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€3bn sale of Bureau van Dijk to Moody’s: a closer look

Written on May 22, 2017 by Yoram Wijngaarde

Credit ratings agency Moody’s Corp will buy financial information provider Bureau van Dijk for €3 billion (about $3.3 bn). Founded in 1991 in Brussels (and currently headquartered in Amsterdam), Bureau van Dijk (BvD) aggregates and sells financial and other information, and has been profitable from the start.

The majority-seller is EQT Private Equity, which is estimated to make a return of about 45% anually (IRR) and a multiple of 2.8x on their original investment. BvD has also undergone four (!) leveraged buyouts, respectively by Candover Partners (in 2004), BC Partners (2007), Charterhouse (2011), EQT Private Equity (2014).

The valuation implies an 2016 EBITDA multiple of 22.7x (based on reported 2016 EBITDA of €132m) and an estimated 2017 EV/EBITDA of 20.7x (EBITDA of €145m based on 10% estimated annual growth). This multiple seems high for a single-digit growth company, but Moody’s is anticipating large synergies, reducing the pro-forma multiple closer to around 15x, which is in line with previous similar transactions. Moody’s said it will fund the deal through a combination of offshore cash and new debt financing.

The BvD database covers about 220 million companies (data somewhat similar to DueDil). BvD has in the meantime diversified its data offering by adding M&A data and intelligence, as well as news stories on deals and rumours (similar to MergerMarket). The majority of its 800 employees focus on sales, marketing and customer support in 30 offices around the globe. BvD is well known by most who have ever worked as analyst or researcher at a large firm, in a world where comprehensive private company information is scarce.

Naspers invests €387 million in Delivery Hero: a closer look at the deal and situation

Written on May 13, 2017 by Yoram Wijngaarde

Naspers will be investing €387 million (about $420 million) for a minority stake in Delivery Hero, the global food delivery marketplace, at a valuation in line with Delivery Hero’s previous valuation, said Naspers’ statement. In a Tweet, Naspers calls it a “pre-IPO round”. Assuming a $3.1 billion pre-money valuation, Naspers will own around 12% while Rocket Internet’s ownership will go from 38% to 33%. Naspers will also take one seat on Delivery Hero‘s Supervisory Board.

The valuation represents a multiple of about 10x 2016 net revenues, which is similar to Just Eat (10x) and slightly below Takeaway.com (11x). For 2017E, the multiple is 7.5x net revenues, a slight discount versus Just Eat (8x) and Takeaway.com (8.5x). Note that Naspers’ investment likely comes with downside protection e.g. in the from of a liquidation preference, distorting the comparison.

Dealroom recently did a deep-dive into the food tech space. The below table compares Delivery Hero’s numbers with it’s peers:

Naspers is obviously a highly experienced investor, but what should we make of this investment?

Delivery Hero’s strengths:

  1. Highest growth (excluding Deliveroo most likely)
    • 2016 revenue growth: Delivery Hero 71%, Just Eat 52%, Takweaway 45%
    • 2017 revenue growth estimate(1): Delivery Hero 40%, Just Eat 25%, Takweaway 30%
  2. Largest food network in the world with #1 positions in 35 of its 42 countries, most notably Turkey, South Korea, Germany (closely tied with Takeaway), Sweden, Finland, Greece and the Middle East. Delivery Hero covers an addressable market that is 3x larger than Just Eat and 6x larger than Takeaway
  3. Delivery Hero’s exposure to emerging markets has long-term growth appeal
  4. Arguably, not being public yet has given the company flexibility to operate a more aggressive growth strategy

Delivery Hero’s weaknesses:

  1. Unprofitable: Delivery Hero is on a path to profitability and management said it would be already profitable excluding Foodora. But while all food delivery players have profitable and unprofitable markets, at Delivery Hero the balance is tilted more towards loss-making positions, whereas Just Eat and Takeaway enjoy several major cash-cow positions
  2. Did not win in some head-to head situations
    • Against Just Eat in the UK, Spain, Italy
    • Against Takeaway in Poland (albeit still an early stage market) and Germany (where the two competitors are head-to-head)
  3. Most complex organisation (the flip-side of being in 40 countries, and now an integration with Food Panda)
  4. Low capital efficiency: $1.6 billion raised with a $3.5 billion valuation compares badly to both Just Eat (only $66M raised with a nearly $4.8B valuation), Takeaway ($90M raised with a $1.4B valuation)

Conclusion

Delivery Hero’s management has chosen a more risky strategy than it’s peers: expanding rapidly across the globe and investing more aggressively into its own fleet and logistics (via Foodora) than Just Eat and Takeaway.com did. Delivery Hero has been an easy target of cynicism due to it’s low capital efficiency and unprofitability. And for a moment it seemed like Delivery Hero was in a tough spot strategically. However, its 2016 revenue growth was ahead of expectations (71% versus 60% expected by analysts). This funding round from Naspers investments indicated strong Q1 2017 performance too. It now seems entirely possible that within a year or two, Delivery Hero’s vast scale, emerging markets and investments will start paying big dividends.

Delivery Hero

 

  1. Source: equity research.

Food Delivery Tech: a Deep Dive

Written on March 10, 2017 by Yoram Wijngaarde

This report is a free slide-deck produced by the Dealroom team, with invaluable data contributions from Priori Data, the Berlin-based leading mobile market intelligence company.

It combines proprietary data from Dealroom and Priori Data with annual reports, investor presentations and equity research about Just Eat, Takeaway.com and Rocket Internet, plus SimilarWeb online traffic data.

Food Delivery Tech Deep Dive

If you have any questions regarding this report or to find out how we can help you with data, intelligence or bespoke research, please do not hesitate to contact us. Contact details are provided inside the report.

FinTech in Europe: any signs of Brexit impact?

Written on March 2, 2017 by Yoram Wijngaarde

FinTech Report

The UK government just published its Digital Strategy document, outlining how it plans to support the UK tech industry post-Brexit.

Has there been a measurable Brexit induced slowdown in UK tech so far? A few reasons for the timing of this post about Fintech and Brexit. First, we are now well into 2017. Second, fintech is a special case, given London’s central role in the EU as financial hub. Third, this BBC post contains some convincing warning signs, both anecdotal and supported with data.

Time for a snapshot of fintech in Europe, using Dealroom Data until Feb 2017, with a focus on the UK vs. the rest of Europe.

Slide6

There seems to be no significant measurable impact on funding levels so far. But the anecdotal signs need to be taken very seriously. Brexit (and more specifically, policies or sentiment impeding science and immigration) will especially have potential ramifications for innovation over the medium to long term.

Momondo acquisition by Priceline: a closer look

Written on February 14, 2017 by Yoram Wijngaarde

Momondo Group was sold to Priceline, owner of rival Kayak, in a $550 million deal. The two Momondo Group brands, Momondo and Cheapflights, will fall under the Kayak division. Another impressive European travel tech success story, made even more impressive by the fact that Momondo underwent major strategic transformations during its development (acquisition, merger and strategic shift by Cheapflights into meta-search).

SkyscannerMomondo3

Growth investor Great Hill owned a majority stake of about 60% in Momondo Group since October 2014. Great Hill’s entry valuation was about $210 million; this implies a value increase of 2.6x in $ terms. In 2 years and 4 months, that’s a roughly 49% annual return, driven by both Momondo’s consistent revenue growth and a large multiple expansion (2.8x LTM revenue at entry vs. 5.0x at exit).

Momondo’s valuation multiples are in line with most similar transactions and with Trivago’s public multiples, post its IPO. However, Momondo’s valuation multiples are below Skyscanner’s, which was acquired by CTrip in Nov last year in a £1.4 billion deal. Both companies have similar EBITDA margins of around 20-25%. And both companies have had roughly similar growth trajectories in the last twelve months. The discrepancy in multiples may be related to some or all of the following factors:

  • Scale: Skyscanner is 1.5x larger in term of net revenues, therefore receives a market leader premium
  • Brand: Skyscanner is a single brand while Momondo Group operates multiple smaller brands (CheapFlights)
  • Model: Cheapflights only recently transitioned to metasearch
  • Buyer: Chinese acquirer being seemingly less price sensitive

Travel tech saw many exits and funding rounds recently. Most of them (if not all) had been previously tipped as “to watch” in our Travel Tech Deep Dive report (free download). So you’ll want to check that out!

Also check the complete data table of travel search and travel deal companies.

Notes:

  • LTM = last twelve months
  • Thanks to Yannick Roux for providing some valuable input!
  • Great Hill return based on public info and excludes impact from financial leverage

Artificial intelligence in Europe: over 1,150 companies and €1.4 billion funding in 2016

Written on February 13, 2017 by Yoram Wijngaarde

Artificial intelligence (AI) will soon be part of nearly every company’s technology stack (proprietary or not) and ingrained in every industry. It is therefore becoming increasingly difficult (and senseless) to draw the line between AI and non-AI. But while we still can, it is interesting to reflect on the state of Artificial Intelligence in Europe.

Here’s a data table with 1,150 companies with proprietary AI technology that’s core to their business. Of them over 525 companies are VC funded.

In 2016, 330 AI related companies got funded, an increase of 25%. Total European funding in 2016 exceeded €1.4 billion, an increase of 26%.

AI funding

Also available in map view:

AImap
A big thanks to Ha Duong who’s work we were able to leverage, via Tech.eu: 600+ European AI tech startups to watch.

Below interactive grid view shows AI companies by growth stage and industry:

AI Grid

A deep-dive report is coming soon.

Nordics snapshot (presentation)

Written on December 11, 2016 by Yoram Wijngaarde

Both France and Sweden have been on fire this year. The Nordics are known for creating several tech icons (examples at bottom of this article). The below image opens a short presentation on high-level venture capital trends in the Nordic region.

TitleNordics

More on this in our full 2016 update!

Other useful Nordics info:

Selected Nordic tech icons

£1.4B Skyscanner acquisition: a closer look

Written on November 26, 2016 by Yoram Wijngaarde

Chinese online travel agent CTrip acquired Skyscanner at a valuation of £1.4B, predominantly in cash. That’s roughly 12x 2015 revenues, 64x 2015 normalised EBITDA. We estimate that on an LTM basis (last twelve months) the multiples are around 10x LTM revenues and 50x LTM EBITDA; a great achievement for Skyscanner’s founders and investors.

How does this transaction compare with others in travel and in tech? Time for a closer look. Download the 3-page slide deck, or continue reading below for additional insights.

How do the multiples compare?

In November 2012, Priceline paid significantly less for closest peer Kayak: 23.8x LTM EBITDA and 5.7x LTM revenues. Kayak was at the time growing at a very similar growth rate of 30%.

In December 2012, Skyscanner’s valuation multiples are similar to Trivago’s multiples back in December 2012. Back then, Trivago had been growing much faster: at about 100% per year.

What is Skyscanner’s current growth rate? Last reported revenues were only growing at 28% from 2014 to 2015. However, Skyscanner’s gross bookings were still growing 49% in 2015. Therefore, if Skyscanner’s margins did not deteriorate in 2016, then revenue growth could well have accelerated again during 2016.

Upside potential

Meta-search continues to be a strong segment. Flight meta-search specifically is benefiting from regional fragmentation of flight OTAs (online travel agents). Skyscanner is testing a direct distribution model with airlines, thus becoming a quasi-OTA. An OTA’s take-rate adds up to 5-10%, whereas for Skyscanner the CPA is as low as 2%.

And no doubt, CTrip sees opportunities for revenue synergies (e.g. tapping into Asia growth, adding hotel inventory), thus justifying the seemingly high acquisition multiple.

Slide2

Skyscanner is teh seventh largest VC backed exit, providing super returns for it’s investors. Skyscanner also ranks 25th in term of European tech acquisitions (in total we counted 36 acquisitions above €1 billion).

Skyscanner3

Looking forward

Travel remains a very exciting space where plenty of strategic activity and disruptions will continue to take place. To get you started, here is a table of top funded travel companies.

As mentioned above, meta-search (aka comparison) continues to be a strong segment, in both flights and accommodations. Below is a list of leading travel comparison companies from seed stage to late growth stage.

Travel comparison companies

Dealroom data used for this post

Finally, check out our July 2016 Travel Research report (free download) with much, much more information.

Slide01

European Food Tech: a Recap

Written on October 16, 2016 by Yoram Wijngaarde

grid

It’s been two weeks since the IPO of Takeaway.com, the Dutch food delivery logistics service. Europe now has several public and private well-funded food tech companies. This makes researching and benchmarking the sector all the more interesting. Time for a recap of European food tech.

Since 2011, about €4 billion has been invested in European food tech (takeout, delivery, shopping, production, restaurant reviews and table bookings).  The largest food tech rounds occurred mostly in 2014 and 2015, after which the market consolidated (to an extent) and focused on execution.

This excludes capital raised by global transport and logistics players such as Uber, Amazon (and Google).

Raising Capital: Public or Private Track?

Traditionally, a core argument for going public was access to capital. Nowadays, it is far from clear whether public or private companies have easier access to large amounts of growth capital. Based on the below chart, comparing total funding, private companies have had more access to capital.

Food Funding Chart

The recent announcement of a potential $100 billion mega-fund by SoftBank and Saudi Arabia’s sovereign wealth fund further underscored the point that private capital is abundant. Therefore, the remaining rationale for going public is to provide liquidity to existing shareholders; something to consider for investors in public tech stocks!

Valuation Data

Takeaway.com’s IPO priced at €23 per share. Currently the stock is trading around €24 (market cap is around €1 billion). By comparison, UK firm Just Eat went public in April 2014 at a valuation of GBP 1.5 billion and is currently valued at GBP 3.7 billion. Just Eat currently trades at roughly 9.5x 2016 Revenues and 32x 2016 EBITDA. Takeaway.com is similarly priced at around 10x 2016 revenues.

There have been several acquisitions in food tech. Transaction multiple data is sparse, but this data table contains transaction multiples sorted by revenue multiple.

Preliminary Performance Data

The below chart shows the relative market position of key players in Takeaway.com’s markets based on web visits only (as per SimilarWeb). A few takeaways (no pun intended) from this map:

  • UK is by far the largest market, more than twice the size of Germany, Austria and Switzerland combined (and seems to have matured most).
  • Takeaway.com leads in Benelux and is a significant player in Germany (but not a leader in any large market)
  • Deliveroo is overtaking smaller players in many markets and well on its way achieving scale in its markets

We will soon follow up with more data in additional markets. We will also be comparing mobile app data. Once Takeaway.com comes out of its so called blackout period we will be able to review equity research as well, which will help us to compare more data.

map

Finally, below a list of selected European Food Tech leaders. Adjacent categories also include merchant tools (restaurant payments such as Velocity, loyalty such as Zenchef) and AgriTech.

All Food Tech data in this post:

Food Tech in Europe

500 companies in AI and Machine Learning

Written on October 9, 2016 by Yoram Wijngaarde

2016-10-14

Spanish Artificial Intelligence recruitment platform source{d} completed a $6 million series-A round. The founding team were previously behind Tyba. Source{d} does algorithmic matching of developer skills with development needs, by analysing the code of over 7.5 million developers, likely using repositories such as Github.

But there is much more AI activity in Europe. Here are 500 companies in Artificial Intelligence and Machine Learning.

Who’d we miss? Let us know.

By the way, it won’t be long before this list becomes obsolete, as almost every tech company will somehow apply AI in their technology stack. Once that happens, we will need to think of a different way to approach research.

screenshot