VOLUME 3, ISSUE 5 ■ JUNE 2018

PRIVATE DEBT SPOTLIGHT

IN THIS ISSUE PRIVATE DEBT IN ASIA: THE NEXT FRONTIER? 60% of Asia-focused funds closed in 2017 met or exceeded their initial target size. With this region historically somewhat FEATURE 2 overlooked in favour of North America and Europe, we Private Debt in Asia: take a look at the fund managers and investors beginning The Next Frontier? to turn to Asia-focused private debt. Find out more on page 2 FEATURE 6 The European Private Debt Opportunity THE EUROPEAN PRIVATE DEBT INDUSTRY NEWS 8 OPPORTUNITY

THE FACTS 88 ■ Sample Investors to 9 Europe-focused private debt funds are currently in market, Watch seeking just under €43bn, paving the way for strong fundraising for Europe-focused private debt funds in the ■ Private Debt 11 year ahead. In this extract from the Preqin Markets in in Europe Focus: Alternative Assets in Europe report, we examine in detail this promising area for private debt fundraising. ■ North-America 12 Focused Mezzanine Find out more on page 6 Funds

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www.preqin.com/contact | [email protected] PRIVATE DEBT IN ASIA: THE NEXT FRONTIER? PRIVATE DEBT IN ASIA: THE NEXT FRONTIER? We take a look at the fund managers and investors turning to opportunities in Asia, analyzing funds closed and currently in market, as well as the investors targeting the region.

nstitutional investors in 2018 are have seen increased fundraising success in higher than in 2016. While still dwarfed Iincreasing their exposure to private recent years. by the North America and Europe, Asia- debt strategies at a higher rate than focused fundraising has carved out a ever before, with many looking to both 2017 was a strong year for Asia-focused significant niche in the global private debt diversify their private debt portfolios and private debt fundraising, with 15 funds market. find less competed opportunities. Beyond reaching a final close, raising an aggregate the mature and competitive private debt $6.4bn in capital. This is the second highest Sixty percent of Asia-focused funds closed markets in North America and Europe, amount of capital raised targeting the in 2017 met or exceeded their initial target credit markets in Asia offer a relatively region to date and resulted in an average size including SSG Capital Partners IV, the untapped reserve of opportunity, and with fund size of $427mn. Asia-focused funds second largest Asia-focused fund to close the recent increase in investor interest accounted for 9% of all private debt funds last year, securing an aggregate $1.7bn, in this area, private debt fund managers closed in 2017, three-percentage points 26% more than its initial target. Known

Fig. 1: Annual Asia-Focused Private Debt Fundraising, Fig. 2: Private Debt Funds Closed by Primary Geographic Focus, 2010 - 2018 YTD (As at May 2018) 2010 - 2018 30 100% 4% 4% 4% 2% 10% 6% 5% 6% 6% 8% 9% 25 90% 11% 15% 9% 13% 6% 9% 25 7% 80% 19% 18% 28% 70% 24% 32% 39% Rest of World 20 No. of Funds 23% 25% 34% 17 16 Closed 60% 15 Asia 15 13 50% 12 Europe 11 Aggregate Capital 40% 10 8.8 Raised ($bn) 68% 64% North America 30% 58% 61% 58% 61% 6 6.2 6.4 56% 52% 50% 4.4 20% 5 4 Proportion of Funds Closed 3.0 3.1 2.0 1.0 1.2 10% 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2010 2011 2012 2013 2014 2015 2016 2017 2018

Year of Final Close Year of Final Close Source: Preqin Source: Preqin Fig. 3: Largest Asia-Focused Private Debt Funds Closed, 2017 - 2018 YTD (As at May 2018) Final Close Fund Firm Fund Size (mn) Type Primary Geographic Focus Date CITIC Private Equity CITIC PE Multi-Strategy Fund 13,300 CNY Mezzanine China Aug-17 Funds Management SSG Capital Asia, China, Greater China, SSG Capital Partners IV 1,700 USD Special Situations Aug-17 Management India, Indonesia Bain Capital Special Situations Asia Bain Capital Credit 962 USD Special Situations Asia Apr-18 Malaysia Debt Ventures Fund 3 Malaysia Debt Ventures 4,000 MYR Venture Debt Malaysia Sep-17 Asia, Australasia, Australia, PAG Asia Loan Fund III PAG Asia Capital 950 USD Direct Lending China, Japan, New Zealand, May-18 South Korea SSG Capital Asia, China, Greater China, SSG Secured Lending Opportunities II 815 USD Direct Lending Aug-17 Management India, Indonesia ASEAN, Far East, Indonesia, NV Private Equity Fund III Dominus Investment 481,000 KRW Mezzanine Feb-17 South Korea, Vietnam Edelweiss Alternative Edelweiss Special Opportunities Fund II 350 USD Direct Lending India Mar-17 Asset Advisors EFA Real Economy Income Trust EFA Group 152 USD Direct Lending Global Sep-17 Trifecta Venture Debt Fund I Trifecta Capital 5,000 INR Venture Debt India May-18

Source: Preqin

2 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com PRIVATE DEBT IN ASIA: THE NEXT FRONTIER?

investors in the fund – which targets high (Fig. 4). This illustrates that direct lending the number of funds that reached a final grade private lending in Greater China, vehicles in the region are typically targeting close and capital secured from 2016-2018 India and Indonesia – include California smaller amounts of capital than funds like YTD, it would seem that fund managers State Teachers’ Retirement System distressed debt and special situations, expect institutional investor interest in the (CalSTRS), San Francisco Employees’ which typically employ investment region to continue on an upward growth Retirement System and Texas Permanent strategies that require larger bitesize trajectory. According to survey results from School Fund State Board of Elections. investments. The largest fund in market Preqin’s H1 2018 Investor Outlook, 30% is Shoreline Capital’s Shoreline Capital of investors feel that Asia presents the best There are currently 31 Asia-focused CNY Fund, seeking CNY 10,000 ($1.5bn) in opportunities for investing in private debt private debt funds in market, seeking an capital. The fund will invest in opportunities (Fig. 6): while this is less than the 44% that aggregate $11bn in capital. The majority in China, with 70% of capital invested in named North America, considering the (58%) employ a direct lending strategy, non-performing assets of banks, loans to relative fundraising in the two regions over followed by distressed debt and special local government platforms and state- recent years it shows significant potential situations (13% each), mezzanine (10%) and owned enterprise loans. for growth in Asia. venture debt (6%). However, only three of the 10 largest Asia-focused funds on the With both the number of funds in market More than 900 investors globally have road will follow a direct lending strategy and aggregate capital sought exceeding stated a preference for Asia-focused funds.

Fig. 4: Largest Asia-Focused Private Debt Funds in Market (As at May 2018) Primary Geographic Fund Firm Target Size (mn) Type Focus Shoreline Capital CNY Fund Shoreline Capital 10,000 CNY Distressed Debt China CDH Mezzanine RMB Fund V CDH Investments 7,000 CNY Mezzanine China China, Japan, South MBK Partners Special Situations I MBK Partners 1000 USD Special Situations Korea Piramal India Resurgent Fund Piramal Capital 1000 USD Distressed Debt India ASEAN, Australia, Far Lending Ark Asia Secured Private Debt Fund I CLSA Capital Partners 750 USD Direct Lending East, New Zealand Asia, India, MENA, Samena Special Situations Fund III Samena Capital 700 USD Special Situations South Asia Adamas Ping An Opportunities Fund Adamas Asset Management 500 USD Direct Lending China Asia, China, India, Avenue Asia Special Situations Fund V Avenue Capital Group 500 USD Distressed Debt Indonesia Greater China, Hong DCP China Credit Fund II Dignari Capital Partners 500 USD Special Situations Kong Orchard Landmark III OCP Asia 500 USD Direct Lending Asia

Source: Preqin

Fig. 5: Largest Asia-Based Fund Managers by Aggregate Capital Raised in the Last 10 Years Total Capital Raised in Estimated Dry Firm Headquarters Fund Strategies Last 10 Years ($mn) Powder ($mn) Direct Lending, Distressed PAG Asia Capital Hong Kong 4,286 1,474 Debt, Special Situations Direct Lending, Distressed SSG Capital Management Hong Kong 4,255 2,300 Debt, Special Situations CITIC Private Equity Funds Management Beijing, China Mezzanine 2,807 1,253 Direct Lending, Distressed Shoreline Capital Guangzhou, China Debt, Mezzanine, Special 1,981 793 Situations Kuala Lumpur, Malaysia Debt Ventures Venture Debt 1,682 741 Malaysia Zhongchen Fund Management China Special Situations 1,578 80 Direct Lending, Special CDH Investments Beijing, China 1,509 994 Situations Everbright Financial Holding Asset Beijing, China Special Situations 1,302 66 Management Dominus Investment Seoul, South Korea Mezzanine 1,186 402 Direct Lending, Distressed ADM Capital Hong Kong 1,094 158 Debt, Special Situations

Source: Preqin

3 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com PRIVATE DEBT IN ASIA: THE NEXT FRONTIER?

The majority (69%) of these investors region where the proportion of AUM is Asia-focused dry powder has largely been are based in North America, with only higher than the proportion of investors is on the rise since 2006, and now stands at 12% based in Asia, although with by far China. South Korea is home to 23% of all a record $17bn. With investors hungry for the largest proportion of all investors investors in the region and seven of the 10 debt managers to put capital to work, the based in North America, this is perhaps investors with the highest allocations to capital supply pipeline for growth across unsurprising. Within Asia, Japan accounts the asset class. National Pension Service, a the continent certainly shows promise for for nearly half of all investor assets under public pension fund based in South Korea, the underlying strategies within private management in the region but only a has the highest allocation to the asset class debt to carve out a better foothold in Asia. quarter of the investors. The only other among Asia-based investors at $2.9bn.

Fig. 6: Investor Views on the Regions Presenting the Best Fig. 7: Investors with a Preference for Asia-Focused Private Debt Opportunities for Private Debt Funds by Location 70%

60% 59% 4% 12% 50% 44% North America

40% Europe 15% 30% 30% Asia

Rest of World 20% Proportion of Investors 69%

10%

0% North America Europe Asia Source: Preqin Investor Survey, December 2017 Source: Preqin

Fig. 8: Asia-Based Private Debt Investors by Location Fig. 9: Private Debt - Risk/Return by Primary Fund Focus 50% 14% 45% 44% 40% 12% 35% 30% 10% 25% 25% 23% 21% North America 20% 16% 8% 13% 13% 15% Europe 10% 9% 8% 6% 6% 3% 4% 4% 3% 4% 5% 2% 1% 1% Asia 0% 4% India Risk - Standard Deviation of IRR Japan China Other 2% Taiwan Malaysia Singapore Hong Kong

South Korea 0% Proportion of Proportion of 9% 9% 10% 10% Asia-Based Investors Asia-Based Investor AUM Return - Median Net IRR Source: Preqin Source: Preqin

Fig. 10: Largest Asia-Based Private Debt Investors by Allocation to Private Debt Current Allocation to Firm Type Headquarters AUM ($mn) Private Debt ($mn) National Pension Service Public Pension Fund South Korea 577,835 2,942 Eastspring Investments Asset Manager Singapore 188,000 1,050 IIFL Capital Asset Manager India 12,000 800 KB Insurance Insurance Company South Korea 22,512 743 Kyobo Life Insurance Insurance Company South Korea 67,202 538 Public Officials Benefit Association Public Pension Fund South Korea 10,205 520 Hyundai Marine & Fire Insurance Insurance Company South Korea 30,103 229 Mirae Asset Life Insurance Insurance Company South Korea 15,989 144 Hana Alternative Asset Management Asset Manager South Korea 464 139 Shin Kong Life Insurance Insurance Company Taiwan 82,413 137

Source: Preqin 4 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com CLAIM YOUR FREE COPY OF THE 2019 PREQIN PRIVATE CAPITAL COMPENSATION AND EMPLOYMENT REVIEW

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Please click here for more information or contact Sonya Nicks at [email protected] to participate. THE EUROPEAN PRIVATE DEBT OPPORTUNITY THE EUROPEAN PRIVATE DEBT OPPORTUNITY In this exclusive extract from the forthcoming Preqin Markets in Focus: Alternative Assets in Europe report, we examine the Europe-focused private debt funds by annual fundraising, dry powder and largest funds in market, as well as private debt-backed deals.

urope remains an area of significant the opportunity set in Europe looks likely With Europe-focused fundraising passing Eattention and interest in the private to be strong in the coming years. €36bn in 2017, the bar set for managers debt space. With the initial growth in the focused on the region is quite high, and asset class focusing primarily on North PRIVATE DEBT FUNDRAISING the likelihood of private debt fundraising America, many participants are now Europe-focused private debt managers continuing the record-setting pace could looking to Europe as the next frontier for have seen a slight downtick in fundraising now be in question for 2018. However, significant growth. As North American during the first quarter of 2018, with four with 88 Europe-focused private debt regulation loosens, potentially allowing an funds having reached a final close securing funds in market seeking just under €43bn opportunity for bank lenders to ramp up an aggregate €1.9bn (Fig. 1). Compared to currently, there is an avenue for strong their activity in the mid-market space, the Q1 2017, when 16 Europe-focused funds fundraising in 2018, led by €24bn in capital opposite looks to be occurring in Europe secured €8.1bn, early figures for the region targeted by direct lending managers with regulation looking likely to tighten could be considered underwhelming, focused on the region. and potentially create new opportunities especially given the record-setting end to and avenues for direct lenders targeting 2017, in which €14bn was raised across 10 EUROPE-FOCUSED DRY POWDER the region. With macro tailwinds in the private debt funds focused on Europe that Record fundraising levels in 2017 have also region and a strong legal regime in place, closed in Q4 2017. led to record-high dry powder totals

Fig. 1: Annual Europe-Focused Private Debt Fundraising by Fund Type, 2008 - 2018 YTD (As at March 2018) Fig. 2: Europe-Focused Private Debt Dry Powder, 2006 - 2018 40 60 35 30 50 25 40 20 15 30 10

5 20 Dry Powder (€bn) Aggregate Capital Raised (€bn) 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 10 YTD Year of Final Close 0 Direct Lending Distressed Debt Mezzanine Private Debt Fund of Funds Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Special Situations Venture Debt Mar-18 Source: Preqin Source: Preqin

Fig. 3: Largest Europe-Focused Private Debt Funds in Market (As at March 2018) Fund Firm Vintage Target Size (mn) Fund Type Fund Status ICG Europe Fund VII Intermediate Capital Group 2018 4,000 EUR Mezzanine Raising OCM European Principal Opportunities Fund IV Oaktree Capital Management 2016 3,000 EUR Distressed Debt Third Close Park Square Capital SMBC JV Park Square Capital Partners 2017 3,000 EUR Direct Lending Raising Direct Lending Fund III BlueBay Asset Management 2018 2,500 EUR Direct Lending Raising Pemberton Asset Pemberton European Mid-Market Debt Fund II 2017 2,000 EUR Direct Lending Raising Management Strategic Value Special Situations Fund IV Strategic Value Partners 2017 1,750 USD Distressed Debt Second Close Tikehau Investment Tikehau Direct Lending IV 2017 1,200 EUR Direct Lending First Close Management Bain Capital Special Situations Europe Bain Capital Credit 2018 1,000 EUR Special Situations Raising EQT Mid-Market Credit Fund II EQT 2018 1,000 EUR Direct Lending First Close Pemberton Asset Pemberton Strategic Credit Opportunities Fund 2018 1,000 EUR Special Situations Raising Management

Source: Preqin

6 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com THE EUROPEAN PRIVATE DEBT OPPORTUNITY

for Europe-focused funds, with managers Fig. 4: Private Debt-Backed Deals in Europe: Banks vs. Private Debt Firms, 2010 - 2017 having access to €57bn in commitments 100% targeting the region as at March 2018, up 90% 19% nearly €3bn from the end of 2017. Putting 28% 27% 80% 35% this record level of capital to work could 44% 42% 42% be challenging for managers moving 70% 61% forward, although there is still significant 60% opportunity as borrowers become 50% increasingly comfortable and experienced 40% 81% working with direct lenders. However, 72% 73% 30% 65% in light of record fundraising, the small Proportion of Deals 56% 58% 58% increases in dry powder indicate managers 20% 39% have been successfully putting capital to 10% work in Europe, with the proportion of 0% private debt-backed deals in the region 2010 2011 2012 2013 2014 2015 2016 2017 increasing steadily over time. Bank Private Debt Firm Source: Preqin In light of record

fundraising, the carved out a robust piece of the market, certainly expanded in recent years, as small increases in with regulation trending towards allowing some managers look outside developed dry powder indicate those managers to continue and increase Europe in search of relative value. managers have been access to lending both in sponsored and successfully putting non-sponsored transactions. Direct lending is solidly in place as a capital to work in necessary financing tool for businesses The UK accounted for the largest throughout the continent, as evidenced Europe proportion (38%) of deals across the in the massive fundraising growth seen eurozone in 2017, with France and since 2013 for Europe-focused lenders, DEAL ACTIVITY Germany accounting for the second and having secured €1.9bn in 2018 so Private debt deal activity in Europe has third highest levels of activity in terms far. Furthermore, the products being traditionally been led by those firms with of both the number and aggregate developed as a result of the capital influx a combination of knowledge, relationships value of deals in the year (Fig. 5). With in the space has led to greater deal access, and access to the nuanced differences direct lending having attracted the most with diversity in offerings across debt between countries and regional disparities. attention among private debt in Europe, strategies. Specialty finance, asset-backed Although competition between banks the UK seems poised to continue as lending and revolving credit facilities have and private debt firms for access to the main hub for private debt activity in all evolved in recent years to fit the risk/ high-quality deals has remained stout the near future. Deal flow for emerging return profiles of borrowers across the compared to the US, managers have alternative lending markets in Europe has diverse regional opportunities in Europe.

Fig. 5: Private Debt-Backed Deals in Europe by Location, Fig. 6: Number of Private Debt-Backed Deals in Europe by 2010 - 2018 YTD (As at March 2018) Industry, 2010 - 2018 YTD (As at March 2018)

100% 10 ter 90% 16% 24% 25% 22% 23% eecom edi 29% 26% 26% 30% 10 ommniction 80% 13% 5% 7% 120 70% 7% 10% normtion 9% 13% 13% ecnoo 60% 13% 100 ndtri 39% 38% 9% 50% 27% 24% 80 40% 40% etcre 56% 40% 34%

No. of Deals 0 ood rictre 30% Proportion of Deals ner tiitie 48% 0 20% 34% 38% 38% onmer 33% 28% 24% 27% 20 icretionr 10% 16% 0% 0 ine erice 0 1 2 1 1 1 1 1 1 1 1

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

2 2 2 2 2 2 2 2

YTD 8 1

UK France Germany Rest of Europe 0 2 Source: Preqin Source: Preqin

7 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com INDUSTRY NEWS INDUSTRY NEWS

In this month’s Industry News, we profile recent institutional investor commitments to private debt as well as private debt funds in market and recently closed funds.

RECENT INSTITUTIONAL INVESTOR FUNDS IN MARKET RECENTLY CLOSED FUNDS COMMITMENTS TO PRIVATE DEBT

CarVal Investors’ CVI Credit Value Fund As at May 2018, there are a total of 366 There have been 41 private debt funds to IV reached a final close in May 2018 private debt funds in market seeking an reach a final close this year as at May 2018, with commitments from Florida State aggregate $168bn in capital. Direct lending securing an aggregate $38bn in capital. Board of Administration, Manchester funds account for 49% of vehicles on the The largest fund to close so far is GSO Employees Contributory Retirement road and capital targeted, followed by Capital Solutions Fund III, managed by GSO System, Massachusetts Pension Reserves mezzanine strategies, which represent Capital Partners, which secured $7.4bn at Retirement Board, Minnesota State Board 19% of funds and 18% of capital targeted. its final close in April 2018. The distressed of Investment, MWRA Retirement System, debt fund will focus on opportunities in New Hampshire Retirement System and The 10 largest funds in market account West Europe and the US. Venture County Employees’ Retirement for 26% of total capital targeted within Association. the asset class, led by GS Mezzanine Over half (51%) of funds closed in 2018 so Partners VII, which is targeting $10bn. The far are North America focused, followed by RBL Bank has recently committed INR mezzanine fund, managed by Goldman 39% that are Europe focused and 10% that 500mn to Trifecta Venture Debt Fund I, the Sachs, secured $730mn at its first close in are Asia focused. Of the top 10 funds to debut fund from Trifecta Capital. The fund August 2017 and will target opportunities close, four are direct lending vehicles and reached a final close in May 2018, with across North America and Europe. There four are distressed debt vehicles, along another known commitment from SIDBI are six direct lending, two distressed debt with one special situations fund and one Venture Capital. and one mezzanine fund that complete the mezzanine vehicle. AlbaCore Partners I, the top 10. only first-time fund of the top 10, closed in April 2016 at €1,458mn, achieving 149% of its initial target.

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8 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com THE FACTS

SAMPLE INVESTORS TO WATCH

We take a look at a sample of investors globally that are looking to commit capital to private debt funds in the coming months. 1 2 3 BEL AIR INVESTMENT PORTFOLIO ADVISORS ALTAMAR PRIVATE EQUITY ADVISORS Type: Private Equity Fund of Type: Private Equity Fund of Funds Manager Type: Private Wealth Funds Manager Location: Darien, Connecticut Location: Los Angeles, California Location: Madrid, Spain AUM: $23.5bn AUM: $7.5bn AUM: €5.4bn The firm is looking to make new The firm is looking to commit to one Altamar is looking to make five or commitments to distressed debt, or two private debt funds over the six senior debt or direct lending special situations and mezzanine next 12 months. It is seeking North commitments over the coming year funds targeting North America, American opportunities through a and plans to deploy €75-150mn. Europe and Asia. mix of both existing managers in its portfolio and managers it has not previously worked with.

2 4 3 1 6 5

4 5 6 LOMBARD ODIER DARIER CHENGDU INDUSTRIAL UTSB MANAGEMENT HENTSCH ASSET MANAGEMENT Type: Investment Bank Type: Private Wealth Type: Asset Manager Location: Seoul, South Korea Location: Geneva, Switzerland Location: Chengdu, China AUM: KRW 36tn AUM: CHF 250bn AUM: - The investment bank is looking to make investments in direct lending The private wealth manager will The asset manager plans to invest at and mezzanine opportunities and look to commit to at least one fund least CNY 10mn in distressed debt typically commits KRW 11-33bn and has a general preference for funds targeting China, North America ($30mn) per fund. It will consider direct lending, distressed debt and and Europe. It is open to investing investing with a mix of existing mezzanine funds with a global reach. with existing managers in its portfolio and managers it has not previously managers in its portfolio and worked with. managers that it has not previously worked with.

9 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com PREQIN GLOBAL DATA COVERAGE

FUNDS OPEN TO INVESTORS FUNDS WITH FIRMS FUNDS DEALS & EXITS ALTERNATIVES INVESTMENT MONITORED PERFORMANCE COVERAGE 33,145 60,782 22,510 16,649 28,469 343,345

PRIVATE NATURAL HEDGE FUNDS REAL ESTATE INFRASTRUCTURE PRIVATE DEBT EQUITY* RESOURCES 7,284 5,497 6,549 3,462 3,351 3,411 INVESTOR Active Active Active Active Active Active COVERAGE Private Equity Hedge Fund Real Estate Infrastructure Private Debt Natural Resources LPs Investors LPs LPs Investors Investors

FUND 20,841 26,539 7,343 1,343 2,648 2,068 COVERAGE Private Equity Hedge PE Real Estate Infrastructure Private Debt Natural Resources Funds Funds Funds Funds Funds Funds

FIRM 9,651 5,044 563 1,666 1,072 15,149 Hedge Fund PE Real Estate Infrastructure Private Debt Natural Resources COVERAGE Private Equity Firms Firms Firms Firms Firms Firms

PERFORMANCE 6,170 18,678 1,873 276 890 582 COVERAGE Private Equity Hedge PE Real Infrastructure Private Debt Natural Resources Funds Funds Estate Funds Funds Funds Funds

FUNDRAISING 2,901 17,516 1,274 183 368 268 COVERAGE Private Equity Hedge PE Real Infrastructure Private Debt Natural Resources Funds Funds Estate Funds Funds Funds Funds

BUYOUT VENTURE CAPITAL REAL ESTATE INFRASTRUCTURE PRIVATE DEBT DEALS & EXITS 161,642 COVERAGE 89,018 Venture Capital Deals 55,947 28,224 8,514 Buyout Deals and Exits Real Estate Deals Infrastructure Deals Private Debt Deals and Exits

Alternatives Investment Consultants Funds Terms Coverage: Analysis Best Contacts: Carefully Selected from Coverage: Based on Data for Around our Database of over 581 18,161 463,226 Consultants Tracked Funds Contacts + PLUS THE PREQIN DIFFERENCE Comprehensive coverage of: + Over 390 research, support and development staff + Placement Agents + Dry Powder + Global presence - New York, London, Singapore, + Fund Administrators + Compensation San Francisco, Hong Kong, Manila and Guangzhou + Law Firms + Plus much more... + Depth and quality of data from direct contact methods + Debt Providers + Unlimited data downloads + The most trusted name in alternative assets

*Private equity includes buyout, growth, venture capital, turnaround, private equity fund of funds, private equity secondaries, direct secondaries, balanced, hybrid, hybrid fund of funds, PIPE, co-investment and co-investment multi- manager funds. 2015 Annual CAIA Corporate Recognition Award Winner As at 1st June 2018 THE FACTS PRIVATE DEBT IN EUROPE

In an extract from the Preqin Markets in Focus: Alternative Assets in Europe report, we examine Europe-focused private debt fundraising, deals and investors

Fig. 1: Annual Europe-Focused Private Debt Fundraising, Fig. 2: Europe-Based Private Debt Funds Closed by Proportion of 2007 - 2018 YTD (As at March 2018) Target Size Achieved, 2007 - 2018 YTD (As at March 2018) 60 100% 10% 8% 52 90% 15% 15%15% 50 20% 22%25%20% 25% 50 48 80% 38% 125% or More 43 50%30% No. of Funds 70% 20% 30% 40 37 31% 50% 22% 36.4 Closed 30% 44% 101-124% 60% 25% 31.3 13% 34% 30 27 50% 20% 100% 24.2 Aggregate 17%21% 21 Capital Raised 40% 40% 19%33% 18 19 31%25% 20 16 16 18.1 (€bn) 12% 50-99% 15.0 13.4 30% 28% 50% 9.3 20% 40% 42%

8.6 Proportion of Funds Closed 10 6.4 13% 25% 33%30%26% Less than 50% 4.9 4 17% 3.9 10% 23% 20% 1.9 13% 13% 0 0% 6% 6% 3% 3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD 2018YTD Year of Final Close Year of Final Close Source: Preqin Source: Preqin

Fig. 3: Europe-Based Private Debt Funds in Market by Primary Fig. 4: Private Debt-Backed Deals in Europe by Location, Strategy (As at March 2018) 2010 - 2018 YTD (As at March 2018) 60 100% 52 90% 16% 50 24% 25% 22% 23% 29% 26% 26% 30% No. of Funds 80% 40 13% Raising 5% 7% 70% 7% 10% Rest of Europe 9% 13% 30 13% 13% 24.1 Aggregate 60% Germany 20 Capital Targeted 39% 38% 9% 50% 27% 24% 12 12 (€bn) 40% 40% 56% 10 6.3 40% 34% France 6 5.9 5.4 4 2 0.9 0.3 30% 0 Proportion of Deals UK 48% 20% 33% 34% 38% 38% 24% 28% 27% 10% 16%

Mezzanine 0% Private Debt Venture Debt Venture Fund of Funds Direct Lending Distressed Debt Distressed 2010 2011 2012 2013 2014 2015 2016 2017 SpecialSituations

Primary Strategy 2018YTD Source: Preqin Source: Preqin

Fig. 5: Europe-Based Institutional Investors in Private Debt by Fig. 6: Europe-Based Institutional Investors in Private Debt by Type Current Allocation (As a Proportion of Total Assets)

Private Sector Pension Fund 3% 10 2% Public Pension Fund 6% 21 Insurance Company Less than 5% Asset Manager 5-9.9% Private Equity Fund of 5 23% Funds Manager 10-14.9% Wealth Manager 1 BankInvestment Bank 15-19.9% 66% Foundation 20% or More 11 Family ffices Investment Company

ther

Source: Preqin Source: Preqin

11 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com THE FACTS NORTH AMERICA-FOCUSED MEZZANINE FUNDS We take a detailed look at North America-focused mezzanine funds, closed historically and currently in market. Fig. 1: Annual North America-Focused Mezzanine Fundraising, Fig. 2: North America-Focused Private Debt Funds in Market by (As at May 2018) Strategy (As at May 2018) 40 100 88 35 90 35 80 30 70 30 29 28.8 27 60 24 24.4 50 25 39.7 39 21 40 28 20 19 18 30 25 16.2 17 20.6 18.2 15.3 20 10 13 15 13 10 4 0.6 1.5 0 10 9.0 8.1 6.9 7 4.5 5.2 5 3.0 4.1 Direct Debt Lending Special

0 Situations Distressed Mezzanine 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Private Debt Venture Debt Venture YTD Fund of Funds Year of Final Close Strategy No. of Funds Closed Aggregate Capital Raised ($bn) No. of Funds Raising Aggregate Capital Targeted ($bn)

Source: Preqin Source: Preqin

Fig. 3: Largest North America-Focused Private Debt Mezzanine Funds Closed in 2018 YTD (As at May 2018) Final Close Fund Firm Target Size (mn) Final Size (mn) Vintage Date KKR Private Credit Opportunities Partners II KKR 1,200 USD 2,240 USD 2015 Jan-18 Merit Mezzanine Fund VI Merit Capital Partners 500 USD 536 USD 2016 Mar-18 Sentinel Junior Capital I Sentinel Capital Partners 480 USD 460 USD 2018 Jan-18 Centerfield Capital Centerfield Capital Partners IV 300 USD 310 USD 2018 Jan-18 Partners Kian Mezzanine Partners II Kian Capital Partners 100 USD 250 USD 2017 Mar-18 Freedom 3 Investments III Freedom 3 Capital 195 USD 195 USD 2017 Mar-18 McLarty Capital Partners SBIC Fund II McLarty Capital Partners 83 USD 83 USD 2018 Jan-18

Source: Preqin

Fig. 4: Largest North America-Focused Private Debt Mezzanine Funds in Market in 2018 YTD (As at May 2018) Fund Firm Target Size (mn) Fund Status Vintage Goldman Sachs Merchant GS Mezzanine Partners VII 10,000 USD First Close 2017 Banking Division CRG Partners IV CRG 1,500 USD Raising 2018 Windjammer Senior Equity Fund V Windjammer Capital Investors 800 USD Raising 2018 Penfund Capital Fund VI Penfund 900 CAD First Close 2018 Harvest Partners Structured Capital Fund II Harvest Partners 600 USD Raising 2018 Cyprium Investors V Cyprium Partners 500 USD First Close 2017 Arrowhead Mezzanine Fund III Arrowhead Mezzanine 400 USD First Close 2017 Ironwood Mezzanine Fund IV Ironwood Capital 400 USD First Close 2017 Anagenesis Capital Partners Fund Anagenesis Capital Partners 300 USD Raising 2018 Balance Point Capital Partners III Balance Point Capital 300 USD Raising 2018 Harbert Management Harbert Credit Solutions Fund IV 300 USD Fourth Close 2017 Corporation

Source: Preqin

12 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com INDUSTRY-LEADING ALTERNATIVE ASSETS INSIGHTS. FOR FREE.

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JUNE 2018

Preqin Conference Dates Location Organizer Discount Code Speaker Private Wealth Management marcus evans 3 - 5 June 2018 Palm Beach, FL - - Summit Summits ILPA Partner Expo 6 - 7 June 2018 Chicago, IL ILPA - - 10% Discount - FundForum International 2018 11 - 13 June 2018 Berlin KNect365 Amy Bensted FKN2546PQL marcus evans Elite Summit 11 - 13 June 2018 Montreux - - Summits Family Office Summit 14 June 2018 Mumbai IVCA - -

JULY 2018

Preqin Conference Dates Location Organizer Discount Code Speaker Family Office & Private Wealth Opal Financial 16 - 18 July 2018 Newport, RI - - Management Forum Group

SEPTEMBER 2018

Preqin Conference Dates Location Organizer Discount Code Speaker 10% Discount - FundForum Asia 2018 3 - 5 September 2018 Hong Kong KNect365 TBC FKN2544PQL 15% Discount - Total Alts 6 - 7 September 2018 San Francisco, CA IMN - PQ15 Preqin Breakfast Seminar – 12 September 2018 London Preqin - - Future of Alternatives - London 12 - 13 September Opal Financial Emerging Managers Summit New York, NY - - 2018 Group 17 - 20 September Patrick Adefuye 10% Discount - SuperReturn Asia Hong Kong KNect365 2018 Felice Egidio FKR2449PRQ LPGP Connect Private Debt 18 September 2018 Chicago, IL LPGP Connect Tom Carr - Chicago 24 - 26 September 20% Discount - Finovate Fall New York, NY KNect365 - 2018 FKV2343PQT Brazil Breakfast in association with LAVCA´s Annual Summit 25 September 2018 New York, NY ABVCAP - - and Investor Roundtable

14 Private Debt Spotlight | June 2018 © Preqin Ltd. 2018 / www.preqin.com