United States Private Equity Buyout Review First Half 2018 Table of Contents

Gary Hershorn, Reuters United States Private Equity Buyout Review First Half 2018 Table of Contents

U.S. PE Buyout Market in H1 2018 3 $ Invested and # Companies Financed 4 Investment by Transaction Type 6 PE Investment vs. all M&A 7 Top PE Buyout Deals 8 Investment by Company Location 9 Investment by Company Sector 12 U.S. Firms’ Investment Abroad 13 Buyout Funds Raised 15 PE Buyout-Backed Exits 16 PE Buyout Returns 17 Explanatory Notes & Contacts 18

U.S. Private Equity Buyout Market Activity: First Half 2018

U.S. Buyout-PE Market Trends

The first half of 2018 within the U.S.’ buyout and related private equity market saw a total of 1,333 transactions collectively valued at $138.5 billion. Deal values reached their second highest level in recorded history, failing to reach the colossal first half of 2007 which surpassed the $200 billion mark. Despite this, values were up 113% year-over-year.

This strong showing was largely thanks to a handful of mega-deals. Heading the top deals list for the half was the sale of a 55% stake in Thomson Reuters’ Financial & Risk business, Refinitiv, to a consortium led by Blackstone Group in a deal valued at $17.0 billion. Other investment partners involved in the deal included Canada Pension Plan Investment Board and Singapore sovereign wealth fund GIC. Other top deals during the half were the announced $9.9 billion acquisition of Envision Healthcare by KKR, as well as the takeover of Chicago-based U.S. mall owner GGP for a cash consideration of $9.3 billion by Brookfield Asset Management.

U.S. Market Trends by Region

New York-based companies were involved in deals valued at $30.1 billion during the first six months of the year, more than quadruple the figure from the same period last year. The aforementioned Refinitiv deal along with Blackstone’s $7.6 billion acquisition of real estate investment trust company, Gramercy Property Trust, were responsible for more than 80% of this total.

U.S. Investor Activity in Global Markets

United States buyout and related PE funds participated in 153 non-U.S. deals during H1 collectively valued at $66.1 billion. While this reflected an decrease in deal volumes of 24% from the same period a year earlier, recorded deal values were more than double what they had been in the first half of 2017.

Top foreign deals for the half include the involvement of Bain Capital and Dell Technologies Capital in the $17.8 billion sale of Toshiba’s memory business, along with The Carlyle Group’s involvement in the acquisition of AkzoNobel’s Specialty Chemicals division for $12.6 billion.

U.S. Fund Performance

The performance of U.S. buyout funds continued to show over-performance to public market comparators through to the end of the first quarter of 2018. Published data provided by Cambridge Associates shows US buyout funds returning a since inception IRR of 13.1% as of the end of Q1. By comparison, the public markets have shown a return of 8.9%. Historical Private Equity - Buyout Investment in U.S. Companies: Deal Values

Deal values reached $138.5 billion in the first half, up 113% from the same period last year. This was the second highest first half on record behind 2007, which saw a total of $206.4 billion.

$250

$227.8

$200

$184.1

$150 $160.6 $160.7 $145.6 $141.9 $138.5 $131.2 $123.9 $100 $111.8

Deal Values ($ Billions) ($ Values Deal $50 $58.5

$0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Q1 Q2 Q3 Q4 Historical Private Equity - Buyout Investment in U.S. Companies: Deal Volumes

Similar to deal values, volumes were up as well, with 1,333 deals announced or completed in the first half, up 15% from 2017.

3,000

2,500 2,384 2,234 2,000 2,110 2,111

2,028

1,722 1,790 1,500 1,585 1,574

1,333 # of Deals of # 1,000 1,095

500

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Q1 Q2 Q3 Q4 PE-Buyout Dealmaking: Deal Volumes by Transaction Type

Add-on acquisitions comprised 51% of all deals in the first half, a share that has grown each and every year since 2011, when acquisitions for expansion accounted for only 36% of deals.

100%

90%

80%

70%

60%

50%

40% # of Deals of # 30%

20%

10%

0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 Control Stake Minority Stake Acquisition for Expansion Restructuring Secondary Other PE-Buyout Dealmaking Versus All M&A of U.S. Targets

With M&A deal volumes down 12% year-over-year, and PE deal volumes up 15%, PE deals as a share of traditional M&A rose to 21.3% in the first six months.

800 30%

700 25% 600 20%

500

400 15%

# of Deals of # 300 10% 200 5% 100

0 0% Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18

# of PE Deals PE Deals as % of all M&A Activity Top U.S. Private Equity Deals, First Half 2018

Portfolio Company Investors

Deal Value Rank Company Name Location Sector Investing Firms (Disclosed) ($ Billions) Blackstone Group, Canada Pension Plan Investment 1 Refinitiv $17.0 New York, NY Financial Data Board, GIC 2 Envision Healthcare $9.9 Nashville, TN Healthcare Services KKR 3 General Growth Properties $9.3 Chicago, IL Property Management Brookfield Asset Management 4 Zephyr Renewables $7.8 Princeton, NJ Electric Services Global Infrastructure Partners 5 Gramercy Property Trust $7.6 New York, NY Real Estate Investment Blackstone Group Energy Capital Partners, Access Industries, Canada 6 Calpine Corp $5.6 Houston, TX Power Generation Pension Plan Investment Board 7 Verscend Technologies $4.9 Waltham, MA Healthcare Technology Veritas Capital 8 LaSalle Hotel Properties $4.8 Bethesda, MD Real Estate Investment Blackstone Group

9 Education Realty Trust $4.6 Memphis, TN Real Estate Investment Greystar Real Estate Partners Westinghouse Electric Cranberry 10 $4.6 Nuclear Power Brookfield Asset Management Company Township, PA U.S. PE-Buyout Rankings, by State

State Rankings H1 2018 # Deals # Deals % H1 2018 Deal Values H1 2017 Deal Values State % Change Rank H1 2018 H1 2017 Change ($ millions) ($ millions) 1 New York 95 78 21.8% 30,129.5 7,480.0 302.8% 2 California 180 153 17.6% 15,319.8 8,461.5 81.1% 3 Tennessee 26 28 -7.1% 14,636.8 6,219.4 135.3% 4 Texas 173 152 13.8% 12,433.8 10,292.9 20.8% 5 Illinois 85 64 32.8% 12,273.9 5,050.0 143.0% 6 Massachusetts 54 41 32.8% 8,026.0 1,695.8 373.3% 7 New Jersey 42 28 50.0% 7,849.0 279.7 2,706.4% 8 Pennsylvania 55 48 14.6% 6,790.0 22.3 30,416.9% 9 Maryland 22 22 0.0% 5,920.0 178.0 3,225.8% 10 Florida 70 67 4.5% 4,405.0 4,479.2 -1.7% 11 Michigan 28 41 -31.7% 3,435.0 44.1 7,681.2% 12 Wisconsin 21 26 -19.2% 3,302.1 573.1 476.2% 13 Georgia 39 35 11.4% 2,900.0 2,874.1 0.9% 14 North Carolina 39 20 95.0% 2,541.5 1,745.9 45.6% 15 Virginia 30 35 -14.3% 2,432.1 3,044.4 -20.1% U.S. PE-Buyout Rankings, by State

State Rankings H1 2018 # Deals # Deals % H1 2018 Deal Values H1 2017 Deal Values State % Change Rank H1 2018 H1 2017 Change ($ millions) ($ millions) 16 Oklahoma 11 12 -8.3% 1,300.0 1,204.7 7.9% 17 Louisiana 9 9 0.0% 1,020.0 30.0 3,299.9% 18 Colorado 37 30 23.3% 968.9 1,662.9 -41.7% 19 Ohio 55 51 7.8% 472.2 255.4 84.9% 20 D. of Columbia 9 2 350.0% 470.0 - N/A 21 Missouri 21 19 10.5% 430.2 - N/A 22 Arkansas 6 2 200.0% 405.0 23.2 1,645.6% 23 Iowa 4 6 -33.3% 282.8 - N/A 24 Connecticut 13 14 -7.1% 209.8 10.4 1,911.3% 25 Minnesota 27 28 -3.6% 180.0 1,588.9 -88.7% 26 Delaware 4 3 33.3% 100.0 155.3 -35.6% 27 Indiana 18 18 0.0% 81.0 - N/A 28 Washington 19 15 26.7% 61.0 802.9 -92.4% 29 Rhode Island 6 2 200.0% 52.5 - N/A 30 Oregon 12 4 200.0% 44.7 - N/A U.S. PE-Buyout Investment by Region Companies located in the New York metropolitan area captured the largest share of deal values with $30.3 billion credited across 150 deals.

$17.4 150 $30.3 New York Tri-State 343 $9.9 Great Lakes 152 Mid-Atlantic $138.5 Billion $13.8 Southern US 1,333 Deals Invested 66 California Region $19.1 69 Southwestern US 163 $15.3 Southeastern US 180 $16.8 Other $16.1 210 U.S. PE-Buyout Investment by Sector, First Half 2018

Computer software companies comprised 19% of all investment rounds. Despite a share of only 6%, Financial companies captured 22% of all deal values, thanks to a number of mega- deals during the half.

First Half 2018 Total # of Deals First Half 2018 Total Deal Values ($ Billions) 300 $35

250 $30

$25 200

$20 150 $15 100 $10

50 $5

0 $0

Computer Software Industrial/Energy Internet Specific Consumer Related Medical/Health Business Serv. Financial Services Manufact. Transportation Computer Hardware Semiconductor/Electr Other PE Investments by U.S. Firms in non-US Companies

U.S. firms invested in 153 deals with non-U.S. companies in the first half, with deal values of $66.1 billion. Despite a 24% drop in volumes year-over-year, the values of these deals increased by 105%.

$45 160

$40 140

$35 120 $30

100

$25 80 $20

60 Deals of # $15 40

Deal Values ($ Billions) ($ Values Deal $10

$5 20

$0 0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18

Total Deal Values, Canadian & Non-Canadian Investors # of Deals Top PE Investments by U.S. in Non-U.S. Companies, First Half 2018

Portfolio Company Investors

Deal Value Rank Company Name Location Sector Investing Firms (Disclosed) ($ Billions) Bain Capital, Dell Technologies Capital, Apple, SK Hynix, 1 Toshiba Memory Corp $17.8 Tokyo, Japan Memory Chips Seagate Technology, Kingston Technology, Toshiba, Hoya Corporation AkzoNobel NV - Specialty 2 $12.6 Amsterdam, Netherlands Specialty Chemicals The Carlyle Group, GIC Chemicals Business Property GIC, Amundi, Colony NorthStar, Credit Agricole AccorInvest $5.4 Courcouronnes, France 3 Management Assurances

4 Neptune Energy Group $3.9 London, United Kingdom Oil & Gas The Carlyle Group, CVC, China Investment Corporation Husky Injection Molding Plastics 5 $3.9 Bolton, Canada Platinum Equity Systems Manufacturing

6 Recordati $3.6 Milan, Italy Pharmaceuticals CVC, PSP Investments, StepStone Group

7 ZPG $3.0 London, United Kingdom Real Estate Software Silver Lake Partners Pure Industrial Real Estate Industrial Properties 8 $2.9 Vancouver, Canada Blackstone Group, Ivanhoe Cambridge Trust REIT

9 Mitel Networks Corp $2.0 Ottawa, Canada Telecommunications Searchlight Capital Partners Financial Trading TPG Capital, The Carlyle Group, Taikang Insurance Du Xiaoman Financial $1.9 Beijing, China 10 Platform Group, ABC International Holdings PE-Buyout Fundraising by U.S. Firms

134 funds raised $91.1 billion during the first six months of the year, remaining relatively in line with the fundraise figures for the previous two years.

$200

$180 $189.6 $178.0 $160 $169.0

$140 $135.7 $133.7 $120 $125.7 $100 $110.2

$80 $91.1 $75.3 $60

$40 $49.9 $52.3

$20

$0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Q1 Q2 Q3 Q4 U.S. PE-Backed Exits, First Half 2018

262 exits were completed in H1, resulting in exit volumes being down 3% year-over-year. Total exit proceeds were $43.6 billion, an increase of 4.3%.

Portfolio Company Investors

Deal Value Rank Company Name Location Sector Exiting Investors (Disclosed) ($ Billions)

1 Oncor Electric Delivery Company $18.8 Dallas, TX Power Generation OMERS Private Equity, GIC

2 Signode Industrial Group $3.9 Glenview, IL Consumer Packaging The Carlyle Group

3 Wave Broadband $2.4 Kirkland, WA Telecommunications Oak Hill Capital Partners, GI Partners KKR, Sequoia Capital, Delta Partners, Canada Pension Plan Aricent $2.0 Santa Clara, CA Digital Engineering 4 Investment Board 5 Polycom $2.0 San Jose, CA Communications Technology Siris Capital

250

200 150 100

# of Exits of # 50 0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18

M&A Public Secondary Sale Cambridge Associates: Private Equity Fund Performance

US private independent buyout funds have seen a return of 13% since inception, a yield of more than 4% above public market benchmarks.

United States

25%

20%

15% 13.1%

10%

8.9% 5%

-5% Q1'99 Q1'00 Q1'01 Q1'02 Q1'03 Q1'04 Q1'05 Q1'06 Q1'07 Q1'08 Q1'09 Q1'10 Q1'11 Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 Q1'18

Buyout Funds mPME Russell 3000 Index

Source: Cambridge Associates, FTSE Russell Explanatory Notes

1. Data collected and analyzed by Thomson Reuters for this statistical report were drawn from a variety of sources including Thomson Reuters M&A databases, regulatory filings, press releases, and proprietary reports from US and non-resident venture capital firms, private equity firms, law firms, and other service providers.

2. Key statistical indicators (e.g., total disbursements, per quarter or per annum) are influenced by the fact that a substantial fraction of buyout and other PE deals are not fully disclosed. For instance, “dollars invested” in a given period pertain only to those deals with values that have been published or confidentially disclosed to Thomson Reuters.

3. The data also highlight the deal-making of US funds in non-US companies. “Dollars invested” pertain to the total value of disclosed deals in which US funds have participated and not the specific US financial contributions to these deals. Deals are first tracked as of announcement date, then tracked as of completion date upon closing.

4. Statistical data reflect all essential forms of buyout-PE deal-making, including control-stake acquisitions of businesses, minority equity investments, restructuring and special-situations transactions, mezzanine deals, acquisitions for expansion and other quasi-equity investments.

5. Fund performance data and public market equivalents are produced via the Cambridge Associates Benchmark Calculator, available through Thomson Reuters Eikon. Returns are for US buyout funds with vintage years of 1986 or greater, on a first cash flow basis, in US dollars, from inception to the end of the indicated quarter, under published data mode Q1 2018. Pooled internal rates of return are net of fees, expenses and carried interest. CA Modified Public Market Equivalent (mPME) replicates private investment performance under public market conditions. The public index’s shares are purchased and sold according to the private fund cash flow schedule, with distributions calculated in the same proportion as the private fund, and mPME NAV is a function of mPME cash flows and public index returns.

6. All current and previous years data is as of Tuesday, August 7th, 2018. Data is continuously updated and is therefore subject to change. All figures are in US dollars unless otherwise noted.

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