political instability, has in the past month been home to several developments for dealmaking in the private equity industry.
For decades, West Africa – defined by the United Nations as 16 nations in the northwest portion of the continent stretching from Nigeria in the southeast to Mauritania in the northwest – had among other difficulties seen its business community face the dual challenges of poor corporate governance standards and a shortage of available capital.
Public markets like Nigeria’s, the largest in the region, are providing solution to those problems. The maturation of the Nigerian stock exchange has been important, and it’s been important not only for the value associated with having a market that is large enough to permit Emerging Capital Partners (ECP) to exit some fairly meaningful investments.
But the value of the stock exchange, the improvement of the stock exchange goes beyond that because it really suggests a number of things: an improved regulatory environment, that there are more local institutions that are keeping money in Nigeria and investing in Nigerian companies rather than taking money abroad. The country’s deregulation efforts in the financial sector as a major growth driver, not only for Nigeria but for the rest of the region as other West African countries consider similar regulatory changes.
ECP has owned or currently owns several portfolio companies on the Nigerian exchange, which has grown its annual value traded from $2 billion in 2005 to $17 billion in 2007, according ECP. Those companies include Continental Re, one of the largest reinsurance companies in Nigeria, and Ecobank, which is also listed on the Ghana and Cote d’Ivoire exchanges.
Although lacking its own exchange, war-torn Liberia has also publicised policy efforts in recent weeks that could make it a fresh destination for private equity activity.
Earlier this month, the Liberian Electricity Corporation disclosed that it was seeking roughly $200 million in private investment to repair a primary hydroelectric facility. The call for private capital is part of the Liberian government’s broader program to funnel money into the nation’s decrepit energy infrastructure.
Private equity involvement in sub-Saharan African energy infrastructure is not without precedent.
For decades, West Africa – defined by the United Nations as 16 nations in the northwest portion of the continent stretching from Nigeria in the southeast to Mauritania in the northwest – had among other difficulties seen its business community face the dual challenges of poor corporate governance standards and a shortage of available capital.
Public markets like Nigeria’s, the largest in the region, are providing solution to those problems. The maturation of the Nigerian stock exchange has been important, and it’s been important not only for the value associated with having a market that is large enough to permit Emerging Capital Partners (ECP) to exit some fairly meaningful investments.
But the value of the stock exchange, the improvement of the stock exchange goes beyond that because it really suggests a number of things: an improved regulatory environment, that there are more local institutions that are keeping money in Nigeria and investing in Nigerian companies rather than taking money abroad. The country’s deregulation efforts in the financial sector as a major growth driver, not only for Nigeria but for the rest of the region as other West African countries consider similar regulatory changes.
ECP has owned or currently owns several portfolio companies on the Nigerian exchange, which has grown its annual value traded from $2 billion in 2005 to $17 billion in 2007, according ECP. Those companies include Continental Re, one of the largest reinsurance companies in Nigeria, and Ecobank, which is also listed on the Ghana and Cote d’Ivoire exchanges.
Although lacking its own exchange, war-torn Liberia has also publicised policy efforts in recent weeks that could make it a fresh destination for private equity activity.
Earlier this month, the Liberian Electricity Corporation disclosed that it was seeking roughly $200 million in private investment to repair a primary hydroelectric facility. The call for private capital is part of the Liberian government’s broader program to funnel money into the nation’s decrepit energy infrastructure.
Private equity involvement in sub-Saharan African energy infrastructure is not without precedent.
Starcomms exit nets Emerging Capital Partners 2.9 times
Emerging Capital Partners has made 2.9 times its original investment in Starcomms, a Nigerian mobile telecommunications operator.
The Africa-focussed private equity firm sold its position in the company via an N64.35 billion ($547 million; €348 million) private placement preceding a listing on the Nigerian Stock Exchange, the first such listing of a telecom company.
The transaction resulted in proceeds of approximately $99 million (€63 million. ECP has invested a total of $34.3 million in Starcomms since 2005, when it teamed with emerging markets-focussed firm Actis to acquire a majority stake in the company for $43.2 million.
ECP and Actis helped the company expand its telecom infrastructure and subscribers from 100,000 to 1.5 million. It is Nigeria’s largest CDMA 3G mobile operator, and the country’s fourth largest telecom operator.
The investment by was made through the firm’s AIG African Fund Infrastructure Fund, which closed on $407 million in 2000.
The Africa-focussed private equity firm sold its position in the company via an N64.35 billion ($547 million; €348 million) private placement preceding a listing on the Nigerian Stock Exchange, the first such listing of a telecom company.
The transaction resulted in proceeds of approximately $99 million (€63 million. ECP has invested a total of $34.3 million in Starcomms since 2005, when it teamed with emerging markets-focussed firm Actis to acquire a majority stake in the company for $43.2 million.
ECP and Actis helped the company expand its telecom infrastructure and subscribers from 100,000 to 1.5 million. It is Nigeria’s largest CDMA 3G mobile operator, and the country’s fourth largest telecom operator.
The investment by was made through the firm’s AIG African Fund Infrastructure Fund, which closed on $407 million in 2000.
Tuesday, August 12, 2008
ECP nearing first close on $1bn Africa fund
The private equity firm will likely hold a first close on more than $523m, topping its entire previous fund. Launched in the second quarter of this year, the fund will be one of the largest dedicated pan-Africa funds raised to date if it meets its target.
Private equity firm Emerging Capital Partners is targeting a record $1 billion (€642 million) for its latest pan-African vehicle.
ECP is nearing full deployment of ECP Africa II, closed in May 2007. Its investors included the International Finance Corporation and UK-government backed fund of funds CDC.
Merrill Lynch began marketing the $1 billion fund in the second quarter of this year. If the firm succeeds in reaching its target, ECP would lay claim to one of the largest pan-African private equity funds ever raised.
South African investment firm Harith is nearing a final close on a $1 billion pan-African infrastructure development fund, according to Probitas Partners. South-Africa based Pamodzi Investment raised a $1.3 billion mining-focused pan-Africa fund last year.
Private equity firm Emerging Capital Partners is targeting a record $1 billion (€642 million) for its latest pan-African vehicle.
ECP is nearing full deployment of ECP Africa II, closed in May 2007. Its investors included the International Finance Corporation and UK-government backed fund of funds CDC.
Merrill Lynch began marketing the $1 billion fund in the second quarter of this year. If the firm succeeds in reaching its target, ECP would lay claim to one of the largest pan-African private equity funds ever raised.
South African investment firm Harith is nearing a final close on a $1 billion pan-African infrastructure development fund, according to Probitas Partners. South-Africa based Pamodzi Investment raised a $1.3 billion mining-focused pan-Africa fund last year.
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