DealZone

Deals du jour

CIT Group Inc, which lends to nearly one million small and mid-sized businesses, signed off on a $3 billion deal late Sunday in rescue financing from a group of bondholders to avoid bankruptcy.  And private equity firm Kohlberg Kravis Roberts & Co on Monday moved a step closer to gaining a stock-market listing.

For these stories and all the rest of the latest deals news from Reuters, click here.

And in the newspapers (some external links might require subscriptions):

* Lloyds Banking Group (LLOY.L) and the Royal Bank of Scotland (RBS.L) might have to sell part of their businesses under proposals to be announced by the opposition Conservatives on Monday, the Times newspaper reported.

* Vietnam’s Oricombank, 10 percent owned by BNP Paribas (BNPP.PA), could sell up to another 10 percent of shares to its French shareholder by year end, Oricombank’s chief executive was quoted in a report as saying. Reuters story here.

* Ron Sandler, the chairman of nationalised British bank Northern Rock (NRKx.L), is on the short list to replace Victor Blank as the chairman of Lloyds Banking Group , the Sunday Telegraph said.

Deals du Jour

Reports of new Asian share sales attracted headlines on Wednesday, with China National Pharmaceutical Group planning a $1 billion IPO, China Merchants Bank seeking $3 billion and BBMG Corp looking for cornerstone investors.Other corporate finance stories in the newspapers include:* French water utility Veolia Environnement (VE.N) plans to sell a 30 percent stake in its Czech unit Dalkia, daily Hospdarske Noviny reported, citing Dalkia’s board chairman.* The Russian government has reached a deal on the purchase of services conglomerate Sistema’s (SSAq.L) stake in telecoms giant Svyazinvest, Kommersant newspaper said.For all the latest deals news, click here.

Deals du Jour

New European regulations made headlines on Tuesday as the former chief executive of Man Group hit out at proposed changes to hedge fund rules and the first details of new European bank regulations emerged.

Other stories to make the newspapers include:

* Bondholders to Northern Rock, the UK bank rescued by the state, are being repaid ahead of the British government due to a contract breach in 2008, the Guardian reported.

* London Residential Opportunities, a new residential property fund, is looking to raise 50 million pounds ($81.16 million) in equity ahead of floating on the London Stock Exchange later this year, according to the Daily Telegraph.

DB pulls off surprise

AIADeutsche Bank, the underdog in the race to run the IPO of a large AIG unit, has come out on top.

The German bank has been chosen as one of two global coordinators to run the IPO of American International Assurance (AIA), beating out Goldman Sachs and Citigroup, which ran the aborted auction of the Asian life insurer earlier this year.

Morgan Stanley, the other global coordinator, is no surprise. The bank has been advising the Fed since the September implosion of AIG, and on top of its own expertise, regulators wanted it in.

Fidelity deal would include any KKR IPO

Henry KravisA deal between KKR and Fidelity would give the mutual fund giant’s customers access to an IPO by the private equity firm itself – if KKR were to do one, a source familiar with KKR said. 
 
The source did not want to be identified because KKR is still studying the possibility of going public and has not said whether it would do an IPO or not.
 
KKR’s plans to become a publicly traded company hinge on a deal to buy an Amsterdam-listed fund, KPE. In April, it extended the deadline to buy the fund by four months.
 
KKR announced the complicated transaction last July, saying it would buy KPE, delist it from Euronext and launch the combined new company on the New York Stock Exchange under the stock symbol “KKR”. KKR had previously considered a more conventional IPO. 
 
Under the terms of the Fidelity deal, the mutual fund company will get the right to sell retail securities to its customers from IPOs of KKR companies. KKR has investments in 50 companies with a combined $200 billion of revenue.

Traditionally, retail customers had trouble getting IPO shares to buy through their brokers, since underwriters first look to wealthier customers and institutional investors to buy large numbers of the securities.

Can this hybrid jump-start the IPO market?

nyse1One of the biggest criticisms made of the IPO process is that investment banks turn around and flip hot new stocks for a big, quick profit, crowding out institutional investors with a longer attention span, and showing with no regard for a company’s long term prospects.

But Menlo, California-based InsideVenture, which is backed by major venture capital firms such as Venrock and Frazier Ventures, major institutional investors such as T Rowe Price, and even the New York Stock Exchange, thinks its new Hybrid Private-Public Offering (HPPOs) method of launching IPOs, introduced this week, is a way around that problem and a way to spur a recovery in the IPO market.

Here’s how an HPPO would work: small and mid-cap companies would still have to file standard IPO registrations with the U.S. Securities and Exchange Commission. But the company would then work with InsideVenture to allocate about half the shares to its existing shareholders and any of the 225 long-term fundamental investors that are InsideVenture members. Once it had lined up a roster made up of enough long term investors, the company would launch its IPO.

U.S. no has-been for IPOs

According to the Russell Global Index, the United States’ market share for IPOs is plummeting. In a news release today Russell said that the U.S.’s share of IPOs in its index had declined to 13.7 percent for the past nine months, from 39.9 percent in 1998.

But don’t write off the U.S. IPO market yet. The Russell figures look at number of deals, not the dollar volume for the offerings.

So far in 2009, the U.S. is showing its old form again: according to Thomson Reuters data, U.S. IPOs account for 30.6 percent of overall global IPO dollar volume so far in 2009, with $1.6 billion, led by deals, large- by pediatrics nutrition maker Mead Johnson ($828 million) and small OpenTable ($60 million.) But measured in terms of deals, the US’s 7 deals make up only 6.8 percent of the 102 deals worldwide this year so far.

First day pop doesn’t guarantee longer term success

digitalglobeThursday’s IPO by satellite image maker DigitalGlobe was the fifth in row to surge in its first day of trading, rising 13 percent in another sign of the IPO market turning around. But a first day pop does not necessarily guarantee long-term success.

Just take a look at the other IPOs this year, with their respective first day pops:

- Mead Johnson, 10 percent (Feb. 11) (pediatrics nutrition)
- Changyou.com, 25 percent (April 2) (online video games)
- Bridgepoint Education Inc, 5.7 percent (April 15) (online college operator)
- Rosetta Stone, 40 percent (April 16) (language training software)

from MediaFile:

Tech M&A: Going down, down, down

Investment bank Jefferies recently released a report on technology M&A in the first quarter of 2009. As one can imagine, there are few surprises. We may as well give you the highlights here, which point to some signs of recovery compared to the end of last year, but clearly there's still a long way to go:

    The number of tech deals in North America fell 4 percent to 373 in the first quarter from the fourth quarter of 2008. It's the lowest level of activity in five years, but at least the drop is a manageable 4 percent -- in the December quarter, the number of deals dropped 23 percent from the third quarter of 2008. The aggregate value of North American M&A transactions was $4.3 billion in the first quarter, also a 4 percent drop from the prior quarter and an 85 percent plunge from the first quarter of 2008. Not a single tech IPO priced in the U.S. market during the quarter. The biggest tech deal announced in the quarter was Autonomy's purchase of Interwoven for $764 million. The first quarter of 2009 has only three transactions greater than $500 million, compared to 10 such deals in the year-ago quarter.

The Jefferies survey also looks at tech M&A in Western Europe, which presents a similarly gloomy picture. Nine of the top 10 Western European deals in the first quarter were cross-border, and four of them involved U.S. buyers. The aggregate deal value fell 80 percent to $1.8 billion compared to the fourth quarter of 2008.

But it's interesting to note that the mix of deals in the software, services and media sub-sector hasn't changed much quarter to quarter. For example, IT services deals have hovered at about 30 percent of total transactions for the past five quarters, while digital media M&A has ranged from 32 percent to 35 percent of total deals in the same period.

from Entrepreneurial:

Learning from Rosetta Stone

traders3

After its blockbuster debut on the New York Stock Exchange, language software maker Rosetta Stone is poised to teach more than just new languages -- it may also serve as a model for start-ups looking to go public in the midst of a recession.

In an interview with peHUB, Phil Clough of Rosetta Stone investor ABS Capital shared his thoughts on what made the company such a draw. The IPO earned ABS more than 6 times its initial investment.

What did Rosetta do right? For starters, it offered what ABS managing general partner Phil Clough calls "substance".  Its online business business model was attractive, and its content and size gave it clout amid a crowded education sector.