The Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin

October 2013

© Go4Venture Advisers 2013

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Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin October 2013

Published by Go4Venture Advisers Research, the Equity Research unit of Go4Venture Advisers LLP.

October 2013

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Contents

This Month in Brief 2

Investments

1.1 - Headline Transactions Index (HTI) 5

1.2 - Large Transactions Summary 6

1.3 - Large Transactions Profiles 7

M&A Transactions

2.1 - M&A Activity Index 13

2.2 - Top 5 Global TMT M&A Transactions Summary 14

Headline European VC & PE-Backed M&A Transactions:

2.3 - Summary 17

2.4 - Profiles 18

List of Acronyms 21

About this Bulletin

The Go4Venture Advisers’ European Venture & Growth Equity Market Monthly Bulletin provides a summary of corporate finance activity among emerging European TMT companies:

Investments, i.e. Venture Capital (VC) and Private Equity (PE) financings, including growth equity, financing rounds with single secondaries components (recapitalisations); and

M&A Transactions where the sellers are VC and PE-backed European companies, including all majority transactions with no new investment going into the business (e.g. acquisitions, Management Buyouts (MBOs) and other buyouts).

Investment activity is measured using Go4Venture’s European Tech Headline Transactions Index (HTI), which is based on the number and value of transactions reported in professional publications.

M&A activity is measured using data from a combination of external sources, primarily Capital IQ, with complementary reporting from 451 Group and VentureSource.

Europe is defined as Western, Central and Eastern Europe, excluding Israel.

For more details, please refer to the Methodology Note available on our website.

Please note that no part of the Bulletin can be reproduced unless content is duly attributed to Go4Venture and the details of republishing are notified to [email protected].

October 2013

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This Month in Brief

Dear Clients and Friends,

Welcome to the latest edition of Go4Venture Advisers’ European Venture & Growth Equity Market Monthly

Bulletin, featuring our proprietary Headline Transaction Index (HTI) of investment activity, as well as a

summary of VC & PE-backed TMT M&A exits of $50mn or more.

European Market: Growth Now Slowing Down

Something unusual happened in the Headline Transactions Index (HTI) in October: we had for the first

time in the past 5 years a sharp slowdown in year-on-year investment growth from one month to the

next. Not only was the overall amount down vs. September but we also had far fewer Large HTI

Transactions to write up, partly because a higher than normal number of deals were just below our threshold

of £5mn / €7.5mn / $10mn. On the exit front, October was also extremely uneventful, were it not for

the Supercell transaction valuing the company at $3bn (€2.2bn).

Investment

Looking at the upcoming figures for November (dominated by the $250mn (€183mn) raised by Spotify –

more on that in our next issue), October looks like something of an anomaly but draws attention to two

interesting trends:

The rate of growth in the European Growth Equity and VC market has been now slowing

down for the past three months. Just like we noted an acceleration of the market from summer

2012 on, we now see a deceleration since summer 2013. In a way, we see this as an encouraging

sign of overall discipline in a market, which we have felt was frothy for the past year; and

The market is increasingly dominated by a handful of very large transactions, making the HTI

more susceptible to month-on-month swings. What we call “Landmark Transactions” (> €20mn)

now represent close to 50% of the overall investment amount captured in the HTI (so probably

something like 40% of the total market).

The continuing healthy state of the market is confirmed by a record 8 new funds of all kinds announcing

first closings, including:

Early-Stage Funds – Examples include Project A (Germany) adding €30mn from Axel Springer to the

€50mn already received from Otto Group. And Episode 1, a new UK-based Enterprise Capital Fund

(with 2/3 public matching money) from a group of high-profile British entrepreneurs;

Mainstream VC Funds – For instance Idinvest Digital Fund II (France), which closed with €30mn on

its way to €100mn (in part brought by Lagardère Group);

Later-Stage Funds – Such as SAP Ventures II with €425mn from one limited partner, SAP, focusing

on software technologies worldwide. Or Oakley Capital (UK), with a €195mn first close from its

publicly-listed feeder fund and a target of €500mn. And Vinci Capital – Renaissance Technologies 4

(Switzerland), which had a first closing at €50mn (with a target of €80mn) for investment in Swiss

SMEs; and

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Thematic Funds – London-based Environmental Technology Fund (ETF) announced the first closing

of its second cleantech fund at €70mn. Ambienta (Italy) also raised its second fund, with a first

closing at c.€150mn, to invest in cleantech assets in Italy, Germany and the UK.

In terms of Large HTI deals, the 6 highlighted in this issue represent quite a balanced spread, from a

country, sector and stage standpoint. It is worth pointing out that 3 of the 6 are Landmark Transactions (a

higher proportion than usual), with Skyscanner as a tremendous flagbearer for the new face of

European venture. Here is a great example of what can be done in Europe extremely capital efficiently (the

previous round was only £2.5mn (€3.5mn)), even in a global space hotly contested by US suppliers, with the

ultimate reward: a marquee investor such as Sequoia Capital joining in.

For those who closely watch European growth equity and venture financing, we know that Europe has quite

a few gems in the making which will transform the European venture landscape.

The challenge is of course to build the next generation, as well as finding new ways to identify and grow

these seeds to their full potential. One such initiative with which we are associated is the Investor Showcase

we are arranging with professional tradeshow organiser ISE in February 2014.

Exits

As has now been a common theme in our recent issues, the tech M&A exit front has been flat for the whole

year. October was as dull as any other month except for the Supercell big bang: SoftBank taking 51%

of Supercell, the Finnish gaming wunderkind. This transaction is remarkable in more ways than one, in that it

is:

An outstanding VC exit valuing the company at €2.2bn – this is one of the biggest ever European

VC exits after Skype’s exit to Microsoft and Yandex’s IPO;

A company generating truly extraordinary financial performance: nearly twice as much

revenues in Q1 2013 as in the whole of 2012, with an insane EBIT margin of 60% – all driven by two

games;

A rare case of a European VC exit making it to the Top 5 Global TMT M&A Transactions league

table; and

The only example of a buyer, SoftBank, making it to the Top 5 Global TMT Transactions twice

in one month. This is a reflection of the incredible drive of its founder and CEO, Masayoshi Son,

who recently announced that SoftBank aims to become the world’s largest company as measured by

EBIT, sales or market capitalisation.

Meet 20 World-Class Companies Active in Smart Buildings, Connected Homes, Digital

Signage and Professional Electronics

On Monday February 3, 2014 in Amsterdam, Go4Venture Advisers will partner with ISE to showcase 20

of the world’s most exciting companies in the space of professional electronic systems. The

companies will be primarily selected from the attendees of Integrated Systems Europe 2014, the world’s

largest electronics tradeshow reserved for professionals: 900 exhibitors, over 45,000 attendees.

Companies wishing to apply to present, as well as financial and strategic investors and other

participants, can register at www.ise.go4venture.com.

October 2013

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The only other October European VC / Growth Equity exit paled in comparison: ISIS Private Equity sold

online holiday retailer On the Beach to Inflexion Partners for €86mn. On one hand, very mundane: it could be

seen as yet another lower mid-market private equity player selling to another – how unexciting for tech

people. On the other hand, this is exactly what the tech VC world needs to get better at doing:

Creating more sizeable companies with more predictable outcomes more regularly; and

In order to have the time to build substantial companies, being prepared to offer liquidity

opportunities to earlier shareholders. Of course this is easier to engineer in the stable cash flow

world of late-stage companies, where buyers and sellers can agree on a “reasonable” price. Venture

valuations are much less stable but they are also moving much faster, allowing new investors to take

higher risks on both new and secondary money as a price to pay to get into attractive

transactions. We see, for example, VCs buying out earlier business angels (if only to reduce the

number of shareholders around the table). It is only a matter of time before this happens more

regularly between VCs, say a larger fund buying out a small regional player, or a later-stage fund

creating liquidity for an early-stage VC.

The blurring border between late-stage VCs and lower mid-market PE funds is bringing a new DNA to the

world of European venture – let’s take advantage of it.

Enjoy the reading. Please direct any questions or comments to [email protected]. If you do not

wish to receive future HTI updates from us, please send an email with the title "unsubscribe" to

[email protected].

The Go4Venture Advisers Team

For more details about the Headline Transactions Index (HTI), please visit our website.

October 2013

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1.1 - Headline Transactions Index (HTI)

Source: Go4Venture Advisers Analysis; HTI Database

0

100

200

300

400

500

600

700

800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Val

ue

of

Tra

nsa

ctio

ns

per

Mo

nth

(€m

n)

Go4Venture HTI Index by Deal Value

2010 2011

2012 2013

Source: Go4Venture Advisers Analysis; HTI Database

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cu

mu

lati

ve

Val

ue

of

Tra

nsa

ctio

ns

(€m

n)

Go4Venture HTI Index by Cumulative Deal Value

2010 2011

2012 2013

October 2012 2013 Year-to-Date 2012 2013

Large Transactions # 12 6 Large Transactions # 97 109

€mn 298.6 158.1 €mn 1,919.9 2,472.4

Other Transactions # 36 17 Other Transactions # 267 293

€mn 83.7 54.0 €mn 712.9 786.6

All Headline Transactions # 48 23 All Headline Transactions # 364 402

€mn 382.4 212.1 €mn 2,632.7 3,259.0

Of Which: Of Which:

Landmark Transactions # 5 3 Landmark Transactions # 31 30

€mn 211.5 124.0 €mn 1,140.0 1,567.3

Definitions

Large Transactions: > £5mn / €7.5mn / $10mn

Other Transactions: < £5mn / €7.5mn / $10mn

Landmark Transactions: subset of Large Transactions > €20mn / £13mn / $27mn

October 2013

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1.2 - Large Transactions Summary

(>£5mn / €7.5mn / $10mn)

# Company Sector Round €mn Description Investors

1 Skyscanner (UK) www.skyscanner.net

Internet Services

B 59.2e Operator of a search engine for flights with growing activities in hotel bookings and car rentals.

Sequoia Capital.

2 Intelligent Energy (UK) www.intelligent-energy.com

Cleantech Late Stage

37.1 Developer of proton exchange membrane fuel cells.

Undisclosed Investors.

3 Funding Circle (UK) www.fundingcircle.com

Internet Services

C 27.4 Lending platform that allows individuals and institutions to loan money to small businesses.

Accel Partners, Index Ventures, Ribbit Capital, Union Square Ventures.

4 SkySQL (Finland) www.skysql.com

Software B 14.8 Provider of an open source database and associated services.

California Technology Ventures, Finnish Industry Investment, Intel Capital, Open Ocean Capital, Spintop Ventures.

5 Exclusive Networks (France) www.exclusive-networks.com

IT Services &

Distribution

Late Stage*

12.0 Value-added distributor specialising in B2B supply of security, storage and networking solutions.

Edmond de Rothschild Investment Partners, Omnes Capital, SOCADIF.

6 Logentries (Ireland) www.logentries.com

Software A 7.3 Cloud-based service provider for collecting and analysing machine-generated log data.

Floodgate, Frontline Ventures, Polaris Partners, RRE Ventures.

Source: Go4Venture Advisers HTI Database

Key Bold indicates lead investor(s)

* Internal round e: Estimated

October 2013

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# Company Sector Round €mn Description Investors

1 Skyscanner (UK) www.skyscanner.net e: Estimated

Internet Services

B 59.2e Operator of a search engine for flights with growing activities in hotel bookings and car rentals.

Sequoia Capital.

Skyscanner (UK), operator of a search engine for flights with growing activities in hotel

bookings and car rentals, raised an estimated €59mn in a Series B round from new investor

Sequoia Capital. This follows the $5.1mn (€3.5mn) Series A round led by Scottish Equity

Partners (SEP) in November 2007. The size of this round was estimated assuming that Sequoia took a 10%

stake in Skyscanner which, based on the company’s $800mn (€590mn) post-money valuation, translates to

$80mn (€59.2mn). This is in line with the announcement that this was “one of Sequoia’s largest investments

ever” and would represent c.11% of the firm’s 2012 vintage $700mn (€514mn) Capital Growth Fund.

On the surface, an investment and valuation of this magnitude are surprising, given the size of the

company’s previous round. However, Skyscanner has since grown dramatically – between 2008 and 2012

total revenue increased from £2.1mn (€2.7mn) to £33.5mn (€40.9mn), a CAGR of 100%. Over the same

period the company has gone from a small EBIT loss to a £11mn (€13.4mn) profit. The investment also

comes on the back of a year which saw Skyscanner’s greatest percentage year-on-year increase in both

revenue and EBIT, its acquisition of Barcelona-based internet hotel search company Fogg and the opening

of a maiden North American office in Miami. The size of the investment can be further explained through the

confidence of Sequoia’s Chairman (and soon to be Skyscanner board member) Sir Michael Moritz.

According to Sir Michael, Skyscanner is "one of the most attractive tech companies in Europe" in a market

that “over the next decade will expand enormously, accelerated by a proliferation of mobile devices.” Sir

Michael’s presence on Skyscanner’s board is a significant vote of confidence: the Welsh ex-journalist is

remarkably influential for a Brit in America, having held board positions in Google, Kayak and LinkedIn

before stepping up as Chairman of Sequoia.

Skyscanner’s main competitors in the travel search market are Google, which acquired flight-pricing software

company ITA Software (ITA) for $700mn (€571mn) in 2010, and Kayak, acquired last year by online travel

reservation engine Priceline for €1.4bn. In terms of financials Skyscanner is relatively small, reaching a fifth

and a third of Kayak’s 2012 revenue and EBIT, respectively. However, one key advantage Skyscanner has

performance-wise is that it checks for fares on a comprehensive list of budget airlines as well as full-service

carriers, unlike ITA and Kayak which focus mainly on the latter.

This investment will support Skyscanner’s stated expansion strategy of continued growth in North America

(Kayak’s and Google’s territory) and a doubling in workforce (to 500) over the next year.

This deal continues a trend in the online travel sector including Gimv’s and Iris Capital’s €15mn investment in

the French online travel agent Planetveo in June and Phenomen Ventures’ $9mn (€7mn) investment in

Russian flight booking site OneTwoTrip. Acquisitions include Expedia’s December 2012 acquisition of 62%

of Trivago for €479mn and the aforementioned November 2012 acquisition of Kayak by Priceline for €1.4bn.

Sequoia Capital (€170mn (2012); AUM €2.3bn) last featured in our May issue as a seller in Yahoo’s €800mn

acquisition of Tumblr. Founded in 1972, Sequoia is one of the oldest and most successful venture capital

firms, having backed companies such as Apple, Electronic Arts, Google, PayPal and Yahoo. Notably,

Sequoia is a previous investor of Kayak and the online travel agencies Decolar and Via.

Despite this the size and valuation of this round, SEP remains Skyscanner’s largest shareholder, following its

£2.5mn (€3mn) investment in 2007.

October 2013

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# Company Sector Round €mn Description Investors

2 Intelligent Energy (UK) www.intelligent-energy.com

Cleantech Late Stage

37.1 Developer of proton exchange membrane fuel cells.

Undisclosed Investors.

Intelligent Energy (UK), a developer of Proton Exchange Membrane (PEM) fuel cells,

raised £31.5mn (€37.1mn) in a Late Stage round led by undisclosed investors. The

money will be used to finance the launch of new divisions and expand its Research &

Development (R&D) capabilities.

Founded in 2001, Intelligent Energy (IE), voted as a technology pioneer at the World Economic Forum in

2006, develops zero emission hydrogen fuel cells based on a proprietary version of PEM technology used to

create clean energy for portable electronic devices, small-scale power production (near point of use) and

vehicles. Its technology, which boasts higher power density and lower cost of fabrication among its

advantages over other fuel cell systems, is protected by a portfolio of some 550 patents covering 50 different

inventions. With more than 300 staff, the company reached revenues of c.£40mn (€50mn) in calendar 2012.

The company clearly described its expansion plans in its 2012 Annual Report, as well as the funding

requirements for their realisation. Following this round, IE is now in the position to proceed with its plans to

launch its consumer electronics and stationary power divisions (the latter initially in India), expand its R&D

activities (including the development of remote asset monitoring capabilities) and further develop its

management risk control systems.

Since its joint venture with Suzuki Motor Corporation – formed in 2012 to develop air-cooled fuel cell systems

– IE has signed partnerships with a number of well-known companies, including telecoms services providers

Cable & Wireless Communications (UK) and Etisalat Nigeria. It is also in advanced negotiations with

prospective clients in India, in particular Indian Oil, India’s largest oil and gas corporation by revenues, and

Microqual, an Indian telecoms infrastructure equipment manufacturer.

According to MarketsandMarkets, the fuel cell technology market is expected to grow from c.$630mn

(€460mn) in 2013 to c.$2.5bn (€1.8bn) by 2018, at a 32% CAGR; underpinning this are a number of relevant

investments and acquisitions over the past years. The European Union, along with the european private

sector, has agreed to invest €1.4bn through to 2020 in research and innovation partnerships for fuel cell and

hydrogen technology. Globally, corporates including GM, Pansonic, Samsung, Siemens, Toshiba and Toyota

have all invested in leading fuel cell technologies such as PEM, molten carbonate and solid oxide. Financial

investors have also been quite active in this sector, most notably with Goldman Sachs, KPCB, Mobius

Ventures and NEA investing c.$1bn (€733mn) over the last decade in solid oxide fuel cell provider Bloom

Energy, which is expected to reach profitability shortly.

Since its launch, IE has raised a total of €132mn over eight rounds. We covered its previous €26.4mn Late

Stage round in our March 2012 Bulletin, as well as its second largest round, a $30mn (€21mn) Series D led

by Yukos Capital and undisclosed investors, in our July 2009 Bulletin. This €37.1mn Late Stage round

remains its largest ever fund-raise. Excluding Yukos Capital (an affiliate of now-defunct Yukos Oil), which

first funded the company along with undisclosed investors, IE’s other known investors including Altima

Partners, F&C Investments, Scottish Enterprise and SSE Venture Capital, all established institutional

investors, have each never participated in more than one round, according to Venture Source.

October 2013

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# Company Sector Round €mn Description Investors

3 Funding Circle (UK) www.fundingcircle.com

Internet Services

C 27.4 Lending platform that allows individuals and institutions to loan money to small businesses.

Accel Partners, Index Ventures, Ribbit Capital, Union Square Ventures.

Funding Circle (UK), a lending platform that allows individuals and institutions to

loan money to small businesses, raised $37mn (€27.4mn) in a Series C round

led by Accel Partners with support from fellow new investor Ribbit Capital and participation of existing

investors Index Ventures and Union Square Ventures. The money will be used to expand UK operations

and launch in the US, its second market.

We last saw Funding Circle (founded 2010) in April 2012 when it raised €12.2mn in a Series B round from

Index Ventures and Union Square Ventures to further develop its services, marketing and recruitment.

With over 100 staff the company now plans to expand its operations in the UK to include lending services

specifically for asset finance and real estate financing. In March this year, the company received £20mn

(€23.2mn) from the UK government to invest in SMEs. Funding Circle’s UK lending activity is expected to

increase even further following Vince Cable (UK business secretary) ordering £55m (€65mn) of government

money to be lent to SMEs through it and other lending platforms. The company is also planning to expand

its activity in the US market by merging with San Francisco-based Endurance Lending Network, an online

lender for small and medium businesses, which will rebranded as Funding Circle USA.

The competition in this market has significantly intensified since the mid-2000s, when the first lending

platforms appeared. In the UK there are now more than 10 known platforms including Zopa, the oldest and

largest loans platform (founded in 2005), having issued loans worth a combined c.£400mn (€472mn),

followed by Funding Circle which has lent a total of c.£180mn (€212mn), impressive considering its three-

year history. Others include Ratesetter and recently launched Assetz Capital. In comparison, the US market

is estimated to be much larger, with the two leading players, namely the Lending Club and Prosper, having

issued loans worth c.$1.5bn (€1.1bn) and c.$430mn (€320mn), respectively.

Readers should be familiar with lead investor Accel Partners (€356mn (2013); AUM €5bn), whose current

investment priorities are infrastructure, internet and consumer services, mobile and cloud services / SaaS.

We saw Accel last month investing €13.5mn in a Series B round in Calastone, a UK-based provider of

independent transaction services for the fund management industry. The firm also appeared this month in

our Bulletin as a seller of mobile game developer Supercell to SoftBank for €1.1bn (details in the next

section).

Fellow new investor Ribbit Capital (€73mn (2013)) is a US-based venture capital firm typically investing in

financial services. It last featured in our October 2012 issue when it invested €19.8mn in a Late Stage round

in UK-based Borro, a provider of online pawnbroking services.

Well-known investor Index Ventures (€350mn (2012); AUM €2bn), who also was a seller in SoftBank’s

acquisition of Supercell, featured last month in our Bulletin for a €13.1mn Series B round in SwiftKey, an

alternative keyboard app for Android. It also appeared in our March Bulletin when investing €9.3mn in a

Series B round in German online peer-to-peer lending platform Auxmoney, the same month as it backed

British peer-to-peer foreign currency transfer service TransferWise in a €4.6mn Series A round. Funding

Circle is at least its third 2013 investment in the financial services sector. In keeping with its preference for

consumer internet plays, Union Square Ventures’ (AUM €347mn) investments in this space include

Auxmoney (March) and Lending Club in 2011.

October 2013

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# Company Sector Round €mn Description Investors

4 SkySQL (Finland) www.skysql.com

Software B 14.8 Provider of an open source database and associated services.

California Technology Ventures, Finnish Industry Investment, Intel Capital, Open Ocean Capital, Spintop Ventures.

SkySQL (Finland), a provider of an open source database and associated services,

raised $20.0mn (€14.8mn) in a Series B round from new investor Intel Capital, with

support from existing investors California Technology Ventures, Finnish Industry

Investment, Open Ocean Capital and Spintop Ventures. The funds will be used to spur

adoption of MariaDB, the company’s open source Relational DataBase Management System (RDBMS), in

enterprise computing. Funds will also be used to develop MariaDB’s ability to scale.

SkySQL was founded in 2010 by former developers of MySQL, the world’s second most widespread RDBMS

after Oracle (according to DB-Engines). As is common with commercial entities involved in open source,

SkySQL generates revenues by providing technology services related to MariaDB. Its roster of more than

400 clients is spread across 35 countries and includes blue-chip corporates such as Facebook, Google, HP

and Virgin Mobile. The company provides 24/7 support priced per server running MariaDB, as well as

training and consulting services.

MariaDB was first architected outside of SkySQL by open source champion Michael “Monty” Widenius (the

creator of MySQL and backer of Open Ocean Capital), in reaction to Oracle acquiring Sun Microsystems for

$7.4bn (€5.4bn) in April 2009. Sun Microsystems itself had acquired the company developing MySQL for

$1bn (€733mn) in January 2008.

Widenius and his company Monty Program, along with the MariaDB Foundation, created the new RDBMS

out of concerns that an Oracle-controlled MySQL would be poorly developed, become closed source or

licensed restrictively. As a result, MariaDB was built to be interchangeable with MySQL and support more

storage systems while being more flexible, fast and secure. Consequently, it has grown popular among

common Linux distributions such as OpenSUSE and Fedora, and is currently 32nd

in the global RDBMS

market, which was worth an estimated $24bn (€18bn) in 2012. In April 2013, SkySQL and Monty Program

merged, reuniting many of the old MySQL team and making SkySQL the lead developer of MariaDB.

Leading the round is well-known Intel Capital (€75mn (2012); AUM €1bn), which as mentioned in September

is very active despite appearing in our Bulletin only three times in 2013. This is also true for open source: the

firm has invested over €350mn in more than 25 open source companies since 2009, its largest investment

being an $85mn (€62mn) round for Joyent, a US-based virtualisation software provider, in January 2012.

Backing SkySQL since its c.$7mn (€5mn) Series A round in April 2012 are California Technology Ventures,

Finnish Industry Investment (€720mn) and Spintop Ventures. California Technology Ventures, featuring for

the first time in our Bulletin, is a West Coast investor based in Pasadena. Specialising in information

technology and life sciences, it invests between $250k-2mn (€183k-1.5mn) in portfolio companies.

State-run Finnish Industry Investment typically backs local technology startups. It also invests in other funds

and non-technology businesses (especially mining), while fellow Nordic investor Spintop Ventures is an

angel group focusing on information technology that invest between SEK 2-15mn (€230k-2mn) per round.

Open Ocean Capital (€60mn) is an investor that typically invests below the threshold we report at.

Considering that it was set up by the founders of MySQL (including Widenius), first as a holding company for

MySQL and then as an investor in open source after MySQL’s acquisition by Sun Microsystems, it is no

surprise that Open Ocean capital seeded SkySQL in September 2010 and has since remained with it.

October 2013

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# Company Sector Round €mn Description Investors

5 Exclusive Networks (France) www.exclusive-networks.com

* Internal Round

IT Services &

Distribution

Late Stage*

12.0 Value-added distributor specialising in B2B supply of security, storage and networking solutions.

Edmond de Rothschild Investment Partners, Omnes Capital, SOCADIF.

Exclusive Network (France), a value-added distributor specialising in B2B

supply of security, storage and networking solutions, raised €12mn in a Late

Stage internal round led by Omnes Capital (investing €6.7mn) with support

from other existing investors Edmond de Rothschild Investment Partners and SOCAFID. This money will

be used to support growth plans. The company simultaneously received €60mn senior debt funding from

Intermediate Capital Group’s 2013 vintage debt fund. Of the debt financing, €25mn is believed to have been

used to refinance existing facilities. Exclusive Networks will use another €5mn to buy out minority

shareholders in some of its subsidiaries, and retain the remaining €30mn for future acquisitions in Asia.

Launched in 1995, France-based Exclusive Networks operates as a value-added distributor of networking,

security and storage software in Europe. The company employs 300 staff, providing services from 20 offices

across Asia, Europe and the Middle East. Of the non-administrative employees, headcount is roughly split

between engineers (providing pre-sales engineering, bid preparation, site surveys and virtual CTO services)

and sales/support staff (providing 24/7 customer support and consultancy services for IT infrastructure and

security integrators). Since its 2010 Leveraged Buyout (LBO), the company has more than tripled its

revenues, reaching €279mn in calendar 2012. Furthermore, its recent acquisition of Secureway (see below

for details) is expected to boost 2013 revenues by €100mn which, together with organic growth, means the

company is on track to reach €400mn in revenues for calendar 2013.

Exclusive Networks has already started to build out Asian operations, acquiring the aforementioned Dubai-

based Secureway, a leading value-added distributor of IT security in the Middle East, in November 2013 for

an undisclosed sum. The acquisition sets Exclusive Networks on a path to becoming the largest EMEA

value-added distributor of security, unified communications and infrastructure technologies. On this note, the

company claims it will continue to acquire three companies per year and reach revenues of €1bn by 2018.

Readers may know lead investor Omnes Capital (€180mn (2013), AUM €1.9bn), which last featured in our

July 2013 Bulletin as part of a €16.8mn Series C round in Scality, a fellow French company providing cloud

storage systems. The firm (then Crédit Agricole Private Equity) became involved with Exclusive Networks

when it acquired a 69% stake in a 2010 LBO that valued the company between €30-50mn. Omnes is known

for investing at stages up to mid-cap buyout.

Linked to Omnes, by being 91% owned by Crédit Agricole, is existing investor SOCADIF, also a French

private equity and venture capital firm (albeit a less frequent guest in our Bulletin). It invests between €0.5-

5mn and first invested in the round led by Omnes Capital in 2010.

Also returning is fellow French investor Edmond de Rothschild Investment Partners (€125mn (2012); AUM

€975mn). A 13-time co-investor of Omnes, it last featured in our April 2013 Bulletin for investing in French

developer of ultrasound medical imaging technology SuperSonic Imagine, a €28mn late stage round in which

Omnes also took part. The firm first supported Exclusive Networks as a lead investor in a previous round,

contributing €1mn of a €3mn growth investment in June 2007.

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# Company Sector Round €mn Description Investors

6 Logentries (Ireland) www.logentries.com

Software A 7.3 Cloud-based service provider for collecting and analysing machine-generated log data.

Floodgate, Frontline Ventures, Polaris Partners, RRE Ventures.

Logentries (Ireland), a cloud-based service provider for collecting and analysing

machine-generated log data, raised $10mn (€7.3mn) in a Series A round led by

existing investor Polaris Partners, with support from other shareholders Frontline Ventures and RRE

Ventures, as well as new investor Floodgate. The funds will be used to accelerate product development

and commercial deployment, as well as to add c.60 staff.

Founded in 2010, Logentries spun-out from UCD’s Performance Engineering Laboratory after a decade of

joint research with IBM. Its technology collects and analyses enormous quantities of machine data and

produces valuable insights regarding applications’ health and performance, helping companies to track their

logs in real-time and troubleshoot potential issues. With an office in US, its engineering base in Dublin and

an R&D lab in Prague, the company has more than 1,000 paying customers and 10,000 users in 100

countries. Customers include leading Infrastructure-as-a-service (IaaS) providers (e.g. Microsoft Azure),

Platform-as-a-service (PaaS) providers (e.g. Heroku) and other application providers (e.g. Hailo).

The importance of log management technologies in extracting from big data the “little data” that matters was

well demonstrated in a study, where Logentries analysed 22bn log events from c.6,000 Heroku applications.

It concluded that only 0.18% of these logs contained useful information – (i) fatal errors and

(ii) intermittent issues and anomalies in log data (e.g. warnings such as request timeouts) which are more

difficult to track, but if unsolved can still result in business loss and negative user experiences.

Logentries’ easy-to-use capabilities (e.g. visualisation, data pre-analysis and plug-ins) automatically identify

relevant events in real-time (unlike other log management technologies, which require the user to manually

search for issues). In addition, the system enables key information to be dynamically tagged, automatically

routed, and easily shared across teams and computing platforms. Thus, Logentries eliminates the need for

in-house data experts by enabling non-technically-proficient employees to process data, monitor system

performance and troubleshoot potential issues.

Its main competitors include US-based Splunk (c.3,700 customers; €5.7bn market cap) and Sumo Logic

(c.90 customers). According to management, Logentries’ key differentiation is its more user-friendly

experience (making machine data accessible to all users) and its focus on companies other than very large

enterprises (i.e. outside the Fortune 100). As per IDC, the worldwide volume of digital data will grow 45%

annually (to c.8tn gigabytes by 2015, with 90% generated by machines), and the worldwide market for Big

Data technology and services will grow 40% annually (to c.$17bn (€13bn) in 2015).

Through this round, US-based venture capital firm Floodgate (€55mn (2012); AUM €109mn) joins the other

existing investors that provided $1mn (€0.8mn) seed money to Logentries in 2012. Floodgate, co-founded in

2006 by well-known investor Mike Maples, typically invests $150k-$1mn (€115k-€0.8mn) in technology

companies, such as Bigcommerce, Chegg and Twitter.

Frontline Ventures (€20mn (2013)) is a Europe-focused venture capital firm, typically participating in seed

(€100-750k) and Series A (€1-2mn) rounds. It invests in software companies focused on Big Data, Cloud

Services, Internet and Mobile, such as CurrencyFair (platform for exchanging currencies and sending funds).

Lead investor in both Logentries’ funding rounds, Polaris Partners (€275mn (2010); AUM €2.5bn) is one of

the largest venture capital firms globally. Founded in 1996, it has a portfolio of more than 100 companies and

typically invests at the seed and early stages in the Consumer, Healthcare and Technology sectors.

Existing investor RRE Ventures (€169mn (2012); AUM €792mn) is a NYC-based early-stage venture capital

firm, typically investing in Technology companies across the US. To date it has provided over $1bn of

funding to more than 125 companies, including Human Capital Management SaaS provider Taleo (acquired

by Oracle for c.€1.4bn in February 2012).

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2.1 - M&A Activity Index

0

5,000

10,000

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25,000

30,000

0

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Dea

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Disclosed Global TMT M&A Transactions

European Deals 2012 (€mn) European Deals 2013 (€mn)

Global Deals 2012 (€mn) Global Deals 2013 (€mn)

# of Global Deals 2012 # of Global Deals 2013

0

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Disclosed European VC & PE-Backed TMT M&A Transactions Value of Deals 2012 (€mn)

Value of Deals 2013 (€mn)

# of Deals 2012

# of Deals 2013

>£30mn / €35mn / $50mn

(1) (3) (2)

Disclosed European VC & PE-Backed TMT M&A Transactions (2013)

> £30mn / €35mn / $50mn

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly Number # 1 3 3 4 5 7 3 6 5 2

Value €mn 360 202 275 3,479 1,746 1,728 625 1,546 367 2,286

Median €mn 360 72 83 157 100 129 67 236 66 1,143

Cum. Number # 1 4 7 11 16 23 26 32 37 39

Value €mn 360 562 837 4,315 6,061 7,790 8,414 9,960 10,327 12,613

Median €mn 360 65 85 83 94 94 122 111 100 100

Source: Capital IQ; Go4Venture Advisers Analysis (1) Includes Dell acquisition by Silver Lake for €22.3bn (2013)

(1)

Source: Capital IQ; The 451 Group; VentureSource (including transaction value estimates); Go4Venture Advisers Analysis (1) Includes NDS acquisition by Cisco Systems for €3.8bn (2012) (2) Includes ista International acquisition by CVC Capital Partners for €3.1bn (2013) (3) Includes Elster acquisition by Melrose for €2.3bn (2012)

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2.2 - Top 5 Global TMT M&A Transactions Summary

Ranked by Price (€mn) in descending order (includes announced and/or completed deals)

# Target & Acquirer Target Sector Price (€mn)

Rev. (€mn) P/R Noteworthy Sellers

1 Samsung Corning Precision Materials (Korea) www.scp.samsung.com Corning (US NYSE:GLW) www.corning.com

Hardware 2,500 N/A N/A -

Corning, an advanced materials and electronics glass manufacturer, will acquire Samsung Corning Precision Materials (SCP), an LCD glass substrate producer. SCP is a Korea-based Joint Venture (JV) set up in 1995 by Corning and Samsung, the electronics and semiconductor giant: the companies each owned 43% of the JV that would eventually be named SCP with the remainder being held by a number of outside shareholders. SCP manufactures substrates – planar sheets of materials that support and protect the electrodes and molecules needed to produce a visible image in flat-screen displays – for flat panel televisions and mobile phones. Used predominantly by Samsung for its Galaxy range of smartphones and for high resolution large format displays, SCP's substrates are based on Corning's Gorilla Glass technology which allows them to be both robust and temperature resistant whilst remaining lightweight. Since its inception, SCP has organically grown its production and research capacity; at time of acquisition it employed c.4000 people.

Corning, named after the city in New York state where it is headquartered, was founded in 1851. Starting as a general glassworks, it has produced everything from vacuum tubes for radios to telescope lenses over its history. Having diversified into related fields, it now produces glass and equipment for the automotive, construction, defence, electronics, life sciences and telecommunications sectors. Corning employs c.29,000 and reported revenues of $8bn (€6bn) for the last twelve months to 30

September 2013. Additionally, sales have grown at a 14% CAGR since 2009. This is the largest deal the company has done since its $3.6bn (€2.6bn) acquisition of Optical Technologies, a communications materials supplier, in September 2000.

Acquiring SCP will allow Corning to benefit from the ongoing rise in demand for displays driven by mobile and tablet proliferation. This will also help to consolidate capital and R&D spending as the glassmaking technology is brought back under one roof. Furthermore, this cements Corning's relationship with Samsung, which stretches as far back as 1973 when the two companies partnered to make glass for black and white televisions (and of course continued with the establishment of SCP): Samsung received convertible shares which equate to a 7.4% holding in Corning for the deal, together with a 10-year supply agreement. Though there have been no directly comparable deals recently, this acquisition comes amid heavy M&A activity in the electronics industry which we covered in our September Bulletin.

2 Supercell (Finland) [51%] www.supercell.net SoftBank (Japan TSE:9984) www.softbank.com

*Implied enterprise value for 100% of Supercell

Application Software

2,200* 79 28.0x Accel Partners, Atomico, Index Ventures, Initial Capital, Institutional Venture Partners.

SoftBank, a telecoms provider and Japan’s third largest mobile network operator, will acquire 51% of Supercell, a mobile games developer. Founded in 2010, Finland-based Supercell offers ‘freemium’ (where additional features or levels can be unlocked for a fee) games for smartphones and tablets. With a portfolio of only two games released in 2012, namely Clash of Clans and Hay Day, and just over 100 employees, Supercell reached revenues of $108mn (€79mn) in calendar 2012 and $179mn (€136mn) in Q1 2013 alone, with EBIT of $106mn (€81mn) during the same time period. The company reached revenue peaks of $2.4mn (€1.8mn) per day with 8.5mn daily active users in April 2013 and saw its valuation quadruple in the past seven months to over $3bn (€2.2bn), bigger than the publicly traded social gaming giant Zynga which employs over 3,000 people, valued at $2.3bn (€1.7mn). Supercell will continue to operate independently, maintaining its headquarters in Finland and co-founder Ilkka Paananen as CEO. In April 2013 the company raised a €100mn Series C round from Atomico, Index Ventures and Institutional Venture Partners. Accel Partners became involved as a lead investor in a €8.4mn Series B round in May 2011. Initial Capital invested in a Series A (size undisclosed) round in December 2010.

Founded in 1981, Japan-based SoftBank Corporation (“SoftBank”) is a listed provider of diversified telecoms services such as mobile network operation, cloud hosting and broadband. An interesting feature of SoftBank is that its CEO, Masayoshi Son, has an exceptionally long-term strategy and recently announced that SoftBank aims to become the world’s largest company as measured by EBIT, sales or market capitalisation. With over 24,500 employees the company reached c.¥284bn (€34bn) in revenues for year ended 30 September 2013, a 41% growth compared to 2012. Readers may be more familiar with SoftBank’s venture capital arm, SoftBank Capital, which last featured in our September 2012 Bulletin when it invested in France-based performance advertising specialist Criteo’s €30mn late stage round. Serial acquirer SoftBank has announced six M&A deals in 2013 including one for mobile phone distributor Brightstar, its second deal in October (detailed below).

This deal is in line with SoftBank’s announcement earlier this year of its intent to diversify into gaming when it acquired a controlling stake (c.58%) in GungHo at the end of March 2013. Please find more details on this deal in section 2.3 (below).

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# Target & Acquirer Target Sector Price (€mn) Rev.

(€mn) P/R Noteworthy Sellers

3 Brightstar (US) [57%] www.brightstarcorp.com SoftBank (Japan TSE:9984) www.softbank.com

*Implied enterprise value for 100% of Brightstar

IT Distribution & Services

1,422* 5,000 0.3x Lindsay Goldberg.

SoftBank, a telecoms company, will acquire 57% of Brightstar, a distributor of mobile phones. Founded in 1997, US-based Brightstar manages distribution and logistics for major mobile network operators including AT&T, T-Mobile and Verizon. Operating in over 50 countries, Brightstar sources mobile devices including phones and tablets, buying them wholesale and reselling them to network operators. The company employs c.3,600 and serves over 200 network operators as well as 30,000 independent retailers. In addition to its ordinary distribution activities it also provides value added logistics services, phone insurance, replacement services and trade-in management. At acquisition, Brightstar reported an EBITDA of $260mn (€191mn) off revenues of $7bn (€5bn) for the last twelve months, meaning the company was acquired at less than 0.2x revenues. Brightstar featured by proxy in our July 2012 Bulletin when its European JV with Tech Data, Brightstar Europe (a supply chain optimisation company), was acquired for €135mn by Tech Data. Lindsay Goldberg acquired an undisclosed minority stake in the company in 2007.

Japan-based SoftBank provides diversified telecoms services such as mobile network operation, cloud hosting and broadband. SoftBank primarily focuses on providing internet-enabled mobile subscriptions and is Japan’s third largest mobile network operator with c.33mn subscribers, close behind KDDI’s c.39mn and approximately half of NTT DoCoMo’s c.62mn. With over 24,500 employees the company has grown sales from ¥2.8tn (€21bn) to ¥3.2tn (€24bn) between 2009 and 2012, experiencing a 5% revenue CAGR. SoftBank is notably acquisitive and announced six M&A transactions in 2013 (with the most recent one of course being Supercell, detailed above and in the European VC & PE-Backed M&A Trasactions section). Moreover, in October 2012 SoftBank acquired an 80% stake in US mobile network operator Sprint for $37bn (€27bn).

Acquiring Brightstar helps improve the company’s buying scale, allowing it to negotiate better supply deals for its own mobile network operations (recently boosted by the Sprint acquisition completing). This however, takes into the account that Brightstar also supplies rivals of Sprint, which will also benefit from the increase in buying scale.

4 Tellabs (US) www.tellabs.com Marlin Equity Partners (US) www.marlinequity.com

Carrier Infrastructure

811 772 1.1x -

Marlin, a private equity firm, will acquire a majority stake in Tellabs, a communications hardware provider. US-based Tellabs manufactures optical transport systems and other equipment for telecoms providers. Founded in 1974, it originally provided switching equipment for traditional telephone networks. Now, its equipment includes routers, packet-optical transport systems and passive optical Local Area Network (LAN) gear. Most of the Tellab’s offering is used for backhaul networking: the sections of a mobile network that connect individual cells to the core fibre optic network. Tellabs has struggled lately against more agile competitors such as Alcatel-Lucent, Cisco and Huawei, who were faster to move away from traditional switching equipment to capture a rising market for backhaul driven by the rise in mobile data use. This, and consolidation among telecoms provider customers such as AT&T, Verizon (Tellab’s largest customer) and Vodafone, has negatively impacted Tellab’s financial performance: the company has faced an annual 15% decline in revenues since 2009, dropping to $1bn (€772mn) in year ended 28 Dec 2012. In fact, its revenues declined year-on-year (except between 2004-2006) from a peak of $3bn (€2.2bn) in 2000. Furthermore, it has posted a loss for the past 11 quarters. Having made no acquisitions since November 2010 (Zeugma systems, a router manufacturer, for an undisclosed sum), the company employs c.2,400 people.

Marlin Equity partners is a US-based private equity firm with $2.6bn (€1.9bn) AUM, founded in 2005. Its investment focus is growth capital, management buyouts and special situations. It covers most sectors including aerospace and defence, healthcare, industrials, logistics, media, technology and telecoms. The firm’s latest fund closed at $1.6bn (€1.2bn) in July 2013. It has been known to adopt a buy-and-build strategy with its portfolio companies: particularly relevant to Tellabs was Marlin’s acquisition of Sycamore Network’s intelligent optical switch business for $19mn (€14mn) in October 2012. Shortly afterwards in December 2012, Marlin acquired the optical hardware business of Nokia Siemens Networks (whose €3bn acquisition by Nokia we covered in August 2013) for an undisclosed sum; the assets acquired in the Sycamore deal were then rolled into the business acquired from Nokia Siemens Networks and renamed “Coriant”.

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# Target & Acquirer Target Sector Price (€mn)

Rev. (€mn) P/R Noteworthy Sellers

5 Virtela (US) www.virtela.net NTT Communications (Japan) www.ntt.com

Internet Services

385 N/A N/A New Enterprise Associates, Newton Technology Partners, Norwest Venture Partners, Palomar Ventures.

NTT Communications, a telecoms provider and operator of Japan’s largest mobile network, will acquire Virtela, a cloud networking provider. Founded in 2000, US-based Virtela provides two networking platforms: Virtela Virtualized Overlay Network (VON) and Virtela Enterprise Services Cloud (ESC), which allow enterprises to reduce their network devices whilst improving connectivity. Based on an open architecture, VON automatically routes network traffic via the most efficient path through Virtela’s c.1,000 network operator partners across 190 countries, providing its enterprise clients with highly stable and fast virtual networks. Virtela ESC platform enables the transition of branch office IT and security services to the cloud, delivering 80% cost savings in upfront capital spent on infrastructure and 30% savings in on-going operating expenses. The company also provides networks analytics, network optimisation and a range of services related to its products. With over 400 employees, oft -acclaimed (Gartner April 2013, Stevie Winner 2013, WCA 2012) Virtela serves more than 500 customers worldwide including well -known brands such as BP, Coca-Cola, FedEx, Google, Honeywell, IBM, Kodak, Paramount, RedHat, Sony and UPS. Norwest Venture Partners became involved as a lead investor in a $40mn (€29mn) Series A round in April 2000. New Enterprise Associates, Newton Technology Partners and Palomar Ventures became involved in a $35mn (€26mn) Series B round in April 2001.

Founded in 1999, Japan-based NTT Communications provides fixed-line and mobile telephony, VoIP and broadband internet services both in Japan and internationally. As mentioned above, it operates the largest mobile network in Japan with c.62mn subscribers. The company operates as a subsidiary of Nippon Telegraph and Telephone Corporation (NYSE:NTT), one of the world's largest telecommunication companies by revenues according to Fortune 500. NTT Communications itself, with 8,000 employees, reached revenues of ¥970bn (€7.3bn) in the year ended 30 June 2012, a 5% decline from the previous year.

Acquiring Virtela (which will become a wholly owned subsidiary) will allow NTT Communications to increase revenues from cloud services to over ¥200bn (€1.5bn) from December 2013 to March 2016 (more than double the figure for 2011-12). This comes at a time when the company faces falling revenue from voice services. It has been apparent for some time that telecoms companies are diversifying to offset declining in traditional revenues.

Source: Capital IQ; The 451 Group; Go4Venture Advisers Analysis

Key Bold indicates name of Target

Italic indicates name of Acquirer P/R – Price / Last 12 Months Revenues

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2.3 - Headline European VC & PE-Backed M&A Transactions

(> £30mn / €35mn / $50mn), includes announced and/or completed deals where price is available

# Target & Acquirer Target Sector

Price (€mn)

LTM Rev.

(€mn) P/R Funding

(€mn) P/F Noteworthy Sellers 1 Supercell (Finland) [51%]

www.supercell.net SoftBank (Japan) www.softbank.com *Implied enterprise value for 100% of

Supercell

Application Software

2,200* 79 28.0x 100 22.0x Accel Partners, Atomico, Index Ventures, Institutional Venture Partners.

2 On the Beach (UK) www.onthebeach.co.uk Inflexion Private Equity Partners (UK) www.inflexion.com

Internet Content & Commerce

86 330 0.3x N/A N/A ISIS Equity Partners.

Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis

Key Bold indicates name of Target P/R – Price / Last 12 Months Revenues

Italic indicates name of Acquirer P/F – Price / Total Funding E– Estimated P/F>1x indicates an investment where all investors have made a positive return on their investment. P/F<1x indicates poor returns for some, but early or late investor entrants may still show a positive return on their investment.

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# Target & Acquirer Target Sector Price (€mn)

LTM Rev. (€mn) P/R

Funding (€mn) P/F Noteworthy Sellers

1 Supercell (Finland) [51%] www.supercell.net SoftBank (Japan) www.softbank.com *Implied enterprise value for 100% of Supercell

Application Software

2,200* 79 28.0x 100 22.0x Accel Partners, Atomico, Index Ventures, Institutional Venture Partners.

Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis

Supercell (Finland), a mobile gaming provider, will be 51% acquired by SoftBank (Japan) for an implied

enterprise value of €2.2bn. The sellers are Accel Partners, Atomico, Index Ventures and Institutional

Venture Partners.

Founded in 2010, Finland-based Supercell offers ‘freemium’ (where additional

features or levels can be unlocked for a fee) games for smartphones and

tablets. With a portfolio of only two games released in 2012, namely Clash of

Clans and Hay Day, and just over 100 employees, Supercell reached revenues

of $108mn (€79mn) in calendar 2012 and $179mn (€136mn) in Q1 2013 alone,

with EBIT of $106mn (€81mn) during the same time period. The company

reached revenue peaks of $2.4mn (€1.8mn) per day with 8.5mn daily active users in April 2013 and saw its

valuation quadruple in the past seven months to over $3bn (€2.2bn), bigger than the publicly traded social

gaming giant Zynga which employs over 3,000 people, valued at $2.3bn (€1.7mn). Supercell will continue to

operate independently, maintaining its headquarters in Finland and co-founder Ilkka Paananen as CEO. In

April 2013 the company raised a €100mnSeries C round from Atomico, Index Ventures and Institutional

Venture Partners. Accel Partners became involved as a lead investor in a €8.4mn Series B round in May

2011. Initial Capital invested in a Series A (size undisclosed) round in December 2010.

Founded in 1981, Japan-based SoftBank Corporation (“SoftBank”) is a listed

provider of diversified telecoms services such as mobile network operation,

cloud hosting and broadband. An interesting feature of SoftBank is that its CEO,

Masayoshi Son, has an exceptionally long-term strategy and recently

announced that SoftBank aims to become the world’s largest company as

measured by EBIT, sales or market capitalisation. With over 24,500 employees

the company reached c.¥284bn (€34bn) in revenues year ended 30 September 2013, a 41% growth

compared to 2012. Readers may be more familiar with SoftBank’s venture capital arm, SoftBank Capital,

which last featured in our September 2012 Bulletin when it invested in France-based performance

advertising specialist Criteo’s €30mn late stage round. Serial acquirer SoftBank has announced six M&A

deals in 2013 including one for mobile phone distributor Brightstar (detailed in the previous section).

This deal is in line with SoftBank’s announcement earlier this year of its intent to diversify into gaming when

it acquired a controlling stake (c.58%) in GungHo at the end of March 2013. SoftBank will be able to

leverage its large mobile network to help Supercell overcome its challenges entering and dominating the

lucrative Asian gaming market. In Europe and the US, Supercell mainly focused on iOS, whereas Android is

vital to enter countries such as China and South Korea. Supercell is the only company that SoftBank has

acquired in Europe this year, making an exception from its traditional doctrine of only investing or acquiring

in Asia or the US.

October 2013

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Accel Partners (€356mn (2013); AUM €5bn) is a global venture capital firm that may be well-known to our

readers for having successful funds both in the US and in Europe. Its current investment priorities are

infrastructure, internet and consumer services, mobile and cloud services / SaaS through its offices in China,

India, UK and the US. It appeared last month in our September 2013 Bulletin when it invested €13.5mn in a

Series B round in UK provider of an independent transaction network and services for the fund management

industry Calastone.

Atomico (€126mn (2010)) is a London-based venture capital founded by Skype co-founder Niklas

Zennström. It primarily invests in growth stage companies in the technology sector geographically located

outside of Silicon Valley. With more than 50 investments over four continents made through its Beijing,

Istanbul, London, São Paulo and Tokyo offices, Atomico is a truly global investor. Many of the best known

and most successful VC firms have taken a similar approach over the last five years, not just to gain

exposure to emerging markets but also because their investee companies are demanding local investors

when they wish to expand into these markets. Atomico last featured in our July 2013 Bulletin, investing

€11.4mn in a Series B round for Bohemian Wrappsody, operator of an online social gift giving programme.

Initial Capital is a London-based early stage and seed investment firm funded by a group of angel investors.

It invests solely in the technology sector and prefers digital and online investments. Though this is the firm’s

first appearance in our Bulletin, one of its key people is Shukri Shammas, founder of gaming companies Glu

Mobile, exited in a $350mn (€257mn) IPO in March 2007, and Playfish, acquired by EA for $400mn

(€293mn) in November 2009.

Index Ventures (€350mn (2012); AUM €2bn) is a global venture capital firm with roots in Geneva and

London; notably the first successful venture capital firm to enter the US from Europe. It typically invests

between €250k-50mn in seed to late stage companies based in Europe. Sector agnostic it has a preference

for life-science and technology where it has built its experience. Index Ventures last featured in our January

2013 Bulletin when it invested €12mn in a late stage internal round for Prescription Eyewear, operator of

eyewear e-tailing sites GlassesDirect, myOptique and SunglassesShop.

Institutional Venture Partners (€733mn (2012), AUM €2.9bn) typically invests between $10-100mn (€7-

73mn) in companies with revenues over $10mn (€7mn) primarily in the US within the internet, digital media,

enterprise IT and mobile communication sectors. The firm has invested in over 300 companies, of which 95

have gone public. It last featured in July 2013 for a €30.6mn investment in Shazam, a music recognition app,

and a €8.5mn investment in Grand Cru, a mobile games developer.

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# Target & Acquirer Target Sector

Price (€mn)

LTM Rev.

(€mn) P/R Funding

(€mn) P/F Noteworthy Sellers

2 On the Beach (UK) www.onthebeach.co.uk Inflexion Private Equity Partners (UK) www.inflexion.com

Internet Content & Commerce

86 330 0.3x N/A N/A ISIS Equity Partners.

Source: Capital IQ; The 451 Group; VentureSource; Go4Venture Advisers Analysis

On the Beach (UK), an online retailer of holidays, will be acquired by Inflexion Private Equity Partners

(UK) for €86mn in cash in a secondary buyout transaction, where the seller is ISIS Equity Partners.

Founded in 2004, On the Beach is a UK-based online retailer of holidays. It

offers a range of flights and hotels (more than 30,000), as well as packaged

holidays in Africa, Asia, Europe and the US. Although the company was

launched in 2004, its website went live in 2005. Since then it has partnered with

Google, MSN and Yahoo! to promote its website. On the Beach is a member of

the Association of British Travel Agents, a trade body whose members have an

estimated combined revenue of £25bn (€30bn) and carry c.750k passengers each year. Since its last round

of funding six years ago, On the Beach increased sales from £78m (€92mn) to £280mn (€330mn), a CAGR

of 24%, and reached an EBITDA of £11m (€13mn) in year ended 30 June 2013. Like other online travel

agencies, On the Beach achieved growth even against the backdrop of economic recession and travel

disruptions such as the 2010 ash cloud and Arab Spring. ISIS Equity Partners became involved in November

2007 when it invested an undisclosed amount in On the Beach.

Inflexion Private Equity Partners is a UK-based private equity firm investing in

small-to-mid market growth businesses domiciled in the UK. The company

currently manages c.£800mn (€944mn) principally from pension and insurance

funds, fund of funds and family offices. While 49% of its investors are Europe-

based (18% of which in the UK), 44% are based in North America, 6% in

Australia and 1% in Japan. The company also maintains local teams in Brazil,

China and India to help foster the overseas operations of its portfolio companies. It prefers to invest between

£10-100mn (€12-118mn) in companies with at least £2mn (€2.4mn) in EBITDA and the potential to double

that over 3-5 years. In terms of sectors, it prefers business services, infrastructure, financial services,

healthcare, retail, engineering and TMT.

This acquisition follows Inflexion’s recruiting of Charlie Cannell (former CEO at Cantos, a provider of online

video services) in January 2013 as Digital Director to drive the digital evolution of its portfolio companies.

Furthermore, On the Beach fits within Inflexion’s investment criteria in terms of geography, sector and size.

See earlier in this Bulletin for coverage on Skyscanner’s fundraising for another deal in this sector.

ISIS Equity Partners (€61mn (2013), AUM €1.4bn) is a UK-based private equity firm specialising in profitable

small to mid-cap businesses, based in the UK and valued between £5-100mn (€6-118mn), in which it

typically invests between £2-40mn (€2-50mn). Since 1999, ISIS has made over 100 investments in the

sectors of business services, consumer, energy, environment, financial services and healthcare, as well as

TMT. ISIS also manages five Baronsmead Venture Capital Trusts (VCTs) listed on the LSE. The investment

firm last featured in our February 2013 Bulletin when it sold the remaining 77% of FFastFill, a risk

management SaaS provider, to ION Trading for €94mn (which had previously acquired 23% of the

company).

October 2013

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List of Acronyms

Financial Terms:

k: used as abbreviation for 1,000 (for example, €1k means €1,000)

mn: million

bn: billion

AUM: Assets Under Management

CAGR: Compound Annual Growth Rate

EBIT: Earnings Before Interest and Tax

EBITDA: Earnings before Interest, Taxes, Depreciation and Amortisation

ECM: Equity Capital Markets

EIS: Enterprise Investment Scheme

EV: Enterprise Value

IPO: Initial Public Offering

LBO: Leveraged Buyout

MBO: Management Buyout

LTM: Last Twelve Months

M&A: Mergers and Acquisitions

P/E: Price to Earnings ratio

P/F: Price to Funding ratio

PE: Private Equity

PIPE: Private Investment in Public Equity

VC: Venture Capital

Business / Technical Terms:

B2B: Business to Business

CEO: Chief Executive Officer

EMEA: Europe, the Middle East and Africa

ESC: Enterprise Services Cloud

JV: Joint Venture

LAN: Local Area Network

LCD: Liquid Crystal Display

OEM: Original Equipment Manufacturer

IaaS: Infrastructure-as-a-service

PaaS: Platform-as-a-service

SaaS: Software-as-a-Service

October 2013

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Page 22 © Go4Venture Advisers 2013

R&D: Research and Development

RDBMS: Relational DataBase Management System

SEC: Securities and Exchange Commission

LSE: London Stock Exchange

NYSE: New York Stock Exchange

SZE: Shenzhen Stock Exchange

TSE: Tokyo Stock Exchange

TMT: Technology, Media and Technology

VCTs: Venture Capital Trusts

VON: Virtualized Overlay Network

October 2013

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Page 23 © Go4Venture Advisers 2013

Go4Venture Advisers LLP

48 Charles Street +44 (0)20 7529 5400

Berkeley Square [email protected]

London

W1J 5EN

This report was published on November 29, 2013

Disclaimer

This report has been prepared and issued by Go4Venture Advisers LLP who are authorised and regulated by the Financial Conduct Authority.

All information used in the publication of this report, has been compiled from publicly available sources that are believed to be reliable, however no representation, warranty, or undertaking, express or limited is given as to the accuracy or completeness of the information or opinions contained in this report. Opinions contained in this report represent those of Go4Venture Advisers LLP at the time of publication. This research is non-objective. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment. Furthermore, as the information contained in this document is strictly confidential it may not be reproduced or further distributed.

The value of investments and any income generated may go down as well as up. Past performance is not necessarily a guide to future performance. Investors may not get back the amount invested. This publication is not intended to be relied upon in making any specific investment or other decisions. Appropriate independent advice should be obtained before making any such decision.

This report has been compiled by Jean-Michel Deligny, Managing Director – for and on behalf of Go4Venture Advisers.

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