Private Equity Spotlight

Welcome to the latest edition of Private Equity Spotlight, the monthly newsletter from Preqin providing insights into private equity performance, investors, deals and Private Equity Spotlight fundraising. Private Equity Spotlight combines information from our online March 2014 products Performance Analyst, Investor Intelligence, Fund Manager Proﬁ les, Funds in Market, Secondary Feature Article Market Monitor, Buyout Deals Analyst and Venture Deals Analyst The State of Co-Investments

This month’s feature article explores the attraction of co-investment opportunities and presents the results of Preqin’s survey of LPs and GPs relating to their attitudes and activities March 2014 within the co-investment space. Volume 10 - Issue 3 Page 3 FEATURED PUBLICATION:

2014 Preqin Global Private Equity Lead Article Report The Diversification of Secondaries Transactions

We look at the different types of strategies that are being increasingly adopted by maturing secondary buyers and sellers, providing details of example transactions featured on Preqin’s Secondary Market Monitor. 2014 Preqin Global Private Equity Report Page 8

Preqin Industry News

This month’s Industry News focuses on investor appetite for private equity co-investments,

ISBN: 978-1-907012-62-4 presenting examples of investors that have recently made such commitments, and those $175 / £95 / €115 www.preqin.com alternative assets. intelligent data. that plan to do so in the near future.

To find out more and to order your Page 12 copy please visit: www.preqin.com/gper The Facts New York: Women in Private Equity - A focus on women employed in the industry. Page 14 One Grand Central Place 60 E 42nd Street Investors - Changing allocations to private equity. Page 15 Suite 630 Buyout Deals - Analysis of US private equity-backed buyout deals. Page 17 New York, NY 10165 +1 212 350 0100 Venture Capital Deals - We examine deals in the software and related industries. Page 18 - Preliminary Q3 2013 private equity benchmarks. London: Performance Page 20 Equitable House Funds of Funds - A look at fund of funds managers that co-invest. Page 21 47 King William Street London, EC4R 9AF Conferences - Upcoming private equity conferences around the world. Page 23 +44 (0)20 7645 8888

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The State of Co-Investments

Jessica Duong explores the attraction of co-investment opportunities and presents the results of Preqin’s recent survey of LPs and GPs relating to their attitudes and activities within the co-investment space.

Many fund managers offer co-investment opportunities (investments Fig. 1: LPs’ Current Level of Co-Investment Activity made in portfolio companies alongside a GP) to their limited partners whereby the private equity ﬁ rm involved will typically exercise control and perform monitoring functions. Such opportunities are usually at Actively Co-Investing the discretion of the GP rather than a matter of entitlement for the 7% LP, but in recent years, there has been a rise in appetite for such investments in the industry. Generally speaking, co-investments are 16% Opportunistically Co- offered primarily to the larger LPs in the fund, and/or to those which Investing were cornerstone investors in the ﬁ rst close, but now investors of all 40% sizes seem to be showing increasing levels of interest in participating in co-investments with their GPs. Considering Co- Investing in the Future But Have Not Co- A Win-Win Invested Yet

Co-investments are passive, non-controlling investments, a provision Not Co-Investing and 37% No Plans to Co-Invest of separate equity that is often not subject to fees. Though they in the Future carry a greater level of risk and complexity, co-investments bring a myriad of benefi ts to both the investor and fund manager. This can include better returns, diversifi cation of portfolio, better alignment of Source: Preqin LP Co-Investment Survey, February 2014 interests between partners and increased effi ciency. Specifi c pulls for the investor could include lower management fees and reduced the breakdown of LPs’ current plans for co-investments, with 40% carried interest, exposure to quality private equity assets, an ability to actively seeking co-investment opportunities at present and 37% evaluate the risk-return profi le, which is not necessarily available in doing so on an opportunistic basis. traditional fund investments, better transparency and mitigation of the J-curve effect as capital is deployed faster. Furthermore, experience Preqin was interested to test the hypothesis that co-investments are in deal-making gained through co-investing alongside GPs gives mainly the domain of larger LPs with more assets under management, LPs the opportunity to expand their internal capabilities, acquire which many in the industry have assumed. Fig. 2 shows the typical valuable experience in direct investments, and gain direct exposure proportion co-investments account for in an LP’s portfolio by current to industries they may not have access to otherwise. allocation to private equity. It shows that there is no real trend to support the assumption that larger LPs typically allocate a greater Increasing Prominence proportion of their portfolio to co-investment opportunities. For instance, 31% of investors surveyed with less than $250mn allocated In February 2014, Preqin conducted a survey of 140 private equity to the private equity asset class have less than 2% of their portfolio LPs based around the globe in an effort to ascertain their current made up of co-investments; 11% of investors with $501mn to $1bn attitudes towards co-investments and their activities within the space. allocated to private equity and 43% of investors with more than $5bn Results revealed that the vast majority (73%) of investors surveyed allocated fall in the same category of low co-investment activity. have co-invested alongside a GP in a deal in the past. Fig. 1 shows Fig. 2: Proportion of LPs’ Total Private Equity Portfolio Made Fig. 3: GPs’ Views on the Benefits of Offering Co-Investment Up of Co-Investments by Current Allocation to Private Equity Rights to LPs

100% 7% 6% 7% Builds a Stronger Relationship with 14% 76% 90% 7% LPs 37% 25% 21% 80% 14% More than Access to Additional Capital for 20% 51% 70% 29% 0% Deals 14% 11-20% 60% 19% Improves the Chance of a 11% 29% 44% 7% Successful Fundraise 50% 6-10% 26% 40% 26% Benefits the Portfolio Company 7% 25% 2-5% 30% 50% 43% 20% 16% Less than None 4% 31% Proportion of LP Respondents 2% 10% 25% 11% 0% Other 1% Up to $251mn $501mn $1.1bn More than $250mn to $500mn to $1bn to $5bn $5bn 0% 20% 40% 60% 80% Current Allocation to Private Equity Proportion of GP Respondents Source: Preqin LP Co-Investment Survey, February 2014 Source: Preqin GP Co-Investment Survey, February 2014

Institutional investors across the board are increasingly seeking new Fig. 4: GPs’ Views on the Downside of Offering Co- ways to extract value from their private equity portfolios and a growing Investment Rights to LPs number are setting aside capital specifi cally for private equity co- investments. Several different motivations are behind this trend, as shown in Preqin’s survey results. A signifi cant 70% of LPs surveyed Slows/Delays Deals Process 58% specifi ed the reduced costs associated with co-investments as a top Negative Impact on Relationships pull factor and 75% cited the real potential for higher returns. Forty-six with LPs that Are Not Offered Co- 33% percent of respondents acknowledged the fact that co-investments Investment Rights also allow LPs to strengthen their GP relationships. A favourable relationship with a GP will increase the likelihood that the LP is at the Additional Costs 23% top of the list when a good investment opportunity arises. Co-Investors Have More Control 7% GPs are becoming more willing to offer co-investment rights, over the Investment acknowledging the substantial investor appetite apparent in the industry and perhaps also using it as a strategy to navigate through Other 7% the diffi culties of the current private equity fundraising environment. Since 2008, fundraising levels have failed to recover completely 0% 10% 20% 30% 40% 50% 60% to the highs seen before the global fi nancial crisis and GPs are recognizing the importance of incentivizing LPs to commit capital to Proportion of GP Respondents their funds. It is now commonplace for fund managers to offer their Source: Preqin GP Co-Investment Survey, February 2014 limited partners co-investment rights as a lure to commit to a private equity fund before any interim closes, granting fi rst-close investors available capital. Legal constraints and regulatory changes affecting priority rights ahead of those participating in subsequent closings. the private equity industry such as Basel III and the Solvency II Preqin found that 64% of GPs offer co-investment rights to their LPs Directive in Europe, which limit the amount of capital certain LPs can and a further 19% are considering doing so in the future. have held in the asset class, are further possible roadblocks.

In addition to the 140 LPs, Preqin also surveyed 80 fund managers Downsides to co-investments from the specifi c viewpoint of GPs around the world to understand their reasons for offering co- can also be numerous. Preqin’s survey of 80 GPs showed that the investment rights. Fig. 3 shows the most prominent reason why GPs greatest proportion (58%) of fund managers see co-investments as offer co-investment rights is to build stronger relationships with LPs, a delay to the deals process, as they can slow down the process. which was cited by 76% of respondents. Over half (51%) of GPs view Other disadvantages include the additional costs incurred, such as co-investments as a valuable method for gaining access to additional the cost of reporting to co-investors or managing AIV/SPVs, and the capital for deals. The use of co-investor capital in deals alongside negative impact on relationships with those LPs that are not offered their funds allows for investment into larger transactions, which GPs co-investment rights, as shown in Fig. 4. may not be able to access with fund capital alone. Promising Potential Hindrances and Downsides In spite of the various hurdles that LPs face in their chase for co- Parallel to the multitude of benefi ts co-investments can bring, investments, Fig. 5 shows that almost half (47%) of all respondents consideration must be given to the number of existing obstacles that have 6% or more of their private equity portfolios attributable to co- can hold co-investment activities back, ranging from micro to macro investments. According to Preqin’s Investor Intelligence database, factors. A lack of human resources will limit a fi rm’s capability to those LPs that have expressed an interest in co-investment take advantage of any co-investment opportunities, as will a lack of opportunities have an aggregate $34tn of assets under management.

Fig. 5: Proportion of LPs’ Total Private Equity Portfolio Made Fig. 6: Proportion of LPs that Requested Co-Investment Rights Up of Co-Investments During a GPs’ Most Recent Fundraise

35%

30% 30% 2% 7%

25% 22% Up to 25% 20% 17% 17% 26-50% 27% 15% 13% 51-75% 10%

64% More than 75%

Proportion of LP Respondents 5%

0% Less than 2% 2-5% 6-10% 11-20% More than 20%

Proportion of LPs’ Private Equity Portfolio Source: Preqin LP Co-Investment Survey, February 2014 Source: Preqin LP Co-Investment Survey, February 2014

This number suggests there is some notable potential for investors to Fig. 7: LPs’ Preferred Approaches to Co-Investment partake in private equity co-investments, with substantial amounts of Opportunities capital allocated to this commitment type. 60% 55% The current level of LP appetite for co-investments is apparent to GPs when negotiating agreements for their latest vehicles. Fig. 6 shows 50% that 64% of GP survey respondents stated that up to 25% of their LPs pushed for co-investment rights during their most recent fundraise; 40% 27% had 26-50% of their investors do so; 7% had 51-75% of LPs request co-investment rights and 2% had more than 75% do so. 30% 23% Selective or Passive Followers? 20% 16% Fig. 7 depicts the breakdown of the LPs surveyed by Preqin by their approach to co-investments. Fifty-fi ve percent stated that they were Proportion of LP Respondents 10% 7% selective followers, meaning they conduct signifi cant due diligence on deals, but later in the process, and decisions are made on a 0% Co-Lead Co-Sponsor Selective Passive Follower deal-by-deal basis whether or not to invest in each deal. Conversely, Follower 23% of investors are passive followers; their due diligence is limited, taking up the co-investment opportunity with the intention of generally Source: Preqin LP Co-Investment Survey, February 2014 following the GP’s lead. Other approaches include the LP playing a co-lead role in the deal origin and leading the deal (7%) and the investment returns to surpass fund returns by up to +2.5%, 49% LP being a co-sponsor, whereby the investor undertakes signifi cant expect outperformance by +2.6% to +5%, and the remaining 28% independent due diligence at an early stage in the process look for over +5.1% relative to fund investments. The levels of satisfaction among investors with their realized co-investments are The Question of Performance illustrated in Fig. 8, which shows a largely positive picture. Indeed, not a single LP in Preqin’s survey indicated that their co-investments With regard to performance of co-investments, Preqin’s study notes had generated lower returns than their fund investments and of those a contrasting picture to the one presented in Lily Fang, Victoria that were able to provide comment on their returns, 85% stated that Ivanshina and Josh Lerner’s report titled ‘The Disintermediation of their co-investments had given better returns, while 15% said the Financial Markets: Direct Investing in Private Equity’, which was returns were similar. While our fi ndings are unequivocal and point published in January 2014. The paper states that co-investments to the outperformance by co-investments, the divergence of results underperform traditional fund investments, attributing poor between the Preqin study and the Fang, Ivanshina and Lerner study performance to fund managers’ selective offering of deals at market is troubling. The safest conclusion may be to say that the jury is still peaks as co-investments. While Fang, Ivanshina & Lerner’s analysis out and further work is needed to fully understand the potential risks uses a proprietary dataset of direct investments undertaken in a time and rewards for investors making co-investments. period of 20 years by seven large institutional investors, Preqin’s statistics on co-investments have been drawn from direct, fi rst-hand Outlook responses from 140 LPs surveyed last month. Preqin questioned LPs and GPs about their plans for co-investment All participants of Preqin’s LP survey indicated that they expect activity in the year ahead. The results shown in Fig. 9 and Fig. 10 some level of outperformance from their co-investments compared suggest that 2014 will see an increase in co-investment activity, with to their private equity fund investments. Preqin’s survey results 52% of LPs intending to ramp up their operations in this sector and show that less than a quarter (23%) of respondent LPs expect co- 31% of GPs planning to offer more co-investment opportunities than

Fig. 8: LPs’ Perception of the Performance of Co-Investments Fig. 9: LPs’ Future Plans for Their Co-Investment Activity Compared to Fund Investments

60% 52% 50% 40% 12% 33% 30% 1% Increase Co- Investment Activity 20% 15% Respondents

Proportion of LP 10% Maintain Co- 0% 0% Investment Activity 0% 52% Decrease Co- 35% Investment Activity

Uncertain Investments Investments Returns from Co- Returns from Co- Investments Significantly Better Significantly Lower from Co-Investments from Co-Investments Slightly Better Returns Slightly Lower Returns Investments and Fund Similar Returns from Co-

Source: Preqin LP Co-Investment Survey, February 2014 Source: Preqin LP Co-Investment Survey, February 2014

they did in the previous year. The responses across both surveys Fig. 10: GPs’ Future Plans for Co-Investment Offerings convey the widely positive outlook the private equity industry has for co-investments at present, with strong recognition of the beneﬁ ts such investments can bring to both LPs and GPs.

However, there seems to be some contradiction between the Offer More 27% Opportunities attitudes towards and the actual co-investment activity occurring. 31% Relatively few LPs are being offered co-investment rights by GPs in Offer Same Number the Limited Partnership Agreement, as shown in Fig. 11. In addition, of Opportunities the proportions of LPs taking up such offers in reality according to the 140 LPs and 80 GPs surveyed by Preqin are not as high as one Offer Fewer 2% would expect given the enthusiasm expressed for the investment Opportunities type, as shown in Fig. 12. Uncertain It is possible that the hindrances and downsides that relate to private equity co-investments could be holding back both investors and fund 40% managers from following through with co-investments, regardless of the level of desire they have to participate. The high expense of co-investments and also rife competition in the landscape are likely Source: Preqin GP Co-Investment Survey, February 2014 deterrents to those who express an initial interest but fall back further down the line when such issues become more apparent to them.

In any case, the appetite for co-investment is not only evident, but is a strong feature among the plans of many GPs and LPs for the year ahead. As the private equity industry matures and the development of a more sophisticated investor community progresses, 2014 could see an increase in co-investment activity, with beneﬁ ts for both fund managers and limited partners.

Fig. 11: Number of LPs in Latest Fund with Co-Investment Fig. 12: Proportion of LPs that Accepted Co-Investment Rights Included in Limited Partner Agreement Opportunities Offered by GPs in 2013

30% 29% 40% 27% 35% 34% 25% 21% 30% 20% 25% 21% 15% 14% 20% 17% 15% 14% 10% 9% 10% 10% 5% Proportion of GP Respondents Proportion of GP Respondents 5% 3%

0% 0% 0 1 to 2 3 to 5 6 to 10 11+ 0% 1-25% 26-50% 51-75% 76-99% 100%

No. of LPs Proportion of LPs Source: Preqin GP Co-Investment Survey, February 2014 Source: Preqin GP Co-Investment Survey, February 2014

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Subscribers to Preqin’s Investor Intelligence can click here to view detailed proﬁ les of 1,136 LPs that consider co-investment opportunities.

The Co-Investor Search feature can be used to ﬁ nd LPs that are interested in co-investing by LP type and location, geographic and industry preferences, requirements when co-investing, future co-investment plans and more.

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Lead Article The Diversification of Secondaries Transactions Download Data

The Diversification of Secondaries Transactions

With the continued evolution of the already complex private equity secondaries universe, Patrick Adefuye looks at the different types of strategies that are being increasingly adopted by maturing secondary buyers and sellers, providing details of transactions featured on Preqin’s Secondary Market Monitor.

As we move through 2014, limited partner interest in the secondary largest ever known secondaries sales being completed, as shown market remains strong, evidenced by the level of fundraising in Fig. 3. attained by secondaries funds in recent years. As seen in Fig. 1, $21bn was raised by dedicated secondaries funds in 2012 by 16 In 2013, however, it seems clear there have been fewer of these vehicles and $15bn was raised by 21 funds closed in 2013. As headline-grabbing portfolio divestments completed compared to shown in Fig. 2, vehicles being raised are ever larger, with funds the previous two years in particular. One factor may be the high closed in 2012 almost $1.5bn in size on average. Furthermore, top level of distributions LPs have received from managers which performing managers are now increasingly successful in attaining is delaying some investors in selling portfolios. Public market closes higher than their previous funds. strength and subsequent NAV increases may also have caused would-be sellers to hold on to their assets. However, large portfolio For instance, in July 2013, HarbourVest Partner’s Dover Street VIII divestments will continue to form an important source of deals successfully raised $3.6bn from investors, 24% more capital than for secondary buyers. For example, both OMERS and New York the vehicle’s predecessor. In February 2013, LGT Capital Partners City Employees’ Retirement System have long-term intentions to closed on $2bn for Crown Global Secondaries III, almost double signifi cantly reduce the number of their managers. CalPERS sees the amount raised for its previous secondaries fund. These fund its ideal number of private equity managers as between 100 and closings do not only refl ect the healthy levels of LP appetite that 120, implying a necessity to cull more than two-thirds (about 269) exist for these vehicles, but also a belief that attractive opportunities of its existing managers. Also, with the fi nalization of the Volcker continue to exist to invest in the secondary market. But what are Rule imminent, banks still holding third-party fund positions are these opportunities? likely to come to market to dispose of these.

1. Purchasing Portfolios of Funds The general consensus, judging by the estimates of the various fi rms that track secondary activity levels, is that secondary activity The traditional type of secondary market investment - the core grew in 2013. In light of the apparent lull in mega portfolio sales, it is for these large secondaries vehicles - is the acquisition of large clear that secondary players are diversifying. Preqin has observed portfolios of funds from limited partners. Indeed, the key driver a growing number of opportunistic investors selling positions in for this cycle of successful secondaries fundraising lies in the individual funds, which have gone come way to make up for the investment rationale that the dual effect of regulatory pressure on shortfall caused by fewer large portfolio sales. Preqin’s Secondary fi nancial institutions and the post-crisis behaviour of large pension Market Monitor profi les 309 investors that will consider selling funds in focusing their investments on fewer managers will create fund stakes on the secondary market. The pricing conditions are opportunities for certain investors to acquire large portfolios funds. favourable with the driving force of vast amounts of capital chasing This has certainly played out in recent years, with some of the deals behind them.

Fig. 1: Annual Private Equity Secondaries Fundraising, 2004 - Fig. 2: Average Size of Private Equity Secondaries Funds 2013 Closed, 2004 - 2013

25 1,600 23 1,470 22 21 21 21 1,400 20 21 1,282 20 1,235 1,200 16 No. of Funds 15 15 977 Closed 1,000 15 14 14 14 13 800 760 10 10 Aggregate 10 9 Capital Raised 589 9 600 551 ($bn) 519 7 445 388 6 400

5 Fund Size ($mn) Average 200

0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year of Final Close Year of Final Close Source: Preqin Secondary Market Monitor Source: Preqin Secondary Market Monitor

2. Fund Restructurings Fund II. Refi nancing allows the fund to complete an extra two or three deals and an extension of its life by four years. Limited partners One observation from this past year is that there are a growing in the 2005 vintage fund were given the option of either selling their number of ‘non-traditional’ secondaries transactions taking stakes in the fund to HarbourVest Partners, or remaining invested place, different from the plain vanilla sale of fund interests from in it for the next four years. It is believed that around half of the an individual LP to a secondary buyer. One such type is in the investors chose the former option, with 20 investors remaining in so-called fund restructurings or fund recapitalizations. Such deals the fund. are usually general partner-led, stemming from a desire to fi nd a solution for investors in their funds that have exceeded (or are The obvious application of this type of transaction has been to close to exceeding) their life-span as set out in their fund terms, the so-called ‘zombie funds’ associated with managers that have with a substantial amount of assets still remaining in the fund. performed poorly and are unable to raise new capital. However, the model of investment can quite easily be applied to healthier fi rms Secondaries players have a role in providing patient capital to give that are managing older funds that have yet to reach full realization GPs opportunities to re-invigorate residual investments with cash for non-performance-related reasons, expanding the opportunity injections. Existing limited partners are given the option to exit set. Examples of GPs actively pursuing restructuring are Argan their position in the fund or to remain and take advantage of any Capital for its 2006 vintage fund and Perseus Capital, which has future upside. An example of such a transaction is Morgan Stanley commissioned secondary intermediary Cogent Capital to assist in Alternative Investments buying into Ferrer, Freeman & Co’s 2004 the restructuring of its ageing vehicles. It will represent a second vintage fund, FFC Partners III. In a deal 100% approved by the attempt at restructuring by the fi rm, highlighting the diffi culties that fund’s existing limited partners, an extension to the fund’s life was can be encountered in such deals, not least in reaching consensus accepted, with limited partners being offered the option to either with limited partners as to what the value of the fund should be. participate in this or liquidate their positions. 3. Acquisition of Private Equity Investment Arms Morgan Stanley AIP has had particular success in executing such deals, completing 12 since 2006 and fi ve in the past year alone. Another investment opportunity for secondaries funds comes in the A more recent example is HarbourVest Partners’ completion of a form of the captive private equity investment arms of banks. These restructuring deal for Motion Equity Partners’ Electra European fi rms, historically supported in their investments by the bank’s

Fig. 3: Largest Known Private Equity Fund Portfolio Sales

Seller Buyer(s) Transaction Year Price ($bn) Intermediary California Public Employees' Conversus Asset Management, HarbourVest Partners, UBS Investment Bank 2008 2.1 Retirement System (CalPERS) Jasper Ridge Partners, Lexington Partners, Pantheon Private Funds Group Länsförsäkringar Abu Dhabi Investment Council, QIC 2012 2.0 Campbell Lutyens GM Asset Management State Administration of Foreign Exchange 2012 2.0 - Lloyds Banking Group Coller Capital 2012 2.0 Campbell Lutyens BAML Global Principal Ardian 2010 1.9 Greenhill & Co. Investments Citi Capital Advisors Ardian 2011 1.7 Greenhill & Co. Lloyds Banking Group Coller Capital 2012 1.7 Campbell Lutyens Public Sector Pension Undisclosed 2013 1.5 Cogent Partners Investment Board California Public Employees' Undisclosed 2012 1.5 - Retirement System (CalPERS) Dresdner Bank PineBridge Investments 2005 1.4 -

Source: Preqin Secondary Market Monitor Fig. 4: Top 10 Private Equity Secondary Fund Managers by Estimated Dry Powder

Firm Firm Location Estimated Dry Powder ($bn) Coller Capital UK 4.6 Lexington Partners US 4.3 Goldman Sachs AIMS Private Equity US 3.9 Ardian France 3.4 HarbourVest Partners US 3.0 Partners Group Switzerland 2.1 Neuberger Berman US 1.8 LGT Capital Partners Switzerland 1.7 Strategic Partners Fund Solutions US 1.3 Newbury Partners US 1.2

Source: Preqin Secondary Market Monitor

balance sheet, are being assisted in attaining spin-outs through secondaries players such as Cipio Partners, W Capital Partners capital provided by secondary players. The parent bank gets the and Vision Capital, but secondaries funds have also been looking chance to lessen its exposure by selling its existing interests, while at such opportunities. One avenue to such deals is in partnering the fund managers are simultaneously backed with capital for new with direct secondaries fi rms, as was the case in Sobera Capital’s investments. purchase of a portfolio of direct investments from BayTech Venture Capital Fund I. Sobera was backed by Switzerland-based fi rm A recent example of this is in a transaction led by HarbourVest Unigestion. Partners in a consortium that also included Coller Capital, funding the independence of Absa Capital Private Equity, the former captive Conclusion investment arm of Barclays Africa Group. The investors purchased Barclay’s entire 73.7% interest in 2006 vintage Absa Capital The secondary market is very crowded indeed given the ample Private Equity Fund I. The new company was named Rockwood capital available to secondary players. Combined, the largest 10 Private Equity. fund managers by estimated dry powder have a total of just over $27bn available for deployment, as shown in Fig. 4. In addition, Potential targets for secondary buyers include NBGI Private Equity, there is growing interest from institutional investors across the the London-based private equity arm of National Bank of Greece, globe in directly taking part in the private equity secondary market. which is reportedly working with Cogent Partners to seek buyers Preqin’s Secondary Market Monitor tracks over 250 potential buyers for the fi rm. In addition, HSBC hired Campbell Lutyens to advise of secondary positions in private equity funds that are not primary on the potential sale of its direct principal investments arm. The fund of funds or secondary fund of funds managers. To expend anticipated spin-out of One Equity Partners from JPMorgan Chase capital, secondary buyers are looking beyond the traditional model & Co. will be one of the largest to date, with the fi rm’s portfolio of acquiring large portfolios of funds from sellers and are fi nding valued at around $5bn. A number of secondary players have innovative ways to provide liquidity to the private equity market. shown interest. The past year alone witnessed a number of ‘non-traditional’ secondaries transactions, a sample of which is listed in Fig. 5. 4. Direct Sales of Portfolio Company Interests This shows the fi rm foothold these strategies have in secondary market buyer and sellers’ operations, as they act accordingly to the An alternative for GPs with funds that have exceeded their opportunities that have presented themselves in the ever-evolving lifetime is through direct sales of interests in the fund’s remaining private equity landscape. portfolio companies. Such investments are the speciality of direct

Fig. 5: Recent Examples of Non-Traditional Secondaries Transactions

Buyer Selling Fund/Firm Date Deal Type Deal Description Morgan Stanley bought into Ferrer, Freeman & Co’s FF&C III Morgan Stanley FFC Partners III Sep-13 Fund Restructuring fund in a deal 100% approved by the fund’s existing LPs. An extension to the fund's life was agreed. HarbourVest Partners provided liquidity to around 20 investors Electra European HarbourVest Partners Jan-14 Fund Restructuring in Electra European Fund II. The fund's life was extended by Fund II four years, with allowance for two or three more deals. HarbourVest and Coller Capital bought out Barclays Africa HarbourVest Partners, Absa Capital Private Group's interest in Absa Capital Private Equity Fund I to Dec-13 Spin-out Coller Capital Equity Fund I complete the spin-out of Absa Private Equity, creating Rockwood Private Equity. The energy team of private equity fi rm HM Capital spun-out to form new company Tailwater Capital. The spin-out was Landmark Partners HM Capital Mar-13 Spin-out assisted by secondaries fi rm Landmark Partners with the purchase of HM Capital's legacy energy portfolio. Sobera Capital, backed by Unigestion, completed the Unigestion, Sobera BayTech Venture Nov-13 Direct Secondaries acquistion of a portfolio of companies from BayTech Venture Capital Capital Fund I Capital's fi rst fund.

Source: Preqin Secondary Market Monitor

Data Source:

Preqin’s Secondary Market Monitor can be used to access comprehensive information on all aspects of the secondary market. View detailed proﬁ les for 205 potential buyers of fund interests and 309 LPs looking to sell fund interests, as well as 37 secondaries funds currently in market and 231 closed historically.

This vital tool is constantly updated by Preqin’s team of dedicated analysts through direct contact with institutional investors and fund managers around the world.

For more information, or to register for a demonstration, please visit:

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alternative assets. intelligent data.

Fund Coverage: 35,210 Funds

4,558 PE Real 765 Infrastructure 15,090 Private Equity* Funds 14,797 Hedge Funds Estate Funds Funds

Firm Coverage: 16,628 Firms

1,941 PERE 7,687 PE Firms 6,559 Hedge Fund Firms 441 Infra. Firms Firms

Performance Coverage: 15,450 Funds (IRR Data for 5,382 Funds and Cash Flow Data for 2,489 Funds)

1,152 PERE 5,453 PE Funds 8,696 Hedge Funds 149 Infra. Funds Funds

Fundraising Coverage: 14,633 Funds Open for Investment/Launching Soon Including 2,115 Closed-Ended Funds in Market and 382 Announced or Expected Funds

1,773 PE Funds 11,643 Hedge Funds 973 PERE 254 Infra. Funds Funds

Deals Coverage: 97,402 Deals Covered; All New Deals Tracked

34,008 Buyout Deals** 56,461 Venture Capital Deals*** 6,933 Infra. Deals

Investor Coverage: 11,651 Institutional Investors Monitored, Including 8,225 Verified Active**** in Alternatives and 87,672 LP Commitments to Partnerships

2,201 Active 5,253 Active PE LPs 4,502 Active Hedge Fund Investors 4,232 Active RE LPs Infra. LPs

Alternatives Investment Consultant Coverage: 460 Consultants Tracked

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*Private Equity includes buyout, venture capital, distressed, growth, natural resources and mezzanine funds. **Buyout deals: Preqin tracks private equity-backed buyout deals globally, including LBOs, growth capital, public-to-private deals, and recapitalizations. Our coverage does not include private debt and mezzanine deals. ***Venture capital deals: Preqin tracks cash-for-equity investments by professional venture capital firms in companies globally across all venture capital stages, from seed to expansion phase. The deals figures provided by Preqin are based on announced venture capital rounds when the capital is committed to a company. ****Preqin contacts investors directly to ensure their alternatives programs are active. We emphasize active investors, but clients can also view profiles for investors no longer investing or with programs on hold. News Preqin Industry News Download Data

Preqin Industry News

Antonia Lee looks at investor appetite for private equity co-investments, presenting examples of investors that have recently made such commitments, and those that plan to do so in the near future.

Several Investors Have Made New Co-Investments Recently How does investor appetite for Teachers’ Retirement System of the State of Illinois (TRS) recently made three co-investments. The $40.8bn pension fund co- co-investments vary by region? invested alongside three private equity fund managers, Madison Dearborn Partners, MBK Partners and Riverstone Holdings, within Chart of the Month: LP Plans for Co-Investment Activity by Investor Location the healthcare, insurance and energy sectors respectively. TRS currently allocates 11.5% of total assets to private equity, above 100% its target allocation of 11.0%. It typically commits around $1bn to private equity annually, including co-investments. 90% Increase Co- 80% 46% Investment Activity 51% London Pensions Fund Authority (LPFA), a £4.75bn public pension 70% 67% 63% fund, and Adveq, a $5bn private equity fund of funds manager, Maintain Co- 60% have co-invested alongside Next Wave Partners in Secured Mail, Investment Activity which specializes in efﬁ cient bulk mail and e-commerce packet 50% Decrease Co- delivery. LPFA, which currently allocates 8% of its total assets to 40% Investment Activity private equity, is approaching new private equity commitments 40% 30% 36% opportunistically over the next 12 months. Adveq is actively 11% 0% Uncertain seeking new private equity opportunities through its latest fund of 20% 38% Proportion of LP Respondents 0% funds vehicle. 10% 1% 22% 14% 12% 0% 0% New Mexico Educational Retirement Board has awarded a new Europe North Asia Rest of co-investment mandate to BlackRock Private Equity Partners America World (BlackRock PEP). The public pension fund committed $100mn to Blackrock/ERB Tactical Opportunities Fund I, which will be Investor Location invested in co-investment opportunities on its behalf by BlackRock Source: Preqin LP Co-Investment Survey, February 2014 PEP. This is the third co-investment multi-manager mandate the pension fund has awarded to the private equity fund of funds In February 2014, Preqin conducted a survey of 140 LPs based manager. In 2009 it committed $100mn to BR/ERB Co-Investment across the globe in order to gain insight into the activities and Fund I and in 2013 it committed another $100mn to BR/ERB Co- attitudes of institutional investors currently interested in co- Investment Fund II. BlackRock PEP is currently raising capital for investments. As a part of the survey, LPs shared some detail on its third co-investment multi-manager vehicle, BlackRock Private their intended plans for future activity in the space. The Chart Opportunities Fund III, with a target of $300mn. of the Month shows the proportions of respondents that plan to increase, decrease or maintain their current levels of co- LPs Are Planning to Increase their Co-investment Activity investment activity by investor location. Most notably, only 1% of North American LPs that participated Northwestern Mutual Life Insurance Company (NMLI) expects to in Preqin’s dedicated survey and no LPs in any other region make 10 co-investments over the next 12 months. The $165bn indicated that they would be decreasing their co-investment insurance company is an active co-investor alongside its private activities in the coming year. The response stated by largest equity fund managers, with co-investments representing 30% proportion was consistent across all regions: LPs are looking to of its entire private equity portfolio. It is looking to make 10 co- increase their co-investment activity. Speciﬁ cally, 67% of Asian investments during 2014, with both existing managers in its portfolio LPs intend to do so, compared to 51% and 46% of investors and managers it had not previously worked with. It typically co- based in North America and Europe respectively and 63% of invests in Europe and the US, co-investing between $10-75mn per LPs based outside of these core regions. deal.

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Women in Private Equity

Despite the historical low levels of female representation in private equity leadership, in recent years we have seen more women appointed to senior roles in the industry. Luke Goldsmith presents the statistics.

Women in Private Equity: Geography Fig. 1: Female Senior Employees as Proportion of Total Number of Senior Employees by Firm Location, 2013 - 2014 As of March 2014, private equity ﬁ rms based in Asia have the highest proportion of women in senior roles, with an average of 11.8% of 14% 12.8% high-level roles held by women, as shown in Fig. 1. This is, however, 12% 11.8% a notable fall from 2013 when 12.8% of women in Asia held senior 11.0% 10.3% 9.9% 10.0% positions. The average proportion of senior positions held by women 10% 9.7% 9.8% in North America- and Europe-based private equity ﬁ rms is 11.0% and 9.7% respectively. North America saw a rise from 2013 when 8% 2013 women held 10.3% of senior roles. The corresponding average for private equity shops headquartered in regions outside of North 6% 2014

America, Europe and Asia is higher than Europe, at 10.0%. Employees 4%

Women in Private Equity: Strategy 2%

The primary investment strategy with the highest proportion of Proportion of Female Senior Average 0% women employed in senior roles is real estate, with an average of Asia Europe North Rest of World 12.8%, as shown in Fig. 2. The strategy with the second highest America proportion of women employed in senior roles is infrastructure, with Firm Location an average of 11.7%. Real estate and infrastructure saw a slight Source: Preqin Fund Manager Profi les rise in the proportion of women employed in senior roles, up from Conclusion 11.3% and 10.5% respectively in 2013. Women account for 11.2% of senior roles in venture capital fi rms while buyout fi rms have the Collectively, though these statistics do highlight some improvements lowest percentage of women in senior roles, with an average of 9.0%, in the levels of female representation in the industry, the overall though it should be noted that this strategy is the only one to have proportion of leadership roles that women occupy in private equity is seen a steady increase in the last two years. still notably low. Indeed, it is an issue that has been acknowledged by the industry and organizations across the world are actively working Women in Private Equity: Firm Size to push for change.

In fi rms with fi ve or fewer people, women in senior positions account for 8.4% of senior employees. These fi rms have seen a decrease over Data Source: the last two years in the ratio of women employed at higher levels. This fi gure increases as the number of employees at each fi rm rises, The data in this article is taken from Preqin’s Fund Manager as shown in Fig. 3. At fi rms with six to ten employees, women account Profi les, which contains detailed information for over 7,200 for 11.8% of senior positions. Women account for 11.5% of high-level private equity fund managers worldwide, including key contact employees at private equity fi rms with 11 to 20 staff members, which details, funds raised, known investors, dry powder and more. is an increase on 2012 and 2013. Firms with 21 or more employees www.preqin.com/fmp have the highest proportion of senior female staff (11.9%). For more information, please visit:

Fig. 2: Female Senior Employees as Proportion of Total Fig. 3: Female Senior Employees as Proportion of Total Number of Senior Employees by Firm Strategy, 2012 - 2014 Number of Senior Employees, 2012 - 2014

16% 14%

14% 13.5% 11.9% 12.8% 12% 11.5% 10.8% 10.7% 11.9% 12.0% 10.4% 10.6% 12% 11.7% 9.9% 11.3% 11.2% 11.2% 10% 10.5% 9.2% 9.3% 9.7% 2012 8.7% 2012 10% 8.4% 8.7%9.0% 8% 8% 2013 6.9% 2013 6% Employees 6% 2014 Employees 4% 2014 4%

2% 2% Average Proportion of Female Senior Average Average Proportion of Female Senior Average 0% 0% Buyout Infrastructure Real Estate Venture 1 to 5 6 to 10 11 to 20 More than 20 Capital Firm Strategy Number of Senior Employees at Firm Source: Preqin Fund Manager Proﬁ les Source: Preqin Fund Manager Proﬁ les

Changes in Investors’ Allocations to Private Equity

Harry Young looks at changes in investors’ allocations to private equity, highlighting a trend of LPs largely maintaining or increasing the proportion of their assets under management (AUM) intended for investments in private equity.

Fig. 1: Average Current Private Equity Allocation by Investor Fig. 2: Average Private Equity Target Allocation by Investor Type (As a % of AUM) Type (As a % of AUM)

30% 35% 28.0% 31.7% 28.9% 25% 24.5% 30% 25% 20% 2013 12.9% 2013 20% 15% 12.9% 11.7% 15% 13.0% 12.0% 11.6% 12.4% 2014 10% 2014 11.9% 6.3% 6.5% 5.7% 10% 7.3% 7.7% 6.2% 6.0% 5.6% 7.1% 6.4% 6.3% 5% 2.7% 6.3% 3.3% 2.6% 5% 3.1% Allocation (As a % of AUM) Allocation (As a % of AUM) Average Private Equity Target Private Equity Target Average Average Current Private Equity Average 0% 0% Office Family Office Family Plan Plan Fund Insurance Fund Company Insurance Company Foundation Foundation Endowment Scheme Endowment Scheme Pension Fund Private Sector Pension Fund Private Sector Public Pension Public Pension Superannuation Superannuation Investor Type Investor Type Source: Preqin Investor Intelligence Source: Preqin Investor Intelligence

Fig. 3: Investors’ Intentions for Their Private Equity Allocations in the Longer Term

Data Source:

8% Preqin’s Investor Intelligence contains detailed proﬁ les for 5,255 investors in private equity funds worldwide. Find those Increase Allocation LPs that are below their target allocations to private equity and 39% have capital available to invest.

Maintain Allocation Extensive proﬁ les include assets under management, current and target allocations, future investment plans, fund type and Decrease Allocation geographic preferences, key contact information and much 53% more.

For more information please visit:

www.preqin.com/ii Source: Preqin Investor Intelligence

Fig. 4: Sample LPs that Have Increased Their Private Equity Allocations in the Last 12 Months

Investor Name Type Country Description In November 2013, the £2.6bn pension fund decided to increase its current and target North East Scotland Public Pension Fund Scotland allocations, which both stood at 5% of total assets at the time. It plans to continue targeting Pension Fund fund of funds vehicles focusing on opportunities in North America and Europe. The $500mn pension fund is looking to commit around $13mn to private equity over the Debswana Pension Private Sector Pension coming year, as part of a three-year plan to increase its current allocation to the asset class Botswana Fund Fund to 7.5% of total assets. It will consider a wide range of fund types, including buyout, venture capital, mezzanine and fund of funds vehicles. In April 2013, the $32.7bn endowment plan increased its target allocation to private equity Harvard Management Endowment Plan US from the 23% goal set in 2005, to 29% of total assets. Thirteen percent of the target will be Company allocated to natural resources vehicles.

Source: Preqin Investor Intelligence

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www.terrapinn.com/pelatam sponsors The Facts US Private Equity-Backed Buyout Deals Download Data

US Private Equity-Backed Buyout Deals

Catriona McCarron provides a geographic breakdown of private equity-backed buyout deals, with a particular focus on US transactions, which have consistently comprised the largest proportion of deals of all regions over the years.

Fig 1: Proportion of Number of Private Equity-Backed Buyout Fig 2: Aggregate Value of Private Equity-Backed Buyout Deals by Region, 2006 - 2013 Deals by Region, 2006 - 2013 ($bn)

100% 500 8% 9% 10% 11% 8% 9% 10% 11% 90% 6% 450 9% 9% 9% 7% 8% 10% 9% 80% 400

70% Rest of World 350 Rest of World 37% 29% 35% 38% 30% 35% 34% 31% 60% 300 Asia Asia 50% 250 Europe 40% Europe 200 US Proportion of Total 30% 150 51% 51% US 49% 47% 45% 48% 48% 49%

20% ($bn) Aggregate Deal Value 100

10% 50

0% 0 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 Source: Preqin Buyout Deals Analyst Source: Preqin Buyout Deals Analyst Fig 3: Proportion of Number of US Private Equity-Backed Fig. 4: Proportion of Number of US Private Equity-Backed Buyout Deals by US State, 2006 - 2013 Buyout Deals by Industry by US State, 2006 - 2013

100% 100% Other 90% 90% Energy & Utilities 80% 80% Clean Technology 70% 70% Food & Agriculture 60% 60% Telecoms & Media 50% 50% Healthcare 40% 40% Business Services 30%

30% Proportion of Total Information Technology

Proportion of Total 20% 20% Consumer & Retail 10% Industrials 10% 0% 0%

2006 2007 2008 2009 2010 2011 2012 2013 Ohio Texas Illinois Other California Texas New York Florida Florida Georgia New York Illinois Ohio Pennsylvania New Jersey California New Jersey

Massachusetts Georgia Other Pennsylvania Massachusetts Source: Preqin Buyout Deals Analyst Source: Preqin Buyout Deals Analyst

Fig 5: US Private Equity-Backed Exits by Type, Q1 2006 - Q4 2013

250 60

Aggregate Exit Value ($bn) Subscriber Quicklink: 50 200 Subscribers to Buyout Deals Analyst can click here to view 40 detailed information on over 16,900 announced and completed 150 US private equity-backed buyout deals. 30 100

No. of Exits 20 The Market Overview feature provides a breakdown of the number and aggregate value of private equity-backed buyout 50 10 deals that have occurred since 2006 by region, value band, industry and type. 0 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2006 2007 2008 2009 2010 2011 2012 2013 www.preqin.com/buyoutdeals

IPO Restructuring Sale to GP Trade Sale Aggregate Exit Value ($bn) Source: Preqin Buyout Deals Analyst 17 Private Equity Spotlight / March 2014 © 2014 Preqin Ltd. / www.preqin.com The Facts Venture Capital Deals: Software & Related Industries Download Data

Venture Capital Deals: Software & Related Industries

Q4 2013 saw a surge in the aggregate value of venture capital financings in the software and related industry sector, reaching a peak of $4.24bn, which is largely attributable to the Supercell deal. Joel Coulson takes a look at historical data on venture capital deals in this buzzing market segment.

Fig. 1: Number and Aggregate Value of Software & Related Fig. 2: Number and Aggregate Value of Software & Related Deals, Q1 2007 - Q1 2014 YTD* (As at 03 March 2014) Deals as a Proportion of all Venture Capital Deals, 2007 - 2014 YTD* (As at 03 March 2014)

450 4.5 25% 22% 400 4.0 21% Aggregate Deal Value ($bn) 20% 350 3.5 18% 17% 18% 17% 16% 300 3.0 15% 16% 15% 14% 13% 250 2.5 12% 12% 11% 10% 10% 200 2.0 10%

No. of Deals 150 1.5 5% 100 1.0

50 0.5 0% 0 0.0 Capital Deals Proportion of All Venture 2007 2008 2009 2010 2011 2012 2013 2014 YTD (03 Mar) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 2012 2013 2014 Proportion of No. of Deals Proportion of Aggregate Deal Value No. of Deals Aggregate Deal Value ($bn) Source: Preqin Venture Deals Analyst Source: Preqin Venture Deals Analyst Fig. 3: Proportion of Number and Aggregate Value of Software & Related Deals by Region, 2007 - 2014 YTD* (As at 03 March 2014)

100% 2% 3% 2% 1% 2% 2% 3% Data Source: 90% 2% 12% 80% 18% Preqin’s Venture Deals Analyst contains detailed information Other on over 56,000 venture capital deals worldwide, including 70% India 10,503 venture capital deals in the software and related 60% industry. Israel 50% Greater China The Search by Deals feature can be used to ﬁ lter deals by 40% 80% 73% deal date, stage, size, industry, location and more. Europe

Proportion of Total 30%

20% North America For more information, or to arrange a demonstration, please visit: 10%

0% Proportion of Proportion of Aggregate www.preqin.com/vcdeals No. of Deals Deal Value Source: Preqin Venture Deals Analyst

Fig. 4: Top Five Software & Related Venture Capital Deals, 2013 - 2014 YTD* (As at 03 March 2014)

Portfolio Company Stage Deal Date Deal Size (mn) Investors Location Supercell Unspecifi ed Round Oct-13 1,530 USD Gungho Online Entertainment, Softbank Finland AirWatch Series A/Round 1 Feb-13 200 USD Insight Venture Partners US Palantir Technologies Unspecifi ed Round Sep-13 197 USD The Founders Fund Management US Growth Capital/ SevOne Jan-13 150 USD Bain Capital US Expansion Altimeter Capital, Intel Capital, New Enterprise Associates, MongoDB, Inc. Unspecifi ed Round Oct-13 150 USD US Red Hat, Inc., Salesforce.com, Sequoia Capital, T Rowe Price

Source: Preqin Venture Deals Analyst *Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt

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American Express, four digit Visa and Mastercard, last code printed on the front of three digits printed on the Email: the card. signature strip. The Facts Q3 2013 Preliminary Preqin Benchmarks Download Data

Q3 2013 Preliminary Preqin Benchmarks

Vasilisa Starodubtseva presents the latest performance data as of Q3 2013, comparing the median net IRRs of buyout and venture capital funds, and also providing a geographic breakdown.

Fig. 1: Preqin All Private Equity Preliminary Benchmark as of 30 September 2013*

Net Multiple Quartiles Net IRR Max/ Median Fund DPI Quartiles (%) RVPI Quartiles (%) Net IRR Quartiles (%) (X) Min (%) No. Called Dist (%) Value (%) Vintage Q1 Median Q3 Q1 Median Q3 Q1 Median Q3 Q1 Median Q3 Max Min Funds (%) DPI RVPI 2013 65 9.8 0.0 95.8 0.0 0.0 0.0 102.2 95.8 82.0 1.04 0.97 0.82 n/m n/m n/m n/m n/m 2012 114 26.5 0.0 98.1 6.0 0.0 0.0 110.0 98.1 83.9 1.12 1.02 0.91 n/m n/m n/m n/m n/m 2011 172 41.5 1.2 102.1 10.9 1.2 0.0 113.7 102.1 88.0 1.21 1.10 0.99 n/m n/m n/m n/m n/m 2010 123 71.3 10.4 105.0 31.8 10.4 0.0 117.0 105.0 87.8 1.38 1.21 1.10 18.2 11.5 6.7 66.9 -26.0 2009 102 83.0 20.9 100.0 41.0 20.9 6.0 118.1 100.0 83.7 1.47 1.25 1.05 19.1 13.8 7.0 448.0 -10.2 2008 220 85.0 29.2 91.4 56.0 29.2 12.9 109.0 91.4 73.5 1.46 1.26 1.12 15.8 10.3 6.0 52.0 -26.1 2007 231 89.0 34.3 88.3 59.0 34.3 17.0 104.1 88.3 65.2 1.44 1.27 1.10 12.7 8.3 4.0 48.9 -74.6 2006 235 93.9 46.3 79.4 72.6 46.3 25.4 102.4 79.4 56.6 1.51 1.33 1.09 11.0 7.2 2.8 33.3 -25.3 2005 192 97.0 65.0 58.4 102.3 65.0 35.1 86.8 58.4 35.5 1.54 1.33 1.09 11.4 7.0 4.0 67.0 -100.0 2004 106 97.7 89.0 46.5 132.0 89.0 46.5 72.6 46.5 14.7 1.82 1.39 1.05 16.6 8.6 2.1 79.8 -26.0 2003 91 99.6 120.9 23.7 167.9 120.9 84.7 57.0 23.7 5.3 1.84 1.55 1.30 22.2 12.5 6.9 59.4 -28.5 2002 78 100.0 136.3 18.0 174.4 136.3 99.4 43.1 18.0 0.3 1.85 1.60 1.39 24.3 13.8 8.9 67.1 -12.4 2001 107 99.0 147.9 14.5 198.9 147.9 99.1 38.0 14.5 1.0 2.16 1.63 1.38 24.2 12.9 7.3 94.0 -16.3 2000 153 99.0 140.2 12.9 182.1 140.2 92.5 25.4 12.9 0.0 2.02 1.60 1.17 20.5 11.8 3.8 73.0 -96.0 Source: Preqin Performance Analyst

Fig. 2: Median Net IRRs - All Private Equity, Buyout and Fig. 3: Regional Comparison of Median Net Multiple by Venture Capital as of 30 September 2013 Vintage as of 30 September 2013

35 1.8

1.6 30 Preqin All Private Equity 1.4 25 Benchmark North 1.2 America 20 Preqin Buyout 1.0 Europe Benchmark 15 0.8 0.6 Asia Median Net IRR 10 Preqin Venture

Median Net Multiple (x) 0.4 Capital 5 Benchmark 0.2

0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Vintage Year Vintage Year Source: Preqin Performance Analyst Source: Preqin Performance Analyst

Data Source:

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*Preqin’s Performance Analyst contains performance data for over 6,700 private equity funds. The data used above is based on preliminary data as of Q3 2013, and is therefore based on a smaller pool of funds.

Co-Investment Activity of Private Equity Fund of Funds Managers

Patrick Adefuye looks at private equity fund of funds managers that consider co-investment opportunities and presents the top five co-investment multi-manager* vehicles by size.

Fig. 1: Proportion of Private Equity Fund of Funds Managers Fig. 2: Private Equity Fund of Funds Managers that Consider that Consider Co-Investment Opportunities Co-Investment Opportunities By Manager Location

1% 5% 10% Consider Offering Co- 29% Investment North America Opportunities Europe Do Not Offer Co- Investment 50% Asia Opoortunities Rest of World Offer Co-investment 35% 70% Opportunities

Source: Preqin Private Equity Fund of Funds Manager Survey, January 2014 Source: Preqin Private Equity Fund of Funds Manager Survey, January 2014

Fig. 3: Largest Private Equity Co-Investment Multi-Manager Vehicles Currently in Market (As at 03 March 2014)

Fund Firm Target Size ($mn) Fund Status Hamilton Lane Co-Investment Fund III Hamilton Lane 1,000 Raising AXA Co-Investment Fund IV Ardian 490 Third Close BlackRock Private Opportunities Fund III BlackRock Private Equity Partners 300 First Close Capital Dynamics Mid-Market Direct III Capital Dynamics 250 Raising Performance Direct Investments III Performance Equity Management 200 Raising RCP Direct II RCP Advisors 200 Raising

Source: Preqin Funds in Market Fig. 4: Five Largest Private Equity Co-Investment Multi-Manager Vehicles Closed, All Time

Fund Firm Final Value ($mn) Vintage AlpInvest Co-Invest V AlpInvest Partners 1,638 2012 Co-Investment Partners III Lexington Partners 1,580 2012 Hamilton Lane Co-Investment Fund II Hamilton Lane 1,192 2007 NB Co-Investment Partners II Neuberger Berman 1,100 2012 AXA Co-investment Fund III Ardian 1,070 2007

*A co-investment multi-manager vehicle is a ﬁ nancial instrument that seeks to co-invest in the deals of more than one fund vehicle. They are Source: Preqin Funds in Market differentiated from co-investment funds which are created for the purpose of co-investing in the deals of a single vehicle or in a single deal.

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Subscribers to Preqin’s Investor Intelligence can click here to view detailed proﬁ les of all 176 private equity fund of funds managers that consider co-investments, including funds previously raised, assets under management, investment preferences and much more.

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Conferences Spotlight

Conference Dates Location Organizer Preqin Speaker Discount Code

Private Banking Asia 2014 18 - 20 March 2014 Singapore Terrapinn - -

Middle East Investment 26 - 27 March 2014 Dubai Terrapinn - - Summit

SuperReturn China 7 - 9 April 2014 Beijing ICBI Mark O'Hare -

Clean Technology 22 - 25 April 2014 Singapore Terrapinn - Investment World Asia 2014 European Family Ofﬁ ce & 01 June 2014 Geneva Opal Finance Group - - Private Wealth

SuperReturn US 9 - 12 June 2014 Boston ICBI Mark O'Hare -

Private Equity World Latin 17 - 18 June 2014 Miami, Florida Terrapinn - - America 2014 SuperReturn Emerging 24 - 27 June 2014 Geneva ICBI Mark O'Hare - Markets Family Ofﬁ ce & Private 21 - 23 July 2014 Newport RI Opal Finance Group - - Wealth Forum

Access Free Conference Slide Decks and Presentations

Preqin attends and speaks at many different alternative assets conferences throughout the year, covering topics from private equity fundraising trends to alternative UCITS.

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Private Banking Asia 2014

Date: 18 - 20 March 2014 Information: www.terrapinn.com/privatebankingasia Location: The Westin, Singapore Organiser: Terrapinn

Private Banking Asia brings together Asia’s leading private banks, family offices and independent wealth managers to discuss strategy, investment allocations, changing business models and new business opportunities in the Asian private wealth sector. Co-located with Asian Family Office Forum, this is the premier forum to access Asia’s ever growing private wealth industry.

Private Debt Investor Forum

Date: 26 March 2014 Information: http://www.iiribcfinance.com/FKW52724PQL Location: London Organiser: IIR Events

There’s no better time to attend the European Private Debt industry’s annual forum, as Private Debt sees huge expansion, growing as an asset class at an astonishing rate. Now in its 4th year, this event is the market leader and attracts 150+ senior private debt professionals & investors from all over Europe.

Middle East Investment Summit

Date: 26 - 27 March 2014 Information: www.terrapinn.com/meis Location: Ritz-Carlton DIFC, Dubai, UAE Organiser: Terrapinn Middle East

Middle Eastern investors get information that determines their investment strategies at the Middle East Investment Summit.

Highlights in 2014 include: •$3 trillion of capital represented •1:1 fund to end investor ratio •Investor Strategy Clinics by global funds •15+ hours of networking •Online networking tool & meeting planner •1-to-1 investor partnering sessions

Swiss Private Equity Conference

Date: 4 April 2014 Information: www.pe-conference.org/swiss Location: Marriott Hotel in Zürich, Switzerland Organiser: Private Equity Conference

The Swiss Private Equity Conference is a one-day concentrated event dedicated to Private Equity Management companies, funds, venture capitals, Limited Partners, wealth managers and lawyers that facilitates a unique platform for discussions, insights, and networking opportunities. Expect exciting keynote speakers, thrilling panel discussions, and valuable networking opportunities.

Clean Technology World Asia 2014

Date: 22 - 25 April 2014 Information: www.terrapinn.com/cleantechasia Location: Resorts World Convention Centre, Singapore Organiser: Terrapinn

Clean Technology World Asia is the region’s most authoritative clean technology investment event which promotes partnership, investment and capital raising for innovators, investors and financiers. In 2014, we have reformatted this exciting convention to effectively connect global & Asian investors and partner communities with cleantech companies and other key stakeholders to explore new investment and partnership opportunities in the region.

Private Equity World Latin America

Date: 6 - 7 May 2014 Information: www.terrapinn.com/pelatam Location: Four Seasons Hotel, Miami FL Organiser: Terrapinn

Private Equity World Latin America unites over 300 local and global investors, private equity funds and venture capitalists to discuss the latest investment strategies and opportunities across the region. If you are looking to forge new partnerships, raise capital or stay on top of the latest fund offerings and investment opportunities, then you must attend.