|
|
|
|
|
|
|
|
|
|
Yesterday saw the launch of our Cloudaq website. Cloudaq was launched on 1st January 2010 and is our index of the top cloud based companies from around the world. It measures the performance of the top 30 global cloud companies relative to the NASDAQ 100 and Techmark All-Share indices. Cloudaq companies are selected, based on market capitalisation, from our broader feeder index of approximately 90 cloud companies.
Over the coming months we will be posting regular updates and commentary as well as having continued coverage from computer weekly.
Looking back over 2011, technology equities as a class struggled to make much headway. The first half of the year revealed some cautious growth with Cloudaq presenting a steeper ascent than either of the comparative indices. However in August, the downgrading of the Americas credit rating, worrying revelations about Europe’s debt levels and the general crisis of confidence across the financial world sent markets tumbling. Cloudaq was particularly badly hit falling 34 points from peak to trough over a month, with Salesforce.com leading the fallers dropping by 30% over the month.
In Q4 Cloudaq regained some ground early on but then fell away again as the fallout from Salesforce.com missing its billing targets in Q3 took hold and Ariba also announced an unexpected fall in Q4 profits which led to a fall in share price of about 14%. In December the executive chairman of OpenTable resigned leading to a fall of about 4% in value. The continuing trend of the large established software players buying their way into the cloud is helping to offset some of the negative news.
by Dan Bowtell
|
|
IBM has accurately identified key growth markets and built out a position in these for as far back as we can remember. Its recent announcement to acquire Worklight, a tool for developing enterprise class workforce management applications is a clear indication that IBM sees this as a growth market it should be in.
We have noted a number of recent deals in this sector, including one of our own, Kirona Solutions, a field force software buy and build platform, and Workplace Systems PLC, interestingly both backed by LDC. The prospect of more deals in this space seems increasingly likely as the tech giants all ensure they have a strong position in this area.
by Samuel Davies
|
|
 
I don’t think a single person in the (tech) world could escape hearing of Apple’s record quarter. It posted some $46bn for its quarterly revenue figure, and with it, its share price climbed yet further hitting a whopping $440+ per share, it makes me wish I had switched to investing in Apple in 2004 when the shares sat at mere $10!
It is clear from the announcement that this growth is being driven by smartphone sales ……. So what about the other players in that market? It appears that the hardest hit is RIM, its share price continued its downward decline to just a little over $16. The new CEO who was brought in to resolve the Canadian company’s woes failed to do much to calm the fears of investors.
It seems RIM maybe left on the scrapheap of tech hardware manufacturers who failed to innovate …… hands up if you had Psion or Palm? The only lifeline for RIM would come in the shape of large competitor, a deal here seems ever more likely as the price continues to drop and RIM appears under-valued.
By Samuel Davies |
|
Some time ago we commented that despite the ongoing hype around SaaS, we had seen relatively few examples of the big software players putting major money on the line for SaaS-focused transactions. They have, of course, acknowledged the shift towards cloud-based software solutions with SaaS versions of their own technology, with varied but generally limited success. But at the end of the day, shifting their business models to genuine SaaS technologies is a gargantuan task so it was only a matter of time before they started to announce acquisitions of SaaS specialists which could cannibalise their traditional businesses.
First up was Oracle’s acquisition of SaaS player RightNow Technologies in a $1.5bn transaction. RightNow is a provider of “customer experience” solutions and the deal saw Oracle, historically the most prolific acquirer of the major software vendors, paying around 5x next year’s revenue. The acquisition allows Oracle to more effectively target the mid-market with CRM solutions as well as helping the business to announce its presence as a SaaS player. Thus far it had been seen as being rather “late to the party” but the RightNow deal along with the acquisitions of ATG, Inquira and FatWire, demonstrate that the business intends to fully participate in the cloud revolution.
Not to be outdone, SAP announced the acquisition of HR SaaS vendor SuccessFactors in a $3.4bn transaction in December, paying 8x 2012 revenue to take out one of the world’s biggest SaaS players. Both companies are aiming to capitalise on the growth in cloud services which Gartner predicts will surge from $68.3bn in 2010 to $148.8bn in 2014.
The question is really around how far this round of consolidation will go. Will we ultimately have the situation that we have seen in so many horizontal software markets where the major vendors snap up all of the bigger vendors before they can do too much damage or will the likes of Salesforce resist the urge to sell out, GroupOn style, and remain independent in a brazen attempt to establish a new order?
By Emma Rodgers |
|
Daisy Group, Alternative Networks and TalkTalk are rumoured to be circling the problematic PE backed telecoms company. With PE backer Silverfleet relinquishing control of the £140m revenue company to the banks before Christmas, and the installation of a revolving door in the CEO’s office, you have to pinch yourself and ask how did it come to this?
It was many years ago now that we quickly turned a sweet IT Services buyout deal backed by LDC into an exit to Azzurri (then Blue sky Networks). Martin St Quinton, the founder, was then at the helm and he was an impressive character. So impressive in fact that he later led the exit of Azzurri and swapped out 3i for PPM (now Silverfleet) in a £183m deal at a reputed 13x EBITDA supported with 6-7x debt. And therein lies the problem. Whilst a prominent business like Azzurri will always have its detractors, it would have to walk on water to survive that sort of structure in a serious economic downturn.
By Carl Houghton |
|
We held our annual tech chairmen’s dinner last Thursday night at One-O-One restaurant in Knightsbridge. Between them our group of 6 chair 14 technology businesses with PE backing from ECI, LDC, Isis, Nova, Hg, Advent, Inflexion and Synova, so a pretty broad church.
There was lively debate with some key themes being:
· Whilst the investing environment is difficult there were still many interesting opportunities across a range of sub-sectors including mobile software, healthcare software, mobile marketing and of course SaaS in general
· The ever interesting topic of where chairmen added their value in the role; motivating the management team won much support around the table, in particular creating the boardroom environment where the best could be brought out of executive management
· If that didn’t work out the propensity to swap out the CEO was high with some but not all participants
· With less ‘financial engineering’ available (aka debt) we expected that our chairmen would have seen some real changes in the approach by PE over the last year or 2, but this was categorically not the case … all attendees felt that PE firms were already doing everything they could to grow shareholder value and not just relying on the low hanging fruit even when debt was more available.
· Favoured PE houses … Chatham House rules apply!
If you are a tech CEO or Chairman and are interested in future tech CEO or tech chairmen’s dinners that we hold, click the links to let us know.
by Nick Jones
|
|
We have just completed investment into a new mobile computing platform deal with LDC which we are very excited about. Cheshire based Kirona is led by CEO and founder David Murray and has a leading position in field force automation. It has expanded already out of its heartlands of (1) public sector (into private); (2) on-premise (to the cloud); (3) UK (winning deals in Asiapac and Benelux) and; (4) as a partner of major SIs including Northgate, BT and Vodafone (into direct business). Kirona has both organic and inorganic plans and will develop into new niches over the coming months. This deal is hot on the back of our Mobile Computing Sector Report which you can download from this link Mobile Computing Sector Report. Our full press release can be found here.
We expect a big increase in M&A in this area as challengers to Click and other larger players make their presence felt.
By Carl Houghton |
|
Mid-market Private Equity investor Lyceum Capital, yesterday underlined its commitment to the Technology sector by announcing an investment in digital security software specialist Clearswift. The transaction brings Lyceum’s activity in the Technology sector in 2011 to a value of over £100m when combined with its previous £30m investment in IT services player Adapt and £50m deal for ERP specialist Access.
Clearswift is an operator in the email and web gateway sub-sector of the increasingly attractive security software market and intends to use the investment to build scale and geographic reach. Ovum is predicting that the security software market as a whole should achieve a CAGR of 6.8% between 2010 and 2015 and both corporates and Private Equity players alike are swarming all over the market.
It seems clear that Lyceum, like most of its competitors, is banking on cloud technologies. Access was a traditional ERP player with a path towards offering SaaS technology, Adapt is firmly focused in the data centre arena, and Clearswift, which sells a subscription service, will aim to capitalise on the growth of cloud computing and mobile technologies fuelling the requirement for improved security solutions. The unrelenting lure of the cloud is surely the reason that a house not previously particularly well known for technology sector investments has taken such a bold step in the sector this year.
By Emma Rodgers |
|
Iomart’s recent results showed that the DC market is still growing at a pace, its 50% headline growth is representative of what we are seeing across the market. The M&A strategy employed by Iomart is very interesting and resolves a fundamental concern about ensuring that rack space is used. Iomart has focussed on acquiring businesses that rent space in competitors DC’s and migrating them over to one of its 5 UK based operations, in doing this not only does it create demand for Iomart’s rack space but helps to reduce the risks.
This model provides confidence to investors on a number of fronts. Not only does it reduce the risk investors are exposed to by creating a mixed model of buy and build for customer acquisition, but it also helps to reinforce the message that rack space in the best DCs is limited and Iomart is a quality DC operator. We will wait and see how long they can keep up this strategy, as surely other emerging DC operators, particularly those with PE backing such as Onyx will be chasing the same assets.
By Samuel Davies
|
|
Last week we returned from out twice yearly conference with our partners in IMAP. I chair the global technology team and our meeting revealed a measured confidence for 2012 with some very exciting mandates already in play or about to be including some larger European IT services opportunities and some leading edge IP in BI / CRM and other areas. Our team has closed 78 technology transactions in the last 3 years, helping to put IMAP 4th globally in deals under $200m. On an even more positive note Marbella was predictably warmer than Blighty and our early evening beach 5-a-sde saw us draw with our colleagues from Brazil then beat the Germans. Only a resilient Norway could stop us in the final who took great pleasure in repeating that famous commentary from 30 years ago. At our next meeting is in Beijing next April we will be opening up the conference to external delegates for a day and will be meeting many of the acquisitive Chinese corporates from tech and other sectors. Don’t fancy our chances in the rhythmic gymnastics though.
by Carl Houghton |
|
|
|
|
|
|
|
|
 |
|
|
|
|