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Posts Tagged ‘Investments’

Dubai is just a harbinger of things to come for sovereign debt

Posted in Board Of Intellectual Capital, boic, tagged , , , , , on November 28, 2009| Leave a Comment »

Here is a good blog article from The Telegraph.

“Watch out. This may be just the beginning. In the scale of things, the debt problems of Dubai are little more than a flea bite. Dubai’s sovereign debts total “just” $80bn, which counts for nothing against the trillions being raised by advanced economies to plug fiscal deficits.

Small wonder, though, that this minor tremor has sent such shock waves around the wider capital markets. The fear is that threatened default in this tiny desert kingdom is just a harginger of things to come for government debt markets as a whole. According to new estimates by Moody’s, the credit rating agency, the total stock of sovereign debt worldwide will have risen by nearly 50 per cent between 2007 and 2010 to $15.3 trillion. The great bulk of this increase comes not from irrelevant little states like Dubai, but from the big advanced economies – America, Europe, and Japan.

Perversely, they are for the time being beneficiaries of the “flight to safety” that trouble in Dubai has sparked. Government bond yields in the major advanced economies have fallen in response to the crisis in the Gulf. If experience of the banking crisis, when investors removed their money from one bank only to find that the one they had put it into looked just as dodgy, is anything to go by, this effect will not last.”

Read the full article here.

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Venture liquidity still a trickle

Posted in Board Of Intellectual Capital, boic, Business models, tagged , , , , , , , , , , on October 1, 2009| Leave a Comment »

Here is a story from VentureBeat.

“It has been a rough three months for startups hoping to get acquired. Well, it’s been more like a rough year, but there’s new data from Dow Jones VentureSource focusing on the third quarter of 2009.

Overall, venture-backed liquidity (the combination of mergers, acquisitions, and initial public offerings) added up to $2.7 billion, down 49 percent from the same period last year, VentureSource says. It’s even a drop from the $3 billion of venture liquidity earned in Q2.

Things were even worse for M&As, which fell 56 percent to $2.25 billion paid in 71 deals — though the number would have been higher if VentureSource had counted Amazon’s $807 million purchase of Zappos, which hasn’t closed yet. Instead, that should add a big boost to next quarter’s numbers.

Acquired companies also made less money (median acquisition price fell 52 percent to $22 million) and had been waiting for longer to sell (median age increased 23 percent to 6.13 years).

On the other hand, IPOs were actually up from last year, with a combined total $451.25 million, the highest since 2007. That’s less exciting than it sounds, since the vast majority of that money came from battery company’s A123’s spectacular IPO, and there were only two IPOs in all. So it’s hard to see the increase as indicative of any big trend, except the fact that big IPOs are still possible. But hey, after the yearlong period (which ended in Q2) of no IPOs , that’s something.”

Read the full story here.

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Investing in Technology M&A

Posted in Board Of Intellectual Capital, tagged , , , , , , , , , , on September 11, 2009| Leave a Comment »

Here is an interesting article by Aaron Pressman at BusinessWeek.

“The conventional wisdom used to be that investors should run from technology companies that did too many mergers and acquisitions. But over the past decade, a group of top-tier tech wheelers and dealers has emerged that increased shareholder value with their acquisitiveness. Companies such as Oracle, IBM, and Adobe Systems have successfully used acquisitions to get into new lines of business, expand their customer bases, and grab hot new technologies. Still, some companies consistently overpay or buy yesterday’s big breakthrough. An informal survey of tech fund managers, analysts, and consultants yielded a list of companies investors will likely favor on more deal news—and a few they may shun.

Once mainly a hardware vendor of computers large and small, IBM (IBM) has used a sharp acquisition strategy to expand into software and information technology services. After a string of successful additions, including performance management software maker Cognos, and Rational, which makes tools to help programmers write code, IBM announced in July it would pay $1.2 billion for SPSS, a leading developer of software to analyze statistical data. “All the software acquisitions have helped shift the company toward higher margins and faster growing areas,” says Ken Allen, manager of the T. Rowe Price Science & Technology Fund. IBM was his 15th largest holding as of June 30.

Salesforce.com (CRM) has always been a poster child for the move from desktop applications to Web-based products. As more computing and data storage have migrated to online servers—the clouds in “cloud computing”—Salesforce has used a series of small acquisitions to keep pace. In 2006 it grabbed wireless software developer Sendia, for example, helping make all its offerings available over mobile phones. “They’re doing a good job of pushing each acquisition into their services,” says Jeff Kaplan, founder of tech consulting firm Thinkstrategies.

Cisco Systems (CSCO) is the king of bolt-on acquisitions. In a typical deal, Cisco purchases a much smaller company, such as voice-over-Internet gearmaker Sipura, which it bought for $68 million in 2005. Then it uses its manufacturing smarts and sales force to promote cutting-edge products that often fit into existing lines of business. Cisco also uses purchases to diversify and get into new businesses. This year it added Pure Digital Technologies, maker of the Flip digital video camera. “Their goal is to become a larger player in the consumer electronics and networking business,” says Ned Douthat, an analyst at Ockham Research in Roswell, Ga.”

Read the full article here.

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Venture-Backed IPOs Still On Hold, But There’s Promise

Posted in Board Of Intellectual Capital, Venture Capital, tagged , , , on August 6, 2009| Leave a Comment »

Here is an excellent article from WSJ venture Blog.

“Should venture capitalists brace for a rebound in the IPO markets?

In a six-week period between May 20 and July 1, four venture capital-backed companies managed to price their initial public offerings, quite a feat considering none had done so in the previous nine months. All four priced at or above the high end of expectations and now trade higher than their pricings.

Sensing the urgency to catch the market while it’s hot (relatively speaking), some venture capital firms have scrambled to get some of their best candidates in shape to file for an IPO, several investment bankers say.

“This environment has led people to start up [the IPO process] again,” said Jeff Becker, managing director with investment bank JMP Securities. “The markets have been strong, and recent IPOs have done well.”

But market observers say start-ups that are ready to go public have already done so, and that the deal pipeline will take months to rebuild.

“For anybody who isn’t already on file… you’re talking four months at the shortest, but likely six months or more” before an IPO could be priced, said Becker, who expects to see more venture-backed IPO filings this year but few pricings before Thanksgiving.

Bryan Pearce, Americas director of the venture capital advisory group at Ernst & Young, said his firm began seeing an uptick in IPO interest from its venture- and PE-backed clients around April.

“I haven’t seen signs yet that we’re going to see the floodgates open, but I think we’re starting to take logs out of the dam and the water’s starting to flow over,” Pearce said.

Pearce predicted that “2010 will be the strong year.” He said technology companies with $50 million or more in revenue should be well-positioned if they have “stability and sustainability of their customer base,” experienced management and dry powder in case the IPO window doesn’t open as expected.

The broader IPO market is far from fully recovered. As of July 31, 16 U.S. offerings totaling about $3 billion had priced this year, down from 46 IPOs totaling $30.2 billion a year earlier, according to data provider Dealogic.

The current IPO market is the worst since early 2003, despite the “incremental increase” in the number of filings over the last couple months, said Richard J. Peterson, director at Standard & Poor’s Markets, Credit & Risk Strategies group.

However, private equity-backed companies appeared to be a bright spot on an otherwise bleak picture. According to Dealogic, seven IPOs by private equity-backed companies (including venture capital) were priced as of July 31 with a total value of $1 billion. While the number is down from $2.7 billion of such offerings in the same 2008 period, it accounted for a bigger percentage of all IPOs that were priced – 33% versus 8%.”

To read the full article, click here.

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Treasury proposal could shut down smaller firms

Posted in Uncategorized, tagged , , , , , , , , , , on July 29, 2009| Leave a Comment »

Here is a thought provoking article from PiOnline.

“Proposed registration, reporting and disclosure laws for alternatives managers — likely to be passed by Congress before year end — could force a swath of smaller managers to close and could have a devastating impact on hedge funds of funds, sources say.

Hedge fund, private equity and venture capital managers and their lobbyists want to strike a deal with legislators to lessen the administrative burden of reporting all investment and trading positions, trading practices, assets and on- and off-balance sheet risks, as is now proposed by the Treasury Department.

“The proposal’s required administrative tasks would be very burdensome for venture capital firms, which tend to be small companies. The chief financial officers in these firms already tend to be very stretched with the existing job of running the firm. I think this proposal … could drive many smaller venture capital firms out of business,” said Emily Mendell, a spokeswoman for the National Venture Capital Association, Washington.

“Smaller hedge fund, private equity and venture capital managers will be disproportionately impacted by the reporting regulations,” agreed Daniel Celeghin, director, Casey Quirk & Associates LLC, Darien, Conn.

“The real panic I’m hearing is from hedge funds of funds, whose executives say the reporting requirements will be a huge problem because they don’t get this level of detail from their underlying managers in order to be able to pass it on to the SEC. They’ve said `What’s coming could sink us,’ ” Mr. Celeghin said.

The new investment manager requirements are part of the Obama administration’s financial reform package first floated in June and designed to increase oversight of systemic risk and to control it.”

Read the full article here.

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