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Your Source For Leveraged and ManageMent

www.buyoutsnews.com August 13, 2012 • Issue 17

Who Took The 2007 Vintage Gold Medal? Joe Dear Leads CalPERS Rebound From $100B Loss

KKR, Stone Point Team On Capital Markets CalPERS Ending $1B In-State Program PRINTED COPY FOR PERSONAL READING ONLY. NOT FOR DISTRIBUTION. Lincolnshire Strikes First Deal In A Year Carlyle Generates Big Payout On Booz Allen Dividend Looking For Market-Beating Returns? Try Debut Funds 73598.qxd:Webvision ready 8/17/12 1:13 PM Page 2

BuYoutS |​August 13, 2012 www.buyoutsnews.com The 2007 Vintage Produces Few Big Winners

By david toll, eamon Beltran, angela Sormani

​Sponsors​routinely​promise​their​backers​that​they’ll​at​least​double their​money.​But​you’d​be​hard-pressed​to​find​such​funds​in​the​hard- luck​2007​vintage.

Out of 83 2007-vintage domestic spell the end of their fundraising hopes. agency . funds in our return database that provide “You combine high purchase multiples Just how much impact the performance investment multiples, only three managed going into a recession with lots of debt and of the 2007 vintage has on overall industry the feat. Far more than that, 15 funds, or 18 you’ll likely have problems with the under- returns remains to be seen. U.S. buyout percent, have recently been underwater—a lying portfolio companies,” said Kelly firms raised nearly $300 billion in 2007, result that, if it doesn’t improve, could well DePonte , managing director of placement more than the industry raised from 2001 to

Post-Bubble Blues: Domestic Buyout Fund Performance By

35.0% 355

300

26.5%

255 23.5% 23.7% 22.2% 20.8%

200

16.3% 16.0% 15.2% 15.2%

155 13.0% 13.2% 12.1% 12.0% 11.6% 11.5% 11.1% 11.1% 10.6% 10.7%

9.0% 9.0% 100 8.5% 7.0% 6.6% 5.9% 6.2% 5.7% 5.8% 5.5%

5 3.4% 1.5% 1.9 1.4% 2.1 1.9 2.2 1.9 1.1% 1.6 1.9 1.71.6% 1.8 1.9 1.9 1.6 1.6 1.7 1.7 1.6 1.4 1.4 1.3 1.2 1.1 1.31.5 1.4 1.1 1.5 1.5 1.4 1.4 1.5 1.3 1.3 1.2 1.2 .9 1.0 .7% 1.1 1.1 1.0 0PRINTED COPY FOR PERSONAL READING ONLY. NOT FOR DISTRIBUTION. -1.2% -2.1% -2.6% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 -55 (13 funds) (20 funds) (26 funds) (46 funds) (37 funds) (47 funds) (34 funds) (25 funds) (26 funds) (46 funds) (62 funds) (77 funds) (92 funds)

Bottom Quartile Multiple Median Quartile Multiple Top Quartile Multiple Bottom Quartile IRR Median IRR Top Quartile IRR 73598.qxd:Webvision ready 8/17/12 1:13 PM Page 3

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2004 combined, and more than triple the median 1.40x and top-quartile 1.81x; a bot- the loans they ended up signing lacked the roughly $90 billion that was raised in 2000, tom-quartile IRR of 2.43 percent, median of strong covenants that, in the dire times to a record at the time. The lackluster 2006 9.40 percent, and top-quartile of 16.15 per- come, might otherwise have forced spon- vintage corresponded to another big cent (see chart below). sors into technical defaults. fundraising year, and together 2006 and All told, our return database includes 591 Meantime, the Federal Reserve took a 2007 account for some half a trillion dollars domestic buyout funds spanning vintage variety of actions to reduce interest rates, in fresh capital raised. Their results will like- years 1981 to 2007. The data, most of it cur- an effort to lower the borrowing costs for ly drag on industry returns for years to rent through year-end 2011, comes from businesses and cushion the impact of the come, perhaps discouraging investors from some two dozen public pension funds and recession on workers. As a result, many making a bigger commitment to the asset other institutional investors that make their investors seeking high-yielding fixed- class. results public. (See p. 11 for a more detailed income instruments turned their attention For those looking to benchmark their explanation of our methodology). to the below-investment-grade corporate returns, our set of 2007-vintage funds gener- loan and debt markets. The subsequent, ated a bottom-quartile investment multiple Secrets of Success sudden boom in the credit markets in late of 1.01x, median 1.20x, and top-quartile To be sure, the 2007 vintage faced stiff 2009 and 2010 enabled poor-performing 1.30x; a bottom-quartile IRR of 1.42 percent, headwinds—a credit crunch that started in companies to refinance their obligations median 9.00 percent and top-quartile IRR of mid-2007, a financial crisis that culminated rather than succumb to bankruptcy or 13.22 percent. In very rough terms, the vin- with the fall of Lehman Brothers in other unwelcome outcomes. tage did a little better than 2006 but not September 2008, and an 18-month reces- Luck played a part in the success of some nearly as well as funds that began investing sion that lasted from late 2007 to mid-2009. 2007-vintage funds. Those that began invest- in the early to mid-2000s (see chart on p. 2). It could have been worse. In the run-up ing their funds rapidly at the beginning of By comparison, our entire database of to the downturn the markets were so inun- 2007, especially in cyclical businesses, got domestic buyout funds has produced a bot- dated with credit that lenders had lost hit the hardest. Those that got started late tom-quartile investment multiple of 1.10x, much of their negotiating power; many of in the year benefited from their ability to

Turnaround Funds Are Tops: Performance By Investment Strategy 25 (All Vintage Years Through 2007)

22.4% 21.8%

20.1% 20 18.6%

16.2%

15

11.9% 12.2% 11.2% 10.6% 9.4% 9.5% 10 9.1% 8.4% 7.5%

6.0% 5.1% 5 3.5% 2.4% 3.3% 1.9 1.8 1.7 1.9 1.5 1.8 1.4 1.2 1.3 1.3% 1.4 1.3 1.6 1.2 1.3 1.3 1.5 1.2 1.5 1.1 .9 1.0 .8 1.1 .9

0 0% -.5%

-2.8%

-5 PRINTED COPY FOR PERSONAL READING-.5.8% ONLY. NOT FOR DISTRIBUTION.

International Venture Domestic Turnaround/ Debut Domestic Domestic Buyout/ Domestic Growth International Buyout/ Domestic Venture Domestic Capital Distressed Debt Buyout/Corporate Corporate Finance Equity Corporate Finance Capital Mezzanine (57 funds) (68 funds) Finance (591 funds) (31 funds) (176 funds) (422 funds) (56 funds) -10-10 120 funds Bottom Quartile Multiple Median Quartile Multiple Top Quartile Multiple Bottom Quartile IRR Median IRR Top Quartile IRR

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BuYoutS |​August 13, 2012 www.buyoutsnews.com Cover​Story

adjust their strategies to new economic real- large amounts of [turnaround] capital chas- est deals at cost, the firm through dividend ities and not to have to care for sick portfo- ing falling knives and being incinerated recaps has returned all invested capital plus lio companies purchased in healthier times. contemporaneously with their invest- a profit in three portfolio companies, Some firms enjoyed far more than luck. ments,” said Psaros. among other distributions. They were patient. “One thing we learned The firm, which closed a $2 billion fund As of year-end, the KPS Special Situations is that in the first 12 months of a downturn in November 2007, deployed its capital very Fund III LP had generated a 1.70x invest- you don’t invest,” said Michael Psaros, selectively until 2011, when finally condi- ment multiple and a net IRR of 22.50 per- managing partner and co-founder of New tions turned to its liking. In the last 12 cent for backer California Public Employees’ York turnaround shop KPS Capital months the firm has seen a burst of activity, Retirement System (after a premium carried Partners, pointing to the 20 years of expe- investing 35 percent of the fund’s capital, interest of 25 percent) . That makes it one of rience he and his partners have investing and launching five platform companies, out the best-performing in our collection of together, through four down cycles. In fact, of the 10 in the fund; its latest is Waupaca 2007 vintage funds. prices looked too high to KPS Capital in Foundry, one of the world’s largest iron Vista Equity Partners Fund III takes the both 2008 and 2010, while the year in foundry companies. The firm still has 25 gold medal for the top-performing 2007 between saw many turnaround firms percent of the fund left to deploy before domestic buyout fund in our database for invest heavily only to realize the economy November 2013, when its six-year invest- which we have IRRs (see table, p. 6). Through still had a ways to fall before rebounding ment period ends. While yet to exit any of March 31 the fund, earmarked for invest- only feebly. “We stood back and watched its Fund III investments, and holding its lat- ments in software and technology companies,

Oregon PERS Domestic Buyout Portfolio Leads The Way (All Domestic Buyout/Corporate Finance Funds Through Vintage 2007)

20 19.4%

17.1% 16.54% 15.9% 15.6%

14.6% 15 14.3% 14.1% 13.8% 13.9% 13.9% 13.3%

12.3%

11.3% 11.2% 10.6% 10.4% 10 8.7% 8.7% 8.6% 8.4% 8.3% 8.3% 8.4% 8.5% 8.1% 8.0%

6.3% 6.1%

4.5% 4.3% 5 4.0%

2.9% 3.1% 2.4% 2.0% 2.2% 1.6% 1.7 1.4% 1.9 1.8 1.6% 1.8 1.8 1.6 1.5 1.5 1.8 1.4 1.3 1.5 1.6% 1.5 1.5 1.5 1.5 1.5 1.2 1.3 1.3 1.3 1.3 1.2 1.3 1.3 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.0 1.1 1.11.2

0

1.2% CalPERS CalSTRS Colorado Connecticut CPPIB Florida Kansas NY State NYC NYC Fire NYC Teachers' Oregon Pennsyl- University Washington PRINTED(169 funds) (97 COPY funds) PERA FORSERS PERSONAL(41 funds) SBA PERS READINGCommon Employees' ONLY. Department Police NOT Retirement FOR PERS DISTRIBUTION.vania of SIB (74 funds) (32 funds) (49 funds) (29 funds) (96 funds) Retirement Pension Pension System (107 funds) PSERS California (102 funds) System Fund Fund of NYC (64 funds) (69 funds) (52 funds) (46 funds) (54 funds) (58 funds) -5 Bottom Quartile Multiple Median Quartile Multiple Top Quartile Multiple Bottom Quartile IRR Median IRR Top Quartile IRR

Source: The limited partners; not all funds provided both IRR and investment multiples 73598.qxd:Webvision ready 8/17/12 1:13 PM Page 5

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has generated a 33.80 percent IRR and a 2.08x over its 12-year history. And the half-dozen sitions. EBITDA grew to $121 million from investment multiple for backer Oregon Public or so platform companies in the 2007 vin- $47 million over a five-year holding period Employees Retirement System . Robert F. tage fund barely seemed to have touched by and the firm ended up generating a 5.4x Smith , the chairman and CEO of Vista Equity, the weak economy: EBITDA growth across cash-on-cash return on the deal, according attributed that result in part to “exceptional the portfolio stands at 4.2x, Smith said. to Smith. transaction execution” and to a “re lentless” One of the best-performing companies Vista Equity’s performance has been so focus on im proving company performance. A from Fund III was Sunquest Information consistently strong that, for its oversub- 12-member consulting team on staff intro- Sys tems, which the firm sold to Roper scribed $3.5 billion fourth fund closed this duces some 50 best practices (so-called Vista Industries Inc. late last month for $1.4 bil- spring, LPs agreed to a 30 percent carried Specific Operational Im provements, or Vista lion. Under Vista Equity’s ownership, the interest should the firm achieve a 3x invest- SOPs) to portfolio companies, including a sys- laboratory diagnostics software company ment multiple. tem of staff training. “We install them in every became more focused by reducing its new- In easier fundraising times a perform- single company we buy, without fail,” said product-development channel to fewer ance-based carry like that might be taken as Smith. “Our involvement is measured in man- than 20 products from some 57. It expand- symptomatic of a bubble. Today, with LPs years, not man-hours.” ed sales of a promising bar-code-based highly selective, and determined to drive The effort pays off. According to Smith, specimen collection management system down costs, it’s a welcome reminder that the firm has yet to lose money on any of its that reduces errors in hospital lab work. investors are still willing to reward hard more than 60 control-stake transactions And it completed a series of add-on acqui- work and exceptional results.O

How The Mega-Firms Fared (All Fund Types, All Vintage Years, Through 2007)

Apollo 1.4 Management (9 funds) 7.9% 1.1 Bain Capital Median Multiple Median IRR (9 funds) 7.9%

Blackstone 1.4 Group (9 funds) 14.6%

Carlyle Group 1.7 (29 funds) 15.6% Hellman & 2.6 Friedman (4 funds) 26.7% Kohlberg Kravis 2.4 Roberts & Co. (17 funds) 16.8%

Permira Group 1.7 (6 funds) 26.6%

Providence 1.7 Equity Partners 20.0% (7 funds) TPG Capital 1.5% (12 funds) 8.5% PRINTED COPY FOR PERSONAL READING ONLY. NOT FOR DISTRIBUTION. 2.0% (8 funds) 12.2%

10 Source:0 The limited partners;5 not all funds provided both IRR and investment multiple;15 results are based only on20 the funds we have 25 30 in our database and shouldn't be considered complete or representative for individual firms ad on.qxd:Webvision ready 8/17/12 1:11 PM Page 2

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All-Star Domestic Buyout Funds From The 2000s (Select Top-Performing Funds By Vintage Year) Vintage 2007 Fund Name Investor Capital Contributed Distributions/ Value of Holdings Total Value Investment IRR Cash Out Multiple

Vista Equity Partners Fund III Oregon PERS $89,600,000 $48,000,000 $137,000,000 $185,000,000 2.08 33.80

Pegasus Partners IV, L.P. NYC Fire $6,943,132 $2,660,222 $11,812,514 $14,472,736 2.08 29.20 Department

Aurora Resurgence Fund (C), L.P. CalPERS $120,584,399 $26,830,830 $228,782,611 $255,613,441 2.10 26.90

KPS Special Situations Fund III, LP CalPERS $56,086,623 $4,070,314 $90,351,726 $94,422,040 1.70 22.50

EnCap Energy Capital Fund VII, L.P. CalSTRS $179,300,892 $71,750,816 21.67

Silver Lake Partners III, LP CalPERS $368,457,947 $283,566,235 $260,656,565 $544,222,800 1.50 19.70

Harvest Partners V, L.P. CalPERS $12,518,409 $2,864,458 $12,684,456 $15,548,914 1.20 18.80

Platinum Equity Partners II, LP New Mexico ERB $24,933,961 $7,090,881 $27,795,490 $34,886,371 1.40 18.34

Sheridan Production Partners I-B, L.P. CalPERS $24,700,795 $6,148,497 $30,683,347 $36,831,844 1.50 17.30

OCM Opportunities Fund VII-B, L.P. Washington SIB $193,500,000 $132,547,500 $166,916,511 $299,464,011 1.50 17.29

Kohlberg Investors VI, L.P. Idaho PERS $33,604,158 $15,549,525 $30,239,263 $45,788,788 1.36 16.65

Green Equity Investors V Oregon PERS $157,300,000 $47,300,000 $171,900,000 $219,200,000 1.41 16.50

Wayzata Opportunities Fund II, LLC CalPERS $140,000,000 $1,051,899 $269,345,107 $270,397,006 1.90 16.00

Industrial Opportunity Partners, L.P. CalPERS $18,202,588 $769,170 $23,613,312 $24,382,482 1.30 15.40

STG III, L.P. CalPERS $13,703,982 $2,193,211 $15,666,462 $17,859,673 1.30 15.10

Bertram I, L.P. CalPERS $16,196,678 $9,674,815 $14,429,518 $24,104,333 1.50 14.80

Olympus Growth Fund V, L.P. CalSTRS $39,625,627 $2,362,413 14.78

KRG Capital Fund IV, L.P. CalPERS $39,564,660 $1,325,547 $48,788,664 $50,114,211 1.30 14.50

GenNX360 Capital Partners, L.P. CalPERS $32,599,055 $4,989,257 $39,900,187 $44,889,444 1.40 14.40

Mainsail Partners II, L.P. CalPERS $5,916,884 $196,289 $7,617,126 $7,813,415 1.30 14.10

Clayton, Dubilier, and Rice Fund VIII, LP New Mexico ERB $23,217,399 $3,951,423 $23,864,804 $27,816,227 1.20 13.33

Vintage 2006 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

STAR Capital Partners II, L.P. University of $16,756,000 $863,000 $23,782,000 $24,645,000 1.47 49.40 California

HIG Capital IV University of $2,118,000 $843,000 $2,654,000 $3,497,000 1.65 36.50 California PRINTEDEnCap Energy Capital FundCOPY VI, L.P. FOR PERSONALCalSTRS READING$137,561,950 $136,079,811 ONLY. NOT FOR DISTRIBUTION.26.03 KSL Capital Partners Supplemental II TE, L.P. Washington SIB $21,123,371 $4,959,746 $24,505,747 $29,465,493 1.40 21.65

Centerbridge Capital Partners Oregon PERS $298,600,000 $240,700,000 $209,500,000 $450,200,000 1.81 21.10 ad on.qxd:Webvision ready 8/17/12 1:11 PM Page 3

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All-Star Domestic Buyout Funds From The 2000s (Select Top-Performing Funds By Vintage Year) Vintage 2006 (continued) Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

Capital Partners Income Fund, L.P. NYC Police $13,783,110 $6,104,507 $13,526,389 $19,630,896 1.42 18.30

OFS Investments UTIMCO $11,536,728 $30,714,904 $0 $30,714,904 2.66 15.91

Acon-Bastion Partners II, L.P. CalPERS $56,563,324 $11,385,061 $74,611,754 $85,996,815 1.50 14.70

AEA Investors 2006 Fund, L.P. NYC Teachers $15,518,840 $3,867,704 $16,756,414 $20,624,118 1.33 14.36

Arsenal Capital Partners II, L.P. NYC Teachers $12,990,826 $1,047,942 $17,110,839 $18,158,781 1.40 14.32

CCMP Capital Investors II, L.P. NYC Police $13,286,536 $1,926,717 $17,568,198 $19,494,915 1.47 14.30

Francisco Partners II Oregon PERS $93,700,000 $58,900,000 $80,500,000 $139,400,000 1.49 13.90

Shamrock Capital Growth Fund II L.P. University of $37,974,000 $15,626,000 $30,907,000 $46,533,000 1.23 13.10 California

Ares Corporate Opportunities Fund II, L.P. NYC Teachers $31,660,506 $21,907,397 $25,752,024 $47,659,421 1.51 13.09

Thoma Cressey Fund VIII, L.P. Florida SBA $49,738,934 12.76

Falconhead Capital Partners II, LP CalPERS $46,790,624 $4,797,875 $63,386,643 $68,184,518 1.50 12.10

KSL Capital Partners II, L.P. Washington SIB $98,928,238 $59,955,853 $60,596,196 $120,552,049 1.20 11.75

Vintage 2005 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

Clessidra Capital Partners CalPERS $68,791,305 $67,604,385 $25,381,597 $92,985,982 1.40 53.60

SCF-VI, L.P. UTIMCO $32,362,524 $39,895,556 $34,122,194 $74,017,750 2.29 31.62

JMI Equity Fund V, L.P. CalSTRS $28,885,000 $36,847,902 23.65

Garnett & Helfrich Capital, L.P. CalPERS $11,149,300 $11,038,113 $20,984,510 $32,022,623 2.90 23.30

Littlejohn Fund III Oregon PERS $49,400,000 $46,600,000 $42,100,000 $88,700,000 1.83 22.50

ABRY Partners V, L.P. CalPERS $4,507,008 $7,007,575 $2,432,928 $9,440,503 2.10 19.70

Brynwood Partners V L.P. CalPERS $4,812,162 $4,690,320 $4,846,922 $9,537,242 2.00 15.00

Snow Phipps Group, L.P. NYC Fire $4,691,537 $1,313,343 $4,796,209 $6,109,552 1.30 13.30 Department

Carlyle/Riverstone Glob Engy & Power III CalPERS $238,751,699 $145,749,057 $244,317,885 $390,066,942 1.60 13.20

Friedman Fleischer & Lowe Capital Partners II, L.P. CalPERS $14,138,354 $14,384,692 $10,220,301 $24,604,993 1.70 12.80

Audax Private Equity Fund II, L.P. CalPERS $74,623,763 $80,757,957 $35,203,861 $115,961,818 1.60 12.70

Pharos Capital Partners II-A CalPERS $23,000,000 $7,596,309 $27,981,049 $35,577,358 1.50 12.40 PRINTED COPY FOR PERSONAL READING ONLY. NOT FOR DISTRIBUTION. Spectrum Equity Investors V, LP CalSTRS $95,474,896 $54,979,363 12.33

Carlyle Partners IV, L.P. Montana $31,662,839 $21,796,010 $33,779,557 $55,575,567 1.68 12.00

Southvest Fund V, L.P. CalPERS $4,299,280 $2,767,964 $3,387,679 $6,155,643 1.40 11.50 ad on.qxd:Webvision ready 8/17/12 1:11 PM Page 4

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All-Star Domestic Buyout Funds From The 2000s (Select Top-Performing Funds By Vintage Year) Vintage 2004 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

Platinum Equity Capital PartnersA, L.P. PA PSERS $97,431,167 $213,061,886 $28,154,490 $241,216,376 2.48 60.61

Lincolnshire Equity Fund III, L.P. NYC Fire $4,114,959 $5,456,145 $2,970,548 $8,426,693 2.05 41.10 Department

First Reserve Fund X Oregon PERS $100,000,000 $143,400,000 $42,500,000 $185,900,000 1.86 37.20

Carlyle Strategic Partners I, L.P. CalPERS $33,915,756 $83,759,053 $2,291,572 $86,050,625 2.50 31.20

Hellman & Friedman Capital Partners V CalPERS $178,557,871 $270,858,577 $154,989,394 $425,847,971 2.40 28.30

Bowmark Capital Partners III-A L.P. 4 CalPERS $12,935,260 $24,199,623 $7,874,930 $32,074,553 2.50 28.00

Odyssey Investment Partners III, L.P. Montana $21,853,872 $33,675,322 $15,449,461 $49,124,783 2.09 27.88

Endeavour Capital Fund IV Oregon PERS $45,600,000 $75,500,000 $61,900,000 $137,400,000 3.02 27.60

Endeavour Capital Fund IV, L.P. Washington SIB $45,552,070 $63,985,332 $64,165,269 $128,150,601 2.80 25.35

Sorenson Capital Partners, L.P. CalPERS $9,988,802 $15,007,011 $2,299,496 $17,306,507 1.70 25.00

Milestone Partners II, L.P. PA PSERS $26,375,867 $33,456,236 $18,219,264 $51,675,500 1.95 24.83

Vintage 2003 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

Lime Rock Partners II, L.P. CalPERS $8,761,576 $27,852,845 $136,241 $27,989,086 3.20 54.80

Carlyle/Riverstone Glob Engy & Power II CalPERS $73,471,142 $139,048,207 $49,595,247 $188,643,454 2.60 54.50

Blackstone Capital Partners IV, L.P. NYC Employees $29,337,263 $60,904,526 $17,730,402 $78,634,928 2.68 40.00

SCF-V, L.P. UTIMCO $19,529,527 $26,003,743 $23,096,778 $49,100,521 2.51 35.16

AG Capital Recovery Partners IV, L.P. UTIMCO $14,166,086 $22,311,017 $76,343 $22,387,360 1.58 28.69

United States Power Fund, L.P. CalPERS $15,000,000 $26,733,525 $1,286,335 $28,019,860 1.90 27.30

GTCR Fund VIII, L.P. Washington SIB $115,655,992 $163,691,598 $43,186,804 $206,878,402 1.80 25.63

ArcLightEnergy Partners Fund I, L.P. UTIMCO $27,344,118 $49,218,825 $386,177 $49,605,002 1.81 24.45

Vintage 2002 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

WLR Recovery Fund II, L.P. CalPERS $50,000,000 $110,849,053 $7,808,428 $118,657,481 2.40 78.90

KPS II Connecticut $30,623,505 $76,490,196 $25,089,559 $101,579,755 3.30 64.20

PRINTEDEnCap Energy Capital FundCOPY IV-B, L.P. FOR PERSONAL UTIMCO $17,380,345 READING $29,663,661 ONLY. $57,591 NOT FOR$29,721,252 DISTRIBUTION. 1.71 50.51 ad on.qxd:Webvision ready 8/17/12 1:11 PM Page 5

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All-Star Domestic Buyout Funds From The 2000s (Select Top-Performing Funds By Vintage Year) Vintage 2002 (continued) Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

OCM Opportunities Fund IVb Oregon PERS $90,000,000 $146,400,000 $0 $146,400,000 2.25 46.50

TSG 4 Colorado $39,222,970 $80,301,825 38.27

Fortress Investment Fund II, LLC Washington SIB $225,686,456 $314,788,180 $7,541,740 $322,329,920 1.40 35.98

Vintage 2001 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

T3 Partners II, L.P. CalPERS $49,540,480 $148,350,439 $8,199,593 $156,550,032 3.20 95.20

First Reserve Fund IX, L.P. Washington SIB $108,200,868 $308,010,240 $0 $308,010,240 2.80 48.12

Apollo Investment Fund V, L.P. NYC Fire $13,930,305 $31,145,278 $5,578,817 $36,724,095 2.64 39.50 Department

New York Life Capital Partners II, L.P. PA PSERS $193,279,467 $465,238,670 $47,199,054 $512,437,724 2.65 32.60

Cerberus Institutional Partners, L.P. (Series 2) PA PSERS $172,004,532 $422,280,748 $77,819,094 $500,099,842 2.90 27.17

Thoma Cressey Fund VII, L.P. CalSTRS $99,999,999 $138,419,571 23.71

J.H. Whitney V, L.P. CalSTRS $200,950,647 $390,683,860 23.09

Vintage 2000 Fund Name Investor Capital Distributions/ Value of Holdings Total Value Investment IRR Contributed Cash Out Multiple

GTCR Fund VII-A, L.P. Washington SIB $20,703,124 $57,693,996 $127,116 $57,821,112 2.80 83.01

Hellman & Friedman Capital Partners IV CalPERS $134,634,415 $377,066,283 $231,620 $377,297,903 2.80 34.60

Endeavour Capital Fund III Oregon PERS $24,500,000 $65,800,000 $1,000,000 $66,800,000 2.73 29.60

Fortress Investment Fund, L.P. Washington SIB $251,644,746 $572,372,903 $16,384,933 $588,757,836 2.30 25.71

TPG Partners III, L.P. CalPERS $127,300,772 $300,909,682 $21,518,029 $322,427,711 2.50 24.60

Providence Equity Partners IV Oregon PERS $215,700,000 $392,400,000 $18,000,000 $410,400,000 2.41 24.10

Carlyle Partners III, L.P. NYC Teachers $33,976,329 $68,178,514 $3,183,056 $71,361,570 2.10 23.29

Wingate Partners III, L.P. UTIMCO $16,983,866 $47,511,010 $1,899,224 $49,410,234 2.91 22.36

Cortec Group Fund III,L.P. UTIMCO $19,777,562 $40,492,809 $1,247,785 $41,740,594 2.11 21.90

GTCR Fund VII, L.P. Washington SIB $93,054,426 $218,964,772 $407,050 $219,371,822 2.40 21.84

PRINTED2000 Riverside Capital COPY Appreciation FundFOR PERSONAL Oregon PERS $46,600,000READING $78,900,000 ONLY. $12,900,000 NOT FOR $91,800,000 DISTRIBUTION. 2.02 21.00

Source: The limited partners; not all funds provide IRRs; see p. 1 1 for detailed explanation of our methodology ad on.qxd:Webvision ready 8/17/12 1:11 PM Page 6

Buyouts | August 13, 2012 www.buyoutsnews.com Cover story

Select Top Performers, Debut Domestic Buyout Funds (All Vintages Through 2007) Vintage Fund Name Investor Capital Distributions Value of Total Value Investment IRR Year Contributed Holdings Multiple 2004 Platinum Equity Capital PartnersA, PA PSERS $97,431,167 $213,061,886 $28,154,490 $241,216,376 2.48 60.61 L.P.

1993 TPG Partners, L.P. PA PSERS $24,375,251 $89,300,776 $0 $89,300,776 3.65 36.55

1997 WLR Recovery Fund I, L.P. CalPERS $50,000,000 $182,014,559 $120,111 $182,134,670 3.6 35.2

2002 Lindsay Goldberg & Bessemer L.P. PA PSERS $310,043,935 $578,569,171 $87,622,945 $666,192,116 2.15 33.97

1989 SCF Partners, L.P. UTIMCO $11,541,715 $35,957,845 $0 $35,957,845 3.12 33.71

1991 Joseph, Littlejohn & Levy Fund Oregon Public Employees $33,200,000 $86,500,000 $0 $86,500,000 2.66 33.3 Retirement Fund

1987 Wingate Partners, L.P. UTIMCO $9,634,328 $58,575,959 $0 $58,575,959 6.08 30.34

2003 United States Power Fund, L.P. California Emerging $15,000,000 $26,733,525 $1,286,335 $28,019,860 1.9 27.3 Ventures

1997 Veritas I * Connecticut $125,435,409 $321,662,707 $0 $321,662,707 2.6 26.90

2007 Aurora Resurgence Fund (C), L.P. CalPERS $120,584,399 $26,830,830 $228,782,611 $255,613,441 2.1 26.9

2000 Fortress Investment Fund, L.P. Washington State $251,644,746 $572,372,903 $16,384,933 $588,757,836 2.3 25.71

1999 Silver Lake Partners I, LP CalPERS $60,133,822 $146,259,080 $87,337 $146,346,417 2.4 25.5

2004 Sorenson Capital Partners, L.P. California Emerging $9,988,802 $15,007,011 $2,299,496 $17,306,507 1.7 25 Ventures

2003 ArcLightEnergy Partners Fund I, L.P. UTIMCO $27,344,118 $49,218,825 $386,177 $49,605,002 1.81 24.45

2002 BDCM Opportunity Fund, L.P. NYC Employees $22,680,595 $40,321,510 $21,267,695 $61,589,205 2.72 24.40

1994 Spectrum Equity Investors, L.P. PA PSERS $25,000,000 $52,261,392 $0 $52,261,392 2.09 23.59

2002 Sterling Capital Partners, L.P. PA PSERS $84,229,630 $124,548,732 $76,259,643 2.38 23.48

2005 Garnett & Helfrich Capital, L.P. California Emerging $11,149,300 $11,038,113 $20,984,510 $32,022,623 2.9 23.3 Ventures

2004 Lion Capital Fund I Oregon Public Employees $108,500,000 $168,300,000 $15,600,000 $183,900,000 1.91 23.1 Retirement Fund

1999 LLR Equity Partners, L.P. PA PSERS $61,250,000 $129,535,601 $5,919,018 $135,454,619 2.21 22.12

2001 PNC Equity Partners, L.P. PA PSERS $39,276,813 $69,099,692 $6,754,497 $75,854,189 1.93 21.37

1992 The Texas Growth Fund - 1991 Trust UTIMCO $8,997,177 $22,161,319 $0 $22,161,319 2.46 21.2

2006 Centerbridge Capital Partners Oregon Public Employees $298,600,000 $240,700,000 1.81 21.1 Retirement Fund

2001 Arsenal Capital Partners Fund, L.P. University of California $21,312,000 $35,884,000 $4,949,000 $40,832,000 1.92 20.90

1998 Tennessee Valley Ventures, L.P. Hypothetical LP 5.94 20.80

1996 Willis Stein & Partners, L.P. PA PSERS $25,000,000 $53,576,381 $0 $53,576,381 2.14 20.65 PRINTED COPY FOR PERSONAL READING ONLY. NOT FOR DISTRIBUTION. 2000 SPV VCOC, L.P. CalPERS $30,601,370 $43,489,189 $113,449 $43,602,638 1.4 20.5

1994 Bastion Capital Fund PA PSERS $12,246,895 $24,148,319 $0 $24,148,319 1.97 18.93

2006 Capital Partners Private Equity NYC Police $13,783,110 $6,104,507 $13,526,389 $19,630,896 1.42 18.3 Income Fund, L.P. ad on.qxd:Webvision ready 8/17/12 1:11 PM Page 7

www.buyoutsnews.com August 13, 2012 | Buyouts Cover story

Select Top Performers, Debut Domestic Buyout Funds (All Vintages Through 2007) Vintage Fund Name Investor Capital Distributions Value of Total Value Investment IRR Year Contributed Holdings Multiple 1990 Zell/Chilmark Fund Oregon Public Employees $29,100,000 $63,900,000 $0 $63,900,000 2.41 17.9 Retirement Fund

1999 KRG Capital Fund I PA PSERS $43,261,578 $91,634,458 $0 $91,634,458 2.12 17.75

2004 Gores Capital Partners I L P Florida SBA $35,827,451 17.64

2007 Sheridan Production Partners I-B, L.P. Capital Link Fund $24,700,795 $6,148,497 $30,683,347 $36,831,844 1.5 17.3

1995 Cypress Equity Group Trust Fund Florida SBA $879,231 16.33

2001 MatlinPatterson Global Opportunities UTIMCO $25,828,685 $45,002,795 $22,926 $45,025,721 1.74 15.98 Partners L.P.

2006 OFS Investments UTIMCO $11,536,728 $30,714,904 $0 $30,714,904 2.66 15.91

1999 FdG Capital Partners NYC Fire Department $24,256,713 $37,935,939 $6,435,530 $44,371,469 1.83 15.7

2007 Industrial Opportunity Partners, L.P. Capital Link Fund $18,202,588 $769,170 $23,613,312 $24,382,482 1.3 15.4

2002 The Resolute Fund, L.P. CALSTRS $94,931,723 $82,376,525 15.07

2007 Bertram Growth Capital I, L.P. California Emerging $16,196,678 $9,674,815 $14,429,518 $24,104,333 1.5 14.8 Ventures

2003 SunTX Fulcrum Fund Colorado $15,000,000 $1,192,383 14.55

2007 GenNX360 Capital Partners, L.P. Capital Link Fund $32,599,055 $4,989,257 $39,900,187 $44,889,444 1.4 14.4

2004 Elevation Partners Oregon Public Employees $93,400,000 $49,800,000 $93,600,000 $143,400,000 1.57 13.9 Retirement Fund

2003 Ares Corporate Opportunities Fund, NYC Fire Department $4,815,370 $5,338,384 $2,154,507 $7,492,891 1.56 13.6 L.P.

2001 ICV Partners, L.P. CalPERS $8,318,271 $13,412,791 -$1,813 $13,410,978 1.6 13.4

2000 New Mountain Partners, L.P. California Emerging $85,776,190 $116,839,166 $11,755,174 $128,594,340 1.5 13.4 Ventures

Source and Explanation: The source for the tables above and for the statistics generat- backed the same fund, the editors selected the fund with the most complete set of data pro- ed for the accompanying story is return data from the California Public Employees' vided by the investor; beyond that the editors would select the fund with the highest reported Retirement System (including the underlying funds of select funds of funds with data return. Investors typically report IRRs net of fees and . However, the editors were as of 12/31/2011), California Teachers' Retirement System (9/30/2011), Canada Pension able to confirm this only with CalPERS, California Regents, Connecticut, Idaho, Montana, New Plan Investment Board (12/31/2011), Colorado Public Employees' Retirement Association York City Employees, New York Fire, New York Police, New York Teachers and Washington. (12/31/2011), Commonwealth of Pennsylvania Public School Employees Retirement Colorado PERA said it uses dollar-weighted IRRs, which is a more common calculation than System (9/30/2011), Connecticut State Employees Retirement System (12/31/2011), time-weighting the figure. UTIMCO said its IRR calculation incorporates both dollar amounts Kansas Public Employees Retirement System (3/31/2012), Maine Public Employees and timing factors. Buyouts was unable to learn the IRR formulation for the others. Not all Retirement System (12/31/2011), Montana Board of Investments (12/31/2011), New Jersey funds provide both investment multiples and IRRs State Investment Council (4/30/2012), New Mexico Educational Retirement Board (12/31/2011), Employees' Retirement System (12/31/2011), New York City The investment multiple represents the sum of distributions plus estimated value of Fire Department (9/30/2011), New York City Police Pension Fund remaining holdings divided by drawn-down capital. Several investors provide investment (12/31/2011), New York State Common Retirement Fund (3/31/2011), Oklahoma Police multiples; where possible Buyouts calculated them for those that did not. Investors typical- Pension & Retirement System (5/31/2012), Oregon Public Employees Retirement Fund ly did not provide a "fund type," such as domestic buyout fund, and Buyouts editors used (3/31/2012), Public Employee Retirement System of Idaho (9/30/2011), Regents of the their best judgment to provide this. Global funds headquartered in the United States were UniversityPRINTED of California (9/30/2011),COPY State FOR Board of PERSONALAdministration of Florida (12/31/2011), READINGcounted as ONLY. international funds. NOT Included FOR in the domestic DISTRIBUTION. buyout fund category are diver- Teachers' Retirement System of the City of New York (12/31/2011), University of Texas sified private equity funds, turnaround and distressed debt funds, and infrastructure funds; Investment Management Co. (2/29/2012) and Washington State Investment Board excluded were growth equity funds, real estate funds, mezzanine funds and private debt (12/31/2011). funds. Many of the investors supply a detailed explanation of how their fund results should be interpreted. If you would like a link to these explanations, please send an e-mail to Our database does not include duplicate funds. In most cases where more than one investor eamon.beltran@thomson reuters.com.

(#73598) Reprinted with permission from the August 13, 2012 issue of Thomson Reuters Buyouts. Copyright 2012 Thomson Reuters. To subscribe to Thomson Reuters Buyouts contact Greg Winterton at [email protected]. For more information about reprints from Thomson Reuters Buyouts please contact PARS International Corp. at 212-221-9595 x426.