Markross121_, Author at Achieve Corporation

Markross121_ October 1, 2019 No Comments

PE mega-funds have higher floors and lower ceilings than smaller vehicles

Private equity mega-funds (of at least $5 billion) have tended to outperform smaller funds over the past 20 years. That shouldn’t come as a surprise, as mega-funds are only raised by firms that have outperformed over time.

At least for private equity, the biggest firms are almost by definition some of the best firms, at least perception-wise, since they had to justify their growth to LPs over several funds. Not every top-performing firm opts to grow that large—but the ones that do go on to raise mega-funds give themselves good odds of maintaining performance as they grow.

Our recent PitchBook analyst note dives into performance metrics for $5 billion-plus PE funds and how they differ from the rest of the market. TVPI figures—which reflect a fund’s investment multiple—suggest that mega-funds hit more doubles than the rest of the market, but also fewer home runs. For example, across several vintage buckets, mega-funds have a higher chance than smaller-sized funds to achieve a TVPI of at least 1.5x. That’s great news for larger LPs looking for consistently positive returns.

Robots are ready to sort our trash, but will VCs be interested in the messy world of recycling?

You finish a greasy-yet-satisfying lunch at the cafeteria, pick up the items from the table and walk to the trash and recycling bins. Like most well-intentioned people, you face a familiar dilemma. Used napkins. Leftover ketchup packets. A foam container. Wait, there’s food stuck on it. Where do they all go? Is anyone watching? Help.

We’ve all been there. And our three-second plight is part of an expensive problem that’s only piling up by the minute.

China took the world by surprise last year when it started banning imports on dozens of kinds of solid waste, including some plastics and other recyclables. The maximum acceptable contamination level in plastics and fiber also dropped to 0.5% in China, making it nearly impossible for recycling facilities around the world to quickly process sizable volumes of scrap.

The impact of those changes has been devastating, and for many private waste management companies in the US, plastic recycling is no longer a viable market. Like any other business, a recycling company needs to efficiently use available resources and have a healthy bottom line. The soaring cost of recycling has forced many local governments across the US and recycling processors to send increasing amounts of waste to landfills or incinerators.

Even in this dire situation, many environmentalists and entrepreneurs believe there’s a silver lining. China’s bold move has forced countries throughout the world to acknowledge green issues and push innovative recycling ideas toward tangible and long-term investments.

While humans could single-handedly choke our planet with waste, we may need some help to clean up the mess. Enter the robots.

One of the crucial steps in contributing toward a circular economy begins with correctly classifying what can and cannot be recycled. Even something as straightforward as a coffee cup could be complicated during disposal. Its light-weight plastic lid, paper cup and cardboard holder may appear to be recyclable components, but rules might be different for a sorting facility if it’s made of virgin tree fiber rather than paper or if it’s contaminated with leftover whipped cream.

Charles Yhap, who co-founded CleanRobotics in 2015, realized there might be a better way to sort trash than to expect high levels of awareness, accuracy and motivation from human beings—especially when recycling laws can be confusing and vary from county to county. The Pittsburgh-based company has developed an AI-powered robot called TrashBot that helps automate the separation process at the point of disposal.

“The idea was born out of frustration, of being confronted with an array of trash bins,” Yhap told PitchBook. “Waste management processes are either dirty, dull or dangerous, and it makes sense to target robotics in this industry.”

TrashBot uses cameras and sensors to scan discarded items from everyday waste—and that doesn’t mean it conveniently tosses an unfinished can of soda straight to the bin bound for the landfill. These robots can “swallow” excess liquids. CleanRobotics is focusing on high-traffic facilities such as airports, convention centers and schools, but one challenge is its technology requires waste to be thrown away one item at a time with a short delay in between. The company is backed by investors including GAN Ventures, SOSV and Innovation Works.

Markross121_ September 6, 2019 No Comments

WeWork has acquired more than 20 companies in the run-up to its IPO

In their endeavors to scale operations and improve their brands, VC-backed companies have turned to robust M&A activity in recent years. Taking notes from consumer-facing platforms such as Facebook and Twitter, who led the way to establish how private companies can grow from strategic acquisitions before their historic rides to the public markets, WeWork has acquired 21 startups to date, with a bulk of those investments sealed in the last three years.

The co-working giant raised nearly $1 billion in VC funding before it made its first acquisition in 2015 with Case, which provides building design and information-modeling services. And in a bid to either grow the current business or explore opportunities in other industries, WeWork is currently one of the most active VC-backed acquirers in the space.

How many of those investments were directly related to the company’s space-as-a-service offering? According to a recent PitchBook analyst note, the split of acquisitions made by WeWork related to the core business versus noncore is an estimated 60-40. Notable acquisitions that currently have little to do with WeWork’s office rental focus include Flatiron School, which offers a coding education platform and Islands Media, the developer of a messaging app for college students.

The co-working giant revealed mounting losses in its S-1 filing last month. However, its appetite to acquire startups that range from the developer an office sign-in system to a behavior-analytics platform, indicates that buying tech or venturing beyond its core business via an acquisition seems to be the preferred route for WeWork, instead of building the same thing in-house.

While mega-deals from deep-pocketed investors such as SoftBank or eye-popping valuation step-ups may have favored WeWork’s acquisition strategies so far, it’s difficult to say whether the business will continue to pick up startups at the same rate in the future, especially as it plans to seek a valuation of between $20 billion and $30 billion in its upcoming IPO, slashing its last private market valuation, according to The Wall Street Journal.

Thomas Cook agrees terms of £900m rescue deal with Fosun

Thomas Cook has confirmed the terms of a £900m rescue deal that will give the Chinese conglomerate Fosun control of its holiday business – but warned its shares may be pulled from the London stock market as a result.

The Chinese investor Fosun will inject £450m into the business in exchange for a 75% stake in its 178-year-old package tour division and a 25% holding in its airline business.

The rescue package will give the Shanghai-based Fosun another foothold in the European market, where it already owns the holiday resort chain Club Med and the Premier League football club Wolverhampton Wanderers. Fosun holds an 18% stake in Thomas Cook.

Sale of British Steel subsidiary to French firm protects 400 jobs

York-based TSP Projects will be folded into Systra, which will take on pension liabilities

A subsidiary of British Steel has been sold by the government to the French company Systra in a deal that protects 400 jobs.

The deal is not expected to have any impact on discussions on the rest of British Steel, as exclusive talks continue between the government’s official receiver, the state employee managing the sale, and Oyak, the Turkish military pension fund.

York-based TSP Projects, which designs and builds large rail infrastructure projects, will be folded into Systra. The proceeds of the sale are likely to be allocated to lenders to British Steel, which collapsed into liquidation in May.

Neither the government nor the companies disclosed the sale price but Systra will also take on TSP’s £70m pension liabilities, a hangover from the company’s days as a division of British Rail before privatisation.

Craig Scott, the chief executive of TSP Projects, said the liquidation of British Steel had never threatened his company, which was performing well and counted firms including Network Rail, Siemens and Costain among its clients.

“We would always have found a buyer,” said Scott. He added that he was “pleased to get out from the association with British Steel in administration and to be able to get on with focusing on our business. We’re moving to an owner where we’re part of their core business and it’s a permanent home.”

He said Systra and TSP Projects were growing, meaning that none of the company’s 400 jobs would be lost and more staff could be hired. “We do not have sufficient people to deliver the pipeline we have got coming, so together we need to grow,” he said.

TSP Projects has worked on projects such as the redevelopment of King’s Cross and Reading stations and is also working on infrastructure at Gatwick airport’s station and upgrades to the TransPennine Express rail route.

Most of its employees are based in York but it also has outposts in Birmingham, Manchester, Reading and Bristol.

Systra, an engineering group specialising in transport, is owned by the French state railway companies SNCF and RATP, which runs public transport in Paris, and a consortium of French banks.

Permira-backed TeamViewer defies European IPO drought

PE-backed software company TeamViewer has announced plans to go public on the Frankfurt Stock Exchange by the end of the year. The offering could be one of Germany’s largest listings since 2017, with the expected valuation said to be between €4 billion and €5 billion (between around $4.4 billion and $5.5 billion).

Based in the city of Göppingen, TeamViewer develops a platform for online meetings and remote desktop access that has been installed on over 2 billion devices. Last year, the company reportedly generated sales of €230 million and EBITDA of €121 million.

Permira bought the business in 2014 for a reported €870 million from GFI Software. The PE firm is anticipated to sell between 30% and 40% of its shares, according to the Financial Times, but is said to be retaining its position as a majority stakeholder. Permira was reportedly approached by Hellman & Friedman and Vista Equity Partners in 2017, with each firm offering separate bids of some $2 billion to acquire TeamViewer.

If successful, the listing bucks a trend that has seen a significant drop in European IPOs. According to data from PitchBook, public offerings on the continent are at their lowest levels in nearly a decade. So far this year, 106 European companies have gone public compared with 311 last year. What’s more, very few of the companies that debuted on the markets this year raised large amounts of cash.

Only three businesses from the continent have broken the €1 billion mark in eight months. The largest IPO came courtesy of Italian lender Nexi, which priced its shares at €9 apiece to raise more than €2 billion in April. Europe’s second-biggest listing of the year saw Volkswagen’s truck and bus unit Traton make its stock market debut at €27 per share which brought in €1.55 billion. The final company that raised at least €1 billion is Trainline, the developer of a platform offering train and bus tickets. The KKR-backed business secured £951 million (around $1.2 billion at the time) by floating in London.

Some European businesses have avoided the markets altogether or backed out of scheduled IPOs. In July, Swiss Re pulled plans to list its UK life insurance arm ReAssure, which could have given the business a market cap of up to £3.3 billion. The group cited weak demand and heightened caution as its reasons, suggesting that certain political events may play a role in IPO suspension.

Of course, Brexit gets some of the blame, especially in the UK, but political uncertainty may not be the only reason for the lackluster demand for IPOs. Considering share price performance, European businesses haven’t been the best performers when going public. Traton’s stock has pretty much been on a downward spiral since the company’s June IPO—closing Wednesday at just over €22 per share—while Nexi’s stock fell a reported 6.2% on its first day. And we all know the debacles that were the Aston Martin and Funding Circle listings.

Still, there is hope that if it is executed, TeamViewer’s public debut will fare better than some of its peers, with its profitability and the attractiveness of the software market.

Which US companies had the biggest valuation jumps in 2019?

Valuation step-ups in the private market continue to be one of the crucial indicators in evaluating the overall health of the venture landscape, especially as companies raise bigger and bigger rounds and strive to meet investor expectations. In 2Q, VC-backed companies in the US pulled in more than $25 billion for the sixth consecutive quarter, and many of those rounds came with lofty valuation gains.

Through the first half of the year, valuation growth has been strong in the US, according to our latest VC Valuations Report, with late-stage valuations reaching new heights. In addition, the median early-stage valuation step-up multiples (a comparison of a company’s latest pre-money valuation to its previous round’s post-money valuation) have been on the rise since 2016, and in 1H 2019, they surpassed 2.0x for the first time in at least a decade.

Here’s a look at the VC-backed companies that have seen the biggest valuation jumps in 2019, including those with the largest valuation step-up multiples from one round to the next, as well as those that have seen the largest gains in their post-valuations. Data is sourced from the PitchBook Platform; click on the images below to see a larger version of the graphic.

Largest valuation jumps by step-up multiple

Station F: A symbol of France’s startup ambitions

Two years ago, the French people elected Emmanuel Macron as their 25th president. His pro-business policies and visions of transforming the slow-moving state into a European powerhouse of innovation helped make him the youngest leader of the nation. Sensing change in the air, Station F, which is said to be the world’s largest startup campus, launched in Paris to represent France’s tech renaissance.

Based in Paris’ 13th arrondissement, or district, Station F sits in an unused rail depot said to span the length of the Eiffel Tower. It is home to over 1,000 startups and offers incubator programs run by companies including Facebook, L’Oréal and Microsoft.

In addition to its working spaces, event areas and restaurant, Station F launched a co-living space in June. The space is the largest of its kind in Europe, according to the company, with the capacity to house 600 startup founders and employees. All of these elements combined have reportedly attracted a steady stream of tech juggernauts like Facebook COO Sheryl Sandberg and Twitter co-founder Jack Dorsey, as well as French dignitaries.

Perhaps a surprise to some, Station F is a private sector initiative rather than government-backed. It’s owned by Xavier Niel, the founder of telecommunications provider Illiad and international seed investor Kima Ventures. Having a high-profile backer is surely a huge benefit for Station F’s startups, especially when it comes to raising money. Several Station F businesses have secured millions of euros from investors.

Team Vitality reportedly landed a €20 million (around $22 million) investment from entrepreneur Tej Kohli in November; the esports company was developed under the tutelage of Naver, a South Korean search engine provider. In February, co-living space provider Colonies received €11 million in a round that included Idinvest Partners and Kima, per reports. And in April, cybersecurity company Alsid, which is part of aerospace giant Thales Group’s program, raised €13 million in a round led by Idinvest Partners.

Leeds-based ticketing platform acquired by Festicket

Leeds-based ticketing platform, Event Genius, has been acquired by Festicket, the world’s largest platform for music festival experiences.

The sale includes Event Genius’s consumer facing brand, Ticket Arena. The terms of the deal have not been disclosed.

The new offering, known as Event Genius by Festicket, will create an “end-to-end platform for organisers and fans alike, providing the most complete offering in the live entertainment industry”.

Founded by managing director Reshad Hossenally (pictured above) in 2008, Event Genius offers complete event solutions to events including Wales Rally GB, Motion Bristol, Annie Mac’s Lost & Found Festival, Summer Daze, Ibiza Rocks and BPM Festival.

Following the acquisition, Festicket will roll out the new offering to festivals, concerts, clubs, sports, family attractions and other events worldwide.

Based in Leeds and London, Event Genius and Ticket Arena has worked with over 1.9 million customers and generated over €400 million worth of sales.

Festicket, founded in 2012 by Zack Sabban and Jonathan Younes, is backed by investors including Beringea, Edge, Lepe Partners and ProFounders. It was ranked as the UK’s 21st fastest-growing technology company by the Sunday Times Tech Track 100 in 2018.

Zack Sabban, CEO and co-founder at Festicket, said: “The acquisition transforms Festicket’s product set. In Event Genius, we have found a company that shares our mission to be a disruptive force in the live entertainment market and – ultimately – to bring the best possible experiences to fans. Reshad and the team have built a great product they have good reason to be proud of, and I look forward to welcoming them to the Festicket family.”

Hossenally, who will join Festicket as chief supply chain officer, said: “The Event Genius mission has always been to utilise technology to bring event organisers and consumers a better experience, regardless of the size or type of event. Couple this with Festicket’s global marketplace and supplier network and we have something truly unique for the events industry.”

Fans at crisis club Bury turn out to clean up their stadium

Bury have been given until 5pm on Tuesday to secure their future, with current owner Steve Dale in talks with data analytics company C&N Sporting Risk over a potential takeover.

However, EFL executive chair Debbie Jevans has suggested that deadline could be extended if only “one per cent” of the deal remains to be completed.

Volunteers have been arriving at Gigg Lane this morning to help after an appeal from the club to help clean up the stadium.

“Whilst the EFL and our potential new owners proceed with their necessary paperwork and dealings, the club needs to prepare the Stadium in order for Saturdays EFL Sky Bet League One clash with Doncaster Rovers to take place.
“With Tuesday’s deadline firmly set, preparations for our first game of the season will commence at 9:00am on Tuesday morning.”
“Recent events, over the summer months, have left the club with just a skeleton staff and we must, therefore, call on voluntary help in order to get the Stadium ready.”

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