Anyone want R50m in venture capital?

Anyone want R50m in venture capital?

Yeah I thought that might get your attention. Had a pretty interesting week with two Venture Capital firms coming up to me - out of the blue - and asking if had any ideas where they can invest funds.

I get to chat to quite a few Venture Capital and Private Equity guys in my spare time and there seems to be a growing theme - "We've got a lot of money sitting on the sidelines and we just can't find anywhere to invest it in SA."

Both firms had problems trying to find places to invest their money - if they go with mass market advertising they get swamped by applications that simply takes too long to work through so they're trying to find smarter ways to find deals.

So I guess I'm throwing it out to the SA entrepreneurs blogosphere - any decent ideas out there for some sizeable investments where guys are open to venture capital or private equity deals?

If you've got some ideas feel free to drop me a 2 page motivation on marc@rival.co.za and we can take it from there....

Venture Capital Fell 33% Last Quarter to Lowest Level Since ’05

Venture-capital investment dropped 33 percent in the fourth quarter of 2008, hammered by a recession that drove software deals to their lowest levels in a decade and cut access to capital for alternative energy firms.

Total investment in startup companies fell to $5.4 billion, the lowest total since early 2005, the National Venture Capital Association and PricewaterhouseCoopers LLP said in a study released today. Investments for the full year fell 8 percent, the first drop since 2003.

Read the full article on Bloomberg here....

Reinet confirms Lehman deal

Reinet has confirmed its offer to purchase the assets of Lehman Brothers. Its an intriguing deal from a South African perspective in that a major SA investment player has displayed enough confidence to go ahead with an international deal...

The press release reads:

Reinet Investments S.C.A. announces that its wholly-owned subsidiary Reinet Fund S.C.A. F.I.S. (together "Reinet") and the management team of Lehman Brothers Merchant Banking ('LBMB') have entered into an agreement with the Lehman Brothers bankruptcy estate for the purchase of certain parts of the business of LBMB with respect to the management of two private equity funds currently known as Lehman Brothers Merchant Banking Partners IV LP and Lehman Brothers Merchant Banking Partners IV (Europe) LP (together the 'Funds').

The transaction is subject to various regulatory approvals, as well as the approval of the limited partners of each of the Funds.

As part of the proposed transaction, Reinet will commit up to $230 million to both existing and new investments in the Funds over the remaining three and a half year investment period. Reinet will also participate in the consideration of all future investments by the Funds. As indicated on 12 January 2009, the transaction is expected to have no material impact on the net asset value of Reinet.

About Lehman Brothers Merchant Banking
LBMB manages funds that seek significant long-term capital appreciation through direct investments in established operating companies in partnership with management. The funds invest in companies with sound business fundamentals, proven operating teams and a compelling business strategy. Since 1986, LBMB has raised and managed four institutional funds and several
employee investment vehicles, with total committed capital in excess of $8.0 billion.

To date, the Funds have made investments of some $ 800 million in aggregate. Further commitments by limited partners to invest in the funds currently amount to some $1.7 billion.

Questioning SA Fastest Growing companies in 2009 list

I got an e-mail supposedly from Reuters detailing South Africa's Fastest Growing in January 2009.

I've got to be honest and say I have to question the list because there were some unusual names on the list.

1) Pick and Pay
2) Africa cash and carry
3) Newclicks
4) Willoton Oils
5) Toys R us
6) British Airways
7) Edcon
8) Mediapost
9) Footprints Filmworks
10) Wellington Fruits
11) Jeftrost Enterprizes
12) Pure Islam Media
13) Kagiso Media
14) Bakerstransport
15) Pam Golding Properties
16) Malls Tiles
17) Exotic Cars
18) Bakers Biscuits
19) South African Law Society
20) Roger Matthews Investments

An airline like BA being one the fastest growing companies in SA?
Exotic Cars?! - In a time like this when the car market is sinking?
Pam Golding Properties? - when the property market is in serious distress

Anyone got any insight into how this list was put together? What criteria were used?

Do you agree with the names on the list?

Venture Capital still on tap

While entrepreneurs are struggling to get loans from banks, venture capital (VC) players are still assessing opportunities.

Read the complete article here on Fin24.com

Personalised Medicine: An Opportunity for Investment

The pharmaceutical industry is currently facing some key challenges. The increase in drug development costs, a decrease in the number of drugs being approved, and scrutiny from regulatory authorities are forcing companies to look at alternative revenue generators. Patients themselves are also demanding more effective and safer drugs.

Read the complete article here.

SA Venture Capital musings for 2009

So what's going to be hot in the Venture Capital and Private Equity sector in 2009? Who knows!

2008 really spooked capital markets and a lot of players are quite content to sit on the sidelines and stick their cash into moneymarket accounts while the world continues to tumble around them.

In my humble opinion I think the food and agriculture sector - as boring as it appears - will gather the most interest from venture capital players.

Invariably the private equity guys are already circling around some of the quality JSE companies and looking to delist them. As an investor not involved in the private equity side of things this would frustrate me to no end to see a number of quality companies delisted.

The most interesting current "News" in the private equity (PE) / VC space has to be the speculation that Johann Ruperts Reinet Investments is about to take a stake in some of the merchant banking / PE assets of Lehman Brothers. The market enjoyed seeing Reinet spending its money but more than a few people will be scratching their heads at the decision to blow money on the financial sector at the moment.

I've put a couple of suggestions below of sectors that I see could receive a boost in 2009, but I'd be interested to see hear what our readers make of the current climate:

Waste Management - still a potentially high growth sector in SA
Food - The government will more than likely carry a lot of responsibilty for feeding its population and demand remains high across the world.
Biotech in the food sector: Same as above
Education and E-learning: Already I've noticed a couple of E-learning projects in SA receiving nice funding

Any other thoughts / comments and suggestions?

*** Note author holds shares in Reinet