Excerpt: "When SurveyMonkey LLC Chief Executive Dave Goldberg wanted to raise money for his Palo Alto, Calif., company, he didn't lean on the venture capitalists that scour Silicon Valley looking for the next Google Inc. or Facebook Inc. Instead, Mr."
Here's an amusing and sardonic take on the film industry and financial investors investing in films: Vegetable Capital Ripens. Draws some unsuspected parallels to the private equity industry. Another piece on the same blog here.
So, short of making or distributing movies oneself, how does one make money investing in movies? I suppose you don't.
Interesting piece at VCCircle here. I thought the comparison below of PE in Indonesia to India a few years ago was apt. The writer's estimate of the number of Indian PE funds in the market today is quite extraordinary too.
Another VC investor mentioned in a discussion yesterday -- and I know that he had the same views three years ago -- that although Vietnam presents great opportunities for the canny investor, entrepreneurs there don't yet have familiarity with terminology and structures that VCs are used to in other markets. For instance, in the Vietnamese legal system, loans and equity are understood, but the concept of preferred shares trips them up.
VCCircle speculates that Just Dial could be looking to IPO at a valuation of over Rs. 2000 crore (20 billion rupees or about $430 million).
Is this a successful exit? Most definitely. The article says that Just Dial had revenues of Rs 134 crore in the year ending March 2010. That means a trailing P/S ratio of 15x when they list. That's not chump change!
Has a large blue-chip Silicon Valley VC made money in this deal? Sure. Sequoia will make a 5x return in two years or less. What has worked in Silicon Valley in the past for the big-boy VCs may not work there in future, but don't count 'em out elsewhere.
Mohanjit Jolly of DFJ India writes another insightful article. To quote just one hard-hitting statement out of many:
Don’t think that the investors can’t afford to shut the company down, or can’t afford not to fund the company. Usually, the entrepreneur loses that game. Instead, it’s best to tackle the tough situations through collaboration, to anticipate the tough times ahead and have a plan to get through it.
Chest-thumping, statistic-twisting propaganda from India's Financial Express, purports to show that India is Asia's most favoured market for private equity. In January (whether 2006 or 2007 is unspecified), according to the article,
India has emerged as the most favoured private equity destination attracting $1,239.22 million worth investments in January, surpassing Asian giants like China and Japan, a study says. India ranks top in terms of PE investments in January-February and has left behind Asian giants like China with $ 609 million and Japan with USD 980 million, according to a report by Asian Venture Capital Journal (AVCJ).
How useful such a statistic is supposed to be beyond... no, wait. I can't think of a single situation where such a statistic could be useful. Anyone with the slightest interest in private equity should know that this is an asset class where:
Investors can be counted in dozens and scores as compared to the millions who participate in the public markets
Investments are similarly few in number (both because of long due diligence processes and an absolute small number of deals in consideration at any given point)
To then state that one country is the favoured destination for private equity based simply on data for one month smacks of ignorance, incompetence and propaganda. Even if the headline conclusion is attributable to the AVCJ (I suspect not) and not to the FE directly, it is a journalist's job to raise questions, not blindly repeat other people's nonsense.
The same article then goes on to provide the following broader statistics:
Asian PE investments in 2006:
2006 growth in funds raised:
This is why I think most journalists are idiots mindless stenographers who haven't the faintest what they're writing about.
Disclaimer: I have not read the original AVCJ report upon which the article is based. Kind souls who would like to enlighten me further may please email me at blogfeedback [at] murli [dot] net or leave a comment here.
It was only a matter of time and the planets aligning in the correct configuration.
Credit markets are buoyant, private equity's techniques look increasingly attractive to and imitable by corporations, structured finance is scaling new heights of innovation each day, and aspiring giants want to make their presence felt outside their traditional markets. What more could one expect but this? Onward ho, I say.
The Economist has an interesting article pointing out that calling today's biggest private equity firms conglomerates isn't too far a stretch, notwithstanding firms' aversion to the appellation. The distaste comes from the conglomerate structure not being in fashion for the past 25 years (in the US, not Asia; large Asian companies are often byzantine setups) but looking at the question purely from a linguistic point of view, it would seem that private equity firms are conglomerates. There really isn't too much more to say on the topic but it's an interesting read with some notable titbits, so go take a look.
An aside: I usually put links like this on my radar, and my radar gets spliced into my main RSS feed. So I'm in the funny position of having a richer RSS feed than a website. The bottom line is that you should probably use my RSS feed or my email newsletter to get updates :)
An insightful article on AltAssets on how to sell businesses, even lemons. Summary (but do read the complete article):
Tell a coherent, credible story that seamlessly takes the business from the past into the future. Pitch the business appropriately for the intended purchasers. Beware the disingenuous over-bidder; they are often the worst of all time wasters. Agree a process to allow the purchaser to get comfortable with the risks of the business. Look well ahead as well as at the road in front of you and know when it's best to do nothing. And, remember Akerlof's Nobel Prize and "The Market for Lemons": Where information is asymmetric, if you don't know what you are doing, there is a very real risk that an asset won't sell, whatever the price.
In today's Telegraph is a piece about European public companies imitating the techniques of LBO houses.
Anything you can do, I can do better. That, at least, is the attitude of some European public companies to the headway being made in the deals business by leveraged buyout houses.
It seems some public companies have piled on debt in their pursuit of returns-enhancing deals. The author cautions against this.
But is this something very new? In the M&A class I am taking at grad school, I've already come across a couple of cases where companies had the option to pursue leveraged recapitalisations and acquisitions. These cases weren't particularly recent. The only thing I can think of that might make a difference is that the cases we studied were all US-based.
My common-sense copyright notice: All original content on this site is copyrighted by the site owner. If you would like to use this anywhere, please credit this site as Greek Complexity at http://www.murli.net/. Please seek permission to use any of this content for commercial purposes. If possible, please also drop me an email at "blogfeedback [at] murli [dot] net" letting me know where I have been quoted (or send me a TrackBack). Thank you.