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PrivateCapitalMarketUpdate2ndAnnualAsia-PacificFundFinance
SymposiumChristopherElvin,HeadofPrivateEquity
13thJune2018,HongKong
www.preqin.com
AboutPreqinPrivateEquity&VentureCapital HedgeFunds RealEstate PrivateDebtInfrastructure Natural
Resources
Clientsincludeover60,000industryprofessionalsfrom16,000firms
Dataavailableviaonlinedatabases,publicaLonsandresearchreports
GuangzhouHongKong
Singapore
LondonNewYork
SanFrancisco
Manila
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MarketUpdate
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0500
1000150020002500300035004000450050005500
AUM($
bn)
GlobalPrivateCapitalAUMbyAssetClass,Dec2010toSept2017
PrivateEquity PrivateDebtRealEstate Infrastructure
GLOBALPRIVATECAPITALAUMATARECORDHIGH-$5.1TN
-
250
500
750
1,000
AUM($
bn)
APAC-FocusedPrivateCapitalAUMbyAssetClass,Dec2010toSept2017
PrivateEquity PrivateDebtRealEstate Infrastructure
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StellarFundraisingConXnues-$848bnRaisedin2017,APAC-FocusedFundraisingReachesnewHighs-$139bn
0
200
400
600
800
1000
2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
AggregateCapitalRaised($bn
)
GlobalPrivateCapitalFundraisingbyAssetClass,2007–2018YTD
PrivateEquity RealEstate PrivateDebt
Infrastructure NaturalResources
0
50
100
150
200
250
2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
AggregateCapitalRaised($bn
)
APAC-FocusedPrivateCapitalFundraisingbyAssetClass,2007–2018
YTD
PrivateEquity RealEstate PrivateDebt
Infrastructure NaturalResources
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-400-200
0200400600800
10001200
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Jan-Sep
t2017
CapitalCalled/Distrib
uted
($bn
)PrivateCapitalCalls&DistribuLons,2000–Sept2017
CalledUp DistribuLon NetCapitalDistribuLon
DistribuXonsConXnuingtoOutstripCall-UpsandDriveFundraising
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RecordLevelsofCapitaltoInvest-$1.8tnGlobally,$321bnfocusedonAPAC
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Mar-18
DryPo
wde
r($b
n)
GlobalPrivateCapitalDryPowder,2010–Mar2018
PrivateEquity RealEstate PrivateDebtInfrastructure NaturalResources
0
50
100
150
200
250
300
350
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Mar-18
DryPo
wde
r($b
n)
APAC-FocusedPrivateCapitalDryPowder,2010–Mar2018
PrivateEquity RealEstate PrivateDebtInfrastructure NaturalResources**
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ChallengingDealEnvironmentRemains
0.010.020.030.040.050.060.070.080.0
0
100
200
300
400
500
600
AggregateDe
alValue
($bn
)
No.ofD
eals
APACPE-BackedBuyoutDealAcXvity,2010-2018YTD
No.ofDeals DealValue($bn)
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ChallengingDealEnvironment(cont)
-50.0
50.0
150.0
250.0
350.0
450.0
550.0
0
50
100
150
200
250
300
AggregateDe
alValue
($bn
)
No.ofD
eals
APACRealEstateDealAcXvity,2010-2018YTD
No.ofDeals DealValue($bn)
-50
50
150
250
350
450
550
0100200300400500600700800
AggregateDe
alValue
($bn
)
No.ofD
eals
APACInfrastructureDealAcXvity,2010-2018YTD
No.ofDeals DealValue($bn)
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OngoingRiseofVCinAsia
-50.050.0150.0250.0350.0450.0550.0
0100020003000400050006000
AggregateDe
alValue
($bn
)
No.ofD
eals
APACVentureDealAcXvity,2010-2018YTD
No.ofDeals DealValue($bn)
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12,500AcXveInsXtuXonalInvestorsGlobally
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ChangingLPLandscape
0% 5% 10% 15% 20% 25% 30%
Other
Government
SuperannuaLon
FoundaLon
EndowmentPlan
Insurance
FundofFunds
FamilyOffice
ProporLonofCapitalCommided
%ofCapitalCommibedtotheAveragePrivateEquityFundClosedbyInvestorType,2012-2017
2012-2014 2015-2017
57%
25%
9% 8%
53%
25%
13%9%
0%
10%
20%
30%
40%
50%
60%
NorthAmerica
Europe Asia RestofWorld
Prop
orLo
nofInvestors
InvestorLocaLon
Make-upofInvestorsinPrivateEquitybyLocaXon,2013vs.2018
Jan-13
Jan-18
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Challenges
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ChallengesToday
0% 20% 40% 60% 80% 100%
MarketVolaLlity
DealFlow
Performance
Fees
ValuaLons
InvestorViewsontheKeyIssuesin2018
NaturalResources PrivateDebtInfrastructure RealEstate
0% 20% 40% 60% 80% 100%
FeePressure
MarketVolaLlity
DealFlow
Performance
ValuaLons
FundManagerViewsontheKeyIssuesin2018
NaturalResources PrivateDebtInfrastructure RealEstate
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LPs’ViewsonCreditFaciliXes
17%
45%
47%
59%
0% 20% 40% 60% 80%100%
Nobenefits
CompeLLveadvantagetoGPsi.e.abilitytomove
ReduceadministraLveburdeni.e.prevent
Cashflowmanagementi.e.providemoreregular,
PerceivedBenefitsofCreditFaciliXes
10%
14%
15%
22%
27%
42%
59%
0% 20% 40% 60% 80% 100%
Legalrisk
TaxconsideraLons
Noconcerns
Clawbackissues
Liquidityrisk
AddiLonalexpense
Fundperformancecomparability
ConcernsRegardingCreditFaciliXes
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Outlook
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RecordNumberofPrivateCapitalFundsinMarket–1,082($360bn)FocusedonAPAC
2,2352,651
2,9653,484
3,869
793 946 1,0081,263 1,379
0500
1,0001,5002,0002,5003,0003,5004,0004,500
Jan-15 Jan-16 Jan-17 Jan-18 Apr-18
PrivateCapitalFundsinMarket,Jan2015toApr2018
No.ofFundsinMarket AggregateCapitalTargeted($bn)
509
274
70 65 35 19 1010063
164
2076
11 11 2 110
100200300400500600
APAC-FocusedPrivateCapitalFundsinMarketbyType,June2018
No.ofFundsinMarket AggregateCapitalTargeted($bn)
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PerformanceMeeXngLPExpectaXonsMedianPublicPensionFundNetReturnsbyAssetClass(AsatJune2017)
5%
29%12% 7% 10%
21%
69%
60%
66% 68% 65%61%
26%12%
22% 25% 25% 18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Prop
orLo
nofRespo
nden
ts
InvestorViewsonPorholioPerformanceOverthePast12MonthsRelaXvetoExpectaXons
FallenShortofExpectaLons MetExpectaLons ExceededExpectaLons
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InsXtuXonalPlansfor2018
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InsXtuXonalPlansforLongerTerm
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PrivateCapitalFundManagersConfidentinFindingValue
70%
77%
74%
64%
66%
29%
20%
24%
30%
27%
1%
3%
2%
6%
7%
0% 20% 40% 60% 80% 100%
NaturalResources
PrivateDebt
Infrastructure
RealEstate
PrivateEquity
AmountofCapitalFundManagersPlantoDeployin2018vs.2017
MoreCapital
SameAmountofCapital
LessCapital
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KeyTakeawaysGlobalPrivateCapitalinrobusthealth:
Ø RecordAUMØ StrongfundraisingsettoconLnuedrivenbynetdistribuLons
BUT….Ø CapitalisbecomingincreasinglyconcentratedØ ChallengingdealenvironmentØ Clearconcernsoverhighpricing&impactonfuturereturns
PosiXveOutlook:Ø GPsconfidentoffindingvalueandlookingtodeploymorecapitalØ LPexpectaLonsbeingmet&LPsremaincommided&manylookingtoincrease
exposure