DVCA Annual Meeting 2006 - PowerPoint PPT Presentation

1 / 34
About This Presentation
Title:

DVCA Annual Meeting 2006

Description:

Independent fund placement and corporate finance advisory firm ... Strategy consulting Europe/US (Bain, Alliance, Telesis) M.Sc. Civil Engineering, INSEAD MBA ... – PowerPoint PPT presentation

Number of Views:49
Avg rating:3.0/5.0
Slides: 35
Provided by: lizso
Category:

less

Transcript and Presenter's Notes

Title: DVCA Annual Meeting 2006


1
DVCA Annual Meeting 2006
  • Current Trends in Fundraising for European
    Private Equity Funds

Thursday, 6 April 2006
2
Acanthus Advisers
  • Firm profile
  • Independent fund placement and corporate finance
    advisory firm focused on private equity, founded
    in 1998
  • Fund advisory focus 100-500m providing
    fundraising, investor relations and strategic
    advice
  • Corporate advisory focus UK Health Care and
    Education EV 10-150m
  • Armando DAmico Managing Partner
  • 20 years experience in private equity, banking
    and strategy consulting
  • Senior banker at EBRD - 700m fund of funds
  • Special adviser to Euro Private Equity Partners
    (FOF)
  • Strategy consulting Europe/US (Bain, Alliance,
    Telesis)
  • M.Sc. Civil Engineering, INSEAD MBA

3
Fundraising trends in Private Equity
Source EVCA
4
Investment trends in Private Equity
Amount invested by country 1996-2005
Source Venture Economics
5
A daunting context
  • 600 funds in the market
  • 2000 investors worldwide
  • A diverse and increasingly analytical LP universe
  • Increasing due diligence depth/length
  • Smaller funds find it difficult to get attention
  • LP teams often under resourced
  • Bifurcated fundraising outcomes

6
The real questions
  • What does it take to fundraise in the current
    environment?
  • How do you raise funds outside your home market?
  • What to look for? Pitfalls to avoid?
  • What resource commitments?
  • How long does it take?
  • How to assess progress?
  • When is it wise to stop?
  • How to deal with over subscription?
  • and many more

7
What LPs look for in a GP
  • Performance
  • how achieved/value creation
  • attributed
  • realised/unrealised
  • Team
  • how long worked together
  • relevant experience/individual TR
  • depth/workload
  • Strategy
  • no strategy drift!/consistency
  • positioning
  • origination

8
What does it take to raise a fund?
  • You cannot change who you are be realistic
  • venture/investor appetite
  • your performance/your team/your strategy
  • But you can significantly enhance your chances of
    success through
  • Understanding your competitive position
  • Understanding LPs strategies, views and
    perceptions
  • Rigorous process
  • Thorough preparation
  • and a lot of hard work!

9
A simple process?
10
Fundraising internationally
  • Start early!
  • Analyse, understand and target your ideal LP base
  • Be aware of investors perceptions of your
    country, segment, competition
  • Understand your competitive position
  • Raise your profile without overdoing it
  • Meet investors when you are not in fundraising
    but ready
  • Seek a base of support from domestic investors

11
  • Understanding the LP universe

12
A very diverse LP Universe

Type/Country
Investment Strategy
Fund of funds Insurance companies Gatekeepers Fami
ly offices Banks Advisers Government bodies Asset
managers
Risk Profile
Opinion Leaders vs. followers
13
Understanding the LP universe
  • There are over 400 private equity investors in
    Europe
  • Possible screening criteria
  • Opinion leader vs. follower
  • Current appetite for lower mid market/venture
  • Current appetite for Denmark
  • Ticket size

14
An example of LP screening Spain
  • Screening criteria
  • Opinion leader
  • Current appetite for lower mid market
  • Current appetite for Spain
  • Ticket size

Source Acanthus Advisers
15
LPs perceptions example (UK LMM)
Volatile segment. Different risk reward
proposition. Almost all below 2x good guys have
moved up.
Boring no spark
Most GPs think 2x is a reason to invest. Why
should I go to the bother for 5-10m?
Crowded too much capital
Plenty of room down lower
Difficult to find exceptional players little
differentiation
We are under-weight - need to increase
Too many accountants
Now looking around the edges for the next
generation
16
Nordic buy-out market growth
  • Very high levels of activity, particularly in
    Denmark
  • Emergence of a number of mega deals
  • Active involvement from foreign investors
  • Increasing levels of GP distributions

Source Unquote
17
Nordic buy-out market LP perceptions
  • Highly developed market
  • Significant number of large deals
  • Highly liquid debt market at the large end of the
    market from both international and domestic
    banks. Growing liquidity in mid market
  • Vibrant mid market fuelled by corporate
    restructuring and succession issues
  • Following shake out in 2000-2004, beginning of
    upswing in venture market
  • Highly competitive
  • Large end of market fought over by domestic and
    international firms (IK, EQT, Nordic Capital,
    Apax, BC Partners, Goldman Sachs, PAI, CVC, KKR
    etc)
  • Mid market dominated by Nordic firms growing
    foreign interest
  • Little proprietary deal flow at the large end of
    the market
  • Investors issues
  • Valuations
  • Continued availability of debt
  • Polarisation between large and mid sized funds
    opportunities for mid market funds

18
  • Understand
  • your competitive position

19
UK Mid Market Competition
Source Acanthus Advisers
20
UK Mid Market - Competition (2)
Source Acanthus Advisers
21
Your competitive position
  • How many deals in your space every year?
  • How many could be your deal?
  • How do you source deals?
  • What is unique about your firm?
  • Who do you compete against?

22
  • Competition in fundraising

23
Who is raising funds when? - Spain
  • 2bn seeking investors over next 24 months
  • Excluding pan European funds active in Spain

Source Acanthus Advisers
24
Competing commitments!
25
  • Preparation and Process

26
Process overview
  • Detailed analysis portfolio, prior funds,
    competitors, deal
  • sourcing, team, differentiation arguments
  • Preparation legal aspects, due diligence
    questionnaire,
  • data room, press releases, placement strategy
  • Incisive Information Memorandum
  • Compelling investor presentation
  • Detailed due diligence packs
  • Commitment from existing investors
  • Targeted list of well primed potential investors
  • Focused pre marketing
  • Background conferences, rehearsals, arranging
    meetings,
  • briefing notes
  • Road show time effective, prioritisation, diary
    unblocking,
  • focused meetings, prompt follow up, investor
    engagement
  • Continual feedback
  • Targeted meetings
  • Investor engagement
  • Due diligence questionnaires (time consuming,
    prompt turn
  • around, multiple requests in short time
    space), extensive,
  • consistency check, liaison
  • Process control investor interaction, legal
    issues, side
  • letters, terms conditions
  • Closing strategy all party involvement,
    flexibility, precision
  • Constant investor interaction
  • Close attention to issues
  • Momentum
  • Successful close

Source Acanthus Advisers
27
The DD Pack
  • A very detailed document covering
  • Performance
  • Market/competition
  • Team
  • Fund structure
  • Terms conditions

28
The DD Pack
  • Performance
  • Realised performance/distributions vs benchmarks
  • Unrealised portfolio expected returns
  • Value creation
  • Investment summaries
  • Market/competition
  • Strategy/positioning
  • Origination/market perception
  • Share of deals
  • Team
  • Individual TR, references
  • Incentives, commitment, cohesiveness
  • Workload, roles, depth

29
Case study Acanthus client
Analysis of unrealised portfolio
30
Trends in Terms Conditions
  • Continuous tightening around the edges
  • Increasing emphasis on corporate governance and
    protection against poor performance
  • Corporate Governance issues
  • No fault divorce clause have become absolutely
    standard on 100 of funds nowadays
  • Keyman clauses are equally crucial
  • Advisory boards conflict of interest
  • Dominant investors

31
  • Focused fundraising

32
Case study Acanthus client
Tailored and focused marketing
Summer 2003 Spring 2004
Screened Approached/IR PPMs circulated Initial
meetings held Due diligence Invested
Over 400 90 73 45 16 10
  • 35 of investors moved from initial meeting into
    due diligence
  • 62 of investors who undertook due diligence
    invested in the fund

33
Conclusions
  • Performance, Team, Strategy can change but not
    overnight
  • Understand the LP universe, their investment
    strategies, approaches and perceptions
  • Position yourself strongly in your market and
    communicate your position clearly
  • Understand your competition in fundraising
  • Prepare a complete but LP friendly DD Pack
  • Be aligned with market standard TC
  • Once ready meet investors when you are not in
    fundraising

34
Conclusions (2)
  • Prepare
  • Prepare
  • Prepare
Write a Comment
User Comments (0)
About PowerShow.com