private equity capital briefing - august 2016

Private Equity Capital Briefing

August 2016

Monthly insights and intelligence on PE trends

Valuation concerns and investment optimism

Firms mull investment strategies as they look to boost investments in an uncertain environment.

The PE Capital Briefing has been designed to help you remain current on capital market trends. It captures key insights from subject-matter professionals across EY, and distils this intelligence into a succinct and user-friendly publication.

PE Capital Briefing provides perspectives on both recent developments and the longer-term outlook for Private Equity (PE) fundraising, acquisitions, and exits, as well as trends in global M&A, cross-border deal flows, IPOs, and the debt and bond markets.

Please feel free to reach out to any of the subject-matter contacts listed on the reverse of this document if you wish to discuss any of the topics covered.

Contents

Section 1 Private equity: fundraising 4

Private equity: acquisitions 5

Private equity: exits 6

Section 2 M&A 7

Section 3 IPOs 9

Section 4 Loans 10

Section 5 Bonds 11

AppendicesAppendix A PE activity by geography 13

Appendix B M&A activity monthly flash 22

Appendix C M&A multiples and bid premium 23

Appendix D Capital Confidence Barometer 24

1.i. Private equity: fundraising

Executive summary

• Buyout fundraising fell 34% in July, to US$38.8b from a year earlier. Year to date, fundraising is trailing last year’s pace by 5.5%.

• Buyout dry powder ended July up 12% versus last year, at US$540b, as PE firms continue to secure more commitments while they patiently wait for investment opportunities.

• PE funds are adopting higher hurdle rates in 2016 as fund managers face continued pressure from investors about management fees and transparency.

Current state

Fundraising

• Buyout fundraising fell 34% in July versus a year earlier. There were 50 investment vehicles that completed their fundraising efforts during the month; in aggregate they collected a total of US$38.8b, down from US$58.7b raised by 74 funds in July 2015. YTD, fundraising is trailing last year by 5.5%, standing at US$278.3b on 19% fewer closes.

• The largest PE fund closed in July was by Brookfield Asset Management; the vehicle ranks as the largest this year. Brookfield Infrastructure Fund III raised US$14b, exceeding its goal of US$12.5b. Pension funds are allocating more capital into infrastructure as a way to manage liabilities amid the continued low interest rate environment. The Toronto-based firm needed just nine months to complete the fund, which is the largest private infrastructure fund ever raised. Brookfield Asset Management received significant support from institutional investors in China, Japan and South Korea. CEO Sam Pollock estimates that 80 of these new investors account for almost a quarter of the fund.

Dry powder

• PE continues to build capital that is ready for deployment. The industry ended July with buyout dry powder up 12% versus a year ago, to US$540.4b. The PE industry appears to be ready to put more of its reserves to work starting in the second half of 2016, but it will only pursue transactions when opportunities and valuation are right. To succeed in spending down the high level of dry powder, PE firms will have to contend with strategic buyers who are using M&A to improve their strategic positioning.

Environment and horizon

• PE funds are adopting higher hurdle rates as fund managers face continued pressure from investors about management fees and transparency. PE managers of 2015 and 2016 vintage funds are setting higher hurdle rates compared with previous years. Preqin’s 2016 Private Capital Fund Terms Advisor report indicated that funds with a hurdle rate of more than 8% rose by 14 percentage points to 22%, from a year earlier. In addition, the proportion of funds with an 8% hurdle fell to 48% from 56%. However, the proportion with no hurdle dropped to 13% from 19%. The data suggests there is evidence that fund managers are making efforts to appeal to investors and making concession on certain fund terms.

• Private debt fundraising is gaining more attention and will likely remain an attractive area to raise capital in the near term. as PE firms are finding many opportunities to purchase debt at steep discounts. Lone Star Real Estate Fund V, which invests in the distressed commercial real estate debt sector, is the largest debt fund closed in 2016 at US$5.9b.

• The California Public Employees’ Retirement System (CalPERS) reported its lowest investment gain for its fiscal year since the financial crisis, attributing the weak results to stock market losses. The pension fund generated a return of 0.6% on its investments for the latest year ended June 30, according to a preliminary report. CalPERS’ longer-term returns of the fund (the 3-, 5-, 10-, 15- and 20-year total return) are below the assumed rate of 7.5% and CIO Ted Eliopoulos said, “That’s a significant policy issue for us.” Despite overall weaker results, the PE program posted returns of 1.7%, which the pension said bested its benchmark by over 250 basis points. CalPERS’ fixed income and real estate holdings reported returns of 9.3% and 7.1%, respectively. However, both were below the pension’s targets.

Global PE fundraising by month (in US$b)

4 Capital Briefing

0

20

40

60

80

100

120

$0

$10

$20

$30

$40

$50

$60

$70

$80

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Commitments (US$b) Number of funds

Top five funds closed in July 2016 (US$b)

Fund name TypeGeographic focus

Target (US$b)

Close (US$b)

Brookfield Infrastructure Fund III

Infrastructure Europe 14.0 12.5

IDG Everbright Industry Buyout Fund

Buyout US 3.1 3.0

Thomas H Lee VII Buyout Asia 2.5 3.0

Astorg VI Buyout Asia 2.3 1.7

Madison International Real Estate Liquidity Fund VI

Real Estate Europe 1.4 0.95

Global PE dry powder by region (in US$b)

0

100

200

300

400

500

600

03 04 05 06 07 08 09 10 11 12 13 14 15 YTD16

Source: Preqin. YTD through 31 July 2016.

North America Europe Asia and Rest of World

Source: Preqin

Source: Preqin

1.ii. Private equity: acquisitions

Executive summary

• PE acquisitions fell 11% in July versus a year ago, to US$23.5b. YTD activity is trailing last year by 11%, reflecting muted volume.

• PE deal value in the US and the rest of the Americas grew 258% versus last July, while EMEA and Asia-Pacific saw marked declines.

• The technology sector accounted for more than quarter of every dollar PE invested through July 31. Consumer products and services represented nearly 19%.

Current state

• Industry chatter suggests that many PE firms are waiting for a trigger that will alleviate concerns about market valuation. In July, PE investments fell 11% to US$23.5b from a year earlier on fewer announced deals (94 vs. 184). There was strength in one region, as investment in the Americas climbed by 258% from a year earlier. However, the Americas’ improvement was more than offset by reduced activity levels in both EMEA and Asia-Pacific, which fell by 75% and 61%, respectively. YTD, PE investments are down 11% versus a year ago.

• The largest announced PE investment in July involves talent and marketing company WME IMG Holdings LLC’s offer to acquire Ultimate Fighting Championship for US$4b. WME IMG is a portfolio company of Silver Lake Group LLC. The deal for the promoter of mixed martial arts fights is also being backed by KKR & Co. LP and, as well as by Michael S. Dell’s MSD Capital LP and MSD Partners LP. Casino entrepreneurs Frank and Lorenzo Fertitta will retain a minority stake in the Las Vegas-based business. Silver Lake was the driver of the proposed deal and will be taking as a much bigger stake than KKR after the transaction closes.

• PE firms continued to make deals in software publishers and in data platform services providers in July. These transactions helped keep technology as the top sector for PE investments this year. Technology accounted for a 26% of the total capital PE invested through July 31, as well as one-fifth of PE transactions by volume. Consumer goods and services accounted for 19% of deal value; the top three sectors were rounded out by healthcare, which represented 10% of total PE investment this year.


• PE firms could find themselves making more add-on transactions than platform investments this year. There was a record number of add-on deals in 2015, and 2016 is on track to exceed it. The trend could benefit from tight credit markets and higher purchase-price multiples. The pursuit of more add-on also helps lower the initial cost of more expensive platform investments, and can allow PE firms to put more dry powder to work on more favorable teams, as well as help firms strengthen some of its portfolio holdings. YTD through July 31, add-ons accounted for 51% of all PE investment volume, up from 50 for all of 2015.

• The PE industry is shifting more of its attention to distressed debt investing as opportunities to acquire non-performing loans at a discount will likely remain more appealing for the foreseeable future. Economic growth remains modest, and is helping to fuel the current distressed cycle, particularly in certain sectors. Distressed energy is receiving significantly increased attention with investors getting more active, after many had steered clear of the sector because the oil prices had not hit its bottom. In addition, we expect more distressed debt investing in companies with either access to credit lines with cash on hand, businesses which may be safer distressed debt investing targets because they have the capital to fund operations and meet other obligations.

• Many PE firms are eager to start investing in the oil and gas sector again and we are likely to see a pickup in deal activity during the H2 2016. Many firms remained on the sidelines since the price of oil began its descent in 2014. The restraint reflects the industry’s chase for value and the fact that many weren’t seeing a bottom to the commodity’s price drop. We are now seeing firms slowly put assets to work in the space in areas such as power generation. Oilfield services companies is another interesting area as many of these US- and Canada-based companies have filed for bankruptcy protection since the start of 2015.

PE acquisitions by month (in US$b)

Top five announced acquisitions in July 2016

5 Capital Briefing

0

50

100

150

200

$0

$10

$20

$30

$40

$50

Jul 15 Aug 15 Sep 15 Oct115

Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16

Value (US$b) Volume

Sector 2016 valueIndustry

share (%)2016 volume

Industry share (%)

Technology $39.11 25.5% 180 20.0%

Consumer goods $19.41 12.7% 120 13.4%

Health care $15.48 10.1% 86 9.6%

Real estate $14.76 9.6% 25 2.8%

Utilities $13.89 9.1% 16 1.8%

Financials $13.07 8.5% 61 6.8%

Materials $12.74 8.3% 124 13.8%

Consumer services $8.99 5.9% 126 14.0%

Oil and gas $5.42 3.5% 23 2.6%

Industrials 5.19 3.4% 74 8.2%

Retail $2.86 1.9% 40 4.5%

Telecom $238 1.6% 23 2.6%

PE acquisitions by sector, YTD 2016 (US$b)

Annouce-ment Date

Company Acquirer Value (US$b)

Sector

11 Jul 16 Ultimate Fighting Championship

William Morris Endeavor Entertainment LLC; MSD Capital LP; Silver Lake Group LLC; KKR & Co. LP

4.0 Consumer goods

11 Jul 16 Thomson Reuters Corp.’s intellectual Property & Science Business

Onex Corp.; Baring Private Equity Asia Ltd.

3.6 Technology

5 Jul 16 Epicor Software Corp.

KKR & Co. LP 3.3 Technology

5 Jul 16 Hostess Brands LLC Gores Holdings Inc. 2.3 Consumer goods

15 Jul 16 D Carnegie & Co AB Blackstone Group LP 2.0 Real estate

Source: Dealogic.

Source: Dealogic. Data through 31 July 2016.

Source: Dealogic

1.iii. Private equity: exits

Executive summary

• M&A exit value declined 46% in July versus a year ago, to US$24.6b, as the realization cycle continues to wind down and PE firms remain opportunistic with respect to exits. YTD, deal value is 29% behind last year’s pace.

• PE secondary buyouts could see an increase over the near term, as volatility in the public markets makes IPOs a less attractive exit route.

• PE-backed IPOs deal value in July fell by 53% from a year earlier as unfavorable market conditions curtail volume.

Current state

• With investments seemingly on hold as PE firms look for better entry points, the industry is holding companies longer, and focusing on operational improvements. Completed transactions are below last year’s levels, which was a very strong period for realizations. With the realization cycle winding down, exit activities could continue to decline for the balance of 2016. PE M&A exit deal value for July fell 46% to US$24.6b from a year ago and volume moderated to 72 from 108 transactions. YTD, deal value for PE M&A exits fell 29% to US$156.7b from a year ago.

• The largest PE-backed M&A exit in July 2016 was Apax Partner LLP’s proposed sale of Epicor Software Corp., developer of financial management software products, to KKR for US$3.3b. Epicor was added to Apax’s portfolio in May 2011. It had purchased both Epicor Software Corp. (Nasdaq: EPIC) and Activant Solutions Inc. and merged the two businesses together. The combined transaction was valued at about US$2b.

• PE-backed IPOs deal value in July fell by 53% from a year earlier as the number of offering shrank to 8 from 14 because portfolio companies are holding back on offering because market conditions are not favorable at this time. YTD is down 64% by value and fell 52% by volume from year-earlier levels. The prospect of a turnaround is not likely to occur until early 2017 as companies remained concerned about the U.S. presidential election in November and the uncertainty posed by Brexit.


• PE secondary buyouts could see an increase over the near term, as volatility in the public markets makes IPOs a less attractive exit route. EY is seeing this trend play out in technology, and other industries could follow if current conditions continue to challenge exits via IPO. Selling a portfolio company to other PE firms will help it realize investments and keep IRR rates from diminishing with longer hold periods.

• The China Securities Regulatory Commission’s (CSRC) plans to reduce the number of companies going public on the Shanghai or Shenzhen stock markets by as much as a third. The agency reversed course earlier this year, when it dropped plans to loosen its grip on the IPO process in China. Instead of being more lax, the CSRC now wants greater control. It started its campaign to stop fraudulent IPO applications in June 2016. Additionally, the agency in July issued a directive that bans firms from floating new shares if they have violated environmental protection laws in the previous three years. The CSRC had 894 companies applying for IPO approval at the end of June. The Wall Street Journal, citing sources, said the CSRC is reportedly seeking to prune China’s IPO waiting list because the backlog is thought to be too heavy for the market to absorb. A more stable Chinese IPO market will allow PE firms to pursue this exit route in this region.

• Banks will have more time to exit their investments in PE firms and hedge funds after the Federal Reserve granted a final one-year extension to comply with the Volker Rule which is requiring that banks stop making bets with their own money. Banks have until 21 July 2017 to sell their stakes in PE and hedge funds. The extension had been anticipated, but a set deadline provides bank with more time to pursue an orderly divestment and to prevent market disruption.

PE M&A exits by month (US$b)

PE IPOs by month (in US$b)

6

Capital Briefing

0

20

40

60

80

100

120

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Jul15

Aug15

Sept15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Value (US$b) Volume

0

2

4

6

8

10

12

14

16

$0

$2

$4

$6

$8

$10

$12

$14

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Value (US$b) Volume

Top 5 announced M&A exits in July 2016

Date Company SponsorValue (US$b)

Sector

5 Jul 16 Epicor Software Corp.

Apax Partners LLP/KKR & Co. LP

3.3 Technology

6 Jul 16 Nortek Inc. Ares Management LP 2.8 Materials

5 Jul 16 Hostess Brands LLC

C Dean Metropoulos & Co./Gores Group LLC;Apollo Global Management LLC

2.3 Consumer goods

1 Jul 16 Intelligrated Inc. Permira Ltd. 1.5 Industrials

5 Jul 16 Wexford Science & Technology LLC (Life Science & Medical Real Estate assets)

Blackstone Group LP 1.4 Real estate

1 Jul 16 Trader Corp. Astorg Partners SA 1.2 Health care

Source: Dealogic

Source: Dealogic

Source: Dealogic

-20%

-15%

-10%

-5%

0%

-20% 0% 20%

Current state• Markets remained muted in July, driven by the uncertainty and volatility

caused by Brexit and the forthcoming US presidential elections. July 2016 saw deals worth US$281b, down substantially (YOY) by 43% against 2015, flat on 2014 and up 11% against 2013. The number of deals recorded in the current month was 2,379 against 2,792 recorded at the same time in 2015 – a 15% drop YOY.

• The UK could become a more attractive target for overseas investors, with a weaker pound offering more favorable valuations. UK-targeted deal values stood at US$40b in July 2016, more than double the value (US$16b) registered in July 2015 and significantly higher than the average July value (US$19b) seen for UK-targeted deals over the last 10 years.

• Technology has been the top target sector for M&A during YTD16, with deals totaling US$369b, up 7.1% YOY. This is the highest YTD value seen since the dot com bubble of 2000. The sector witnessed two megadeals in July, including the third-largest deal announced so far in 2016:

• Japan's Softbank agreed to acquire ARM Holdings, the giant UK semiconductor firm, for US$32b. This is the largest UK technology-targeted M&A deal on record and the biggest deal in Softbank's history. ARM would be an excellent strategic fit for Softbank and can help it to become a leader in one of the next big technology markets,

the “internet of things.” As part of the deal, Softbank committed tokeeping top managers and ARM's headquarters, and doubling the number of ARM employees in the UK over the next five years.

• Another significant deal in the technology sector was Verizon Communications Inc.’s agreement to acquire Yahoo! Inc’s operating business for approximately US$4.8b in cash. The sale doesn’t include, among other things, Yahoo’s cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, and Yahoo’s non-core patents, called the Excalibur portfolio. Verizon’s Chairman believes that the acquisition of Yahoo would put it in a highly competitive position as a top global mobile media company.

Environment and horizon• Economic uncertainty resurfaced following the UK’s European Union

(EU) referendum. Brexit has also raised levels of uncertainty in capital and M&A markets. As such, the International Monetary Fund (IMF) downgraded its forecasts for global economic growth in 2016 and 2017 by 0.1% relative to its April 2016 World Economic Outlook, to 3.1% and 3.4% respectively.

• The IMF said “Brexit is expected to have a substantial increase in economic, political and institutional uncertainty, which is likely to have negative economic consequences, especially in advanced European economies.” It also recommended that, to rebuild the lost confidence, the UK Government would need to carry out much-needed structural reforms, and negotiate smooth trading and financial relationships with the EU.

• However, Brexit may open up M&A opportunities in the UK. Overseas buyers spurred by a weaker currency are looking to snare UK companies. This activity, demonstrated by Japanese group Softbank's US$32b swoop for UK chip designer ARM Holdings, has undermined warnings that dealmaking could dry up for a period if British voters backed Brexit, given the heightened uncertainty and volatility. However, doubts still remain for corporate dealmakers, already struggling in one of the most uncertain M&A markets in years, as to whether the devaluation of sterling will be enough to spark continued foreign interest in British businesses.

• According to EY’s Digital Deal Economy study, 90% of the companies are facing increased competition from companies that have embraced digital. “Technological advances continue to drive sector convergence and are speeding up the pace of change in consumer behaviors. This is compelling companies to adopt forward-looking, deal-centric strategies to ensure they future-proof themselves for a digital world,” commented Steve Krouskos, EY Global Vice Chair, Transaction Advisory Services.

• The survey suggests that M&A, JVs and alliances can provide the fastest strategic route to digital transformation and growth. The study also found that 67% of companies are planning to use M&A to upgrade their digital capabilities in the near future.

Deal environment: by area (year on year (YOY) % change)

Last 12 months (LTM) to July 2016 versus LTM to July 2015Source: Dealogic and EY analysis

Deal environment: by target sector and target area (% share of global value)

LTM to July 2016Source: Dealogic and EY analysis; excludes real estate asset transactions.

Note: because of rounding, percentages may not add up to total.

Top 10 announced deals by value, July 2016Source: Dealogic

M&A analysis as at 1 August 2016.

Note: data is continually updated and therefore subject to change.

Figures have been rounded off to nearest decimal place.7

Executive summary• Global M&A remained muted in July — recording a decline in both deal value and volume against 2015.

• The UK becomes an attractive target for overseas investors due to favorable valuations, as indicated by July numbers.

• Technology was the strongest-performing sector of 2016 in value terms, recording the third-largest M&A deal so far of 2016.

• Strategic deals, including spin-offs, could drive the next wave of M&A.

• Low economic growth, disruptive technology, sector convergence and changing consumer behavior will remain key deal drivers in 2016.

2. M&A

Target Sector Country Acquiror Value (US$m)

ARM Holdings plc Technology UK SoftBank Group Corp. 31,645

Energy FutureHoldings Corp.

Power and utilities

US NextEra Energy Inc. 18,400

First Gulf Bank PJSC Banking and capital markets

United Arab Emirates

National Bank of Abu Dhabi PJSC

14,842

Linear Technology Corp.

Technology US Analog Devices Inc. 14,728

WhiteWave Foods Co. Consumer products and retail

US Danone SA 12,482

NetSuite Inc. Technology US Oracle Corp. 9,165

CPFL Energia SA Power and utilities

Brazil State Grid Corp of China 8,722

United Arab Shipping Co. SAG

Automotive and transportation

United Arab Emirates

Hapag-Lloyd AG 5,400

Operating business -Yahoo! Inc.

Technology US Verizon Communications Inc.

4,830

RTE Reseau de Transport d' Electricite

Power and utilities

France CNP Assurances SA;Caisse des Depots et Consignations - CDC

4,638

Value

Vo

lum

e

Americas

EMEA

Global

Asia-Pacific

Americas Asia-Pacific EMEA Total

Technology 11% 4% 3% 19%

Consumer products and retail 6% 2% 5% 13%

Diversified industrial products 6% 2% 3% 11%

Banking and capital markets 3% 2% 3% 9%

Life sciences 6% 1% 1% 9%

Power and utilities 4% 1% 1% 6%

Oil and gas 4% 1% 1% 6%

Automotive and transportation 1% 3% 1% 6%

Media and entertainment 2% 2% 1% 4%

Others 7% 6% 5% 17%

All sectors 50% 25% 25% 100%

Executive Briefing

http://www.ey.com/GL/en/Services/Transactions/EY-digital-deal-economy

2.i. M&A: cross-border deal flow

Key cross-border M&A deal flow(LTM to July 2016)(Total = US$1.27t)

N America to:UK&I – $66b

W Europe – $64bOceania – $24b

Japan to:UK&I - $38b

N America – $24bW Europe – $9b

UK&I to:N America – $67bW Europe – $20bL America – $2b

L America to:W Europe – $9bN America – $1b

Greater China andMongolia to:

W Europe – $94bN America – $49b

Latin America – $15bW Europe to:N America – $187b

UK&I – $153bJapan – $15b

Cross-border M&A deal flow (LTM to July 2016)

(US$m)

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

# Acquiror refers to acquirer’s ultimate holding company.

$ Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan.

M&A analysis as at 1 August 2016.

Source: Dealogic. All Rights Reserved.

Note: data is continually updated and therefore subject to change.

Key >US$100b >US$50b >US$10b

Intra-area cross-border deals

Target Acquiror# Africa SE Asia (including Korea)

Greater China and Mongolia$

Russia, CIS and CSE

W Europe (excluding UK&I)

India Japan Latin America

Middle East

North America

Oceania UK&I Inboundtotal

% versus PTM

Africa 904 370 3,182 55 1,529 28 1,025 - 514 3,783 522 1,597 13,509 9%

SE Asia (including Korea)

5 6,240 12,136 - 6,620 23 4,486 360 317 3,643 753 349 34,932 8%

Greater China andMongolia $

- 3,527 25,270 300 4,134 - 363 - - 12,670 327 126 46,718 -18%

Russia, CIS and CSE 2,461 1,803 6,039 4,153 5,211 4,403 132 596 3,586 2,807 58 691 31,942 1%

W Europe (excluding UK&I)

1,324 1,266 93,701 7,599 43,875 337 8,641 9,083 2,926 63,558 1,677 19,557 253,544 -10%

India 240 4,330 3,352 10 1,110 - 2,711 - 1,018 5,508 150 625 19,055 104%

Japan - 186 8,921 - 14,544 293 - - - 8,468 0 575 32,987 471%

Latin America 70 1,224 15,463 502 11,942 11 1,018 7,069 3,111 14,202 636 1,644 56,893 -3%

Middle East 2,206 77 6,666 362 7,992 99 247 140 5,015 2,471 65 174 25,515 209%

North America 552 4,239 48,790 732 186,994 1,681 23,694 1,480 6,486 92,540 3,228 67,248 437,664 7%

Oceania 61 1,065 7,174 1 5,069 122 2,437 49 80 23,606 2,443 465 42,574 36%

UK&I 1,671 1,749 6,263 48 152,603 367 37,721 51 1,420 65,961 2,566 7,783 278,204 39%

Outbound total 9,495 26,075 236,958 13,762 441,623 7,364 82,476 18,829 24,474 299,217 12,427 100,836 1,273,536 12%

% versus previous 12 months (PTM)

2% -2% 138% 24% 20% 128% 4% 4% -67% -16% -44% 44% 12%

8 Executive Briefing

3. IPOs

Executive summary

• Global IPO activity registered a YOY decline of 17% and 14% in deal value and volume respectively.

• Asia-Pacific led, both in terms of deal value and volume, on the back of strong activity in Greater China.

• July 2016 saw the dual listing of the biggest technology IPO of the year so far, Line Corp., which raised US$1.3b.

• Global IPO outlook is cautious, as economic uncertainty is expected to persist in the short term, with IPO candidates adopting a wait-and-see approach.

9

Current state• Global IPO activity slowed in July 2016, witnessing a 17% and 14% decline

in proceeds and deal volume respectively against July 2015, as the combined effect of the Brexit vote and a slowdown in emerging economies continued to impact investment activity across the world.

• Asia-Pacific continues to be the bright spot for IPO activity, accounting for 71% of global proceeds and 77% of total volume of deals in July. Activity in the region was led by Greater China, which contributed 65% in terms of deal value and 47% in terms of deal volume. Activity in Asia-Pacific was 31% and 14% higher compared with activity in July 2015, in terms of value and volume respectively.

• EMEA IPO activity declined sharply this month with a 39% and 59% drop in terms of deal value and volume respectively as compared with July 2015, due to sustained economic uncertainty and geopolitical upheaval in several countries within the Eurozone. This was the slowest July since 2010 in terms of deal volume, as many IPO candidates across sectors continue to wait for the market environment to improve.

• US exchanges saw mixed IPO activity this month with a 3% increase in terms of deal value and a 19% drop in terms of volume as compared with July 2015. July 2016 saw the US$1.3b listing of Japanese mobile messaging company Line Corp., the largest technology sector listing so far this year. The company, which listed on both the New York and Tokyo stock exchanges, is the largest cross-border listing in the US since Alibaba in 2014. It intends to use the proceeds to expand the business globally.

Environment and horizon• The global IPO outlook is cautious as economic uncertainty due to the

Brexit vote and high market volatility are expected to linger. Furthermore, a slowdown in certain emerging economies and geopolitical tensions in many regions are likely to see companies following a wait-and-see approach until these factors stabilize.

• The recovery-bound US IPO market is in for a stern test, with only a small window after the historically low performing third quarter, before the political uncertainty generated by the US presidential election intensifies in the lead up to November’s vote. We should see markets spring to life around the New Year if the elections does not result in any unexpected surprises.

• The outlook for European IPOs is opaque as we await more clarity on the Brexit negotiations – in particular, the impact on “passporting rights” that allow financial institutions operating and regulated in the UK to do business throughout the European market. Additionally, the fall in the value of the pound may result in increased M&A activity as British companies become relatively cheaper to buy.

• Mainland China is expected to experience a challenging second half of the year as a result of slower growth in the real estate market and weaker prospects for exports and corporate investment. Also, the China Securities Regulatory Commission (CSRC*) plans to reduce the backlog of companies aimed at easing the supply pressure on the market and squeeze down on fraudulent IPO applicants. This is expected to reduce the number of IPOs on the Shanghai and Shenzhen stock markets by as much as one-third. While pruning the backlog may result in reduced IPO activity, cracking down on irregularities in the stock market is likely to prevent the entrance of fraudulent companies – which bodes well for the health of financial markets.

• We anticipate healthy IPO activity in Hong Kong, which has a pipeline of over 100 companies waiting to go public. The prospective listing of the Postal Savings Bank of China Co., expected to raise US$8.0b, coupled with other financial services companies, is likely to make Hong Kong one of the most active stock exchange this year.

• IPO activity in Japan should continue to improve as the combined effect of monetary and fiscal easing, which included a stimulus to the tune of US$265.0b, is expected to give a major boost to growth.

• The strong IPO activity in India is expected to continue in to the second half of the year, driven by improving economic fundamentals, a strong monsoon season and stellar performance of stocks in secondary markets. The country's benchmark index, the BSE Sensex, is currently trading near 11-month highs, providing a thriving environment for companies looking to go public.

IPO activity by area (YOY % change)

(LTM to July 2016 versus LTM to July 2015)Source: Dealogic; regional classification on the basis of issuer nationality.

Top 10 IPOs by proceeds, July 2016Source: Dealogic

Issuer name Issuerlocation

Sector Exchange Proceeds(US$m)

Orient Securities Co. Ltd. (China)

ChinaBanking and capital markets

Hong Kong 1,629

LINE Corp. Japan Technology New York, Tokyo 1,322

ENAV SpA ItalyAutomotive and transportation

Borsa Italiana 918

China Development Bank Financial Leasing Co. Ltd.

China Other sectors Hong Kong 810

Patheon N.V. Netherlands Life sciences New York 719

AdvancePierre Foods Holdings Inc.

United States

Consumer products and retail

New York 449

China Logistics Property Holdings Co. Ltd.

ChinaAutomotive and transportation

Hong Kong 434

Shandong Linglong Tyre Co. Ltd.

ChinaAutomotive and transportation

Shanghai 396

EC World Real Estate Investment Trust

China Real estate Singapore 256

Korea Asset In Trust Co. Ltd.

South Korea Real estate Korea 238

IPO activity by sector and area (% share of global proceeds)

LTM to July 2016Source: Dealogic; regional classification on the basis of issuer nationality.

Note: because of rounding, percentages may not add up to total.

Americas Asia-Pacific EMEA Total

Banking and capital markets 1% 11% 6% 18%

Technology 4% 4% 5% 13%

Real estate 2% 7% 3% 13%

Consumer products and retail 2% 4% 2% 9%

Diversified industrial products 0% 4% 4% 8%

Government and public sector 0% 5% 3% 8%

Life sciences 2% 2% 1% 5%

Automotive and transportation 0% 3% 2% 5%

Insurance 0% 3% 1% 4%

Others 2% 7% 7% 17%

All sectors 14% 51% 36% 100%

-60%

-40%

-20%

0%

20%

40%

60%

-80% -60% -40% -20% 0%

Value

Vo

lum

e

US

Americas(including US) EMEA

Global

Asia-Pacific

*Link to the source: http://www.wsj.com/articles/chinese-regulator-plans-to-prune-waiting-list-for-ipos-1467709059

Executive Briefing

0 200 400 600

Energy and power

Industrials

High technology

Consumer staples

Consumer products and services

Media and entertainment

Government and agencies

Proceeds (US$b)

Current state• In July, US$38b of loans were issued in the US and €6b in Europe, taking

the YTD global issuance to US$296b, down 15% from the same period in 2015. Notably, 54% of the July loan deals in the US, and 71% of those in Europe, were for M&A activities. This is down by 15% in the US and by 6% in Europe from the same period in 2015, but holds the ongoing trend of high M&A contribution in 2016.

• There was also a notable component of opportunistic financing in the second half of July as borrowers took advantage of powerful investor demand to refinance or recapitalize their debt. Opportunistic loan volume has reached €10.2b for 2016, but is down from €17.5b in 2015.

• Recovering swiftly and convincingly post-Brexit, the European leveraged market powered through July but is still lagging 19% behind where it was last year when compared YTD until the end of July. In its usual resilient style, the European market quickly recovered its stride and eager investor appetite, allowing for a lively and varied spell of new issuance.

• The US issuers seeking to tap the European market are not expected to launch new deals unless there is a clear currency preference. Cross-border activity was stronger in 1H16 when the US market was relatively weak, but now it has become harder to argue the case for a US borrower to tap Europe.

• The Schuldschein (German debt instrument) market has been super competitive lately, offering highly attractive terms and providing borrowers with a way to diversify their sources of debt.

• July 2016 continued to observe tightening of pricing during syndication;the average clearing yield for single-B rated TLBs was unchanged in the US, around 5.7% since tightening in May, and it tightened to 5.09% from 5.5% in Europe.

Environment and horizon• Dollar premiums were seen returning on loans funding European

companies’ recent acquisitions of US firms, which were financed by US dollar-denominated loans, as European banks try to ease the pain of the increased costs of funding deals in dollars.

• The Bank of England had surprised the markets by holding its interest rate at 0.5% when quantitative easing (QE) was expected following Brexit. The Bank had delayed its decision for a rate cut until next month, as it felt it was too early to make a judgment on the medium-term impact from the vote, but added £375b to the QE program.

• The Fed, after raising rates last December for the first time in almost a decade, has been holding off further rate hikes; however, the contribution from the ECB through CSPP has helped to keep the market stable, despite background turmoil.

Opportunities• After some hesitation following the Brexit vote, interest in the loan

asset class remained strong for issuers to take advantage of. The European secondary market climbed to a year high in July as primary market supply remains scarce and yields continue to hover at low levels, helping deals to lock in funds at a cheaper cost.

• Looking forward, a possible hindrance for leveraged loan issuance in the second half of the year is the return of single-B credits to the European high-yield bond market.

• Although Britain’s vote to leave the European Union is likely to have a limited impact on leveraged loan issuance by single-B European borrowers, post-referendum economic uncertainty could weigh on the most vulnerable leveraged issuers, particularly those who are exposed to the UK domestic economy.

4. Loans

Executive summary

Global investment-grade loans (US$b)Source: Thomson ONE

Global high-yield loans (US$b)Source: Thomson ONE

Top arrangers ranking, YTD 2016 (US$b)Source: Thomson ONE

Global loan issuance by industry, YTD 2016Source: Thomson ONE

Proceeds Issues

Bank of America Merrill Lynch 159.7 728

J.P. Morgan 121.9 627

Citigroup Inc. 112.3 447

Mizuho Financial Group, Inc. 94.3 558

Mitsubishi UFJ Financial Group, Inc. 90.3 726

All loans by region, YTD 2016 (US$b)Source: Thomson ONE

Market share Proceeds Issues

Americas 58.2% 1,306.9 2,342

EMEA 23.7% 532.5 904

Asia-Pacific 18.1% 407.8 1,811

0

200

400

600

0

200

400

600

800

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Proceeds (LHS) Number of issues (RHS)

0

1,000

2,000

3,000

0

300

600

900

1,200

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Proceeds (LHS) Number of issues (RHS)

10

• More opportunistic transactions appeared in July as borrowers took advantage of powerful investor demand to refinance or recapitalize their debt.

• Recovering swiftly and convincingly post-Brexit, the European leveraged market powered through July.

• The US issuers seeking to tap the European market are not expected to launch unless there is a clear currency preference.

• Return of single-B credits to the European high-yield bond market could be a hindrance in the issuance of leveraged loans.

• Britain’s vote to leave the European Union is likely to have a limited impact on leveraged loan issuance

Executive Briefing

Current state• Global high-yield activity slumped in July after high-yield issuance in the

US hit US$14.9b and, in Europe, €3.5b, taking the total YTD 2016 to $164.7b, down 36% from the same time last year. In the European market, issuers such as Ineos and Gamenet returned for refinancing, and even a Sterling offering was observed, the first since the Brexit referendum, by Mydentist.

• Primary conditions are strong, and prospective issuers that aren’t taking advantage are believed to be missing out. Since the Brexit vote, the European high-yield market has produced an abundance of single-B rated deals, even though issuers are paying 100bps more for their timing.

• High-yield issuance pertaining to M&A activity was only 27% of the US high-yield issuance, or US$36.1b, a 49% YOY decrease. In Europe, it was 19% of high-yield issuance, or €5.3b, a 70% decline from last year.

• Italian-domiciled issuers are trying to emphasize their importance in the European high-yield market. Problems faced by Italian banks are benefiting the high-yield segment, as Italian companies cannot rely on their local banks for financing. With a slew of new Italian deals having come to market, high-yield investors have become more receptive to Italian risk.

• The conspicuous absence of an inverse relationship between oil prices and option adjusted spread (OAS) in July 2016 represents a dramatic decoupling between oil prices and high yield.

• Pricing levels are probably still slightly higher than where they were a little over a month ago, but not by much. Instead, numerous deals are being accelerated, with pricing tighter than, or at the tight end of, guidance, or are being upsized. Clearing yields for double-B rated bonds fell in the US to 5.47% in the three months to the end of July, from 5.56% at the end of June, and rose to 3.49% from 3.41% in Europe.

Environment and horizon• Europe’s high-yield market is much more heavily concentrated than its

US counterpart in BB issues. A direct comparison of quality spreads between the two regions mainly demonstrates that Europe’s high-yield universe is a lower risk and much tighter than the US at BB and CCC levels, opening the European market for more issues.

• A week after the Brexit vote, the secondary market had resolutely recouped and embarked on an upward trek that continued into July. For the time being, investors have shrugged off the potential destabilizing impact of Britain's decision to depart from the European Union, and many of the issues that had wilted on the Brexit vote recovered to trade back at prior levels, to attract more investors going forward.

• July was a busy month for bond redemptions, with a host of companies announcing full or partial redemptions, and an array of different financing methods being used to fund these efforts. Hybrid instruments can open better opportunities for issuers.

Opportunities• July was probably the last shine in primary market activity until

September — largely as the market tends to stop for a break in August, but also because there is a lack of issuers ready to go, making the coming few weeks most desirable to launch.

• The current slowdown comes at a less-than-desirable time, as primary conditions have been supportive in recent weeks. It is believed that it is as good a time for issuers to come to market now as early September, given that companies could encounter a congested marketplace that month.

0 50 100 150 200

Energy and power

Industrials

Health care

Real estate

Consumer staples

High technology

Telecommunications

Materials

Retail

Consumer products and services

Media and entertainment

Proceeds (US$b)

Executive summary

Euro bond issuancesSource: Thomson ONE

US bond issuancesSource: Thomson ONE

Top 10 corporate bond issuers, YTD 2016 (US$b)Source: Thomson ONE

Global bond issuance by industry, YTD 2016Source: Thomson ONE

Issuer Nation Industry Proceeds

Apple Inc. US High technology 24.9

Teva Pharmaceutical Finance Netherlands II B.V.

Netherlands Health care 15.0

Anheuser-Busch InBevSA/NV

Belgium Consumer staples 14.9

Oracle Corporation US High technology 14.0

Aetna, Inc. US Health care 13.0

Johnson & Johnson US Health care 12.1

Daimler AG Germany Industrials 11.0

AT&T Inc. US Telecommunications 10.0

Petrobras Global Finance B.V.

Netherlands Energy and power 9.8

Shell International Finance B.V.

Netherlands Energy and power 9.2

0

50

100

150

200

0

50

100

150

200

250

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Proceeds (US$b) (LHS) Number of issues (RHS)

11

0

100

200

300

400

500

0

100

200

300

400

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Proceeds (US$b) (LHS) Number of issues (RHS)

5. Bonds

• Global high-yield activity slumped in July and produced an abundance of single-B rated deals along with bond redemptions.

• Italian-domiciled issuers are trying to emphasize their importance in the European high-yield market as problems faced by Italian banks are benefiting the high-yield segment.

• Pricing levels are probably still slightly higher than where they were a little over a month ago, but not by much.

• Europe’s high-yield market is much more heavily concentrated than its US counterpart in BB issues.

• The current slowdown comes at a less-than-desirable time as primary conditions have been supportive lately.

Executive Briefing

Appendices

Dry powder — buyout funds — by region

Global PE fundraising (in US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin

0

200

400

600

800

1,000

1,200

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Commitments (US$b) Number of funds

0%

2%

4%

6%

8%

10%

12%

14%

16%

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

North America Europe Asia and rest of world Asia-Pac and ROW as percentage of total

Capital Briefing13

Source: Preqin

Source: Dealogic

Global PE value and volume — quarterly trend (US$b)

PE acquisitions by year (in US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic

0

100

200

300

400

500

600

700

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

Value Number of deals

Capital Briefing14

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


15

Americas PE acquisitions — top eight in July 2016

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

0

50

100

150

200

250

300

350

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0



Capital Briefing

Source: Dealogic

Announcementdate

Completiondate

Company SectorValue

(US$m)Acquiror

11 Jul 16 Ultimate Fighting Championship Consumer goods 4,000.00 William Morris Endeavor Entertainment LLC; MSD Capital LP; Silver Lake Group LLC; KKR & Co. LP

11 Jul 16 Thomson Reuters Corp.’s intellectual property and science business

Technology 3,550.0 Onex Corp.; Baring Private Equity Asia Ltd

5 Jul 16 Epicor Software Corp. Technology 3,300.0 KKR & Co. LP

5 Jul 16 Hostess Brands LLC Consumer goods 2,307.4 Gores Holdings Inc.

25 Jul 16 Outerwall Inc. Technology 1,499.3 Apollo Global Management LLC

1 Jul 16 Trader Corp. Technology 1,215.5 Thoma Bravo LLC

14 Jul 16 Access Pipeline Inc. (50%) Oil and gas 1,189.3 Canada Pension Plan Investment Board

13 Jul 16 Imprivata Inc. Technology 546.1 Thoma Bravo LLC

Source: Dealogic

EMEA PE acquisitions — top 10 in July 2016

Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Source: Dealogic

16

Capital Briefing

Announcement date

Completion date

Company SectorValue

(US$m)Acquiror

15 Jul 16 D Carnegie & Co. AB Real estate 2,008.2 Blackstone Group LP

28 Jul 16 Keter Plastic Ltd. (80%) Materials 1,600.0 BC Partners Ltd.

19 Jul 16 19 Jul 16 Grupo Garnica Plywood SL (Majority%)

Materials 221.2 Intermediate Capital Group plc/Existing Management

22 Jul 16 22 Jul 16 IM Production SAS Isabel Marrant (51%)

Retail 168.6 Montefiore Investment SAS

28 Jul 16 Investcorp Bank BSC (20%)

Financials 110.4 Mubadala Development Co. PJSC

20 Jul 16 MediPole Partenaires SAS (Minority%)

Health care 105.0 Bpifrance Investissement SAS

1 Jul 16 1 Jul 16 Steris plc (UK Linen Management Services business)

Consumer services 67.0 Star Capital Partners Ltd.

26 Jul 16 26 Jul 16 O&S Doors Ltd. Materials 46.0 Sun Capital Partners Inc.

1 Jul 16 1 Jul 16 Oase Outdoors ApS (80%) Materials 45.4 Ratos AB

24 Jul 16 24 Jul 16 Westleigh Investments Ltd. (Stake%)

Financials 27.5 Palatine Private Equity LLP

0

50

100

150

200

250

300

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00


Value No. of deals

Source: Dealogic

Asia-Pacific PE acquisitions — top five in July 2016

Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

0

20

40

60

80

100

120

140

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00


Value No. of deals

17 Capital Briefing

Announcement date

Completion date

Company SectorValue

(US$m)Acquiror

5 Jul 16 Nirvana Asia Ltd. Consumer services 1,052.2 CVC Capital Partners Ltd.

20 Jul 16 20 Jul 16 Happycall Co. Ltd. Consumer goods 158.0 EastBridge Partners Co. Ltd.

4 Jul 16 4 Jul 16 Phoon Huat Co. (Pte.) Ltd. (Stake%)

Consumer goods 111.5 Standard Chartered Private Equity Ltd.

4 Jul 16 4 Jul 16 Sutures India Pvt. Ltd. (13%)

Health care 59.5 Kedaara Capital Investment Managers Ltd.

27 Jul 16 27 Jul-16 With Innovation Co. Ltd. (Stake%)

Technology 17.6 JKL Partners Inc.

Source: Dealogic

Source: Dealogic

Global PE-backed IPOs — value and volume — quarterly trend (US$b)

Appendix AGlobal PE exit activity

Global PE-backed exits by M&A — value and volume — quarterly trend (US$b)

0

50

100

150

200

250

300

350

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00



0

10

20

30

40

50

60

70

80

90

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00



18 Capital Briefing

Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top 10 in July 2016

Americas PE exits (in US$b)

Announcementor filing date

Completion or priced date

Company Sector Value (US$m)

Sponsor Type

5 Jul 16 Epicor Software Corp. Technology 3,300.0 Apax Partners LLP/ KKR & Co. LP M&A Exit

6 Jul 16 Nortek Inc. Materials 2,807.0 Ares Management LP M&A Exit

5 Jul 16 Hostess Brands LLC Consumer goods 2,307.4 C Dean Metropoulos & Co./Gores Group LLC/Apollo Global Management LLC

M&A Exit

1 Jul 16 Intelligrated Inc. Industrials 1,500.0 Permira Ltd M&A Exit

5 Jul 16 Wexford Science & Technology LLC (Life Science & Medical Real Estate assets)

Real estate 1,433.0 Blackstone Group LP M&A Exit

1 Jul 16 Trader Corp. Technology 1,215.5 Apax Partners LLP/Thoma Bravo LLC

M&A Exit

19 Jul 16 Dollar Shave Club Inc. Technology 1,000.0 Technology Crossover Ventures M&A Exit

25 Jul 16 OptionsHouse LLC Financials 725.0 General Atlantic LLC M&A Exit

14 Jul 16 14 Jul 16 AdvancePierre Foods Holdings Inc.

Consumer goods 449.2 Oaktree Capital Group LLC IPO

6 Jul 16 Advanced Cell Diagnostics Inc.

Health care 325.0 Summit Partners LP M&A Exit

0

20

40

60

80

100

120

140

160

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0


M&A value IPO value M&A volume IPO volume

19Capital Briefing

Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top 10 deals in July 2016

EMEA PE exits (in US$b)

Announcementor filing date

Completion orpriced date

Company Sector Value (US$m) Sponsor Type

12 Jul 16 Odeon & UCI Cinemas Group Ltd.

Consumer goods 1,174.89 Terra Firma Capital Partners Ltd.

M&A Exit

20 Jul 16 20 Jul 16 Patheon NV Health care 718.8 JLL Partners Inc. IPO

18 Jul 16 Konrad Hornschuch AG Materials 441.4 Equistone Partners Europe Ltd.

M&A Exit

4 Jul 16 GEKA GmbH Consumer goods 289.6 3i Group plc M&A Exit

14 Jul 16 Inspired Gaming Group Ltd.

Industrials 264.9 Vitruvian Partners LLP M&A Exit

5 Jul 16 5 Jul 16 Internatural AB Consumer goods 96.0 Priveq Investment M&A Exit

12 Jul 16 Nutricafes Cafes e Restauracao SA

Consumer goods 82.3 Explorer Investments SA/MCH Private Equity SGECR SA

M&A Exit

19 Jul 16 19 Jul 16 Geroresidencias SL (85%)

Consumer services 77.4 MCH Private Equity SGECR SA/Gala Capital Partners Equity SCR de RS SA

M&A Exit

7 Jul 16 7 Jul 16 Lantmannen Granngarden AB

Retail 48.0 EQT Partners AB M&A Exit

19 Jul 16 Eptisa Servicios de Ingenieria SL (90%)

Materials 17.7 Magnum Capital Industrial Partners

M&A Exit

0

20

40

60

80

100

120

140

160

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0



Capital Briefing20

Source: Dealogic

Capital Briefing21

Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Announcement or filing date

Completion orpriced date

Company Sector Value (US$m) Sponsor Type

3 Jul 16 China Greenland Rundong Auto Group Ltd. (67.3533%)

Automotive 1,073.8 KKR & Co. LP M&A Exit

5 Jul 16 Nirvana Asia Ltd. Professional Services

1,052.2 CVC Capital Partners Ltd./AIF Capital

M&A Exit

15 Jul 16 15 Jul 16 China Logistics Property Holdings Co.Ltd.

Industrials 433.9 Carlyle Group LP/RRJ Capital IPO

22 Jul 16 SPi Global Solutions Inc Professional Services

181.0 CVC Capital Partners Ltd. M&A Exit

29 Jul 16 29 Jul 16 Dual Co. Ltd. Materials 54.6 JKL Partners Inc. IPO

1 Jul 16 1 Jul 16 Itswell Co. Ltd. (25.65%)

Computers and Electronics

11.1 EastBridge Partners Co. Ltd. M&A Exit

18 Jul 16 18 Jul 16 Mega Study Co. Ltd. (6.66%)

Professional Services

7.4 H&Q Asia Pacific Ltd. M&A Exit

Asia-Pacific PE exits — top seven deals in July 2016

Asia-Pacific PE exits (in US$b)

0

5

10

15

20

25

30

35

40

45

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0



Capital Briefing

Source: Dealogic

Appendix BM&A activity monthly flash

Volume Value Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2016(to May 16)

vs. 2015(to May 15)

2016(to May 16)

vs. 2015(to May 15)

LTM (to May 16)

vs. PTM(to May 5

LTM (to May 16)

vs. PTM(to May 15)

M&A activity by areas and regions

Global 14,585 -10% 1,200,960 -20% 36,551 -7% 4,005,902 15%

Americas 5,585 -9% 657,189 -21% 14,257 -4% 2,337,439 16%

Canada 1,129 13% 96,643 32% 2,638 18% 223,616 20%

MeCAR 87 -19% 10,354 1% 254 -18% 28,767 -11%

SA region 356 -23% 30,327 95% 1,018 -15% 76,718 -1%

US 4,424 -12% 578,566 -25% 11,410 -6% 2,139,683 18%

EMEA 5,316 -13% 406,722 -10% 12,738 -16% 1,266,500 15%

Africa 267 2% 15,502 37% 651 3% 35,451 -19%

BeNe 296 -31% 14,098 -87% 811 -19% 200,128 44%

CIS 431 -30% 13,813 53% 879 -55% 51,815 72%

CSE 458 -12% 15,728 2% 1,070 -14% 44,635 6%

FraLux 1,022 -3% 64,267 -14% 2,255 -9% 165,416 5%

GSA 839 -16% 170,586 352% 2,217 -13% 297,997 63%

Israel 109 8% 6,882 -39% 270 8% 57,956 195%

Mediterranean 553 -26% 52,007 -24% 1,371 -23% 160,441 -17%

MENA 142 2% 3,319 -84% 354 3% 24,015 -40%

Nordics 565 -16% 25,849 -17% 1,226 -25% 57,590 -26%

UK&I 1,361 0% 74,984 -61% 3,411 6% 420,079 7%

Asia-Pacific 5,296 -6% 451,470 -6% 13,674 3% 1,234,531 26%

ASEAN 710 -1% 36,153 65% 1,696 -12% 78,908 23%

Greater China 2,063 -7% 305,653 4% 5,572 10% 823,440 35%

India 523 -9% 16,755 -30% 1,294 6% 44,644 -6%

Japan 1,162 -13% 59,729 -3% 2,906 -5% 181,768 54%

Korea 549 17% 26,450 -54% 1,361 18% 69,048 -30%

Oceania 612 -2% 31,032 -36% 1,664 0% 88,212 -8%

M&A activity by sectors

Aerospace and defense 135 -23% 9,684 12% 356 -17% 35,432 30%

Automotive and transportation 958 -14% 111,907 9% 2,464 -9% 295,634 40%

Banking and capital markets 972 -14% 113,009 -2% 2,435 -12% 413,663 42%

Consumer products and retail 2,205 -11% 192,858 -9% 5,522 -8% 637,330 36%

Diversified industrial products 1,913 -12% 166,427 9% 4,856 -9% 457,555 20%

Government and public sector 261 -25% 10,638 -33% 663 -17% 27,903 -2%

Insurance 418 -11% 40,100 -36% 1,100 1% 288,607 114%

Life sciences 966 -8% 221,343 19% 2,454 2% 485,024 2%

Media and entertainment 980 -10% 60,059 -61% 2,495 -9% 207,767 -16%

Mining and metals 895 6% 49,875 10% 2,153 4% 142,972 36%

Oil and gas 552 -3% 80,454 -43% 1,413 -16% 332,462 -27%

Other sectors 1,679 -16% 60,760 55% 4,312 -14% 157,078 37%

Power and utilities 526 -13% 90,930 93% 1,399 -14% 231,933 38%

Provider care 455 -9% 13,990 -48% 1,174 0% 52,736 -5%

Real estate 1,320 -15% 73,292 -50% 3,245 -16% 207,316 -33%

Technology 3,881 -4% 226,946 -14% 9,520 4% 742,274 61%

Telecommunications 274 -29% 39,224 -60% 757 -19% 148,424 -33%

Wealth and asset management 412 -9% 19,355 -82% 1,019 -5% 42,204 -68%

22

Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region. Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped.M&A analysis as at 1 June 2016. Source: Dealogic. All Rights Reserved. Note: Data is continually updated and therefore subject to change.

Capital Briefing

2015 2016

J F M A M J J A S O N D J F M A M J J A S O N D

2014 2015 2016

M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N

Appendix CM&A multiples and bid premium

Deal multiples greater than 30x and bid premium greater than 100% have been excluded from calculation of median.M&A analysis as at 1 June 2016. Source: Dealogic. All Rights Reserved. Note: Data is continually updated and therefore subject to change.

23

Median deal multiple — EV / EBITDA

Global Americas Asia-Pacific EMEA

LTM(to May 16)

PTM(to May 15)

LTM(to May 16)

PTM(to May 15)

LTM(to May 16)

PTM(to May 15)

LTM(to May 16)

PTM(to May 15)

Aerospace and defense 10.3x 11.3x 10.1x 16.6x 14.1x 11.5x 10.9x 10.6x

Automotive and transportation 8.9x 10.3x 9.8x 9.2x 9.9x 10.2x 8.2x 10.6x

Consumer products and retail 10.9x 11.3x 10.4x 14.7x 12.0x 11.0x 10.0x 9.6x

Diversified industrial products 9.8x 10.5x 10.8x 10.7x 11.0x 11.7x 9.1x 9.2x

Government and public sector 10.2x 15.0x 4.6x 15.6x 21.8x 5.5x 10.2x 25.4x

Life sciences 11.0x 17.2x 12.4x 19.2x 11.4x 18.3x 10.8x 12.5x

Media and entertainment 12.0x 12.4x 8.8x 10.8x 15.2x 13.8x 10.7x 11.9x

Mining and metals 8.8x 9.1x 7.8x 12.7x 10.4x 8.5x 9.4x 8.5x

Oil and gas 8.0x 7.4x 8.0x 6.6x 6.5x 9.7x 9.3x 7.7x

Other sectors 9.2x 9.5x 10.6x 8.6x 10.5x 11.6x 7.8x 8.6x

Power and utilities 11.9x 11.6x 11.5x 11.7x 18.0x 8.8x 10.2x 10.1x

Provider care 11.9x 11.1x 10.2x 11.6x 10.4x 9.1x 12.6x 12.7x

Real estate 10.0x 10.4x 10.4x 10.3x 10.5x 10.1x 8.7x 10.6x

Technology 11.2x 10.7x 13.6x 17.1x 11.3x 9.4x 10.2x 10.6x

Telecommunications 7.3x 10.5x 6.9x 10.1x 8.2x 11.6x 7.3x 9.6x

Total 10.3x 10.7x 10.4x 11.7x 11.1x 10.8x 9.5x 10.0x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEA

LTM(to May 16)

PTM(to May 15)

LTM(to May 16)

PTM(to May 15)

LTM(to May 16)

PTM(to May 15)

LTM(to May 16)

PTM(to May 15)

Aerospace and defense 15% 26% 14% NA 31% 32% 14% 13%

Automotive and transportation 14% 17% 21% 7% 13% 17% 9% 18%

Consumer products and retail 23% 17% 32% 24% 16% 16% 27% 9%

Diversified industrial products 19% 14% 24% 24% 17% 12% 24% 27%

Government and public sector 22% 20% 44% 23% 21% 12% 16% 14%

Life sciences 27% 22% 43% 31% 17% 16% 17% 23%

Media and entertainment 17% 20% 34% 34% 11% 20% 14% 18%

Mining and metals 23% 24% 28% 29% 18% 20% 36% 12%

Oil and gas 27% 18% 34% 17% 24% 18% 14% 30%

Other sectors 19% 25% 28% 27% 16% 17% 18% 31%

Power and utilities 17% 11% 27% 17% 10% 7% 17% 8%

Provider care 23% 12% 34% 21% 18% 13% 5% 3%

Real estate 14% 21% 13% 30% 15% 18% 3% 11%

Technology 22% 25% 34% 28% 15% 21% 23% 20%

Telecommunications 25% 14% 28% 12% 27% 13% 16% 17%

Total 21% 20% 30% 26% 16% 17% 18% 19%

Capital Briefing

Appendix DCapital Confidence Barometer (April 2016): by Area

Respondents who expect their company to pursue acquisitions in the next 12 months

31%

40%

56%59%

50%

0%

25%

50%

75%

100%

Apr 14 Oct 14 Apr 15 Oct 15 Apr 16

28%

34%

57%

67%

54%

0%

25%

50%

75%

100%


32% 33%

49% 48% 47%

0%

25%

50%

75%

100%


Global Americas EMEA

26%

57%

45% 44%

38%

0%

25%

50%

75%

100%


Asia-Pacific China Germany

23%28%

51%56%

50%

0%

25%

50%

75%

100%


Japan UK US

26%

16%

58%

52%

59%

0%

25%

50%

75%

100%


29%33%

61%

74%

57%

0%

25%

50%

75%

100%


24 Capital Briefing

33%

56%

43%40%

43%

0%

25%

50%

75%

100%


16%

68%

51%

43%

35%

0%

25%

50%

75%

100%


Notes

25 Capital Briefing

Notes

26 Capital Briefing

If you would like to discuss any of the topics covered in this publication, please contact your EY advisor or any of the contacts below.

EY | Assurance | Tax | Transactions | Advisory

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

About EY’s Transaction Advisory Services

How you manage your capital agenda today will define your competitive position tomorrow. We work with clients to create social and economic value by helping them make better, more informed decisions about strategically managing capital and transactions in fast-changing markets. Whether you're preserving, optimizing, raising or investing capital, EY’s Transaction Advisory Services combine a unique set of skills, insight and experience to deliver focused advice. We help you drive competitive advantage and increased returns through improved decisions across all aspects of your capital agenda.

© 2016 EYGM Limited.All Rights Reserved.

EYG no: 02504-164GBL

ED None

In line with EY’s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

ey.com

Transaction Advisory Services

Steve Krouskos

EY Global Vice Chair


+1 404 817 5090

[email protected]

Bill Casey

Americas Leader


+1 305 415 1645

[email protected]

Andrea Guerzoni

EMEIA Leader


+39 02 8066 9707

[email protected]

Harsha Basnayake

Asia-Pacific Leader


+65 6309 6741

[email protected]

Peter Wesp

Japan Leader


+81 3 4582 6465

[email protected]

Private Equity

Jeff Bunder

Global Leader

Private Equity

+1 212 773 2889

[email protected]

Michael Rogers

Global Deputy Sector Leader

Private Equity

+1 214 969 0675

[email protected]

Bill Stoffel

Americas Leader

Private Equity

+1 212 773 3141

[email protected]

Sachin Date

EMEIA Leader

Private Equity

+44 20 7961 0435

[email protected]

Satoshi Sekine

Japan Leader

Private Equity

+81 3 4582 6400

[email protected]

Press and marketing

Dhwani Vahia

Marketing Leader

Private Equity

+212 773 8939

[email protected]

Research and Insights

Mark Temple

EY Knowledge


+44 20 7951 6985

[email protected]

Pete Witte

EY Knowledge

Private Equity

+1 312 879 4404

[email protected]

private equity capital briefing - august 2016

Documents