Technology, Media, and Telecom News Flash

This is the first of a monthly newsletter focused on deal updates, fundraising, and industry developments in the technology, media, and telecom industry.

Questions, comments, or suggestions? Email Erica Martin (ericamar@wharton.upenn.edu)

Sponsors continue to sell aggressively while valuations in the sector are sky high.  The IPO markets have been more active than we’ve seen in years with 28 tech IPOs and 3 telecom IPOs in 2013 alone.  After a sluggish first half of 2013, new deals seem to be moving along at a decent clip as well.

Publicly-traded Tellabs has agreed to be acquired by Marlin Equity Partners for $891 million.  This price represents a 3% premium on its most recent trading day.  The telecom networking products provider has been unprofitable for nearly three years and is one of the largest take-privates in the space to date.

The Riverside Company has acquired ARCOS, a crew management, callout, and emergency response software-as-a-service company for the power and utilities industries.

Advent and Bain Capital are moving towards buying the remaining 20% in existing portfolio company, WorldPay.  The PE funds originally purchased a majority stake in the credit card processing company from RBS for $3 billion about three years ago.  They will buy the remaining 20% for ~$400 million from RBS, who is under increasing pressure from regulators to raise cash. 

TPG has acquired 21^st Century Fox’s 12.5% stake in Phoenix Satellite Television Holdings Limited, a Hong-Kong based Mandarin and Cantonese broadcaster.  Phoenix has an ~$10.5 billion enterprise value and trades at nearly 8.0x EBITDA after the announcement.

Advent International has offered to acquire publicly-traded Unit 4, a Dutch enterprise software vendor, for €1.2 billion (over 30% premium to the price the company was trading at when it announced takeover interest).     

Insight Venture Partners is continuing on its deployment tear with a large growth investment in Unitrends, an “all-in-one” archiving, backup, and recovery technology solutions vendor.  Though the investment size was undisclosed, Unitrends has recently reported profitability and its 19^th consecutive quarter of growth.

Accel-KKR has invested in On Center Software, a construction automation software company.  The Texas based company offers takeoff, estimating, and labor-tracking software products for the construction project bidding process.

Thoma Bravo has completed its acquisition of Empirix, an end-to-end network testing, monitoring, and analytics solutions company.  This follows several other investments by TB in the service assurance and network management markets (Network Instruments, BlueCoat, nCircle, Solera…)

Redfin, a real estate technology company, has raised $50 million in growth capital from Tiger Global Management and T Rowe Price.  Rumor has it that valuation came in at around $500 million.

Mainsail Partners, a San Francisco-based growth PE fund, has acquired nCourt, an online municipal payments company.

Lambert Private Equity will invest $200 million in Accelera Innovations, a healthcare software-as-a-service company, over the next 36 months.

Twitter raised $1.8 billion in its IPO with as much hype as one would expect: the first day “pop” saw shares rise 73 percent – up to a $25 billion valuation.  The shares traded at a 22x 2014P revenue multiple, nearly twice that of Facebook and LinkedIn, despite the fact that Twitter is highly unprofitable.  Interestingly, many publications declared a “tech bubble” in reaction to this IPO.

Nine Entertainment is seeking up to $660 million in what is poised to be the largest Australian media IPO in history.  The deal was a turnaround story backed by Apollo and Oaktree, who bought out CVC’s stake in the company in a debt-for-equity swap last year.

Carlyle stands to make ~2.25x in CommScope, which went out a few days ago and has since remained quite flat.  Carlyle benefitted from dividends in this deal as enterprise value remains largely the same as when they bought the company and debt levels are still high at $2.5 billion.

Other recent private-sponsor backed IPOs include:                        

Chegg: Raised $187.5M at a $1.1B valuation – however, shares of this unprofitable company quickly took a 20%+ tumble.  Backed by KPCB, Foundation Capital, and Insight Venture Partners, Chegg aims to be the “Netflix of textbooks”

Barracuda Networks: This Francisco Partners and Sequoia Capital-backed internet security company enjoyed a successful IPO.  The company raised $75M raised and saw a 30%+ “pop” in day one share price

Mavenir: The Austin Ventures and August Capital-backed “LTE-over-voice” telecom company raised $55M in an underwhelming IPO.

KKR & Permira have sold off €1.1 billion worth of shares in publicly-traded German broadcaster ProSieben Sat.1 Media AG.

ISIS Equity Partners has sold CableCom Networking to Inflexion Private Equity for an estimated return of ~4.8x.  CableCom is a UK-based internet and digital media services provider.  CableCom users have grown from 13,000 in 2007 to 250,000 in 2012 under ISIS ownership.

Spectrum Equity Investors and Great Hill Partners have sold Passport Health Communications to Experian for $850 million. This transaction implies a 3.2x return for the two funds on their 2008 investment.

Elevation Partners-backed Forbes Media is seeking a buyer at an asking price of ~$400 million.

The Riverside Company has sold ProfitSystems, a software company targeting furniture retailers, to an undisclosed buyer.  No other terms were announced.

North Bridge Growth Equity has closed on $580 million of commitments in its second growth fund.  North Bridges pro forma assets under management is now ~$1.1 billion.  All of North Bridges activity is geared towards primarily technology and tech-enabled businesses.

Vista Equity closed on a second $1.1 billion small-cap fund this month.  This brings their total amount raised to ~$5.0 billion.

Consumer Internet: Several prominent consumer internet companies that are sitting on tons of cash are out to raise new mega-rounds.  What does this say about current pricing and the scarcity of deals in this space - are we nearing the peak?

Nextdoor has raised $60M in primary capital from KPCB and Tiger just 6 months after its last round.  This deal is rumored to have been done at a valuation of $600M 

Snapchat is rumored to be seeking another couple hundred million dollars less than six months after their last mega fund-raise of $80M at an $800M valuation from IVP

Pinterest has raised $225M after having just raised $200M eight months ago

VP Industries: David Gluckman
Consumer: Chris King | Energy: Dan Lee | Healthcare: Visali Ramanathan | Industrials: Bahaa Naamani | Technology: Erica Martin