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Private Equity Capital Briefing

October 2016

Monthly insights and intelligence on PE trends

Brexit may spark PE consolidation in the UK

At least one firm is looking to grow through acquisition

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 distills 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

• Q3 buyout fundraising fell 18% to US$109b from a year ago, despite higher volume. The latest period includes more small funds.

• Year-to-date (YTD) however, buyout fundraising remains in line with last year’s pace, up 0.4% to US$370.2b.

• PE firms ended September with 11% more buyout dry powder than a year earlier, reflecting the industry’s rapidly growing war chest.

Current state

Fundraising

• The abundance of small fund closes contributed to the 18% year-over-year (YoY) decrease in Q3 PE fundraising. Buyout fundraising for the latest third quarter fell to US$109b, from US$132.8b a year ago. The average fund size in 3Q16 fell by 23% YOY, to US$653m. Despite this, YTD fundraising is slightly ahead (up 0.4%) of last year’s pace, to US$370.2b.

• PE firms secured significant amounts of capital for infrastructure and real estate investments in the third quarter. While buyout fundraising led the way, capturing 30% of the quarter’s aggregate commitments and 20% of volume, infrastructure funds held two of the top five closes during the period, accounting for 19% of the quarter’s commitments, while real estate trailed closely with a 16% share.

• Brookfield Asset Management closed the largest PE fund in Q3, with Brookfield Infrastructure Fund III collecting a total of US$14b. The Toronto-based firm’s fund, which exceeded its US$12.5b target, benefited from pension funds allocating more capital into infrastructure, who see the asset class as a way for investors to manage liabilities amid the continued low interest rate environment.

Dry powder

• The pace of buyout fundraising is outstripping the speed at which PE firms are putting capital to work, which is contributing to the rising level of buyout dry powder. The total at the end of Q3 rose 11%, to US$540.7b versus a year earlier. While the industry looks ready to put its war chest of capital to work, it remains held back by its continued valuation concerns and increased competition from strategic buyers using M&A to pursue growth agendas. Dry powder levels increased in all regions, led by a 17% increase in Asia and the rest of the world. Buyout dry powder in Europe rose 15% and increased 8% in North America.

Environment and horizon

• Demand in North America and Europe suggests fundraising for infrastructure debt funds is likely to increase in the near future. The number of unlisted infrastructure debt funds in the market has been increasing since 2011, according to Preqin, which estimates that there are a record 43 debt funds in the market, seeking a total of US$25b in capital commitments. Both public and private infrastructure projects and businesses in the US and Canada are prime targets for investments. Investors may be valuing infrastructure more favorably over the next few years, as such investments pay an attractive return while providing a sense of consistency and low correlation with volatile equities markets.

• PE firms will continue to face increased regulatory scrutiny over the fees they charge investors after the US Securities and Exchange Commission secured additional settlements in its crackdown over fee practices within the industry. California recently passed a law requiring the state’s public pensions to disclose PE-related fees and expenses; AB-2833 became law on August 25, despite objections from two California pensions. The Los Angeles City Employees’ Retirement System (LACERS) opposed the bill on the grounds that it could do significant harm to the pension’s ability to invest in the asset class.

• In the US, the PE industry is preparing for the final outcome of legislation designed to reduce federal oversight brought on by the Dodd-Frank Act. In September, the U.S. House of Representatives voted 261 to 145 to advance the Investment Advisers Modernization Act of 2016. The bill, which is backed by industry lobbyist American Investment Council, looks to ease regulatory requirements resulting from the Dodd-Frank Act, which became law six years ago as a reaction to Wall Street excesses that contributed to the Great Financial Crisis. The bill may stall in the Senate; however, if it receives enough support, lawmakers could attach it to a spending measure or other must-pass legislation. The White House has threatened a possible veto.

Global PE fundraising by quarter (in US$b)

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Commitments (US$b) Number of funds

Top five funds closed in Q3 2016 (US$b)

Fund name TypeGeographic focus

Target (US$b)

Close (US$b)

Brookfield Infrastructure Fund III

Infrastructure US 12.50 14.00

Thoma Bravo Fund XII Buyout US 7.00 7.60

Riverstone Global Energy and Power Fund VI

Natural resources

US 7.50 5.09

Macquarie European Infrastructure Fund V

Infrastructure Europe NA 4.50

Blackstone Real Estate Debt Strategies III

Real estate US 4.00 4.50

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

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600

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

Source: Preqin YTD through 30 September 2016.

North America Europe Asia and rest of world

Source: Preqin

Source: Preqin

1.ii. Private equity: acquisitions

Executive summary

• PE acquisitions fell 32% in Q3 versus a year ago, to US$69.9b, on valuation concerns and a drop-off in UK activity.

• Technology accounted for four of the top five PE investments in Q3, as enterprise software companies and IT service providers attracted PE capital.

• The long-term growth in consumerism could continue to entice PE interest in Asia.

Current state

• A drop-off in PE investments in the UK and continued valuation concerns at many firms globally hurt Q3 deal activity. The industry’s total investment for the latest quarter fell 32%, to US$69.9b from a year earlier, on 27% fewer transactions. The amount invested decreased across all regions, led by a 55% decline in Europe, the Middle East and Africa (EMEA). The UK has seen PE acquisitions of domestic businesses slow markedly, with announced deal value down 64% on 20% fewer deals. YTD, global PE investment is down 16%, to $212.5b versus a year ago.

• Apollo Global Management LLC’s latest technology investment was the largest announced PE deal of Q3. Apollo agreed to acquire Rackspace Hosting Inc. in a $4.4 billion deal that will take the Texas-based provider of cloud-computing services private. Rackspace CEO Taylor Rhodes expects Apollo will help his company’s strategy as it develops information technology products and seeks new markets.

• Technology accounted for four of the top five PE investments in Q3, as enterprise software and IT service providers continue to attract interest from financial sponsors. This trend helped technology maintain its position as the top destination of PE investments this year. Technology has accounted for nearly 28% of each dollar PE has invested this year. Consumer goods and services trails with a combined 17% industry share.


• Could Brexit spark a PE industry consolidation in the UK? It may be too soon to tell, but there is one firm that is looking to grow through acquisition. HarbourVest Partners is seeking to buy PE investor SVG Capital PLC (LON:SVI) that had more than £1b in assets under management (AUM) at the end of April. HarbourVest made an unsolicited offer to buy SVG for about £1.02b (US$1.35b) in cash. The Boston-based firm, which has AUM of US$42b, is taking advantage of the post-Brexit weakening of the pound to pursue one of its smaller rivals more cheaply. SVG has asked its shareholders to reject HarbourVest’s offer. It also agreed in principle to sell some of its investment portfolio to Pomona Capital and Pantheon Ventures. In addition, SVG is in talks with other possible bidders.

• PE investments in emerging markets will continue, aided by the ultra-low or negative interest rate environment in developed countries. Emerging markets remain an attractive destination, especially for investors searching for yield. According to Emerging Markets Private Equity Association’s (EMPEA) 1H 2016 industry statistics, health care and business support services are areas that have experienced an increase in PE investments. EMPEA Director of Research Jeff Schlapinski said, “Many of the GPs in emerging Asia and sub-Saharan Africa, as well as Latin America … may have the opportunity to deploy capital at more favorable terms in more attractive opportunities than in the recent past, given some of the downward pressures on currencies witnessed over the past 18 months and tighter financing conditions now prevalent in many emerging markets.”

• Those with bets in the oil and gas (O&G) sector are asking investors for more patience and additional funds to bolster energy holdings. YTD, PE firms’ total investment in the industry totaled US$5.2b through 25 investments, versus the US$4.7b invested through 34 deals at the same point last year. While many PE firms raised capital to invest in O&G in the wake of the commodity’s price crash in mid-2014, firms have been challenged to put those assets to work. While volatility remains, prices have stabilized in the $40-a-barrel range, leading PE firms with energy investments to reach out to their investors seeking to extend the life of some funds in order to avoid having to exit at the bottom of the cycle.

• Secular long-term growth in consumerism could entice PE to remain interested in Asia. Many countries in the region continue to see growth in the middle class and expansion in consumer-driven markets. The shifting demographics, coupled with the anticipated trends in the consumer-focused areas, such as health care, consumer products and retail, make the region attractive to investors. The outcome of the proposed Trans-Pacific Partnership trade agreement, signed in February 2016, is expected to principally benefit Southeast Asian countries.

PE acquisitions by quarter (in US$b)

Top five announced acquisitions in Q3 2016

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Value (US$b) Volume

Sector 2016 valueIndustry

share (%)2016 volume

Industry share (%)

Technology $59.25 27.9 234 19.9

Consumer goods $23.85 11.2 153 13.0

Health care $23.08 10.9 117 9.9

Industrials $17.04 8.0 107 9.1

Financials $16.95 8.0 77 6.5

Real estate $16.88 7.9 32 2.7

Utilities $16.29 7.7 21 1.8

Materials $12.83 6.0 161 13.7

Consumer services $12.32 5.8 169 14.4

Oil and gas $5.23 2.5 25 2.1

Telecom $4.76 2.2 32 2.7

Retail $4.02 1.9 49 4.2

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

Announcement Date

Company Acquirer Value (US$b)

Sector

26 Aug 16 Rackspace Hosting Inc.

Apollo Global Management LLC

4.40 Technology

17 Aug 16 * Ultimate Fighting Championship

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

4.00 Consumergoods

2 Aug 16 Emerson Electric Co. (Network Power Division)

Platinum Equity LLC 4.00 Technology

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

Onex Corp./Baring Private Equity Asia Ltd.

3.55 Technology

1 Sep 16 * Epicor Software Corp.

KKR & Co. LP 3.30 Technology

Source: Dealogic.Note: * refers to completion date.

Source: Dealogic. Data through 30 September 2016.

Source: Dealogic

1.iii. Private equity: exits

Executive summary

• PE-backed M&A exit deals fell 40% by value, to US$68.8b in Q3 from a year earlier. YTD, exit value is down 29%. The present slowdown may be partially caused by the elevated pace of realizations over the last three years.

• Many PE-backed companies considering an IPO are holding off on pulling the trigger until after the US presidential elections.

• The IPO pipeline for financial sponsor-backed businesses continues to build, as many view IPO readiness as a good business practice.

Current state

• PE firms have exited more than 1,000 investments during each of the previous two years. That rapid pace may be contributing to slower speed of realizations so far this year. With many firms having exited the bulk of their portfolios, the industry can remain patient in waiting for the right offer for the balance of their exits, and indeed may be taking the opportunity to hold onto some investments where they can focus on additional value creation initiatives. Total deal value for PE realizations fell 40% in Q3, to US$68.8b; and decreased 29% on a YTD basis to US$205.6b. PE-backed M&A exit activity was down across all regions.

• CVC Capital Partners Ltd. was involved in Q3’s two largest M&A exits. The firm led an investor group that agreed to sell Delta Topco, the parent of Formula One Group, to Liberty Media Corp. for US$7.8b. The overall transaction remains pending, but Liberty Media completed an initial acquisition of an 18.7% stake in Formula One for about US$821m. CVC’s proposed sale of Spain’s largest private hospital operator IDC SaludHolding SLU for €5.8b (US$6.4b) was the quarter’s second-largest PE-backed M&A exit. The sale of IDC Salud, also known as Quironsalud, is expected to close in Q4 of this year or Q1 of next year.

• Uncertainty in the public markets has made its presence felt within PE-backed IPOs during the latest quarter. Offerings by PE firms remained muted, with 3Q16 down 62% from a year ago. There were 12 PE-backed offerings with total proceeds of US$2.7b for latest quarter. Market conditions worldwide are causing many businesses that considered going public to hold off. In addition, some are waiting for the conclusion of the US presidential elections so they have more clarity into how the incoming administration’s economic policy might affect the public markets. Unprecedented levels of geopolitical uncertainty are weighing heavily on dealmakers, despite improving economic fundamentals. This combination suggests 2016 will be a slow year for IPOs globally, according to the quarterly EY Global IPO Trends: 2016 3Q report. YTD, deal value for PE-backed IPOs fell 58% to US$17b from a year ago on fewer offerings (58 versus 121).

• Advent International Corp., Bain Capital and Danish pension fund ATP are involved in Q3 2016’s largest PE-backed IPO exits. Nets Holding AS raised about US2.4b when its shares started trading on the Copenhagen Stock Exchange in late September. They plan to issue new shares worth US$824m when the Nordic payment company starts trading on the Nasdaq Copenhagen exchange.


• Many are forecasting that IPO activity for Q4 will remain muted, but that doesn’t mean PE firms and other investors are not working behind the scenes for when the window re-opens. Portfolio companies and their financial sponsors have pushed back the timetables of some planned offerings because current conditions make it difficult to meet their targeted valuations. “Despite the very strong performance of this year’s IPOs — which are currently trading on average at 31.7% above offering price — most private companies and financial investors are adopting a wait-and-see strategy,” said Jackie Kelley, EY Americas IPO Markets Leader. “With levels of private capital still at all-time highs and multi-tracking baked into corporate strategy, business leaders and financial sponsors are focused on getting set for 2017 when political and interest rate uncertainty are likely resolved by year-end and conditions will be supportive of doing a well-priced IPO.”

• The pipeline for financial sponsor-backed businesses continues to build, despite weak projections for PE-backed IPOs for the rest of 2016. Misys PLC’s proposed IPO is the largest PE-backed offering entering the IPO pipeline during the latest quarter. The Vista Equity Partners-sponsored software company seeks to list its shares on the London Stock Exchange. This and other offerings indicate why IPOs remain an important method to realize investments for PE firms. In addition, PE-backed companies are viewing IPO readiness as a good business practice for the possible positive turn in the market next year.

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

PE IPOs by quarter (in US$b)

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Value (US$b) Volume

Top five announced M&A exits in Q3 2016

Date Company SponsorValue (US$b)

Sector

7 Sep 16 Formula One World Championship Ltd.

CVC Capital Partners Ltd.

7.86 Consumer goods

5 Sep 16 IDC Salud Holding SLU Quironsalud

CVC Capital Partners Ltd.

6.4 Health care

16 Sep 16 *

Mattress Firm Holding Corp.

JW Childs Associates LP

3.9 Retail

1 Sep 16 * Epicor Software Corp.

Apax Partners LLP/KKR & Co. LP

3.3 Technology

31 Aug 16 *

Nortek Inc. Ares Management LP 2.8 Materials

Source: Dealogic

Source: Dealogic.Note: * refers to completion date.

Source: Dealogic

-15%

-10%

-5%

0%

-20% 0% 20%

Current state• Global M&A performed moderately well in 3Q16, recording deals worth

US$792b. While this was down 27% (YOY) against a very active 3Q15, it was at similar levels to 3Q14 and up 12% against 3Q13. The difference against 3Q15 is driven by eight fewer megadeals (over US$10b) witnessed in 3Q16. On the volume front, 3Q16 registered 8,029 deals as compared to 8,384 recorded at the same time in 2015.

• In September 2016, there were 50 deals valued between US$1b and US$10b, worth a combined US$146b, a key indicator of the underlying health of the M&A market. This is up from the same period in 2015 (42 deals totalling US$118b) and in line with the median monthly value and volume since the deal market accelerated in 2014

• The Americas was the most targeted area in 2016, attracting US$1.2t of deals (50% of the global total), followed by EMEA at US$573b (25%) and Asia-Pacific at US$564b (25%).

• China and Japan have been the top-acquiring Asian nations in 2016 so far. China has reached record-breaking levels of outbound deal activity, spending US$166b through 563 deals, driven by slower domestic growth and the Government’s efforts to support the global expansion plans of Chinese companies. Similarly, a shrinking domestic demand, an aging population and the low cost of borrowing also boosted overseas acquisitions by Japan, which saw 473 deals worth US$66b in 2016.

• The highest value deal of the month saw Enbridge Inc. and Spectra Energy Corp entering into a merger agreement under which the two companies will combine in a stock-for-stock transaction, valuing Spectra at US$28b (US$43b, including net debt). The deal would create the largest energy infrastructure company in North America and one of the largest globally, based on a enterprise value of C$165b (US$127b).

• Another deal that made headlines during September was the long-awaited announcement of the merger between Bayer AG and Monsanto Co. to create a global leader in the agriculture sector, the largest all-cash deal ever at US$66b. The discussions centred on price, and Bayer revised its offer multiple times before clinching the deal at US$128 a share. It first offered US$122 per share in May 2016, which was subsequently raised to US$125 per share, then US$127.50 before finally getting over the line at US$128 per share. The deal is subject to regulatory approvals and is expected to close by the end of 2017.

Environment and horizon• The global economy appears firmly stuck in a low gear, coupled with

weak growth for trade, investment, productivity and wages. The Organisation for Economic Cooperation and Development (OECD) expects global GDP growth to remain flat at around 2.9% in 2016 (compared with 3.1% in 2015) with only a modest improvement to 3.2% projected in 2017. Sustained low, and sometimes negative, interest rates pose an additional challenge, causing significant distortions in financial markets.

• While the outlook for the global economy appears uncertain, it actually provides the base case for dealmaking. With growth hard to find, companies may look to boost profits and improve their market position. M&A would be a favorable route, possibly by acquiring a competitor or by adding new products and capabilities.

• Deal fundamentals that are essential to drive M&A activity still exist —low financing costs, availability of credit, strong cash balances, the need for growth and high equity valuations (which should support share-based transactions). Other factors, such as low organic growth and disruptive forces, including digital, globalization and sector blurring, may also help support deal markets through the remainder of 2016.

• Shareholder demand for M&A could be one of the key deal drivers in the coming months. Growth focus from investors is shifting from efficiency drives and organic investment-led growth toward pursuing M&A. Shareholder activism has reached new heights, both in the number of campaigns and the size and iconic nature of the companies targeted — all businesses, in every industry across the globe, are involved. In the current activist-driven environment, there may be a greater number of deal outcomes being defined by shareholders.

• Technology should continue to lead the global M&A market in the coming months. The combination of digital disruption and slow organic growth should drive 2016 M&A. Because technology is an industry in major transformation, we expect the sector’s M&A momentum to continue for the foreseeable future. According to EY’s Digital Deal Economy Study, M&A, JVs and alliances can provide the fastest strategic route to digital transformation and growth.

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

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

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

LTM to September 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, September 2016Source: Dealogic

M&A analysis as at 1 October 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 performed moderately well in 3Q16, recording 8,029 deals worth US$792b.

• Core M&A drove uptick in September 2016, with a strong performance in the US$1b–US$10b value band.

• China and Japan have been the top-acquiring Asian nations in 2016 so far.

• Shareholder demand for M&A could be one of the key deal drivers in the coming months.

• Low economic growth, disruptive technology and sector convergence are the key drivers for M&A activity in 2016.

2. M&A

Target Sector Country Acquiror Value (US$m)

Spectra Energy Corp Oil and gas US Enbridge Inc. 42,962

Agrium Inc. Diversified industrial products

Canada Potash Corp of Saskatchewan Inc.

18,333

Wuhan Iron & Steel Mining and metals China Baoshan Iron & Steel Co. Ltd.

9,407

Hewlett Packard Enterprise Co.

Technology US Micro Focus International plc

8,822

Formula One World Championship Ltd.

Media and entertainment

UK Liberty Media Corp. 7,857

Port Terminals Automotive and transportation

Australia Australian Government 7,268

IDC Salud Holding SLU

Provider care Spain Fresenius SE & Co. KGaA

6,425

Reliance Communications Ltd.

Telecommunications India Binariang GSM Sdn Bhd 5,596

Nova Transportadora do Sudeste SA

Oil and gas Brazil Brookfield Asset Management Inc.

5,190

Uniper SE Power and utilities Germany Existing Shareholders 4,965

Value

Vo

lum

e

Americas

EMEA

Global

Asia-Pacific

Americas Asia-Pacific EMEA Total

Technology 12% 4% 3% 19%

Consumer products and retail 5% 2% 5% 12%

Diversified industrial products 7% 2% 3% 12%

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

Life sciences 6% 1% 1% 8%

Oil and gas 5% 1% 1% 8%

Power and utilities 1% 4% 1% 6%

Automotive and transportation 3% 1% 1% 6%

Media and entertainment 1% 1% 1% 4%

Others 6% 6% 4% 16%

All sectors 50% 25% 25% 100%

Capital 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 September 2016)(Total = US$1.25t)

N America to:UK&I – $74b

W Europe – $61bOceania – $22b

Japan to:UK&I - $32b

N America – $24bW Europe – $10b

UK&I to:N America – $39bW Europe – $17b

Africa – $2b

L America to:W Europe – $9bN America – $3b

Greater China andMongolia to:

W Europe – $86bN America – $47b

Latin America – $15bW Europe to:N America – $163b

UK&I – $147bJapan – $14b

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

(US$m)

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

# Acquiror refers to acquiror’s ultimate holding company.

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

M&A analysis as at 1 October 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 442 373 3,506 55 2,182 28 578 - 512 3,178 845 1,590 13,289 7%

SE Asia (including Korea)

6 7,123 11,281 - 6,199 23 3,611 376 117 4,995 697 445 34,873 13%

Greater China andMongolia $

2 2,950 26,752 300 4,343 - 518 - - 12,342 280 116 47,604 -11%

Russia, CIS and CSE 2,353 1,617 2,415 3,911 5,177 4,075 22 613 3,858 1,465 58 567 26,129 -27%

W Europe (excluding UK&I)

1,246 2,711 85,509 7,182 57,126 337 10,297 9,067 1,331 60,844 1,549 17,343 254,543 -11%

India 631 10,096 1,832 10 1,462 - 3,131 - 1,018 4,526 28 250 22,984 86%

Japan - 254 8,802 - 14,289 443 - - - 2,345 15 575 26,724 202%

Latin America 70 1,224 15,268 700 13,543 11 764 5,722 3,118 20,880 657 1,104 63,062 40%

Middle East 2,205 113 11,957 510 7,992 44 212 140 5,000 1,915 133 24 30,243 241%

North America 4,344 3,968 47,148 762 163,003 1,200 24,211 2,581 6,890 128,834 3,375 38,734 425,050 5%

Oceania 93 2,192 6,919 1 3,109 76 2,687 0 80 21,947 2,632 343 40,078 20%

UK&I 2,223 857 5,772 57 146,536 367 32,486 51 2,009 73,771 2,532 853 267,514 40%

Outbound total 13,613 33,479 227,160 13,488 424,960 6,604 78,516 18,551 23,934 337,042 12,801 61,944 1,252,093 12%

% versus previous 12 months (PTM)

37% 40% 100% 26% 35% 30% -7% 19% -67% 0% -26% -47% 12%

8 Capital Briefing

3. IPOs

Executive summary

• Global IPO activity registered a YOY increase of 74% in terms of deal volume, and deal value increased 5 fold.

• September 2016 recorded the strongest monthly IPO activity year to date (YTD) in terms of capital raised, with two US$1b+ deals, including the biggest IPO of the year.

• Global IPO activity recorded the highest number of deals for the month of September since 2010.

• IPO activity is likely to be driven by emerging markets for the remainder of this year, while developed markets will see pipeline building across sectors, including some unicorns (start-up companies valued at over US$1.0b) that may take the IPO route in 2017.

9

Current state• Global IPO activity surged in September 2016 (94 deals raising US$18.6b),

registering a YOY increase of 74% in terms of deal volume. Total deal value increased 5 fold when compared with September 2015, mainly due to the US$7.4b listing of Postal Savings Bank of China Co. Ltd. on the Hong Kong stock exchange. In fact, this month saw the highest IPO activity in terms of deal value this year.

• Asia-Pacific continued to dominate IPO activity with 72 deals raising US$12.6b, accounting for 77% of global deal volume and 68% of global deal value. China, India and Japan drove the activity in the region.

• EMEA saw mixed results in September 2016 (seven deals raising US$3.2b). While deal volume decreased by 30% YOY, deal value saw an uptick of 122% due to the US$2.4b listing of Denmark’s Nets A/S.

• IPO activity more than doubled on the US exchanges this month, raising US$2.8b via 17 deals, as companies looked to take advantage of the IPO window before the uncertainty of the presidential election starts to set in later in October.

• The top deals of the month were:

• Postal Savings Bank of China Co. Ltd., which raised US$7.4b in the world’s biggest IPO by proceeds since the Alibaba Group Holding Ltd. IPO, which raised US$25.0b in September 2014. It is the largest state-owned bank in China, with approximately 40,000 branches across the country. It intends to use its IPO proceeds to support business growth.

• Nets A/S, a Nordic payments firm, which raised US$2.4b on NASDAQ OMX Copenhagen and intends to use the proceeds to repay its debt.

Environment and horizon• Global IPO activity has a mixed outlook for the rest of 2016. IPO activity is

expected to be driven by emerging markets, as equities’ performance has rebounded after five years of underperformance in these markets. This has resulted in attractive valuations, evident from recent and upcoming mega-listings. While emerging markets will dominate IPO activity for the rest of this year, developed markets look to be building the pipeline for next year —including some unicorns that may take the IPO route.

• We anticipate that the combination of positive performance by recent IPOs and low volatility will encourage US IPO activity in the short window ahead of the presidential election in November. However, the renewed concerns around an interest rate hike and a potentially close US presidential race will weigh heavily on confidence, so activity will likely remain muted through to the end of 2016. IPOs from health care, technology and financial sectors will continue to feature as investors seek a combination of growth and value generation.

• European IPO activity is likely to see an uptick toward the end of the year, with equity markets quickly recovering from post-Brexit declines, resulting in lower volatility levels. IPO sentiment is also supported by improved valuations. With real interest rates being negative, investors are being pushed into equities to generate higher returns, which in turn pushes European equity indices higher. However, significant uncertainty remains, and the impact of Brexit on investment is likely to unfold gradually over the coming quarters.

• Asia-Pacific is expected to be the focal point of global IPO activity, driven by China, Japan, South Korea and India:

• The recovery of IPO activity on the Hong Kong Stock Exchange is likely to continue through the fourth quarter of 2016, traditionally the busiest period of the year. Furthermore, the upcoming Shenzhen-Hong Kong Stock Connect Program (SZ-HK) — expected to be launched around the middle of December — will be a further boost to market sentiment and is expected to encourage greater participation by foreign institutional investors.

• The SZ-HK program will also have a positive impact on mainland China, which is set to maintain its position as the world’s most active market for IPOs. We expect the China Securities Regulatory Commission (CSRC) to set the pace of IPOs as it seeks to balance the timing of new listings with the impact of market volatility.

• IPO activity in India is expected to see a strong end to the year, with a record number of PE exits expected. The activity will be driven by improving economic fundamentals and stellar performance of stocks in secondary markets.

Top 10 IPOs by proceeds, September 2016Source: Dealogic

Issuer name Issuerlocation

Sector Exchange Proceeds(US$m)

Postal Savings Bank of China Co. Ltd.

ChinaBanking and capital markets

Hong Kong7,429

Nets A/S Denmark TechnologyNASDAQ OMX Copenhagen 2,356

ICICI Prudential Life Insurance Co. Ltd.

India Insurance Bombay 903

Valvoline Inc. US Oil and gas New York 759

Triangle Tyre Co. Ltd. ChinaAutomotive and transportation

Shanghai 661

PT Waskita Beton Precast Tbk

Indonesia Real estate Indonesia 395

Takeaway.com B.V. Netherlands TechnologyEuronext (Amsterdam)

368

Noble Midstream Partners LP

US Oil and gas New York 323

Sakura Sogo REIT Investment Corp.

Japan Real estate Tokyo 296

Bank of NT Butterfield & Son Ltd.

BermudaBanking and capital markets

New York 287

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

LTM to September 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% 17% 5% 23%

Technology 4% 4% 5% 13%

Real estate 2% 8% 3% 13%

Consumer products and retail 2% 4% 2% 8%

Diversified industrial products 0% 3% 4% 7%

Government and public sector 0% 4% 3% 7%

Life sciences 2% 2% 1% 5%

Automotive and transportation 0% 2% 2% 4%

Insurance 0% 3% 1% 4%

Others 2% 8% 6% 17%

Grand Total 13% 55% 32% 100%

Capital Briefing

IPO activity by area (YOY % change)

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

-60%

-40%

-20%

0%

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

Value

Vo

lum

eAmericas

EMEAGlobal

Asia-Pacific

0 200 400 600

Energy and power

Financials

Industrials

Materials

High technology

Real estate

Consumer staples

Health care

Consumer products and services

Retail


Telecommunications

Government and agencies

Proceeds (US$b)

Current state• In September, US$70b of loans were issued in the US and €9b in Europe,

taking the YTD global issuance to US$409b, up 1% YOY. Debt repricing shot up in September, leading 3Q16 activity to record the highest rolling three-month volume for these deals. Also, a surge in opportunistic transactions was noted as a reason for increasing volumes in 3Q16.

• In the first nine months of 2016, borrowers kept away from the loan market, despite high levels of market liquidity and the ultralow loan pricing on offer, reflecting the end of the main refinancing cycle and wider uncertainty, including Britain’s shocking vote to leave the European Union in June and the upcoming presidential election in the US.

• The European loan market is being driven by high demand and a lack of deals across the credit spectrum. Also, the market was particularly slow this year due to private equity sponsors being unsuccessful in auction processes. But, with an increase in M&A activity recently, market conditions are expected to improve, and to acting as a catalyst for 2017 growth.

• The upturn in activity is less noticeable in Asia, which has deeper local currency markets and fewer borrowers tapping the US term loan market than Europe. However, in Russia, the moribund loan market is picking up and is set to improve by the year end due to increasing lender appetite.

• Loan markets in the Gulf are seeing the dominance of jumbo sovereign issuances over LTM. The trend should likely continue in 4Q16, as Middle East sovereigns are looking to borrow due to increasing budget deficits.

• September continued to observe the tightening of pricing during syndication; the average clearing yield for single-B rated term loans dipped in the US to 5.6% from 5.78% in August, and tightened to 4.73%, from 4.91%, in Europe.

Environment and horizon• Transatlantic loan markets are facing a busy spell as companies have

accelerated borrowing plans to take advantage of strong and liquid market conditions before running into any potential volatility around the looming US election in November.

• Volatility has picked up lately in all risk markets and is expected to spill into October over the fear that quantitative easing, and other central bank easing policies might be coming to the end, based on the European Central Bank’s (ECB’s) statement this month.

• With the ECB moving toward the introduction of tighter-leveraged lending rules by early 2017 to curb high-risk lending, non-bank lenders’ participation is expected to increase, but no major impact is anticipated for players already abiding with similar existing US rules.

Opportunities• Demand is expected to outstrip supply without a meaningful pickup in

buyout activity. Until a more visible pipeline of LBOs emerges, the market is likely to see more repricing, add-on and recapitalization deals. This does not bring actual new-money paper, so the imbalance remains.

• October is being seen as a window of opportunity for companies to take advantage of strong loan markets while interest rates are low, which is boosting M&A activity.

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 217.0 1,006

J.P. Morgan 172.2 830

Citigroup Inc. 148.4 584

Mitsubishi UFJ Financial Group, Inc. 131.0 1,066

Mizuho Financial Group, Inc. 128.7 759

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

Market share Proceeds Issues

Americas 57.4% 1,666.8 3,141

EMEA 22.9% 664.6 1,200

Asia-Pacific 19.6% 570.2 2,626

0

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10

• September was led by repricing and opportunistic transactions, recording the highest rolling three-month volume for these deals.

• The European loan market is being driven by high demand and a lack of deals across the credit spectrum. With an increase in M&A activity recently, market conditions are expected to improve and act as a catalyst for 2017 growth.

• Transatlantic loan markets are facing a busy spell as companies accelerate corporate borrowing plans to take advantage of strong and liquid market conditions before the US election in November.

• Until a more visible pipeline of leveraged buyouts (LBOs) emerges, the market is likely to see more repricing, add-ons and recapitalization deals, which does not bring actual new-money paper, maintaining the capital imbalances.

Capital Briefing

Current state• Global high-yield activity rose in September as high-yield issuance in the

US accounted for US$27.5b and €13b in Europe, taking the YTD total to US$229b, still down 20% from the same period last year. In September, the European high-yield bond market generated the largest monthly volume since 2006, particularly in the sterling market, which is set to continue with more than £1b fresh bonds in the market in the last week of the month.

• On a quarterly basis, bond volumes soared for 3Q16 in Europe to €18.8b from €16.8b, whereas the contrary was seen in the US, where quarterly bond issuance fell from $82.8b in 2Q16 to $62b in 3Q16. The Brexit vote and a long lull around Labour Day contributed to the downturn in the US.

• The key driver of the strong issuance levels seen in both 3Q16 and 2Q16 has been the ECB’s corporate bond buying program, CSPP. Globally, the busy pace in the high-yield primary market showed no signs of slowing, particularly after the US Federal Reserve’s (Fed’s) decision to keep rates unchanged gave the market an extra boost.

• Overall, markets were heavily influenced by the central banks this month. With the ECB indicating to refrain from further easing, yields rose across the world sharply. But after the Fed left the interest rates unchanged, against expectation, the markets returned to normal business, with lower volatility and yields.

• High-yield issuance for M&A activity was US$45.2b, contributing 25% to total high-yield issuance in the US or a 49% YOY decrease. In Europe, it was €7.7b of high-yield issuance or a 18% contribution, signalling a 59% decline from last year.

• Markets observed an increase in reverse Yankee issuances with a total of €3.2b in September, as companies look to capitalize on cheap yields in the euro market to refinance existing debt.

• Clearing yields for double-B rated bonds fell in the US to 5.35% in the three months to the end of September, from 5.45% at the end of August, and yields rose to 3.71% from 3.47% in Europe.

Environment and horizon• Following the ECB, the Bank of England also started its long-anticipated

Corporate Bond Purchase Scheme, which is expected to boost the bond markets further after simulating a flurry in September itself.

• Although borrowers may not be able to squeeze pricing in future as much as they could at the start of September, new-issue yields are still close to historical lows. Most of the upcoming issuers are familiar to the investors, with refinancing still the main reason for coming to market.

Opportunities• Looking ahead, the bond market should run out of high coupons to

refinance to provide consistent supply, for which acquisition financing is needed. But LBOs are more likely to be financed in the loan market, raising questions on the sustainability of the growth of bond markets.

• The high-yield market does show good appetite, but it cannot be explained without the ECB being part of the picture. Investors wouldn’t have bought the deals if the ECB wasn’t supportive, concluding that the market does feel more ambitious about the issuance levels, but peaks will be determined with time.

0 100 200 300

Energy and power

Industrials

Health care

High technology

Real estate

Consumer staples

Materials

Telecommunications

Consumer products and services

Retail


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

Microsoft Corporation US High technology 19.8

Shell International Finance B.V.

Netherlands Energy and power 16.5

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

Cisco Systems, Inc. US High technology 13.3

Aetna, Inc. US Health care 13.0

Johnson & Johnson US Health care 12.1

Petróleos Mexicanos Mexico Energy and power 11.9

0

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200

250

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Aug16

Sep16

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

11

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400

Oct15

Nov15

Dec15

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Feb16

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Apr16

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Jun16

Jul16

Aug16

Sep16

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

5. Bonds

• Global high-yield activity rose in September, generating the highest monthly European high-yield bond activity since 2006.

• Bond volumes soared for 3Q16 in Europe, whereas the contrary was seen in the US. The key driver of the strong issuance levels seen in both 3Q16 and 2Q16 has been the ECB’s corporate bond buying program.

• Markets observed an increase in reverse Yankee issuances in September, with companies looking to capitalize on cheap yields in the euro market to refinance existing debt, whereas high-yield issuance for M&A activity declined from last year.

• As the need for acquisition financing increases, and with the market showing an inclination toward loans, it raises questions on the sustainability of the growth of bond markets.

Capital Briefing

Appendices

Dry powder — buyout funds — by region

Global PE fundraising (in US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin

0

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800

1,000

1,200

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

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$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 (ROW) Asia-Pacific 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

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400

500

600

700

$0.00

$20.00

$40.00

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$80.00

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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

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


15

Americas PE acquisitions — top 10 in Q3 2016

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

0

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Capital Briefing

Source: Dealogic

Announcementdate

Completiondate

Company SectorValue

(US$m)Acquirer

26 Aug 16 Rackspace Hosting Inc. Technology 4,404.68 Apollo Global Management LLC

11 Jul 16 17 Aug 16 Ultimate Fighting Championship Consumer goods 4,000.00 William Morris Endeavor Entertainment LLC/MSD Capital LP/Silver Lake Group LLC/KKR & Co. LP

2 Aug 16 Emerson Electric Co.’s network power division

Technology 4,000.00 Platinum Equity LLC

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

Technology 3,550.00 Onex Corp./Baring Private Equity Asia Ltd.

5 Jul 16 1 Sep 16 Epicor Software Corp. Technology 3,300.00 KKR & Co. LP

7 Sep 16 McAfee Inc.’s Intel Security (51%)

Technology 3,100.00 TPG Capital LP

9 Aug 16 Press Ganey Holdings Inc. Consumer services 2,396.93 EQT Partners AB

5 Jul 16 Hostess Brands LLC Consumer goods 2,307.41 Gores Holdings Inc.

14 Sep 16 Four Power Plants Utilities 2,170.00 Blackstone Group LP/ArcLight Capital Partners LLC

1 Aug 16 inVentiv Group Holdings Inc. (50%)

Health care 1,900.00 Advent International Corp.

Source: Dealogic

EMEA PE acquisitions — top 10 in Q3 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)Acquirer

29 Sep 16 Morpho SAS Technology 2,718.456 Advent International Corp./Bpifrance Investissement SAS

15 Jul 16 D Carnegie & Co. AB Real Estate 2,008.15 Blackstone Group LP

28 Jul 16 Keter Plastic Ltd. (80%) Consumer goods 1,600.00 BC Partners Ltd.

12 Sep 16 SVG Capital plc Financials 1,346.31 HarbourVest Partners LLC

16 Sep 16 Ascot Underwriting Holdings Ltd.

Financials 1,100.00 Canada Pension Plan Investment Board

28 Sep 16 Danmarks Skibskreditfond(Danish Ship Finance) (72%)

Financials 711.92 Axcel A/S/PFA Pension/PensionskassernesAdministration A/S

15 Sep 16 Powerflute Oyj Materials 402.10 Madison Dearborn Partners LLC

19 Sep 16 Tsebo Outsourcing Group Pty. Ltd.

Consumer goods 370.17 Wendel SA

27 Sep 16 Plantasjen AS Retail 357.43 Ratos AB

1 Aug 16 1 Aug 16 Shopping centers: Centro Navile and Metropolis in Italy and L'Aljub in Spain

Real Estate 279.36 TPG Capital LP/Partners Group Holding AG

0

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$10.00

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Source: Dealogic

Asia Pacific PE acquisitions — top 10 in Q3 2016

Appendix AGlobal PE acquisition activity by region — Asia Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

0

20

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140

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17 Capital Briefing

Announcement date

Completion date

Company SectorValue

(US$m)Acquirer

5 Jul 16 Nirvana Asia Ltd. Consumer service 1,052.231 CVC Capital Partners Ltd.

26 Sep 16 SAI Global Ltd. (95.7529%) Consumer services 909.224 Baring Private Equity Asia Ltd.

18 Jul 16 5 Aug 16 PT Go Jek Indonesia (30%) Technology 550.000 KKR & Co. LP/Sequoia Capital India/Northstar Advisors Pte. Ltd./Rakuten Ventures/DST Global Solutions Ltd./Farallon Capital Partners LP/Warburg PincusLLC/NorthStar Group Services Inc./Formation Group plc/Capital Group Private Markets

2 Sep 16 Yum China Holdings Inc. (Minority%)

Consumer goods 460.000 Primavera Capital Management Ltd./Ant Financial Services Group

23 Sep 16 23 Sep 16 Logen Co. Ltd. Industrials 299.177 CVC Capital Partners Ltd.

4 Aug 16 Vitaco Holdings Ltd. Health care 271.846 Shanghai Pharmaceuticals Holding Co. Ltd. (60%)/Primavera Capital Management Ltd. (40%)

4 Jul 16 4 Jul 16 Essel Infraprojects Ltd. (Stake%)

Materials 250.000 Goldman Sachs Capital Partners

25 Aug 16 Worldmark Group Pty. Ltd. (Majority%)

Industrials 228.397 Quadrant Private Equity Pty. Ltd.

1 Sep 16 Novarese Inc. Consumer services 213.745 Polaris Capital Group Co. Ltd.

28 Jul 16 Sinogreenergy Co. Ltd. (Controlling%)

Utilities 200.000 Partners Group Holding AG/Cathay Financial Holding Co. Ltd.

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)

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18 Capital Briefing

Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top 10 in Q3 2016

Americas PE exits (in US$b)

Announcementor filing date

Completion or priced date

Company Sector Value (US$m)

Sponsor Type

7 Aug 16 16 Sep 16 Mattress Firm Holding Corp..

Retail 3,900.35 JW Childs Associates LP M&A exit

5 Jul 16 1 Sep 16 Epicor Software Corp. Technology 3,300.00 Apax Partners LLP/KKR & Co LP M&A exit

6 Jul 16 31 Aug 16 Nortek Inc. Materials 2,807.03 Ares Management LP M&A exit

26 Jul 16 EverBank Financial Corp. Financials 2,663.08 TPG Capital LP/Sageview Capital LP M&A exit

9 Aug 16 Press Ganey Holdings Inc.

Consumer services 2,396.93 EQT Partners AB;/estar Capital Partners Inc.

M&A exit

29 Aug 16 Aleris Corp. Materials 2,330.00 Oaktree Capital Group LLC/Apollo Global Management LLC

M&A exit

5 Jul 16 Hostess Brands LLC Consumer goods 2,307.41 C Dean Metropoulos & Co./Gores Group LLC/Apollo Global Management LLC

M&A exit

1 Aug 16 inVentiv Group Holdings Inc. (50%)

Health care 1,900.00 Thomas H. Lee Partners LP/Advent International Corp./CVC Capital Partners Ltd.

M&A exit

15 Aug 16 Sensus USA Inc. Technology 1,700.00 Jordan Co. LLC/Goldman Sachs Capital Partners

M&A exit

15 Aug 16 RCN Telecom Services LLC

Telecommunications 1,600.00 Abry Partners Inc./TPG Capital LP M&A exit

0

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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 in Q3 2016

EMEA PE exits (in US$b)

Announcementor filing date

Completion orpriced date

Company Sector Value (US$m) Sponsor Type

7 Sep 16 Formula One World Championship Ltd.

Consumer goods 7,856.64 CVC Capital Partners Ltd M&A exit

5 Sep 16 IDC Salud Holding SLU Quironsalud

Health care 6,425.34 CVC Capital Partners Ltd M&A exit

27 Sep 16 27 Sep 16 Nets A/S Technology 2,356.36 Advent International Corp./Bain Capital LLC/ATP Private Equity Partners

IPO

12 Jul 16 Odeon & UCI Cinemas Group Ltd

Consumer goods 1,174.87 Terra Firma Capital Partners Ltd.

M&A exit

22 Sep 16 Moleskine SpA Consumer goods 574.44 Index Ventures/Syntegra Capital Advisors Ltd.

M&A exit

18 Jul 16 Konrad Hornschuch AG Materials 441.40 Equistone Partners Europe Ltd.

M&A exit

30 Sep 16 30 Sep 16 Takeaway.com BV Technology 368.41 Macquarie Capital/Prime Ventures

IPO

27 Sep 16 Plantasjen AS Retail 357.43 Ratos AB/Apax Partners LLP M&A exit

4 Jul 16 30 Aug 16 GEKA GmbH Consumer goods 289.60 3i Group plc M&A exit

14 Jul 16 Inspired Gaming Group Ltd

Industrials 264.92 Vitruvian Partners LLP M&A exit

0

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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

28 Jul 16 Gland Pharma Ltd. (86.08%)

Health care 1,261.37 KKR & Co. LP M&A exit

5 Jul 16 Nirvana Asia Ltd. Consumer services

1,052.23 CVC Capital Partners Lt./AIF Capital

M&A exit

3 Jul 16 17 Aug 16 China Greenland RundongAuto Group Ltd.(47.9005%)

Industrials 912.36 KKR & Co. LP M&A exit

22 Jul 16 Genesis Care Ltd. (50.01%) Health care 636.57 KKR & Co. LP M&A exit

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

Consumer services

458.44 Carlyle Group LP/RRJ Capital IPO

26 Aug 16 Property Portfolio (Shanghai Central Plaza)

Real estate 369.52 Carlyle Group LP M&A exit

23 Sep 16 23 Sep 16 Logen Co. Ltd. Industrials 299.18 CVC Capital Partners Ltd./Baring Private Equity Asia Ltd.

M&A exit

25 Aug 16 25 Aug 16 WH Group Ltd. (2.6141%) Consumer goods 293.85 CDH China Holdings Management Co. Ltd.

M&A exit

11 Jul 16 Concord Medical Services Holdings Ltd. (55.5311%)

Health care 292.68 Carlyle Group LP M&A exit

4 Aug 16 Vitaco Holdings Ltd. Health care 271.85 Next Capital Pty. Ltd./Primavera Capital Management Ltd.

M&A exit

Asia-Pacific PE exits — top 10 in Q3 2016

Asia-Pacific PE exits (in US$b)

0

5

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15

20

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45

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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 Sep 16)

vs. 2015(to Sep 15)

2016(to Sep 16)

vs. 2015(to Sep 15)

LTM (to Sep 16)

vs. PTM(to Sep 15

LTM (to Sep 16)

vs. PTM(to Sep 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 acquirer, 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 Sept 16)

PTM(to Sept 15)

LTM(to Sept 16)

PTM(to Sept 15)

LTM(to Sept 16)

PTM(to Sept 15)

LTM(to Sept 16)

PTM(to Sept 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 Sept 16)

PTM(to Sept 15)

LTM(to Sept 16)

PTM(to Sept 15)

LTM(to Sept 16)

PTM(to Sept 15)

LTM(to Sept 16)

PTM(to Sept 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

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