Spring 2018
Akash Pulluru
THE IMPACT OF TAX REFORM ON THE PE INDUSTRY

On December 19th, a Republican-controlled Congress narrowly passed a tax reform bill. This bill represents the most significant tax overhaul since 1986 and has profound implications for the private equity industry. Although this administration is often chastised for being overly friendly to private equity barons, the reality of this bill is far more complicated.

Fall 2018

The Implications of Saudi Money in Silicon Valley

Headed by CEO Masayoshi Son, the SoftBank Vision Fund continues to soar, as they recently capped a $93 billion-dollar fund. 45% of this fund is backed by Saudi Arabia’s Public Investment Fund (PIF), thus making them the largest investor. For the sake of comparison, Sequoia Capital, one of the largest and most reputable American venture firms, is set to raise an $8 billion-dollar fund, which is considered monstrous for venture capital firms in the US.

The Rise of Private Equity Advisory Firms

While the growth of the private equity industry is phenomenal, the introduction of differentiated private equity advisory firms has slowly been developing. One such example of this type of firm is Franklin Park, located in West Philadelphia. Franklin Park has been around for over 15 years, currently has over $13.3 billion under management, and has global representation in both Dublin and Hong Kong. 

ByteDance: The Road to Becoming the World’s Most Valuable Internet Startup

The Chinese unicorn ByteDance has become the world’s largest internet startup after recently closing a $3 billion round of funding on October 25th. Backed by the Softbank Group, KKR, General Atlantic and China-based investment firm Primavera, the company is now valued at $75 billion — surpassing Uber’s current valuation at $72 billion, according to CB Insights. Launched in 2012, ByteDance is a Chinese internet technology company that owns a number of machine learning based-social media apps such as Toutiao, a news aggregator app, and Duoyin, a platform that allows users to record and share short videos. 

Apple Considers Stake in Bankrupt iHeartMedia

iHeartMedia is a mass media company that owns iHeartRadio, which is a free broadcast and internet radio platform. iHeartMedia aggregates 850 local iHeart radio stations across the United States and it is the biggest US radio station owner. In 2008, iHeartMedia was taken private by Bain Capital and Thomas H. Lee Partners through an $18bn leveraged buyout.

FEMTECH EXPECTED TO REACH $50B BY 2025

In the next decade, technology geared towards women’s health will receive more funding than it ever has. “Femtech,” a term coined by female entrepreneur Ida Tin, describes technological software, diagnostics and products focused on improving and monitoring women’s health. In 2016, Ida Tin created Clue, a menstrual tracking application now used by millions of women. Most mainstream healthcare options are geared towards men, not women. However, femtech firms combine technological innovation and women’s health issues to design products that target aging & menopause, fertility management, period cares and more. More generally, these firms address taboo topics specific to women’s health. According to Forbes, only 10% of global investment is allocated to female-led startups, and even less directly funnels into women’s healthcare start-ups. Further, women’s health is traditionally only thought of in conjunction with pregnancy, birth and babies. However, the healthcare industry is finally beginning to change with growing attention focused on the femtech sector.

VISTA ACQUIRES APPTIO

On November 11, 2018, Vista Equity Partners announced its intention to take software company Apptio private for $1.94 billion, at approximately $38 per share. Apptio stockholders were certainly happy with the deal, receiving a 53% price premium per share as a result of the buyout. Apptio’s price skyrocketed after the announcement, past $40 a share. The deal is expected to pass regulatory hurdles and consummate in 1Q19, but Apptio does hold the right to engage other offers for the thirty days following their agreement with Vista. The high premium, however, makes it extremely unlikely that another buyer would produce a more competitive price.

IBM ACQUIRES RED HAT

On October 28, IBM (NYSE: IBM) and Red Hat (NYSE: RHT) announced that they reached a deal where IBM would acquire Red Hat for $190 per share, representing more than a 60% premium over Red Hat’s closing price of $116.68 on October 26. In after-hours trading, Red Hat’s stock price jumped nearly 50% to $172.98, while IBM’s stock price fell approximately 4.3% from 124.75 to $119.84. The deal is expected to close in 2H19, and represents the largest software acquisition since Microsoft’s $26 billion purchase of LinkedIn in 2016.

SALAD CHAIN SWEETGREEN SHOWS UNICORN POTENTIAL FOR IMPACT INVESTMENTS

The value of social impact is often perceived as an expense more than an asset among investors. However, sweetgreen has proven that a social mission can drive growth and serve as a differentiating factor in the competitive food industry. Their success counters beliefs about the scalability of social impact, showing how one impact-driven restaurant can develop into a chain that maintains its values even when it spans the country.The value of social impact is often perceived as an expense more than an asset among investors. However, sweetgreen has proven that a social mission can drive growth and serve as a differentiating factor in the competitive food industry. Their success counters beliefs about the scalability of social impact, showing how one impact-driven restaurant can develop into a chain that maintains its values even when it spans the country.