lpeq 14 june conference presentations
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7262019 LPEQ 14 June Conference Presentations
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wwwLPEQcom
Disclaimer
Important Information
LPEQ was established in 2006 to increase awareness and
understanding of listed private equity through research and
information The presentations herein are prepared and
issued by the speakers and represent their views rather than
the views of LPEQ
These presentations are made available to you as aProfessional Client and must not in any circumstances be
distributed to or relied upon by Retail Clients
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wwwLPEQcom
Table of Contents
Conference Programme Pages 3 ndash 6
How can PE firms deliver amidst a fragile recovery Pages 7 - 43
Bain amp Company ndash Graham Elton Partner
Debt Markets How ldquoOpen for Businessrdquo are they Pages 44 - 54
Deloitte Corporate Finance Debt Advisory
James Douglas Partner
Private Equity Outlook Pages 55 - 62
Barwon ndash Sam Armstrong Managing Partner
Focus amp Findings Pages 63 - 68
LPEQ -Andrea Lowe Executive Director
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LPEq London Investor Conference
Outlook for Alpha in Private Equity
AgendaHow can Private Equity firms deliver amidst a fragile recovery (930am)
Graham Elton Partner ndash Bain amp Company
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner Corporate Finance Debt Advisory ndash Deloitte LLP
What drives Private Equity returns
PANEL MODERATOR Andrew Lebus Partner Pantheon Ventures
Dear Delegate
Welcome to the inaugural LPEQ Investor Conference in association with
Singer Capital Markets
LPEQrsquos aim is to increase awareness understanding and interest in listed
private equity At a pivotal time for the asset class we invite you to consider
and debate the issues raised by todayrsquos expert speakers
We hope you find this conference valuable
For further information please visit wwwLPEQcom
Yours sincerely
Andrea Lowe
Executive Director LPEQ
T +44 (0) 20 8995 9466 E andrealoweLPEQcom
Guildhall London14 June 2011
LPEQ member companies
Aberdeen Private Equity Fund Ltd
Altamir Amboise
Conversus Capital LP
Deutsche Beteiligungs AG
Dinamia Capital Privado SCR SA
Dunedin Enterprise Investment Trust PLC
Electra Private Equity PLC
FampC Private Equity Trust plc
Gimv NV
Graphite Enterprise Trust PLC
HarbourVest Global Private Equity Ltd
HBM BioVentures AG
HgCapital Trust plc
JP Morgan Private Equity Ltd
JZ Capital Partners Limited
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How can PE firms deliver amidst a fragile recovery
Graham Elton Partner ndash Bain amp Company
Graham Elton is a Partner at Bain amp Company in London and Head of
the European Private Equity Practice and the UK Media Practice
He joined the firm in 2001 Whilst at Bain Graham has lead
assignments in a variety of industries including consumer products
media retail and business services Prior to joining Bain amp Company
Graham was a partner of Evolution Global Partners CEO at Miller
Freeman UK Managing Director of FT Business Strategy Director at
Pearson and worked for the Boston Consulting Group
His experience includes corporate strategy value improvement
programs turn-around situations merger integration customer and
channel strategies and business transformation In the private equity
group Graham has led a number of teams in fund strategy strategic
due diligence and portfolio company improvement Graham earned an
MBA at Harvard Business School and his MA from Oxford University
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner ndash Corporate Finance Debt Advisory
Deloitte LLP
James Douglas joined Deloittersquos debt advisory business in 2005following seven years at JP Morgan Cazenove where he worked in
Corporate Finance focusing on debt advisory assignments for FTSE
350 companies During this period James advised UK companies on
fund raising for acquisitions refinancing and restructuring Prior to this
James worked in Debt Capital markets for ABN AMRO where he was
responsible for European Derivative Sales He also spent 6 years
trading derivatives for ABN AMRO Abbey National Financial Products
and Barings James qualified as a Chartered Accountant with Touche
Ross and is a Fellow of the Association of Corporate Treasurers
What drives Private Equity returns
Moderator Andrew Lebus Partner ndash Pantheon Ventures
Andrew Lebus is a partner of Pantheon Ventures (UK) LLP and a
Director of various Pantheon funds based in Guernsey As a senior
Mark Freebairn Partner ndash Odgers Berndtson
Mark Freebairn is a Partner and Head of the Financial Management
Practice of Odgers Berndtson based in London The Financial
Management Practice appoints Finance Directors and CFOs across allsectors in a range of businesses both public and private and is a
leader in its market niche
Mark is also a member of the Board amp CEO Practice and is involved
with searches for non-executive directorships when the requirement is
to appoint a candidate with senior finance experience Mark was
recently appointed as a Non-Executive Director on the Board of
Progressive Digital Media Plc
Robert Morgan Chairman ndash HT Forrest Group amp Atlas Interactive
Energy
Robert Morgan is currently chairman of a number of PE owned
businesses in the B2B and healthcare sectors ranging from Social
Housing BPO SME services Compliance and Learning amp
Development in the Energy sector and previously Healthcare staffing
and complex care services Robert has worked in the legal and criminal
justice sectors in outsourcing also more recently around the Clementi
reforms He has been involved in new procurement models with the
Cabinet Office involving the private sector
Robert has acted as an Industry Operating Partner for HgCapital LLP
since 2002 on new and existing investments on value creation including
exits (former Chairman of Pulse Healthcare Services acquired by
Blackstone ICS at a 25x multiple in November 2010) He has worked
with the HM Treasury on Human Capital amp Small Business Taxation policy
and Compliance in relation to recent Finance Acts
Prior to this Robert was an Executive Director of Hays plc a leading
FTSE 100 Services Group Over a ten year period and as Chief Executive
of Hays DX (a document services group aimed at the legal and related
professions and sectors) he grew the business from pound3m operatingprofits to pound58m operating profits with cash 110 of profit This included
a 35000 subscription business where he organically grew the business
from 300 FTEs into 5000 FTEs over 6 EU countries
Gerry Murphy Senior Managing Director ndash The Blackstone Group
Dr Gerry Murphy is a Senior Managing Director in the Corporate Private
E i b d i L d H l Ch i f Th
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Where is the value in Listed PE over the next 12-18 months
Moderator Alan Geeves Partner ndash Singer Capital Markets
Alan Geeves joined Singers in April 2009 and has specialised in Closed
End Funds for 22 years His early career was at Hambros Bank BZWand Hoare Govett as a Salesman He moved to Collins Stewart to head
the Sales team in 1999 and worked there until mid 2005 when he left to
co-found Fairfax the investment back which he left in late 2008 In
recent years Alan has worked with James Waterlow to raise over pound15bn
of new equity from UK and International clients for a wide variety of
Closed End Funds in areas as diverse as Private Equity Real Estate
Debt and Frontier Markets They have also been active participants in
the secondary market sector and over a long period have built a
reputation for successfully trading large shareholdings of Closed End
Funds between investors They have also advised Boards of Closed End
Funds across a variety of subjects including capital raising MampA
defence and attack and restructurings
Sam Armstrong Managing Partner ndash Barwon Investment Partners
Sam Armstrong has been involved in alternative investments since 1990
Until April 2005 Sam Armstrong was the Joint Managing Partner of Quay
Partners Pty Ltd a specialist private equity fund-of-funds group founded
in October 2000 Before forming Quay Partners Sam was Head of
Alternative Investments at Macquarie Funds Management where heworked for over 10 years At Barwon Sam oversees the private equity
team which is focused on global listed private equity investing and
secondary fund investing Barwon currently manages over US$S300
million sourced from Australian institutional clients in its global listed
private equity strategy Barwon is in the process of launching a UCITS
version of the Barwon Global Listed Private Equity Fund
Sam graduated with a BComm (Hons) from the University of Melbourne
and has an MBA from Columbia University New York
Adam Goldman Managing Director ndash Red Rocks Capital
Adam Goldman serves as a Co-founder and Managing Director of Red
Rocks Capital LLC Prior to forming Red Rocks Capital in 2003 he was
a General Partner and Managing Director in four separate venture funds
with Centennial Ventures managing over $1 billion Mr Goldman has
served on the boards of more than a dozen private and public
companies He is a past President and Chairman of the Board of the
Paul Craig Director of Fund of Funds ndash Henderson Global Investors
Paul Craig joined New Star in 2003 and the Henderson Multi-Manager
team as part of the Henderson New Star acquisition in April 2009 He
has 21 yearsrsquo investment experience including 10 years gained at
Exeter Investment Group At Exeter he focused on managing
investment trust shares and portfolios He employs a lsquobottom uprsquo
investment process in identifying securities overlaid with a lsquotop-downrsquo
view of general economic trends
LPEQrsquos latest findings and focus
Ian Armitage Chairman ndash LPEQ
Ian Armitage has led HgCapital since 1990 and developed a focused
control-oriented approach to private equity investment whilst
reorganising and divesting the portfolio of legacy investments He then
transformed Hg to be the first sector specialist private equity firm in the
mid market In 2000 Ian completed the buy-out of the business from
Merrill Lynch which resulted in HgCapital becoming independent Ian
became Chairman of Hg in September 2007 He previously spent 10
years with 3i plc in London and Dublin Ian has made over forty
investments across a wide range of industries
Ian has been the Chairman of LPEQ since it was established in 2006
and served as Chairman of the Investor Relations Committee of theBritish Venture Capital Association He has a degree in Politics
Philosophy and Economics from Oxford University
Andrea Lowe Executive Director ndash LPEQ
Andrea Lowe started LPEQ in 2006 with its mission to increase
awareness understanding and interest in listed private equity Andrea
brings over 20 years experience in investment management marketing
strategy research and communications resulting in LPEQrsquos focus on
seeking investor views through market research
After graduating from Dartmouth College in New Hampshire USA she
was a market research analyst for Pillsbury and Gillette later earning an
MBA from Stanford University in California Andrea joined fund manager
GT Management (later INVESCO) in London developing marketing
strategy in Europe the US and Asia She also served as editor of the
PricewaterhouseCoopers European Investment Management Newsletter
f A d i h d h f US di l d i
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Singer Capital Markets
are pleased to work with LPEQ
to bring you the first
LPEq London Investor Conference
Covingtonrsquos investment funds group lawyers have acted as
counsel in transactions involving more than 2000 investment
funds located in over 30 jurisdictions worldwide
Our investment funds group has an interdisciplinary and
international approach to fund and investor representations We
offer our investor and sponsor clients in-depth expertise in fundis a proud sponsor of the
Singer Capital Markets is an integrated UK capital markets and
advisory partnership with a primary focus on UK Mid and Small Cap
companies
Established in 2006 the business comprises a team of sixty five
leading professionals It provides sales research execution
corporate finance and corporate broking advisory services to
institutional corporate hedge fund and high net worth clients
Singer Capital Markets is uniquely positioned by virtue of its
partnership structure where staff and managers own equity and
govern the business
The firm boasts a strong balance sheet at over four times the
required level of regulatory capital which allows the business to take
a long term view with clients
THE GUILDHALL LONDON
The City of London has been governed from the area occupied by
Guildhall for more than 800 years Today Guildhall is home to the City
of London Corporation ndash the provider of local government services to
the Square Mile and promoter of the City as the world leader in
international finance and business services
The present Guildhall was built between 1411 and 1430 although
evidence suggests that a civic hall has stood here since the late
13th century Local government developed here and its pattern hasserved as a model for many cities and towns
The crypt porch and medieval walls have twice emerged unscathed
from disastrous fires In 1666 Guildhall was caught up in the Great Fire
of London and in 1940 monuments windows and galleries were
damaged and the famous statues of Gog and Magog destroyed in a
single night of the Blitz Guildhall was restored in 1954
The Livery Hall
The Livery Hall was designed by Sir Horace Jones Architect and
Surveyor to the City Corporation It was built between 1870 and 1873
and is a listed Grade II structure
The crypts
Immediately beneath Guildhall are two crypts The western cryptis thought to date from the 13th century and was probably the
undercroft oan earlier Guildhall It completely collapsed in the
Great Fire but in 1973 was restored to its original state The eastern
crypt is 15th century and has survived the fires of 1666 and 1940
Restored in 1961 it is divided into 12 bays by six clustered pillars of
Purbeck marble
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5268
copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5368
copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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wwwLPEQcom
Table of Contents
Conference Programme Pages 3 ndash 6
How can PE firms deliver amidst a fragile recovery Pages 7 - 43
Bain amp Company ndash Graham Elton Partner
Debt Markets How ldquoOpen for Businessrdquo are they Pages 44 - 54
Deloitte Corporate Finance Debt Advisory
James Douglas Partner
Private Equity Outlook Pages 55 - 62
Barwon ndash Sam Armstrong Managing Partner
Focus amp Findings Pages 63 - 68
LPEQ -Andrea Lowe Executive Director
7262019 LPEQ 14 June Conference Presentations
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LPEq London Investor Conference
Outlook for Alpha in Private Equity
AgendaHow can Private Equity firms deliver amidst a fragile recovery (930am)
Graham Elton Partner ndash Bain amp Company
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner Corporate Finance Debt Advisory ndash Deloitte LLP
What drives Private Equity returns
PANEL MODERATOR Andrew Lebus Partner Pantheon Ventures
Dear Delegate
Welcome to the inaugural LPEQ Investor Conference in association with
Singer Capital Markets
LPEQrsquos aim is to increase awareness understanding and interest in listed
private equity At a pivotal time for the asset class we invite you to consider
and debate the issues raised by todayrsquos expert speakers
We hope you find this conference valuable
For further information please visit wwwLPEQcom
Yours sincerely
Andrea Lowe
Executive Director LPEQ
T +44 (0) 20 8995 9466 E andrealoweLPEQcom
Guildhall London14 June 2011
LPEQ member companies
Aberdeen Private Equity Fund Ltd
Altamir Amboise
Conversus Capital LP
Deutsche Beteiligungs AG
Dinamia Capital Privado SCR SA
Dunedin Enterprise Investment Trust PLC
Electra Private Equity PLC
FampC Private Equity Trust plc
Gimv NV
Graphite Enterprise Trust PLC
HarbourVest Global Private Equity Ltd
HBM BioVentures AG
HgCapital Trust plc
JP Morgan Private Equity Ltd
JZ Capital Partners Limited
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 468
How can PE firms deliver amidst a fragile recovery
Graham Elton Partner ndash Bain amp Company
Graham Elton is a Partner at Bain amp Company in London and Head of
the European Private Equity Practice and the UK Media Practice
He joined the firm in 2001 Whilst at Bain Graham has lead
assignments in a variety of industries including consumer products
media retail and business services Prior to joining Bain amp Company
Graham was a partner of Evolution Global Partners CEO at Miller
Freeman UK Managing Director of FT Business Strategy Director at
Pearson and worked for the Boston Consulting Group
His experience includes corporate strategy value improvement
programs turn-around situations merger integration customer and
channel strategies and business transformation In the private equity
group Graham has led a number of teams in fund strategy strategic
due diligence and portfolio company improvement Graham earned an
MBA at Harvard Business School and his MA from Oxford University
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner ndash Corporate Finance Debt Advisory
Deloitte LLP
James Douglas joined Deloittersquos debt advisory business in 2005following seven years at JP Morgan Cazenove where he worked in
Corporate Finance focusing on debt advisory assignments for FTSE
350 companies During this period James advised UK companies on
fund raising for acquisitions refinancing and restructuring Prior to this
James worked in Debt Capital markets for ABN AMRO where he was
responsible for European Derivative Sales He also spent 6 years
trading derivatives for ABN AMRO Abbey National Financial Products
and Barings James qualified as a Chartered Accountant with Touche
Ross and is a Fellow of the Association of Corporate Treasurers
What drives Private Equity returns
Moderator Andrew Lebus Partner ndash Pantheon Ventures
Andrew Lebus is a partner of Pantheon Ventures (UK) LLP and a
Director of various Pantheon funds based in Guernsey As a senior
Mark Freebairn Partner ndash Odgers Berndtson
Mark Freebairn is a Partner and Head of the Financial Management
Practice of Odgers Berndtson based in London The Financial
Management Practice appoints Finance Directors and CFOs across allsectors in a range of businesses both public and private and is a
leader in its market niche
Mark is also a member of the Board amp CEO Practice and is involved
with searches for non-executive directorships when the requirement is
to appoint a candidate with senior finance experience Mark was
recently appointed as a Non-Executive Director on the Board of
Progressive Digital Media Plc
Robert Morgan Chairman ndash HT Forrest Group amp Atlas Interactive
Energy
Robert Morgan is currently chairman of a number of PE owned
businesses in the B2B and healthcare sectors ranging from Social
Housing BPO SME services Compliance and Learning amp
Development in the Energy sector and previously Healthcare staffing
and complex care services Robert has worked in the legal and criminal
justice sectors in outsourcing also more recently around the Clementi
reforms He has been involved in new procurement models with the
Cabinet Office involving the private sector
Robert has acted as an Industry Operating Partner for HgCapital LLP
since 2002 on new and existing investments on value creation including
exits (former Chairman of Pulse Healthcare Services acquired by
Blackstone ICS at a 25x multiple in November 2010) He has worked
with the HM Treasury on Human Capital amp Small Business Taxation policy
and Compliance in relation to recent Finance Acts
Prior to this Robert was an Executive Director of Hays plc a leading
FTSE 100 Services Group Over a ten year period and as Chief Executive
of Hays DX (a document services group aimed at the legal and related
professions and sectors) he grew the business from pound3m operatingprofits to pound58m operating profits with cash 110 of profit This included
a 35000 subscription business where he organically grew the business
from 300 FTEs into 5000 FTEs over 6 EU countries
Gerry Murphy Senior Managing Director ndash The Blackstone Group
Dr Gerry Murphy is a Senior Managing Director in the Corporate Private
E i b d i L d H l Ch i f Th
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 568
Where is the value in Listed PE over the next 12-18 months
Moderator Alan Geeves Partner ndash Singer Capital Markets
Alan Geeves joined Singers in April 2009 and has specialised in Closed
End Funds for 22 years His early career was at Hambros Bank BZWand Hoare Govett as a Salesman He moved to Collins Stewart to head
the Sales team in 1999 and worked there until mid 2005 when he left to
co-found Fairfax the investment back which he left in late 2008 In
recent years Alan has worked with James Waterlow to raise over pound15bn
of new equity from UK and International clients for a wide variety of
Closed End Funds in areas as diverse as Private Equity Real Estate
Debt and Frontier Markets They have also been active participants in
the secondary market sector and over a long period have built a
reputation for successfully trading large shareholdings of Closed End
Funds between investors They have also advised Boards of Closed End
Funds across a variety of subjects including capital raising MampA
defence and attack and restructurings
Sam Armstrong Managing Partner ndash Barwon Investment Partners
Sam Armstrong has been involved in alternative investments since 1990
Until April 2005 Sam Armstrong was the Joint Managing Partner of Quay
Partners Pty Ltd a specialist private equity fund-of-funds group founded
in October 2000 Before forming Quay Partners Sam was Head of
Alternative Investments at Macquarie Funds Management where heworked for over 10 years At Barwon Sam oversees the private equity
team which is focused on global listed private equity investing and
secondary fund investing Barwon currently manages over US$S300
million sourced from Australian institutional clients in its global listed
private equity strategy Barwon is in the process of launching a UCITS
version of the Barwon Global Listed Private Equity Fund
Sam graduated with a BComm (Hons) from the University of Melbourne
and has an MBA from Columbia University New York
Adam Goldman Managing Director ndash Red Rocks Capital
Adam Goldman serves as a Co-founder and Managing Director of Red
Rocks Capital LLC Prior to forming Red Rocks Capital in 2003 he was
a General Partner and Managing Director in four separate venture funds
with Centennial Ventures managing over $1 billion Mr Goldman has
served on the boards of more than a dozen private and public
companies He is a past President and Chairman of the Board of the
Paul Craig Director of Fund of Funds ndash Henderson Global Investors
Paul Craig joined New Star in 2003 and the Henderson Multi-Manager
team as part of the Henderson New Star acquisition in April 2009 He
has 21 yearsrsquo investment experience including 10 years gained at
Exeter Investment Group At Exeter he focused on managing
investment trust shares and portfolios He employs a lsquobottom uprsquo
investment process in identifying securities overlaid with a lsquotop-downrsquo
view of general economic trends
LPEQrsquos latest findings and focus
Ian Armitage Chairman ndash LPEQ
Ian Armitage has led HgCapital since 1990 and developed a focused
control-oriented approach to private equity investment whilst
reorganising and divesting the portfolio of legacy investments He then
transformed Hg to be the first sector specialist private equity firm in the
mid market In 2000 Ian completed the buy-out of the business from
Merrill Lynch which resulted in HgCapital becoming independent Ian
became Chairman of Hg in September 2007 He previously spent 10
years with 3i plc in London and Dublin Ian has made over forty
investments across a wide range of industries
Ian has been the Chairman of LPEQ since it was established in 2006
and served as Chairman of the Investor Relations Committee of theBritish Venture Capital Association He has a degree in Politics
Philosophy and Economics from Oxford University
Andrea Lowe Executive Director ndash LPEQ
Andrea Lowe started LPEQ in 2006 with its mission to increase
awareness understanding and interest in listed private equity Andrea
brings over 20 years experience in investment management marketing
strategy research and communications resulting in LPEQrsquos focus on
seeking investor views through market research
After graduating from Dartmouth College in New Hampshire USA she
was a market research analyst for Pillsbury and Gillette later earning an
MBA from Stanford University in California Andrea joined fund manager
GT Management (later INVESCO) in London developing marketing
strategy in Europe the US and Asia She also served as editor of the
PricewaterhouseCoopers European Investment Management Newsletter
f A d i h d h f US di l d i
7262019 LPEQ 14 June Conference Presentations
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Singer Capital Markets
are pleased to work with LPEQ
to bring you the first
LPEq London Investor Conference
Covingtonrsquos investment funds group lawyers have acted as
counsel in transactions involving more than 2000 investment
funds located in over 30 jurisdictions worldwide
Our investment funds group has an interdisciplinary and
international approach to fund and investor representations We
offer our investor and sponsor clients in-depth expertise in fundis a proud sponsor of the
Singer Capital Markets is an integrated UK capital markets and
advisory partnership with a primary focus on UK Mid and Small Cap
companies
Established in 2006 the business comprises a team of sixty five
leading professionals It provides sales research execution
corporate finance and corporate broking advisory services to
institutional corporate hedge fund and high net worth clients
Singer Capital Markets is uniquely positioned by virtue of its
partnership structure where staff and managers own equity and
govern the business
The firm boasts a strong balance sheet at over four times the
required level of regulatory capital which allows the business to take
a long term view with clients
THE GUILDHALL LONDON
The City of London has been governed from the area occupied by
Guildhall for more than 800 years Today Guildhall is home to the City
of London Corporation ndash the provider of local government services to
the Square Mile and promoter of the City as the world leader in
international finance and business services
The present Guildhall was built between 1411 and 1430 although
evidence suggests that a civic hall has stood here since the late
13th century Local government developed here and its pattern hasserved as a model for many cities and towns
The crypt porch and medieval walls have twice emerged unscathed
from disastrous fires In 1666 Guildhall was caught up in the Great Fire
of London and in 1940 monuments windows and galleries were
damaged and the famous statues of Gog and Magog destroyed in a
single night of the Blitz Guildhall was restored in 1954
The Livery Hall
The Livery Hall was designed by Sir Horace Jones Architect and
Surveyor to the City Corporation It was built between 1870 and 1873
and is a listed Grade II structure
The crypts
Immediately beneath Guildhall are two crypts The western cryptis thought to date from the 13th century and was probably the
undercroft oan earlier Guildhall It completely collapsed in the
Great Fire but in 1973 was restored to its original state The eastern
crypt is 15th century and has survived the fires of 1666 and 1940
Restored in 1961 it is divided into 12 bays by six clustered pillars of
Purbeck marble
7262019 LPEQ 14 June Conference Presentations
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
7262019 LPEQ 14 June Conference Presentations
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
7262019 LPEQ 14 June Conference Presentations
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4368
37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4468
copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4668
copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5268
copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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LPEq London Investor Conference
Outlook for Alpha in Private Equity
AgendaHow can Private Equity firms deliver amidst a fragile recovery (930am)
Graham Elton Partner ndash Bain amp Company
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner Corporate Finance Debt Advisory ndash Deloitte LLP
What drives Private Equity returns
PANEL MODERATOR Andrew Lebus Partner Pantheon Ventures
Dear Delegate
Welcome to the inaugural LPEQ Investor Conference in association with
Singer Capital Markets
LPEQrsquos aim is to increase awareness understanding and interest in listed
private equity At a pivotal time for the asset class we invite you to consider
and debate the issues raised by todayrsquos expert speakers
We hope you find this conference valuable
For further information please visit wwwLPEQcom
Yours sincerely
Andrea Lowe
Executive Director LPEQ
T +44 (0) 20 8995 9466 E andrealoweLPEQcom
Guildhall London14 June 2011
LPEQ member companies
Aberdeen Private Equity Fund Ltd
Altamir Amboise
Conversus Capital LP
Deutsche Beteiligungs AG
Dinamia Capital Privado SCR SA
Dunedin Enterprise Investment Trust PLC
Electra Private Equity PLC
FampC Private Equity Trust plc
Gimv NV
Graphite Enterprise Trust PLC
HarbourVest Global Private Equity Ltd
HBM BioVentures AG
HgCapital Trust plc
JP Morgan Private Equity Ltd
JZ Capital Partners Limited
7262019 LPEQ 14 June Conference Presentations
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How can PE firms deliver amidst a fragile recovery
Graham Elton Partner ndash Bain amp Company
Graham Elton is a Partner at Bain amp Company in London and Head of
the European Private Equity Practice and the UK Media Practice
He joined the firm in 2001 Whilst at Bain Graham has lead
assignments in a variety of industries including consumer products
media retail and business services Prior to joining Bain amp Company
Graham was a partner of Evolution Global Partners CEO at Miller
Freeman UK Managing Director of FT Business Strategy Director at
Pearson and worked for the Boston Consulting Group
His experience includes corporate strategy value improvement
programs turn-around situations merger integration customer and
channel strategies and business transformation In the private equity
group Graham has led a number of teams in fund strategy strategic
due diligence and portfolio company improvement Graham earned an
MBA at Harvard Business School and his MA from Oxford University
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner ndash Corporate Finance Debt Advisory
Deloitte LLP
James Douglas joined Deloittersquos debt advisory business in 2005following seven years at JP Morgan Cazenove where he worked in
Corporate Finance focusing on debt advisory assignments for FTSE
350 companies During this period James advised UK companies on
fund raising for acquisitions refinancing and restructuring Prior to this
James worked in Debt Capital markets for ABN AMRO where he was
responsible for European Derivative Sales He also spent 6 years
trading derivatives for ABN AMRO Abbey National Financial Products
and Barings James qualified as a Chartered Accountant with Touche
Ross and is a Fellow of the Association of Corporate Treasurers
What drives Private Equity returns
Moderator Andrew Lebus Partner ndash Pantheon Ventures
Andrew Lebus is a partner of Pantheon Ventures (UK) LLP and a
Director of various Pantheon funds based in Guernsey As a senior
Mark Freebairn Partner ndash Odgers Berndtson
Mark Freebairn is a Partner and Head of the Financial Management
Practice of Odgers Berndtson based in London The Financial
Management Practice appoints Finance Directors and CFOs across allsectors in a range of businesses both public and private and is a
leader in its market niche
Mark is also a member of the Board amp CEO Practice and is involved
with searches for non-executive directorships when the requirement is
to appoint a candidate with senior finance experience Mark was
recently appointed as a Non-Executive Director on the Board of
Progressive Digital Media Plc
Robert Morgan Chairman ndash HT Forrest Group amp Atlas Interactive
Energy
Robert Morgan is currently chairman of a number of PE owned
businesses in the B2B and healthcare sectors ranging from Social
Housing BPO SME services Compliance and Learning amp
Development in the Energy sector and previously Healthcare staffing
and complex care services Robert has worked in the legal and criminal
justice sectors in outsourcing also more recently around the Clementi
reforms He has been involved in new procurement models with the
Cabinet Office involving the private sector
Robert has acted as an Industry Operating Partner for HgCapital LLP
since 2002 on new and existing investments on value creation including
exits (former Chairman of Pulse Healthcare Services acquired by
Blackstone ICS at a 25x multiple in November 2010) He has worked
with the HM Treasury on Human Capital amp Small Business Taxation policy
and Compliance in relation to recent Finance Acts
Prior to this Robert was an Executive Director of Hays plc a leading
FTSE 100 Services Group Over a ten year period and as Chief Executive
of Hays DX (a document services group aimed at the legal and related
professions and sectors) he grew the business from pound3m operatingprofits to pound58m operating profits with cash 110 of profit This included
a 35000 subscription business where he organically grew the business
from 300 FTEs into 5000 FTEs over 6 EU countries
Gerry Murphy Senior Managing Director ndash The Blackstone Group
Dr Gerry Murphy is a Senior Managing Director in the Corporate Private
E i b d i L d H l Ch i f Th
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Where is the value in Listed PE over the next 12-18 months
Moderator Alan Geeves Partner ndash Singer Capital Markets
Alan Geeves joined Singers in April 2009 and has specialised in Closed
End Funds for 22 years His early career was at Hambros Bank BZWand Hoare Govett as a Salesman He moved to Collins Stewart to head
the Sales team in 1999 and worked there until mid 2005 when he left to
co-found Fairfax the investment back which he left in late 2008 In
recent years Alan has worked with James Waterlow to raise over pound15bn
of new equity from UK and International clients for a wide variety of
Closed End Funds in areas as diverse as Private Equity Real Estate
Debt and Frontier Markets They have also been active participants in
the secondary market sector and over a long period have built a
reputation for successfully trading large shareholdings of Closed End
Funds between investors They have also advised Boards of Closed End
Funds across a variety of subjects including capital raising MampA
defence and attack and restructurings
Sam Armstrong Managing Partner ndash Barwon Investment Partners
Sam Armstrong has been involved in alternative investments since 1990
Until April 2005 Sam Armstrong was the Joint Managing Partner of Quay
Partners Pty Ltd a specialist private equity fund-of-funds group founded
in October 2000 Before forming Quay Partners Sam was Head of
Alternative Investments at Macquarie Funds Management where heworked for over 10 years At Barwon Sam oversees the private equity
team which is focused on global listed private equity investing and
secondary fund investing Barwon currently manages over US$S300
million sourced from Australian institutional clients in its global listed
private equity strategy Barwon is in the process of launching a UCITS
version of the Barwon Global Listed Private Equity Fund
Sam graduated with a BComm (Hons) from the University of Melbourne
and has an MBA from Columbia University New York
Adam Goldman Managing Director ndash Red Rocks Capital
Adam Goldman serves as a Co-founder and Managing Director of Red
Rocks Capital LLC Prior to forming Red Rocks Capital in 2003 he was
a General Partner and Managing Director in four separate venture funds
with Centennial Ventures managing over $1 billion Mr Goldman has
served on the boards of more than a dozen private and public
companies He is a past President and Chairman of the Board of the
Paul Craig Director of Fund of Funds ndash Henderson Global Investors
Paul Craig joined New Star in 2003 and the Henderson Multi-Manager
team as part of the Henderson New Star acquisition in April 2009 He
has 21 yearsrsquo investment experience including 10 years gained at
Exeter Investment Group At Exeter he focused on managing
investment trust shares and portfolios He employs a lsquobottom uprsquo
investment process in identifying securities overlaid with a lsquotop-downrsquo
view of general economic trends
LPEQrsquos latest findings and focus
Ian Armitage Chairman ndash LPEQ
Ian Armitage has led HgCapital since 1990 and developed a focused
control-oriented approach to private equity investment whilst
reorganising and divesting the portfolio of legacy investments He then
transformed Hg to be the first sector specialist private equity firm in the
mid market In 2000 Ian completed the buy-out of the business from
Merrill Lynch which resulted in HgCapital becoming independent Ian
became Chairman of Hg in September 2007 He previously spent 10
years with 3i plc in London and Dublin Ian has made over forty
investments across a wide range of industries
Ian has been the Chairman of LPEQ since it was established in 2006
and served as Chairman of the Investor Relations Committee of theBritish Venture Capital Association He has a degree in Politics
Philosophy and Economics from Oxford University
Andrea Lowe Executive Director ndash LPEQ
Andrea Lowe started LPEQ in 2006 with its mission to increase
awareness understanding and interest in listed private equity Andrea
brings over 20 years experience in investment management marketing
strategy research and communications resulting in LPEQrsquos focus on
seeking investor views through market research
After graduating from Dartmouth College in New Hampshire USA she
was a market research analyst for Pillsbury and Gillette later earning an
MBA from Stanford University in California Andrea joined fund manager
GT Management (later INVESCO) in London developing marketing
strategy in Europe the US and Asia She also served as editor of the
PricewaterhouseCoopers European Investment Management Newsletter
f A d i h d h f US di l d i
7262019 LPEQ 14 June Conference Presentations
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Singer Capital Markets
are pleased to work with LPEQ
to bring you the first
LPEq London Investor Conference
Covingtonrsquos investment funds group lawyers have acted as
counsel in transactions involving more than 2000 investment
funds located in over 30 jurisdictions worldwide
Our investment funds group has an interdisciplinary and
international approach to fund and investor representations We
offer our investor and sponsor clients in-depth expertise in fundis a proud sponsor of the
Singer Capital Markets is an integrated UK capital markets and
advisory partnership with a primary focus on UK Mid and Small Cap
companies
Established in 2006 the business comprises a team of sixty five
leading professionals It provides sales research execution
corporate finance and corporate broking advisory services to
institutional corporate hedge fund and high net worth clients
Singer Capital Markets is uniquely positioned by virtue of its
partnership structure where staff and managers own equity and
govern the business
The firm boasts a strong balance sheet at over four times the
required level of regulatory capital which allows the business to take
a long term view with clients
THE GUILDHALL LONDON
The City of London has been governed from the area occupied by
Guildhall for more than 800 years Today Guildhall is home to the City
of London Corporation ndash the provider of local government services to
the Square Mile and promoter of the City as the world leader in
international finance and business services
The present Guildhall was built between 1411 and 1430 although
evidence suggests that a civic hall has stood here since the late
13th century Local government developed here and its pattern hasserved as a model for many cities and towns
The crypt porch and medieval walls have twice emerged unscathed
from disastrous fires In 1666 Guildhall was caught up in the Great Fire
of London and in 1940 monuments windows and galleries were
damaged and the famous statues of Gog and Magog destroyed in a
single night of the Blitz Guildhall was restored in 1954
The Livery Hall
The Livery Hall was designed by Sir Horace Jones Architect and
Surveyor to the City Corporation It was built between 1870 and 1873
and is a listed Grade II structure
The crypts
Immediately beneath Guildhall are two crypts The western cryptis thought to date from the 13th century and was probably the
undercroft oan earlier Guildhall It completely collapsed in the
Great Fire but in 1973 was restored to its original state The eastern
crypt is 15th century and has survived the fires of 1666 and 1940
Restored in 1961 it is divided into 12 bays by six clustered pillars of
Purbeck marble
7262019 LPEQ 14 June Conference Presentations
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
7262019 LPEQ 14 June Conference Presentations
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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How can PE firms deliver amidst a fragile recovery
Graham Elton Partner ndash Bain amp Company
Graham Elton is a Partner at Bain amp Company in London and Head of
the European Private Equity Practice and the UK Media Practice
He joined the firm in 2001 Whilst at Bain Graham has lead
assignments in a variety of industries including consumer products
media retail and business services Prior to joining Bain amp Company
Graham was a partner of Evolution Global Partners CEO at Miller
Freeman UK Managing Director of FT Business Strategy Director at
Pearson and worked for the Boston Consulting Group
His experience includes corporate strategy value improvement
programs turn-around situations merger integration customer and
channel strategies and business transformation In the private equity
group Graham has led a number of teams in fund strategy strategic
due diligence and portfolio company improvement Graham earned an
MBA at Harvard Business School and his MA from Oxford University
Debt markets How ldquoOpen for Businessrdquo are they
James Douglas Partner ndash Corporate Finance Debt Advisory
Deloitte LLP
James Douglas joined Deloittersquos debt advisory business in 2005following seven years at JP Morgan Cazenove where he worked in
Corporate Finance focusing on debt advisory assignments for FTSE
350 companies During this period James advised UK companies on
fund raising for acquisitions refinancing and restructuring Prior to this
James worked in Debt Capital markets for ABN AMRO where he was
responsible for European Derivative Sales He also spent 6 years
trading derivatives for ABN AMRO Abbey National Financial Products
and Barings James qualified as a Chartered Accountant with Touche
Ross and is a Fellow of the Association of Corporate Treasurers
What drives Private Equity returns
Moderator Andrew Lebus Partner ndash Pantheon Ventures
Andrew Lebus is a partner of Pantheon Ventures (UK) LLP and a
Director of various Pantheon funds based in Guernsey As a senior
Mark Freebairn Partner ndash Odgers Berndtson
Mark Freebairn is a Partner and Head of the Financial Management
Practice of Odgers Berndtson based in London The Financial
Management Practice appoints Finance Directors and CFOs across allsectors in a range of businesses both public and private and is a
leader in its market niche
Mark is also a member of the Board amp CEO Practice and is involved
with searches for non-executive directorships when the requirement is
to appoint a candidate with senior finance experience Mark was
recently appointed as a Non-Executive Director on the Board of
Progressive Digital Media Plc
Robert Morgan Chairman ndash HT Forrest Group amp Atlas Interactive
Energy
Robert Morgan is currently chairman of a number of PE owned
businesses in the B2B and healthcare sectors ranging from Social
Housing BPO SME services Compliance and Learning amp
Development in the Energy sector and previously Healthcare staffing
and complex care services Robert has worked in the legal and criminal
justice sectors in outsourcing also more recently around the Clementi
reforms He has been involved in new procurement models with the
Cabinet Office involving the private sector
Robert has acted as an Industry Operating Partner for HgCapital LLP
since 2002 on new and existing investments on value creation including
exits (former Chairman of Pulse Healthcare Services acquired by
Blackstone ICS at a 25x multiple in November 2010) He has worked
with the HM Treasury on Human Capital amp Small Business Taxation policy
and Compliance in relation to recent Finance Acts
Prior to this Robert was an Executive Director of Hays plc a leading
FTSE 100 Services Group Over a ten year period and as Chief Executive
of Hays DX (a document services group aimed at the legal and related
professions and sectors) he grew the business from pound3m operatingprofits to pound58m operating profits with cash 110 of profit This included
a 35000 subscription business where he organically grew the business
from 300 FTEs into 5000 FTEs over 6 EU countries
Gerry Murphy Senior Managing Director ndash The Blackstone Group
Dr Gerry Murphy is a Senior Managing Director in the Corporate Private
E i b d i L d H l Ch i f Th
7262019 LPEQ 14 June Conference Presentations
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Where is the value in Listed PE over the next 12-18 months
Moderator Alan Geeves Partner ndash Singer Capital Markets
Alan Geeves joined Singers in April 2009 and has specialised in Closed
End Funds for 22 years His early career was at Hambros Bank BZWand Hoare Govett as a Salesman He moved to Collins Stewart to head
the Sales team in 1999 and worked there until mid 2005 when he left to
co-found Fairfax the investment back which he left in late 2008 In
recent years Alan has worked with James Waterlow to raise over pound15bn
of new equity from UK and International clients for a wide variety of
Closed End Funds in areas as diverse as Private Equity Real Estate
Debt and Frontier Markets They have also been active participants in
the secondary market sector and over a long period have built a
reputation for successfully trading large shareholdings of Closed End
Funds between investors They have also advised Boards of Closed End
Funds across a variety of subjects including capital raising MampA
defence and attack and restructurings
Sam Armstrong Managing Partner ndash Barwon Investment Partners
Sam Armstrong has been involved in alternative investments since 1990
Until April 2005 Sam Armstrong was the Joint Managing Partner of Quay
Partners Pty Ltd a specialist private equity fund-of-funds group founded
in October 2000 Before forming Quay Partners Sam was Head of
Alternative Investments at Macquarie Funds Management where heworked for over 10 years At Barwon Sam oversees the private equity
team which is focused on global listed private equity investing and
secondary fund investing Barwon currently manages over US$S300
million sourced from Australian institutional clients in its global listed
private equity strategy Barwon is in the process of launching a UCITS
version of the Barwon Global Listed Private Equity Fund
Sam graduated with a BComm (Hons) from the University of Melbourne
and has an MBA from Columbia University New York
Adam Goldman Managing Director ndash Red Rocks Capital
Adam Goldman serves as a Co-founder and Managing Director of Red
Rocks Capital LLC Prior to forming Red Rocks Capital in 2003 he was
a General Partner and Managing Director in four separate venture funds
with Centennial Ventures managing over $1 billion Mr Goldman has
served on the boards of more than a dozen private and public
companies He is a past President and Chairman of the Board of the
Paul Craig Director of Fund of Funds ndash Henderson Global Investors
Paul Craig joined New Star in 2003 and the Henderson Multi-Manager
team as part of the Henderson New Star acquisition in April 2009 He
has 21 yearsrsquo investment experience including 10 years gained at
Exeter Investment Group At Exeter he focused on managing
investment trust shares and portfolios He employs a lsquobottom uprsquo
investment process in identifying securities overlaid with a lsquotop-downrsquo
view of general economic trends
LPEQrsquos latest findings and focus
Ian Armitage Chairman ndash LPEQ
Ian Armitage has led HgCapital since 1990 and developed a focused
control-oriented approach to private equity investment whilst
reorganising and divesting the portfolio of legacy investments He then
transformed Hg to be the first sector specialist private equity firm in the
mid market In 2000 Ian completed the buy-out of the business from
Merrill Lynch which resulted in HgCapital becoming independent Ian
became Chairman of Hg in September 2007 He previously spent 10
years with 3i plc in London and Dublin Ian has made over forty
investments across a wide range of industries
Ian has been the Chairman of LPEQ since it was established in 2006
and served as Chairman of the Investor Relations Committee of theBritish Venture Capital Association He has a degree in Politics
Philosophy and Economics from Oxford University
Andrea Lowe Executive Director ndash LPEQ
Andrea Lowe started LPEQ in 2006 with its mission to increase
awareness understanding and interest in listed private equity Andrea
brings over 20 years experience in investment management marketing
strategy research and communications resulting in LPEQrsquos focus on
seeking investor views through market research
After graduating from Dartmouth College in New Hampshire USA she
was a market research analyst for Pillsbury and Gillette later earning an
MBA from Stanford University in California Andrea joined fund manager
GT Management (later INVESCO) in London developing marketing
strategy in Europe the US and Asia She also served as editor of the
PricewaterhouseCoopers European Investment Management Newsletter
f A d i h d h f US di l d i
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 668
Singer Capital Markets
are pleased to work with LPEQ
to bring you the first
LPEq London Investor Conference
Covingtonrsquos investment funds group lawyers have acted as
counsel in transactions involving more than 2000 investment
funds located in over 30 jurisdictions worldwide
Our investment funds group has an interdisciplinary and
international approach to fund and investor representations We
offer our investor and sponsor clients in-depth expertise in fundis a proud sponsor of the
Singer Capital Markets is an integrated UK capital markets and
advisory partnership with a primary focus on UK Mid and Small Cap
companies
Established in 2006 the business comprises a team of sixty five
leading professionals It provides sales research execution
corporate finance and corporate broking advisory services to
institutional corporate hedge fund and high net worth clients
Singer Capital Markets is uniquely positioned by virtue of its
partnership structure where staff and managers own equity and
govern the business
The firm boasts a strong balance sheet at over four times the
required level of regulatory capital which allows the business to take
a long term view with clients
THE GUILDHALL LONDON
The City of London has been governed from the area occupied by
Guildhall for more than 800 years Today Guildhall is home to the City
of London Corporation ndash the provider of local government services to
the Square Mile and promoter of the City as the world leader in
international finance and business services
The present Guildhall was built between 1411 and 1430 although
evidence suggests that a civic hall has stood here since the late
13th century Local government developed here and its pattern hasserved as a model for many cities and towns
The crypt porch and medieval walls have twice emerged unscathed
from disastrous fires In 1666 Guildhall was caught up in the Great Fire
of London and in 1940 monuments windows and galleries were
damaged and the famous statues of Gog and Magog destroyed in a
single night of the Blitz Guildhall was restored in 1954
The Livery Hall
The Livery Hall was designed by Sir Horace Jones Architect and
Surveyor to the City Corporation It was built between 1870 and 1873
and is a listed Grade II structure
The crypts
Immediately beneath Guildhall are two crypts The western cryptis thought to date from the 13th century and was probably the
undercroft oan earlier Guildhall It completely collapsed in the
Great Fire but in 1973 was restored to its original state The eastern
crypt is 15th century and has survived the fires of 1666 and 1940
Restored in 1961 it is divided into 12 bays by six clustered pillars of
Purbeck marble
7262019 LPEQ 14 June Conference Presentations
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
7262019 LPEQ 14 June Conference Presentations
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 1268
6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 1968
13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 2368
17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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Where is the value in Listed PE over the next 12-18 months
Moderator Alan Geeves Partner ndash Singer Capital Markets
Alan Geeves joined Singers in April 2009 and has specialised in Closed
End Funds for 22 years His early career was at Hambros Bank BZWand Hoare Govett as a Salesman He moved to Collins Stewart to head
the Sales team in 1999 and worked there until mid 2005 when he left to
co-found Fairfax the investment back which he left in late 2008 In
recent years Alan has worked with James Waterlow to raise over pound15bn
of new equity from UK and International clients for a wide variety of
Closed End Funds in areas as diverse as Private Equity Real Estate
Debt and Frontier Markets They have also been active participants in
the secondary market sector and over a long period have built a
reputation for successfully trading large shareholdings of Closed End
Funds between investors They have also advised Boards of Closed End
Funds across a variety of subjects including capital raising MampA
defence and attack and restructurings
Sam Armstrong Managing Partner ndash Barwon Investment Partners
Sam Armstrong has been involved in alternative investments since 1990
Until April 2005 Sam Armstrong was the Joint Managing Partner of Quay
Partners Pty Ltd a specialist private equity fund-of-funds group founded
in October 2000 Before forming Quay Partners Sam was Head of
Alternative Investments at Macquarie Funds Management where heworked for over 10 years At Barwon Sam oversees the private equity
team which is focused on global listed private equity investing and
secondary fund investing Barwon currently manages over US$S300
million sourced from Australian institutional clients in its global listed
private equity strategy Barwon is in the process of launching a UCITS
version of the Barwon Global Listed Private Equity Fund
Sam graduated with a BComm (Hons) from the University of Melbourne
and has an MBA from Columbia University New York
Adam Goldman Managing Director ndash Red Rocks Capital
Adam Goldman serves as a Co-founder and Managing Director of Red
Rocks Capital LLC Prior to forming Red Rocks Capital in 2003 he was
a General Partner and Managing Director in four separate venture funds
with Centennial Ventures managing over $1 billion Mr Goldman has
served on the boards of more than a dozen private and public
companies He is a past President and Chairman of the Board of the
Paul Craig Director of Fund of Funds ndash Henderson Global Investors
Paul Craig joined New Star in 2003 and the Henderson Multi-Manager
team as part of the Henderson New Star acquisition in April 2009 He
has 21 yearsrsquo investment experience including 10 years gained at
Exeter Investment Group At Exeter he focused on managing
investment trust shares and portfolios He employs a lsquobottom uprsquo
investment process in identifying securities overlaid with a lsquotop-downrsquo
view of general economic trends
LPEQrsquos latest findings and focus
Ian Armitage Chairman ndash LPEQ
Ian Armitage has led HgCapital since 1990 and developed a focused
control-oriented approach to private equity investment whilst
reorganising and divesting the portfolio of legacy investments He then
transformed Hg to be the first sector specialist private equity firm in the
mid market In 2000 Ian completed the buy-out of the business from
Merrill Lynch which resulted in HgCapital becoming independent Ian
became Chairman of Hg in September 2007 He previously spent 10
years with 3i plc in London and Dublin Ian has made over forty
investments across a wide range of industries
Ian has been the Chairman of LPEQ since it was established in 2006
and served as Chairman of the Investor Relations Committee of theBritish Venture Capital Association He has a degree in Politics
Philosophy and Economics from Oxford University
Andrea Lowe Executive Director ndash LPEQ
Andrea Lowe started LPEQ in 2006 with its mission to increase
awareness understanding and interest in listed private equity Andrea
brings over 20 years experience in investment management marketing
strategy research and communications resulting in LPEQrsquos focus on
seeking investor views through market research
After graduating from Dartmouth College in New Hampshire USA she
was a market research analyst for Pillsbury and Gillette later earning an
MBA from Stanford University in California Andrea joined fund manager
GT Management (later INVESCO) in London developing marketing
strategy in Europe the US and Asia She also served as editor of the
PricewaterhouseCoopers European Investment Management Newsletter
f A d i h d h f US di l d i
7262019 LPEQ 14 June Conference Presentations
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Singer Capital Markets
are pleased to work with LPEQ
to bring you the first
LPEq London Investor Conference
Covingtonrsquos investment funds group lawyers have acted as
counsel in transactions involving more than 2000 investment
funds located in over 30 jurisdictions worldwide
Our investment funds group has an interdisciplinary and
international approach to fund and investor representations We
offer our investor and sponsor clients in-depth expertise in fundis a proud sponsor of the
Singer Capital Markets is an integrated UK capital markets and
advisory partnership with a primary focus on UK Mid and Small Cap
companies
Established in 2006 the business comprises a team of sixty five
leading professionals It provides sales research execution
corporate finance and corporate broking advisory services to
institutional corporate hedge fund and high net worth clients
Singer Capital Markets is uniquely positioned by virtue of its
partnership structure where staff and managers own equity and
govern the business
The firm boasts a strong balance sheet at over four times the
required level of regulatory capital which allows the business to take
a long term view with clients
THE GUILDHALL LONDON
The City of London has been governed from the area occupied by
Guildhall for more than 800 years Today Guildhall is home to the City
of London Corporation ndash the provider of local government services to
the Square Mile and promoter of the City as the world leader in
international finance and business services
The present Guildhall was built between 1411 and 1430 although
evidence suggests that a civic hall has stood here since the late
13th century Local government developed here and its pattern hasserved as a model for many cities and towns
The crypt porch and medieval walls have twice emerged unscathed
from disastrous fires In 1666 Guildhall was caught up in the Great Fire
of London and in 1940 monuments windows and galleries were
damaged and the famous statues of Gog and Magog destroyed in a
single night of the Blitz Guildhall was restored in 1954
The Livery Hall
The Livery Hall was designed by Sir Horace Jones Architect and
Surveyor to the City Corporation It was built between 1870 and 1873
and is a listed Grade II structure
The crypts
Immediately beneath Guildhall are two crypts The western cryptis thought to date from the 13th century and was probably the
undercroft oan earlier Guildhall It completely collapsed in the
Great Fire but in 1973 was restored to its original state The eastern
crypt is 15th century and has survived the fires of 1666 and 1940
Restored in 1961 it is divided into 12 bays by six clustered pillars of
Purbeck marble
7262019 LPEQ 14 June Conference Presentations
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
7262019 LPEQ 14 June Conference Presentations
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 968
3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4668
copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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Singer Capital Markets
are pleased to work with LPEQ
to bring you the first
LPEq London Investor Conference
Covingtonrsquos investment funds group lawyers have acted as
counsel in transactions involving more than 2000 investment
funds located in over 30 jurisdictions worldwide
Our investment funds group has an interdisciplinary and
international approach to fund and investor representations We
offer our investor and sponsor clients in-depth expertise in fundis a proud sponsor of the
Singer Capital Markets is an integrated UK capital markets and
advisory partnership with a primary focus on UK Mid and Small Cap
companies
Established in 2006 the business comprises a team of sixty five
leading professionals It provides sales research execution
corporate finance and corporate broking advisory services to
institutional corporate hedge fund and high net worth clients
Singer Capital Markets is uniquely positioned by virtue of its
partnership structure where staff and managers own equity and
govern the business
The firm boasts a strong balance sheet at over four times the
required level of regulatory capital which allows the business to take
a long term view with clients
THE GUILDHALL LONDON
The City of London has been governed from the area occupied by
Guildhall for more than 800 years Today Guildhall is home to the City
of London Corporation ndash the provider of local government services to
the Square Mile and promoter of the City as the world leader in
international finance and business services
The present Guildhall was built between 1411 and 1430 although
evidence suggests that a civic hall has stood here since the late
13th century Local government developed here and its pattern hasserved as a model for many cities and towns
The crypt porch and medieval walls have twice emerged unscathed
from disastrous fires In 1666 Guildhall was caught up in the Great Fire
of London and in 1940 monuments windows and galleries were
damaged and the famous statues of Gog and Magog destroyed in a
single night of the Blitz Guildhall was restored in 1954
The Livery Hall
The Livery Hall was designed by Sir Horace Jones Architect and
Surveyor to the City Corporation It was built between 1870 and 1873
and is a listed Grade II structure
The crypts
Immediately beneath Guildhall are two crypts The western cryptis thought to date from the 13th century and was probably the
undercroft oan earlier Guildhall It completely collapsed in the
Great Fire but in 1973 was restored to its original state The eastern
crypt is 15th century and has survived the fires of 1666 and 1940
Restored in 1961 it is divided into 12 bays by six clustered pillars of
Purbeck marble
7262019 LPEQ 14 June Conference Presentations
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
7262019 LPEQ 14 June Conference Presentations
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
7262019 LPEQ 14 June Conference Presentations
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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June 14 2011
How can PE firms deliver amidsta fragile recovery
Graham Elton
7262019 LPEQ 14 June Conference Presentations
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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2LPEQ2011TOR
After hitting bottom in 2009 the PE marketbegan to recover in 2010
bull PE investments rebounded ndash plenty of dry powder
good-quality assets and available credit
bull Inflated prices prevented many deals from closing
bull PE exits also rebounded ndash strong momentum inthe last quarter of 2010
bull All three exit channels played a significant role
bull PE fundraising hit a cyclical low ndash tight PEallocations ongoing liquidity issues and lack ofcompelling investment opportunities
bull LPs re-evaluated their investment preferences
bull Recovery in portfolio valuations powered short-term PE returns
bull Lower incidence of default played a key role
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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3LPEQ2011TOR
Notes Excludes add-ons loan-to-own transactions and acquisitions of bankrupt assets Based on announcement date Includesannounced deals that are completed or pending with data subject to change Geography based on the location of targets
Source Dealogic
PE investment activity moved beyond itscyclical low
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
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0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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4LPEQ2011TOR
Fuelled by PE firms wielding over $1T of drypowderhellip
Note Distressed PE includes distressed debt special situation and turnaround fundsSource Preqin
S iff i i k h l i l
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 1968
13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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5LPEQ2011TOR
Stiff competition kept purchase multipleshigh
US Europe
Note Based on pro-forma trailing EBITDASource SampP LCD
D d i th h d f di i li d GP
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 1968
13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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6LPEQ2011TOR
0
20
40
60
80
100High pressure
to investbelow avg
performance
High pressureto investabove avg
performance
Lowpressureto invest
Percent of globalbuyout dry powder
Notes Analysis includes $1B+ buyout funds vintage 2005-2010 globally with sufficient data available lsquoHigh pressure toinvestrsquo includes 2005-2007 vintage funds lt23 called and 2008 vintages with lt13 called performance based onquartile of current fund at time of analysis primarily as of Q2 2010 vintage year refers to year of initial investment
Sources Preqin Bain analysis
bull GPs with funds nearing theend of their investment periodwill feel pressure to investtheir remaining dry powder(ldquouse it or lose itrdquo)
bull Faced with limited prospects
of raising another fund GPswith weak performance trackrecords will feel this pressuremost acutely
bull Pressured GPs are at risk ofbecoming undisciplined
investors distorting themarket by competing fiercelyfor deals and inflating prices
Dry powder in the hands of undisciplined GPsmight distort the market
E it ti it h i d t d
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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7LPEQ2011TOR
Exit activity has gained momentum andthere are continued signs of strength
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
bull IPOs will continue to bea viable channel forhigh-quality companiesand high-growthstories
bull There is no reason to
believe that interest insponsor-to-sponsortransactions will fade
bull With growth firmlyback on corporateagendas and animproved macro-
economic environmentthere is optimism thatsales to strategicbuyers will increase
But many unrealised investments may not be
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
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0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
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its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
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Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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8LPEQ2011TOR
But many unrealised investments may not beripe for exit
Notes Fund vintages in sample range from 2002-2008 analysis includes unrealised investments and partially realizedinvestments for which lt90 of the total value of the investment is still unrealised valuation multiples are before fees
Source Bain analysis
bull Most ldquopregnant exitsrdquo havealready been realized
bull Remaining unrealised holdingsare likely afflicted by one ofmore of the following
-Purchased at high multiplesduring the peak
-In cyclical sectors hit hard by thedownturn and with performancethat has yet to stabilize
-Large companies that take longerto mature and face more limitedexit options
bull Overall it means that a largeportion of unrealised holdingsare currently valued below costor below the carry hurdle rate
Lack of market beta points to more modest
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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9LPEQ2011TOR
Lack of market beta points to more modestPE-industry returns going forward
bull Recent valuation multiples and purchase prices remain high
bull Further expansion in multiples expected to be limited
bull Debt markets have become more friendly to LBO financing
as investors hunt for yield with some evidence of increasingleverage lower cost of debt and looser terms
bull Conditions akin to recovering market of 2003-05 butunlikely to ease significantly more
bull Macro-economic recovery is expected to be tepid yet a
double-dip is unlikely to materialize in the near futurebull Recovery likely to show geographical differences
Leverage
Multipleexpansion
GDP growth
E x t e r n a l d r i v e r s
bullThe conditions of this recovery will not be as friendlyas the previous one
bullIt is hard to understand what will drive the nextreturn cycle ndash the historical sources of market betaare in short supply
How will top quartile funds continue to
7262019 LPEQ 14 June Conference Presentations
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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10LPEQ2011TOR
-10
0
10
20
30
40
Overunder performance vs SampP 500(5-year rolling pooled net IRR)
868890929496980002040608101H
1st quartilefunds
All funds
-10
0
10
20
30
40
Overunder performance vs EU index(5-year rolling pooled net IRR)
98 00 02 04 06 08 101H
All funds
1st quartilefunds
Composite of FTSE CAC and DAX (equally weighted)Note Quartile position assigned based on ranking within region fund type and vintage yearSource Thomson Reuters
European buyout fundsUS buyout funds
Averagersquo97-rsquo10186
Averagersquo97-rsquo1032
Averagersquo97-rsquo10
267
Averagersquo97-rsquo1069
How will top quartile funds continue tooutperform by a substantial margin
Alpha will be created by four inter-related
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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11LPEQ2011TOR
Build repeatablevalue-creation
processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptiveinvestment strategybuilt on core strengths
Alpha will be created by four inter-relatedfactors
Develop an adaptive investment strategy
7262019 LPEQ 14 June Conference Presentations
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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12LPEQ2011TOR
Develop an adaptive investment strategybuilt on core strengths
Key questions
bull How aligned is our strategy with our core strengths
bull What do our investors think
bull Is there a growth imperative
bull Which vectors of growth will be most valuable
- larger deals or more deals
- geographic expansion
- new asset classes
- deals with more risk
How to remain focused yet flexible
Strengthen and professionalise the
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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13LPEQ2011TOR
Strengthen and professionalise theorganisation
Generalmanagement
Investor relations
Resources tosupport
repeatable value-creation processes
Talentmanagement
bull Attract retain and motivate the best people
bull Address morale and incentives of junior partners many ofwhom have yet to earn any carry
bull Fundraise and manage investor relations 365 days per year
bull Dedicate resources to both of these efforts - more full-timeand senior talent
bull Create a strategic plan for mapping and segmenting theinvestor universe and then driving activity
bull Appropriately resource against the fund strategy
bull Move from ad hoc to repeatable model
bull Bolster general management functionscapability to set thefirmrsquos direction facilitate the sharing of insights acrossinvestment teams develop the programs to recruit andmotivate top talent and take the lead in fundraising andmanaging investor relations
Create truly proprietary investment theses
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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14LPEQ2011TOR
Create truly proprietary investment thesesand beef up due diligence
Enhanced due diligenceStrong investment
committee processes
bullInstitutionalized data-drivenapproach
bullEarly diligence to winnow
deals
bullFocused diligence to address ldquoanswer-changingrdquo issues
bullExtended diligence todevelop differentiatedinsights
bullClear investment strategiesand criteria that governdecisions
bullEffective and differingprocesses by round
bullKey analytics that enableconsistent and value-addeddiscussions
Avoid losers and develop proprietaryinsights required to stretch for winners
B ild t bl l ti
7262019 LPEQ 14 June Conference Presentations
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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15LPEQ2011TOR
Build repeatable value-creation processes
Common pitfalls
bull Throw people at the challenge without resolving how best todeploy them Having a disciplined process is far more important thanthe volume of resources it consumes
bull With a focus on people over process the squeaking wheel alwaysgets the grease It is easier and more valuable to help a good company
on a path to 3X return boost its performance to 5X than to help astruggling company get from 05X back to par or above Achieving thiscalls for a process that reaches out to every portfolio company
bull One size fits all The complexities of dealing with different businessesand management-team personalities are immense A process that isboth disciplined and flexible enough to partner with management teams
to create value is crucial
bull Paralysis by analysis Not knowing how to get started and strugglingto change deeply entrenched operating norms some PE firms wind updoing nothing That is the worst pitfall of all
Si tf li h
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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16LPEQ2011TOR
Six portfolio approaches
Level of engagement(CEO guidance vs resources to help )
Amount ofintervention
(how close todoing)
lsquoFacilitatorrsquo
lsquoSeasonedmentorrsquo
Owneroperator Exec
Chairman
Functionalexpert
lsquoHands-off
6
lsquoMonitorrsquo
10
lsquoStrategic
architectrsquo
2
3 5
4
1 Adopt a prevalent approach that best suits your unique combination of firm
and portfolio company characteristics
2 Customize your approach to the unique needs of each portfolio company -calls for sophisticated assessment and decision-making skills
3 Flex your model to suit portfolio company needs at any stage in the ownershiplife cycle ndash calls for emotional intelligence
Successful models are a balancing act of 4
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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17LPEQ2011TOR
gcritical elements
Culture
Organisation and
Resourcing
Process amp Activities
Accumulated experienceamp judgment
Secondary
Enabler
Critical
Foundation
Primary
Enabler
Starting
point
No substitute for well-seasonedinvestors guiding decision-making
Key elements include ndashintellectual honestycollaboration and empowerment
Critical to have right resourcesat the right stage of deal cycleat the right time (no-one has just one hat)
Institutionalizing ldquowhat worksrdquo
creates a sustainable andrepeatable model
Four top of mind issues for GPs in 2011
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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18LPEQ2011TOR
Four top-of-mind issues for GPs in 2011
Build repeatable value-creation processes
Strengthen andprofessionalise the
organisation
Create truly proprietaryinvestment theses
supported by enhanceddue diligence
Develop an adaptive
investment strategybuilt on core strengths
bull Objectively vet any opportunity against your own
strengths and ability to competebull Gauge interest of LPs and get support before committing
to an opportunity
bull Attract retain and motivate the best people
bull Make investor relations a priority
bull professionalise general management
bull Build resources to support repeatable post-acquisitionvalue-creation processes
bull Drive sector expertise to proprietary investment theses
bull Enhance due diligence to develop proprietary insightsrequired to stretch for winners and avoid losers
bull Strengthen investment committee processes
bull Adopt a prevalent model that best suits your firm andportfolio company characteristics
bull Flex the model to suit the unique needs of each portfoliocompany at any stage in the ownership life cycle
and unexpectedly robust debt markets
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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19LPEQ2011TOR
hellip and unexpectedly robust debt markets
Source Dealogic
High-yield bond issuance at
record high
Rebound in leveraged loan on the
back of a strong bond market
Exit activity picked up significantly
7262019 LPEQ 14 June Conference Presentations
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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20LPEQ2011TOR
Notes Excludes bankruptcies IPO value represents offer amountSource Dealogic
Exit activity picked up significantly
0
100
200
300
$400B
0
500
1000
1500
1 9 9 5
6
1 9 9 6
15
1 9 9 7
15
1 9 9 8
34
1 9 9 9
37
2 0 0 0
82
2 0 0 1
52
2 0 0 2
43
2 0 0 3
65
2 0 0 4
169
2 0 0 5
257
2 0 0 6
232
2 0 0 7
355
2 0 0 8
151
2 0 0 9
72
2 0 1 0
232
Global buyout-backed exits
Value by channel Total count
Sponsor-to-sponsor
IPO
Total count
Strategic
Difficult fundraising conditions persisted
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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21LPEQ2011TOR
Difficult fundraising conditions persisted
Note Includes funds with final close represents year funds held their final closeSource Preqin
bull LPsrsquo willingness andcapacity to take on newcommitments remainedweak in 2010
bull The number funds on theroad and the amount ofcapital they sought to
raise remained high
bull This demand-supplyimbalance made for verydifficult fundraisingconditions in 2010
bull Funds that closed quicklyand successfully weregenerally smaller orgeographysector focused
There is still a huge amount of dry powder
7262019 LPEQ 14 June Conference Presentations
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
7262019 LPEQ 14 June Conference Presentations
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
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its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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22LPEQ2011TOR
D i s t r e s s e d P E
O t h e r s
N e x t
1 5
O a k
t r e e
M e z z a n i n e
O t h e r s
N e x t
1 5
G o l d
m a n S a c h s
Notes Data as of December 2010 Distressed PE includes distressed debt specialsituation and turnaround funds
Source Preqin
fragmented amongst a large number of firms
Improving debt markets are enabling morel d i f LBO
7262019 LPEQ 14 June Conference Presentations
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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23LPEQ2011TOR
leverage and easier terms for LBOs
Note Equity contribution includes both rollover and contributed equitySource SampP LCD
2011 could see more P2P deals
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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24LPEQ2011TOR
Note Other types of deals include secondary carve-out and private targetsSource Bain US LBO Deal Database
0
100
200
300
400
$500B
2004 dealvalue
Private
Secondary
Carve-out
P2P
P2Pdeals
Averagedeal size
Numberof deals
Other typesof deals
2007 dealvalue
Private
Secondary
Carve-out
P2P
Buyout deal value of US-based PE firms bull Banks and lendersare increasingly opento writing largerchecks
bull PE firms are lured by
the inefficient capitalstructures of manypublic companies
bull Bain model confirmsthe window ofopportunity for P2Pdeals is wider in2011 (albeit verysensitive to changesin market valuations)
2011 could see more P2P deals
P2P deals largely drove the last boomand are essential to a strong recovery
Prevalence of secondary buyouts will likelyti
7262019 LPEQ 14 June Conference Presentations
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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25LPEQ2011TOR
continue
0
20
40
60
80
100
Primarybuyout
Secondarybuyout
Multiple
Free cash flow
EBITDA
Leverage
Percent of value created
(by type of effect)
319379
Notes Based on 236 primary buyouts and 50 secondary buyouts from 1989-2006 in Europe freecash flow effect refers to the impact of debt repayment and dividend payment on returns
Sources Golding Capital Partners amp CEFS ldquoPrivate Equity study Secondary buyouts offer attractivepotential for value creationrdquo November 2010 Bain analysis
Research suggests similar returnsamp value creation potential
bull More expeditious and certain than anIPO or sale to a strategic buyer
bull PE-owned companies represent a largeshare of all businesses and an evengreater share of businesses that comeup for sale
bull Limited holding periods can trigger the ldquoprematurerdquo sale of a company withstill significant upside to be realized
bull Some companies are better suited forprivate ownership than public
bull Different stages of a companyrsquos
development may be best supportedby PE firms with different particularskill sets
Fundamental reasons whysecondary buyouts make sense
Significant risks exist that could easily derailPErsquos deal recovery
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
7262019 LPEQ 14 June Conference Presentations
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
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0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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26LPEQ2011TOR
PErsquos deal recovery
bull Sustainability of the USand EU economicrecoveries is not certain
bull Sovereign risk is stillpresent in Europe asovereign debt crisis
could spill over to thefinancial system
bull In Asia worries aboutinflation and the riskthat policy-makers maybe slow in responding to
the threat of assetbubbles forming couldincrease volatility
If past patterns remain a reliable guidefundraising is poised for a recovery
7262019 LPEQ 14 June Conference Presentations
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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27LPEQ2011TOR
fundraising is poised for a recovery
Sources Preqin Dealogic
bull Recovery of PEinvestment andexit activity areleading indicatorsof a pickup infundraising
bull Growingmomentum in bothof these seen inthe latter half of2010 bodes well for
a recovery infundraising in 2011
Fundraising typically lags investment activity
LPsrsquo are budgeting for increasedcommitments in 2011
7262019 LPEQ 14 June Conference Presentations
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
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bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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28LPEQ2011TOR
commitments in 2011
Source Preqin Investor Survey (n=100 December 2010)
LPs are budgeting to commit thesame or more capital in 2011
bull Increase (albeit modest) inLPsrsquo 2011 budgets for newcommitments is driven byexpectations of many high-quality GPs coming to market
bull Yet LP budgets continue to betempered by tight allocationslarge unfunded commitmentsand confidence in PE dentedby the downturn
bull Still for all the short-term
strains and a few challengingyears LPsrsquo conviction in PEremains solid
LPsrsquo investments are shifting towardssmaller more targeted funds
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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29LPEQ2011TOR
0 10 20 30 40 50
EuropeanIsraeli Venture CapitalTimber Funds
Mega Buyout Funds
Fund of FundsOther niche sectors
US Large BuyoutsCleantechGreen-Focused Funds
Secondary FundsEmerging Markets (Ex-Asia)
Infrastructure FundsUS Venture Capital
MezzanineCredit focused fundsEnergy Funds
Restructuring Funds
Pan-Asian FundsEuropean Middle Market Buyouts (pan-European)
Distressed Debt FundsAsian country focused funds
European Middle Market buyouts (country focused)US Small Market Buyouts
Growth Capital FundsUS Middle Market Buyouts
Percent of LPs surveyedNote Respondents asked not to choose more than 5Source Probitas Partners 2011 Institutional Investor Survey (N=180 November 2010)
Areas LPs will focus investment attention in 2011
bull LPs are notlooking to gainany moregenericexposure to PE
bull In particular
LPs are turningsharply awayfrom largebuyout funds
bull LPs are seekingGPs targeting aparticular
geographysector dealstage etc
smaller more targeted funds
Over-supply could make fundraisingconditions challenging in 2011
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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30LPEQ2011TOR
conditions challenging in 2011
Note Ratio calculated as aggregate capital sought globally for all PE types at the start of the yeardivided by the total global PE capital raised the prior year (sum of funds achieving final close)
Source Preqin Bain analysis
Ratio of funds-in-market to newcommitments suggest a continued
supply-demand imbalancebull Backlog of funds that
put off fundraising in2009-10 will likelywiden the supply-demand imbalance
bull Further compoundingthe challenge is thedisproportionatenumber of GPsexpected to come tomarket in 2011 that
are historically topperformers
0
1
2
3X
2006
06
2007
07
2008
11
2009
13
2010
23
2011
26
GPs will face lower re-up rates
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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31LPEQ2011TOR
Note Based on a sample of 51 funds closed in 2009-2010Source Preqin
Re-up rates are expectedto slip further
62 average
bull Large and increasing proportion of
LPs are declining re-ups-84 of NA LPs 91 of EU LPs and70 of Asian LPs
bull Reflects ongoing flight to quality
-GPs on the losing end of the culling
process will be most affected
bull Will be difficult to fill the void withnew LPs
-Because LPs have earmarked a largeproportion of their 2011 newcommitments budgets they may
have little room to take on new GPrelationships
-While LPs are open to new GPrelationships they will be selective
LPs continue to be more discerning investors
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4668
copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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32LPEQ2011TOR
0
20
40
60
80
100
Shift
towardsLPs
No change
Shift towards GPs
Percent of LPs surveyed
Balance of power has
shifted in LPsrsquo favour
Source Preqin Survey of Investors on Fund Terms amp Conditions (May 2010 n=50)
Doing more with due diligencebull Verifiable returns
bull GPsrsquo investment discipline
bull GPsrsquo true operational skills
bull GPsrsquo organisational dynamics
and risks
Keep up the pressure for morefavorable terms amp conditions
bull Search for new GP-LP
alignment of interestsbull See more room for
improvement in financial terms
Distribution of PE fund returns has a longerand bigger tail of out-performers
7262019 LPEQ 14 June Conference Presentations
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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33LPEQ2011TOR
and bigger tail of out performers
0
20
40
60
80
100
Net IRR (in )
Distribution of global buyout funds IRR(number of funds)
-50 -25 0 25 50 75 100
Notes Only mature vintages considered (1996-2005) n=435 buyout funds (with 1 fundwith IRR of 147 excluded) performance data as of December 2009
Sources Preqin Bain Analysis
Median=11 Mean=14
QuartileCutoff(min IRR)
MedianIRR
Q1 215 295Q2 111 152
Q3 31 79
Q4 -30
Bain works with a diversified group offinancial investors
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4668
copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
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its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
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copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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34LPEQ2011TOR
a c a es o s
Private equity
Sovereignwealth funds
Governmentinvestmentcorporations
Hedge funds
Third-partypension fund
managers
Privatefamily
financialholdings
Financialinvestors
Publicinvestmentcompanies
Pension funds
Bainrsquos Private Equity business
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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35LPEQ2011TOR
Critical component of Bainrsquos global business
ndash 25 of the firmrsquos business
ndash 11-fold growth since 1997
Global network of experience in firmfund strategy sourcingdue diligence and post-acquisition performance improvement
ndash 400+ professionals serving PE clients globally
High penetration of firms and transactions
ndash Advised on 50 of $500M+ buyout transactions in the last decade($1T+ enterprise value)
ndash Work with buyout funds representing 75 of equity capital
ndash 4X the next largest firm in due diligence and 35X in portfoliocompany performance improvement
Fully aligned incentives
ndash Bain partners have invested $500M+ in private equity deals and
funds over last ten years ndash superior returns
Very serious commitment to private equity
Clear market leader
Bain provides a full range of services insupporting private equity investors
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4568
copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4668
copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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36LPEQ2011TOR
pp g p q y
Objectives
Duration
Bainactivities
Dealgeneration
Immediately
post-acquisition
Duediligence
Ongoing
valueaddition
Exit
bull Rightinvestmentfocusthesis
bull Augment dealflow
bull Better dealdecisions-Avoid dogs
-Hidden gems
-Right pricing
bull Drive forrapid dealreturns
bull Increasedcompanyvalue
bull Maximumdeal returns
bull 1-4 months bull 3-4 weeks bull 1-4 months bull 3-12 months bull 1-3 months
bull Due diligence-Market trends
-Competitivecost position
-Customerfranchise
-Operationalefficiency
-Managementorg capabilities
bull Improvementopportunities- Investmentthesis
- Post-acquisitionagenda
bull Blueprintvaluecreation plan-Clear direction
- Prioritizedinitiatives
-Org alignment
-Quick hits
- Programmanagement
bull Focused
initiativesbull Management
workshops-Alignment
- Prioritization
bull Focusedinitiatives-Revenueenhancement
-Costimprovement
-Capitalmanagement
-Add-onacquisitions
- organisation
development
bull Re-fresh valuecreation plan
bull Portfolio scan
bull Prepare for exit(position forperformance)
bull Identify optimalexit strategy
bull Prepare sellingdocuments-Vendor duediligence
bull Pre-qualifybuyers andcustomizeapproach
bull Sector profilingand investmenttheses
bull Targetidentificationand screening- Plan to approachtargets
Firmfund strategy and operations
Bain helps PE firms realize superior returns
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
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y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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37LPEQ2011TOR
00
10
20
30
40X
Industry
Average
Top
quartile
23X
None
23X
Post-acq(no DD)
29X
DD (noPost-acq)
32X
DD amp Post-acq
36X
Average gross deal multiple for
select top quartile Bain clients (n=283 deals)
Select Bain
clients totalreturn
Notes Includes partially or fully exited deals for four top quartile clients invested 1995 or later excludes two outliers with dealmultiple gt100X Bain involved in both Bain was involved in 80 of the 283 deals in analysis analysis completed Sept 2009with return data ranging from Q308 to Q109 industry mean based on 1995-2006 funds
Source Bain analysis
Top quartile PE firmsby type of Bain involvement
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4468
copy 2011 Deloitte LLP Private and confidential
983108983141983138983156 983117983137983154983147983141983156983155 983112983151983159 991260983119983152983141983150 983142983151983154 983106983157983155983145983150983141983155983155991261 983137983154983141 983156983144983141983161983103
983114983137983149983141983155 983108983151983157983143983148983137983155
983120983137983154983156983150983141983154 983085 983108983141983148983151983145983156983156983141 983107983151983154983152983151983154983137983156983141 983110983145983150983137983150983139983141 983108983141983138983156 983105983140983158983145983155983151983154983161
2010 983108983141983138983156 983105983140983158983145983155983151983154983161 983110983145983154983149 983151983142 983156983144983141 983129983141983137983154
983113983150983155983156983145983156983157983156983145983151983150983137983148 983142983145983150983137983150983139983141 983144983137983155 983138983141983141983150 983138983151983156983144 983137 983140983154983145983158983141983154 983137983150983140 983137983138983155983151983154983138983141983154 983151983142 983148983145983153983157983145983140983145983156983161
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5268
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0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
20
40
60
80
100
120
140
160
180
1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
W e s t e r n E u r o p e a n l e v e r a g e d
f i n a n c e v o l u m e ( $ b n )
High Yield Bonds
Institutional
Banks
2
983108983141983142983145983150983145983150983143 983156983144983141 983148983141983158983141983154983137983143983141983140 983142983145983150983137983150983139983141 983149983137983154983147983141983156
Leveraged finance volumes
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983107983116983119 983145983155983155983157983137983150983139983141 983144983137983155 983138983141983141983150 983137 983140983154983145983158983141983154 983151983142 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983105 983138983145 983107983116983119 983148
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4668
copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4868
copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5268
copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential3
983105983154983138983145983156983154983137983143983141 983107983116983119 983158983151983148983157983149983141
New issue ndash arbitrage CLO volume
0
10
20
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
C L O V o l u m e ( $ B n )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983145983150983155983156983145983156983157983156983145983151983150983137983148 983137983152983152983141983156983145983156983141 983145983155 983150983151983159 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141
983147 983156
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4968
copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 4768
copy 2011 Deloitte LLP Private and confidential
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156 983158 983155
983107 983116 983119 983139
983137 983152 983137 983139 983145 983156 983161
( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
4
1) Excess liquidity
Institutional liquidity
983149983137983154983147983141983156983107983116983119983155 983150983141983137983154983145983150983143 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155 983148983151983151983147983145983150983143 983156983151 983145983150983158983141983155983156
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983159983145983156983144 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161 983142983151983154983139983145983150983143 983155983141983139983151983150983140983137983154983161 983152983154983145983139983141983155 983138983137983139983147 983157983152983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
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Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential5
983125983152983148983145983142983156 983145983150 983148983141983158983141983154983137983143983141983140 983155983141983139983151983150983140983137983154983161 983149983137983154983147983141983156 983152983154983145983139983145983150983143
Secondary pricing
40
50
60
70
80
90
100
110
J a n - 0 6
M a r - 0 6
M a y - 0 6
J u l - 0 6
S e p - 0 6
N o v - 0 6
J a n - 0 7
M a r - 0 7
M a y - 0 7
J u l - 0 7
S e p - 0 7
N o v - 0 7
J a n - 0 8
M a r - 0 8
M a y - 0 8
J u l - 0 8
S e p - 0 8
N o v - 0 8
J a n - 0 9
M a r - 0 9
M a y - 0 9
J u l - 0 9
S e p - 0 9
N o v - 0 9
J a n - 1 0
M a r - 1 0
M a y - 1 0
J u l - 1 0
S e p - 1 0
N o v - 1 0
J a n - 1 1
M a r - 1 1
983127 983141 983155 983156 983141 983154 983150 983109 983157 983154 983151 983152 983141 983123 983141 983139 983151 983150 983140 983137 983154 983161
983152 983154 983145 983139 983145 983150 983143 ( 983151 983142 983152 983137 983154 )
Avg Bid Avg Offer
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
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purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
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London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
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bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
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Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential6
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
61983160
4983160
44983160 46983160
32
5351
48
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
2007 2009 2010 983129983124983108 2011
983109 983153 983157 983145 983156 983161 983139 983151 983150 983156 983154 983145 983138 983157 983156 983145 983151 983150
983137 983155 983137 983151 983142 983109 983126
983116 983141 983158 983141 983154 983137 983143 983141 983140 983149 983157 983148 983156 983145 983152 983148 983141 983155 ( 983160 983109 983106 983113 983124 983108 983105 )
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983117983145983158983145983155983137 983085 983137 983139983137983155983141 983155983156983157983140983161 983145983150 983141983160983139983141983155983155 983148983145983153983157983145983140983145983156983161983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
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Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
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being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
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surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
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Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
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The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
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The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
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Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5068
copy 2011 Deloitte LLP Private and confidential7
Original structure
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 450
983123983141983150983145983151983154 983106 440 500
983108983154983137983159983150 983155983141983150983145983151983154 565
983116983141983158983141983154983137983143983141 44983160
983109983157 983154983145 983138983151983154 983142983148 983151983151 983154 1 75 983138983152 983155
983109983153983157983145983156983161 983139983157983155 983144983145 983151983150 37
Reverse flex 1 ndash Anchorinvestors
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 475
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151 983154 983142983148 983151983151983154 1 50 983138983152 983155
983109983153983157983145 983156983161 983139983157983155983144983145 983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 1983098
983109983160983152983137983150983140 983155983145 983162983141 983151983142 983123983141983150983145983151983154 983106
983107983157983156 983149983137983154983143983145983150 983138983161 25983138983152983155 983137983139983154983151983155983155 983137983148983148 983156983154983137983150983139983144983141983155
983107983157983156 983109983157983154983145983138983151983154 983142983148983151983151983154
983109983153983157983145983156983161 983139983157983155983144983145983151983150 983140983151983159983150 983156983151 33
Reverse flex 2 ndash Generalsyndication
983123983156983154983157983139983156983157983154983141 983121983157983137983150983156983157983149 983117983137983154983143983145983150
983123983141983150983145983151983154 983105 125 425
983123983141983150983145983151983154 983106 473 425
983108983154983137983159983150 983155983141983150983145983151983154 59830978
983116983141983158983141983154983137983143983141 47983160
983109983157 983154983145 983138983151983154 983142983148 983151983151983154 1 50983138 983152983155
983109983153983157983145983156983161 983139983157983155 983144983145983151983150 33
983122983141983158983141983154983155983141 983142983148983141983160 2983098
983110983157983154983156983144983141983154 983139983157983156 983145983150 983123983141983150983145983151983154 983106 983152983154983145983139983145 983150983143
983123983137983149983141 983149983137983154983143983145983150 983142983151983154 983137983149983151983154983156983145983155983145983150983143 983137983150983140 983138983157983148983148983141983156 983156983154983137983150983139983144983141983155
983124983144983141 983154983141983156983157983154983150 983151983142 983154983141983158983141983154983155983141 983142983148983141983160
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
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copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5368
copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5568
Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5168
copy 2011 Deloitte LLP Private and confidential8
983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
Leverage and equity contribution trends
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
983137983150983140 983140983154983145983158983145983150983143 983148983145983153983157983145983140983145983156983161 983138983137983139983147 983145983150983156983151 983156983144983141 983152983154983145983149983137983154983161 983149983137983154983147983141983156983116983141983158983141983154983137983143983141 983149983157983148983156983145983152983148983141983155 983137983150983140 983141983153983157983145983156983161 983139983151983150983156983154983145983138983157983156983145983151983150983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5268
copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5368
copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5568
Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5268
copy 2011 Deloitte LLP Private and confidential9
0
1
2
3
4
5
6
Sunrise Britax Vue Cinemas Novacap IMCD IDH Mivisa Picard Surgles Dorna R Cable
DebtEBITDA multiple Senior Mezz
Source LCD Loanconnector Debtwire Deloitte analysis
Oct 10
euro1070mCVC
Telecoms
Equitycushion
ND
Nov 10
pound520mNordicCapital
Safetyequipment
Equitycushion
50
Nov 10
pound450mDoughtyHanson
Cinemas
Equitycushion
ND
Feb 11
euro670mBlackstone
Manufacturing
Equitycushion35
Jan 11
euro210mAXA
Chemicalsproduction
Equitycushion30
Feb 11
pound490mBain Capital
Chemicalsdistribution
Equitycushion35
Feb 11
pound150mCarlyle
Dental
Equitycushion35
Mar 11
euro750mLion Capital
Frozen foodchain
Equitycushion38
Arp 11
euro420mBridgepoint
Motorsport
Equitycushion30
Apr 11
euro400mCVC
Cableoperator
Equitycushion35
Benchmark transactions
983143 983152 983153 983161
983138983157983156 983139983151983157983148983140 20134 983138983141 983137 983156983157983154983150983145983150983143 983152983151983145983150983156983107983116983119983155 983159983145983156983144 983141983160983139983141983155983155 983139983137983155983144 983150983141983137983154983145983150983143 983141983150983140 983151983142 983154983141983145983150983158983141983155983156983149983141983150983156 983152983141983154983145983151983140983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5368
copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5568
Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5368
copy 2011 Deloitte LLP Private and confidential10
983143 983152
Institutional liquidity
0
10
20
30
40
50
60
2011 2012 2013 2014 2015
983113 983150 983155 983156 983145 983156 983157 983156 983145 983151 983150 983137 983148 983148 983141 983158 983141 983154 983137 983143 983141 983140 983140 983141 983138 983156
983158 983155 983107 983116 983119 983139 983137 983152 983137 983139 983145 983156 983161 ( 991404 983138 983150 )
983113983150983155983156983145983156983157983156983145983151983150983137983148 983149983137983156983157983154983145983156983145983141983155
983113983150983155983156983145983156983157983156983145983151983150983137983148 983154983141983145983150983158983141983155983156983149983141983150983156 983139983137983152983137983139983145983156983161
2) Liquidityshortfall
983123983151983157983154983139983141 983116983107983108 983116983151983137983150 983107983151983150983150983141983139983156983151983154 983108983141983148983151983145983156983156983141 983137983150983137983148983161983155983145983155
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5568
Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5468
copy 2011 Deloitte LLP Private and confidential
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (ldquoDTTLrdquo) a UK private company limited by guarantee and its network of member firmseach of which is a legally separate and independent entity P lease see wwwdeloittecoukabout for a detailed description of the legal structure of DTTL and
its member firms
Deloitte LLP is the United Kingdom member firm of DTTL
This publication has been written in general terms and therefore cannot be relied on to cover specific situations application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any ofthe contents of this publication Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
circumstances Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of anymaterial in this publication
copy 2011 Deloitte LLP All rights reserved
Deloitte LLP is a limited liability partnership registered in England and W ales with registered number OC303675 and its registered office at 2 New StreetSquare London EC4A 3BZ United Kingdom Tel +44 (0) 20 7936 3000 Fax +44 (0) 20 7583 1198
Member of Deloitte Touche Tohmatsu Limited
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5568
Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5568
Private Equity Outlook ndash 2011-12Barwon Investment Partners
June 2011
Underlying Companies ndash
Balance sheets are
54
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5668
being repaired
Across the board we have seen a focus on
deleveraging
Many PE managers took the opportunity to
buy back debt at deeply discounted prices
and use free cash flow to pay downbalances
From a sample of 19 companies under
SVGA management they have seen debt
levels reduced by almost 2 turns
Similarly weighted average netdebtEBITDA levels have fallen in Thomas
H Leersquos Fund V by 24x
Source SVG Advisers January 2011 data comprises of a sample of 19 companies
Source Thomas H Lee PartnersNote Excludes Ariel and impact of Dunkinrsquo refinancing
Rebound in credit markets has
surprised everybody
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5768
surprised everybody
Source Thomson Reuters LPC
Denotes peak CLO activity historical average excludes peak CLO years
Source Fitch Ratings
Leveraged loan market is returning tohistorical averageshellip
High Yield Bond issues have reachedhistorical highs
PE-backed companies weathered the
2008-2009 storm better
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5868
Annualized rate of default in
the 2008-09 recession ()
Lower default rate in the 2008-09 recessionhellip hellipconsistent with long-term default performance
Annualized rate of
default 1970-2002 ()
Sources Bain and Co Global Privat Equity Report 2011 ldquoThe Credit Performance of Private Equity-
backed Companies in the ldquoGreat Recessionrdquo of 2008-2009rdquo Jason M Thomas Private Equity Council
March 2010
Earnings have rebounded surprisingly
strongly
57
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 5968
The broad and pre-emptive cost management
measures taken at investee companies through thedownturn reduced the impact to earnings
Poised to take advantage of the recovery many
private equity backed companies are also
experiencing greater profitability with the rebound in
revenue
Peak of Cycle Deals ndash back from the depths58
KKR I t t M lti l
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6068
The combination of refinancing low
default rates deleveraging andstronger equity markets has seen
private equity backed company
valuations rebound
As an example the top 10 portfolio
companies of KKR and SVG Capital
have all recovered strongly
Investments written down sharply have
been gradually written back up with
improved trading conditions
Companies that traded well through the
downturn such as Dollar General and
HCA have continued on their growth
trajectory
KKR
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeNXP Semiconductor 01x 03x 05x 11x 1030
ProSiebenSat1 Media 01x 01x 02x 05x 412
HCA 08x 19x 25x 30x 274
Dollar General 11x 26x 33x 36x 225
The Nielsen Company 09x 11x 15x 18x 102
Alliance Boots 06x 08x 09x 10x 79
US Foodservice 08x 12x 10x 12x 50
Biomet 08x 10x 10x 10x 25
First Data 06x 06x 06x 06x 0
Energy Futures 07x 04x 02x 02x -71
Average 06x 10x 12x 14x 117
Investment Multiple
SVG Capital
Portfolio Company Dec-08 Dec-09 Sep-10 Mar-11 ChangeProSieben Sat1 Media 00x 00x 03x 05x NA
Galaxy Entertainment Group 01x 03x 08x 13x 885
Freescale Semiconductor 02x 02x 03x 05x 213
Provimi 08x 12x 15x 21x 181
Valentino Fashion Group 05x 06x 07x 10x 106
Arysta LifeScience 06x 06x 08x 09x 63Birds Eye Iglo 12x 18x 18x 20x 61
Legico 07x 06x 08x 10x 51
AA Saga 10x 14x 15x 13x 30
TeleDenmark 16x 22x 23x 17x 3
Average 07x 09x 11x 12x 86
Investment Multiple
Source Company filings Barwon analysis
Earnings growth will continue to drive
NAV growth
59
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6168
Majority of leading
earnings indicators
suggest further earningsgrowth ahead and
surpassing 200607 peaks
in 2012
Earnings for SampP500
companies rose 30 in
2010 the fastest growth
since 1995 and accordingto analyst forecasts will
rise another 14 this
year
Similar growth is expected
across Europe
particularly in the
materials and technologysectors
US and European consensus EPS growth forecasts
2011e 2012e 2012e
vs peak 2011e 2012e
2012e
vs peak
Market 15 12 7 14 14 27
Energy 14 11 -7 15 21 -11
Materials 29 12 12 28 13 27
Industrials 20 15 21 19 17 21Discretionary 15 16 32 16 16 71
Staples 11 11 43 8 11 32
Healthcare 7 5 39 8 7 27
Financials 22 18 -30 22 19 -39
IT 26 11 2 10 11 73
Telecoms 3 5 8 16 15 -4
Utilities -2 7 -10 -1 -1 -3
Europe US
Source IBES yoy as of 3rd January 2011
Dry powder ldquouse or loserdquo and ldquotrading downrdquo by
mega buyout funds are some of the reasons
purchase prices are high
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6268
purchase prices are high
$49026
$262$773
$1787
$3610
$13005
$15553
$9618
$4419
$0
$100
$200
$300
$400
$500
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2004 2005 2006 2007 2008 2009 2010Cumulative Overhang Under $100M $100M-$250M $250M-$500M $500M-$1B $1B-$5B $5B+$ in Billion$ in Billion
As of 6302010
Mega Funds are
Trading Down into
Large BuyOut Segment
Capital Overhang of US PE Investors by Vintage Year
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6368
London Investor Conference14 June 2011
LPEQ Focus and Findings
Andrea Lowe
Executive Director
LPEQ
andrealoweLPEQcom
wwwLPEQcom
What does LPEQ strive to do
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6468
bull LPEQrsquos mission is to increase awareness understanding
and interest in listed private equity (LPE) among investors
and other industry participants
Networking and sharing best practice across
companies markets and countries
Conducting ground‐breaking research on LPE sector
Maintaining leading compendium of publicly available
information on
LPE
at
wwwLPEQcom
Unified voice speaking to industry bodies press
regulators
What does LPEQ strive to do
Signature Achievements
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6568
Investor Relations
bull Listed Private Equity DaysmdashAmsterdam Stockholm Paris
Research
bull Surveyed Wealth Managers Family Offices Institutional Investors IFAs and Pension Consultants
bull Investors share
views
on
LPE
learn
about
peersrsquo
approaches
Website wwwLPEQcom
bull Comprehensive sector information and performance data
bull Member profiles
bull One‐stop shop for academic and industry research
Signature Achievements
Whatrsquos ahead for LPEQ
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6668
bull Publication of Investor Communications Guidelines
bull 3
Listed
Private
Equity
Days
in
major
European
cities
bull Drive for membership
bull New research
on
global
private
wealth
management
market‐‐HNW Asset Allocator Survey
What s ahead for LPEQ
HNW Asset Allocator Survey
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6768
y
bull Research to understand the current allocation of leading wealth
managers and role of PELPE in portfolios
bull Conducted by Scorpio Partnership sponsored by LPEQ
bull Third survey in series previously Q4 2009
bull Sample to date 21 institutions with nearly $6 trillion in AUM
(global market of $165 trillion)
bull Full results will be available late June in conjunction with Exit Poll
data
LPEQ members are listed across Europe
Offering global access to most segments of PE market
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
7262019 LPEQ 14 June Conference Presentations
httpslidepdfcomreaderfulllpeq-14-june-conference-presentations 6868
Offering global access to most segments of PE market
Source JP
Morgan
Cazenove
LPEQ
Deal
focus
LBO=Leveraged
Buyout
BO=
Buyout
VC=
Venture
Capital
Combined Market
Cap
euro8140
GC=Growth Capital SS=Special Situations RE=Real Estate MEZZ=Mezzanine FoF=Fund‐of ‐Funds LPE=Listed Private Equity
Name Type
Regulated Market Investment
focus Deal
focus Deal
size
‐EV Market
Cap
euro
May 2011
Aberdeen Private Equity Fund‐of ‐funds London Global All Entire range 101 mn
Altamir Amboise Direct Manager Paris Mainly France LBOGCVC Small to mid 291 mn
Conversus Capital LP Fund‐of ‐funds Amsterdam Global LBOVC Entire range 1057 mn
Deutsche Beteiligungs AG Direct Manager Frankfurt Germany LBOGC euro50‐250m 275 mn
Dinamia Capital
Privado Direct
Manager Madrid SpainPortugal LBOGC euro50
‐300m 133
mn
Dunedin Enterprise Direct Manager London UK LBOLPE pound10‐50mn 110 mn
Electra Private Equity Direct Manager London Europe All Up to euro500m 672 mn
FampC Private Equity Fund‐of ‐funds London Global LBOMEZZ euro50‐500m 123 mn
Gimv NV Direct Manager Brussels BEL NLGER LBOVC Up to euro125m 1000 mn
Graphite Enterprise Fund‐of ‐funds London Europe LBOFoF Entire range 304 mn
HarbourVest Global PE Fund‐of ‐funds Amsterdam London SFM Global LBOVC Entire range 408 mn
HBM BioVentures AG Direct Manager Switzerland Global BOVC euro10‐50m 385 mn
HgCapital Direct Manager London Europe LBO euro75‐500m 396 mn
JP Morgan Private Equity Fund‐of ‐funds London Global LBOREVC Entire range 364 mn
JZ Capital Partners Ltd Direct Manager London US LBOMEZZ Small 384 mn
LMS Capital Direct
Manager London UKUS GCVC Small 182
mn
NB Private Equity Partners Fund‐of ‐funds Amsterdam London SFM Global LBOVCGCSS Entire range 306 mn
Pantheon Intrsquol Participations Fund‐of ‐funds London Global LBOVC Entire range 466 mn
SVG Capital Fund‐of ‐funds London Europe LBO Large 894 mn
Standard Life European PE Fund‐of ‐funds London Europe LBO euro100‐1000m 288 mn
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