Private Equity Capital Briefing PE Turns to Deployment

July 2018

Private Equity Capital Briefing Quarterly insights and intelligence on PE trends

PE turns to deployment PE deal activity sees its busiest first half in more than a decade The Private Equity Capital Briefing has been designed to help you remain current on capital market trends. It captures key insights from subject-matter professionals across EY and distills this intelligence into a succinct and user-friendly publication. Private Equity Capital Briefing provides perspectives on both recent developments and the longer-term outlook for private equity (PE) fundraising, acquisitions and exits, as well as trends in global M&A, cross- border deal flows, IPOs and the debt and bond markets. Please feel free to reach out to any of the subject-matter contacts listed on the back page of this document if you wish to discuss any of the topics covered. Contents Section 1 Private equity: fundraising 4 Private equity: acquisitions 5 Private equity: exits 7 Section 2 Infrastructure 8 Section 3 Private credit 9 Section 4 M&A 10 Section 5 IPOs 12 Section 6 Loans 13 Section 7 Bonds 14 Appendices Appendix A PE activity by geography 16 Appendix B M&A activity monthly flash 25 Appendix C M&A multiples and bid premium 26 1.i. Private equity: fundraising

Executive summary • Fundraising activity remained strong in 1H18, albeit off last year’s record levels. PE firms have closed 376 funds so far this year with aggregate commitments of US$267.8b. • Activity was driven by closings from a number of large funds. The average size of PE funds closed in 1H18 increased by 27% versus a year ago. • Buyout funds remain the most active strategy, accounting for 36% of funds raised in 1H18, followed by real estate (20%) and infrastructure (13%).

Current state PE fundraising by half year (US$b) Source: Preqin. Investor confidence remained intact as PE fundraising continued its momentum into 1H18 amid a highly competitive environment. $400 800 • Fundraising activity remained robust in 1H18, albeit off last year’s $350 700 record levels. PE firms raised US$267.8b, down 29% from a year $300 600 ago. Activity was driven by closings from a number of large $250 500 vehicles; the average size of PE funds closed in 1H18 increased $200 400 27% versus a year ago, a trend expected to prevail throughout this $150 300 year and next. $100 200 • Dry powder is currently growing at a three-year compounded $50 100 growth rate of 9%, significantly lower than the 36% rate at which $0 0 dry powder grew between 2005-2007, when the industry experienced its fastest growth spurt.

PE fundraising by region Commitments Number of funds closed Source: Preqin.

Top funds raised so far this year Source: Preqin. Americas: Asia-Pacific: 1H17 – US$55b 1H17 – US$215b Value 1H18 – US$36b Fund Type 1H18 – US$139b (US$b)

EQT VIII Buyout $13.2 EMEA: BC European Cap X Buyout $8.5 1H17 – US$97b 1H18 – US$92b Starwood Global Opportunity Fund XI Real estate $7.6 GSO Capital Solutions Fund III Distressed debt $7.4 Source: Exclusive of diversified multi-regional funds. American Securities Partners VIII Buyout $7.0 Blackstone Real Estate Partners Asia II Real estate $7.0 Environment and horizon Carlyle Asia Growth Partners V Buyout $6.6 Outlook to remain strong in light of PE’s tailwinds. ISQ Global Infrastructure Fund II Infrastructure $6,5 • Fundraising is expected to remain strong through the rest of 2018, PAI Europe VII Buyout $6.7 driven by a number of strong tailwinds, including new investors in Bain Capital Europe V Buyout $5.1 the asset class, increased allocations from large LPs and a 10% uptick in exit activity last year that is poised to be reallocated to new funds. • PE capital is finding its way into the impact space. Global Impact Buyout dry powder – three-year compounded growth rates Investing Network’s Eighth Annual Impact Investor Survey found that, relative to three years ago, 84% of respondents said they Source: Preqin. were making more impact investments and had a greater commitment to measuring and managing the impact of their 40% investments. Seventy-two percent reported that there was greater 35% 30% buy-in from internal stakeholders around developing an impact 25% investment arm. 20% 15% • US pensions are getting serious about direct investments. New 10% players, including sovereign wealth funds, pension funds and family 5% offices are now vying for the same deals as traditional PE firms. 0% Both CalPERS and CalSTRS have recently announced steps to build -5% -10% out their capabilities, albeit using different models. CalPERS is -15% creating a separate entity – “CalPERS Direct,” governed by a separate board and consisting of two separate funds – one focused on late-stage investments in technology, life sciences and health care, and the other on long-term investments in established companies. CalSTRS is taking a more collaborative approach, and has formed a committee to develop a formal plan of action.

4 Private Equity Capital Briefing 1.ii. Private equity: acquisitions

Executive summary • Investment activity grew markedly in 1H18 versus the same period last year, jumping 61% to US$250b across more than 800 deals. • It was the busiest first half of the year in more than a decade. • Activity in the Americas grew the most, increasing by 71% versus a year ago, followed by EMEA and Asia-Pacific, where acquisition activity increased by 59% and 42% respectively.

Current state PE acquisition values and volumes by half year (US$b) PE deal activity sees its busiest first half in more than a decade. Source: Dealogic.

• PE firms turned their attention in 1H18 to deploying record levels $300 1,400 of dry powder, announcing 805 acquisitions valued at US$250b, up 61% by value from the same period a year ago, and up 2% by $250 1,200 1,000 volume. It was the busiest first half for PE since 2007. $200 800 • Upswings were evident across all major regions: In the Americas, $150 PE firms announced deals valued at US$128b, up 71% from last 600 $100 year; in EMEA, firms announced deals valued at US$76b, up 59% 400 from last year; in Asia-Pacific, firms announced deals valued at $50 200 US$47b, up 42% from last year. $0 0 • Fund managers are increasingly pursuing opportunities in large multibillion-dollar deals. A recent survey conducted by Mergermarket found that more than 76% of the respondents anticipated that there will be 5-10 more PE megadeals in 2018 Deal value (US$b) Number of deals than last year.

Average PE deal size by half year (US$m) PE deal activity by value (US$b), 1H17 vs.. 1H18 Source: Dealogic. Source: Dealogic.

$300 $150

$200 $100

$100 $50

$0 $0 Americas EMEA Asia-Pacific 1H 2013 1H 2014 1H 2015 1H 2016 1H 2017 1H 2018 H1 2017 H1 2018

Environment and horizon Top deals so far this year PE continues to lure large institutional investors, which increased Source: Dealogic. capital allocation in a bid to increase returns. Value Target Industry Sponsor • The California Public Employees’ Retirement System (CalPERS) (US$b) reported an investment gain of 8.6% during the fiscal year ended Thomson Reuters Technology Canada Pension Plan Investment $17.5 June 2018, higher than its long-term annual target but trailing last Financial & Risk (F&R) Board; GIC Special Investments Business Pte Ltd.; Blackstone Group LP year’s performance. Private equity was a key contributor to the Ant Small & Micro Technology Canada Pension Plan Investment $12.5 fund’s overall performance, generating a 16.1% return, versus a Financial Services Board; GIC Special Investments preliminary net return of 11.5% for public equities, which comprise Group Pte Ltd, Carlyle Group LP; more than half the portfolio. Real assets, primarily real estate, Warburg Pincus LLC; General generated a return of 8% and fixed income increased by 0.4%. Atlantic LLC; Primavera Capital Management Ltd.; Silver Lake • Add-on deals by PE investors are increasing. Amid the current high- Group LLC valuation environment, PE firms are increasingly adapting the “buy- Akzo Nobel NV Materials GIC Special Investments Pte Ltd.; $12.5 and-build” model as a key value creation strategy. Pitchbook’s data (specialty chemicals Carlyle Group LP suggests add-ons represent nearly 65% of all buyouts until 1H18. business) • The American Investment Council (AIC) recently named Drew TDC A/S Telecom Macquarie Infrastructure & Real $10.7 Maloney as its President and CEO. Maloney joins the AIC from the Assets Pty Ltd. US Department Treasury, where he served as Assistant Secretary Envision Healthcare Health care KKR & Co. LP $9.6 BMC Software Inc. Technology GIC Special Investments Pte Ltd; $8.3 for Legislative Affairs. Golden Gate Capital Corp; Bain Capital LLC; Insight Venture Management LLC; KKR & Co. LP Gramercy Property Real Estate Blackstone Group LP $7.7 Trust Recordati SpA Health care CVC Advisers Ltd. $7.4 Techem GmbH Consumer Partners Group Holding AG; $5.4 services Macquarie Infrastructure & Real Assets Pty Ltd. LaSalle Hotel Real Estate Blackstone Group LP $4.9 Properties

5 Private Equity Capital Briefing 1.iii. PE acquisition activity by region

PE acquisition activity by key regions and countries (YTD 2017 vs. YTD 2018)

YTD 2017: $9.2b YTD 2018: $11.0b YTD 2017: $1.2b UKI Change: 21% YTD 2018: $11.2b

Canada Change: 870%

YTD 2017: $b YTD 2018: $b

Europe Change: % Western

YTD 2017: $13.1b YTD 2017: $73.1b YTD 2018: $24.2b

YTD 2018: $116.3b US China Change: 85% Change: 59%

YTD 2017: $1.2b YTD 2018: $1.4b

Change: 18% SE SE Asia

YTD 2017: $2.8b YTD 2018: $5.7b India Change: 104%

YTD 2017: $3.2b YTD 2018: $11.4b

Change: 252% Australia

PE deal activity by country and region (by quarter, 2015 through Q2 2018, US$b)

Target nationality %  Q2 %  Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 vs. 2018 vs. 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 Q2 2018 Q2 2018

Americas

Canada $0.2 $3.2 $1.0 $0.5 $0.3 $1.6 $2.1 $0.1 $0.0 $1.1 $0.1 $4.6 $2.9 $8.2 634% 181%

US $25.0 $47.6 $58.7 $57.3 $19.0 $62.6 $50.6 $32.6 $30.8 $42.3 $44.3 $34.4 $46.2 $70.1 66% 52%

Latin America $0.7 $1.0 $0.6 $3.2 $0.0 $3.9 $0.2 $2.1 $0.4 $0.5 $0.8 $5.7 $0.5 $0.0 N/A N/A EMEA

UK&I $12.4 $12.2 $8.1 $10.5 $1.5 $4.7 $2.7 $20.5 $5.3 $3.8 $15.1 $13.7 $3.8 $7.2 89% 90% Germany / Switzerland / Austra $1.4 $7.0 $5.7 $1.2 $4.0 $10.4 $1.5 $12.6 $2.6 $3.2 $4.7 $4.7 $3.2 $6.3 94% 100% Belgium / Luxembourg / Netherlands / France $3.2 $4.7 $8.3 $4.0 $2.5 $12.7 $3.6 $2.4 $4.2 $8.2 $3.5 $6.4 $16.5 $7.4 -10% -55%

Nordics $0.4 $0.8 $5.0 $1.8 $0.2 $3.0 $2.1 $0.8 $0.1 $7.4 $6.9 $5.5 $12.4 $3.0 -59% -76%

Mediterranean $2.0 $4.2 $2.6 $4.4 $2.6 $10.0 $0.9 $4.6 $6.3 $2.4 $10.2 $11.1 $7.4 $12.9 433% 74%

Western Europe $19.1 $28.1 $24.8 $20.2 $10.5 $38.7 $8.6 $40.0 $18.4 $17.7 $33.5 $36.0 $30.8 $39.9 126% 29% Asia-Pacific

China $1.0 $4.2 $0.4 $0.9 $1.5 $0.1 $0.1 $0.7 $5.1 $8.0 $0.8 $0.2 $4.1 $20.1 152.0% 390.2%

SE Asia $0.1 $0.3 $0.3 $1.5 $0.4 $0.1 $1.4 $0.7 $0.4 $0.8 $17.6 $0.3 $0.6 $0.8 5% 43%

India $0.9 $0.6 $1.4 $0.8 $0.1 $1.0 $0.7 $0.5 $2.2 $0.6 $1.8 $0.4 $4.1 $1.7 191% -59%

Australia $1.8 $2.1 $0.0 $0.8 $0.6 $0.2 $1.1 $5.8 $1.5 $3.8 $21.1 $1.8 $0.2 $0.0 -100% -89%

Japan $6.5 $2.4 $0.9 $3.3 $9.3 $1.3 $2.6 $13.0 $0.5 $2.7 $2.3 $0.7 $1.3 $10.1 271% 647%

6 Capital Briefing 1.iv. Private equity: exits

Executive summary • PE exits have witnessed a modest decline so far this year, with 526 deals valued at US$178b, down 6% from a year ago. • Declines in exit activity were evident in both M&A and IPOs. • Overall, PE exits are falling, although secondaries are increasing as PE firms seek ways to deploy dry powder. • From a regional perspective, while the Americas and EMEA regions saw declines in exits, activity in Asia-Pacific increased substantially.

Current state PE M&A exits by half year (US$b) Exits continue to see declines as firms focus on deployment. Source: Dealogic. • PE exit activity witnessed a modest decline in 1H18 as PE fund $250 700 managers continued to focus on deployment. Firms announced 526 600 exits valued at US$178b in the first half of 2018, down 6% from the $200 500 same period a year ago. $150 400 • Exits by M&A fell 4% over the period versus a year ago, to $100 300 US$160b, with declines evident across the Americas and EMEA 200 $50 regions; activity by value was down 21% in the Americas, and down 100 12% in EMEA. Asia-Pacific, however, witnessed a notable increase, $0 0 with deal value up 46% from last year. • PE-backed IPOs proceeds were down 22% from the first half of 2017. The number of PE-backed IPO deals declined 20%, from 64 deals in 1H17, to 51 deals in 1H18. Deal value Number of deals

Environment and horizon PE-backed IPOs by half year (US$b) Secondary buyout deals have gained popularity recently. Source: Dealogic. • A recent Pitchbook report stated that amid the decline in overall PE exit activity, there are several reasons pushing secondary deals up: $60 140 • Record levels of dry powder, and a hypercompetitive $50 120 dealmaking environment in which sourcing proprietary dealflow $40 100 is increasingly challenging. 80 $30 • The existence of an aging cohort of PE assets that need to be 60 $20 divested, in many cases at attractive prices. 40 $10 20 • Perhaps most importantly, the continued development of the $0 0 expansion of the PE ecosystem in recent years has driven many such sales. Smaller and middle market firms are able to provide very different value-adds from larger firms; however, each can be indispensable for companies at the appropriate stage of Deal value Number of deals their growth.

Largest PE exit deals so far this year PE secondary buyout deals (US$b) Source: Dealogic. Source: Dealogic.

Target Industry Value (US$b) Sponsor Type $100 500 $80 400 ADT Inc. Consumer $10.5 Apollo Global IPO services Management LLC $60 300 BMC Software Inc. Technology $8.3 GIC Special M&A $40 200 Investments Pte $20 100 Ltd.; Golden Gate $0 0 Capital Corp.; Bain Capital LLC; Insight Venture Management Deal value Number of deals LLC; KKR & Co. LP Adyen BV Technology $8.3 Blackstone Group IPO LP Blue Buffalo Pet Consumer $8.0 Invus Group LLC M&A Products Inc. goods Gates Industrial Industrials $5.5 Blackstone Group IPO Corp. plc LP

7 Private Equity Capital Briefing 2. Infrastructure

Executive summary • PE fundraising for infrastructure continues to set new records. Unlisted funds raised US$50b in the first half of 2018, up 12% from a year ago. • Infrastructure funds have more than US$167b in capital to deploy. This is up more than 50% from just 2½ years ago. • Deal activity however, remains off the pace of the last several years, as competition for assets pushes valuations higher. Deals for assets valued at US$151b were announced in 1H18, down 21% from a year ago.

Current state Infrastructure fundraising (US$b) • Infrastructure fundraising remained active in the first half of Source: Preqin. 2018. Firms raised a record US$50b in the first half of the year $60 80 as LPs continue to seek exposure to the asset class. This $50 70 represented an increase of 12% from the first half of 2017, and 60 $40 was nearly double the amount raised in the second half of 2017. 50 • Firms have more dry powder to deploy than ever before. $30 40 Infrastructure funds currently have US$167b in commitments $20 30 20 from investors, up 5% from six months ago, and up a remarkable $10 53% from just 2½ years ago. 10 $0 0 Top infrastructure funds raised YTD 2018 Source: Preqin.

Commitments Number of funds closed Commitments Fund (US$b) Type Sector focus BlackRock Infrastructure 7.6 Debt Diversified Debt – Aggregated Infrastructure dry powder (in US$b) Separate Accounts Source: Preqin. ISQ Global Infrastructure 6.5 Core plus Diversified Fund II $180 Copenhagen 4.3 Core plus Renewable $160 Infrastructure III energy $140 Macquarie Asia 3.3 Core Diversified $120 Infrastructure Fund II $100 GCM Grosvenor 3.2 Opportunistic Diversified $80 Infrastructure Separately $60 Managed Account $40 • Funds that closed in the first 6 months of 2018 took 19 months $20 to reach final close, slightly higher than last year’s average of 17 $0 months. However, they’re raising more capital relative to their initial target – funds closed this year raised 117% of their target, versus 107% of funds that closed in 2017. • While fundraising remains robust, the pace of deployment remains muted, the result of persistently high valuations. Firms Infrastructure deals by half year (US$b) announced deals for asset valued at US$151b in 1H18, down Source: Preqin. 21% from a year ago. It was the quietest six-month period since 2015.

$300 1,800 Environment and horizon 1,600 $250 • Panelists at the recent IFC/Emerging Markets Private Equity 1,400 Association annual conference discussed the impact and the $200 1,200 1,000 potential of “disruptive infrastructure”: technology-enabled $150 infrastructure assets that have very different profiles from 800 $100 600 traditional deals. As the risks of obsolescence increase, investors 400 $50 have to be increasingly careful about viewing infrastructure as a 200 long-term asset class; emergent technologies can leapfrog over $0 0 constraints very quickly. As a result, many are predicting that the infrastructure as a service model will become increasingly important, and that firms need to be increasingly flexible in their approach to developing and extracting value from assets. One Commitments Number of funds closed example – electrified roads are being developed that can charge electric vehicles as they drive, something that could create significant opportunities for investors in roadways and change the model, from charging tolls to selling electricity. Many of these emergent opportunities are likely to be less regulated with fewer incumbents.

8 Private Equity Capital Briefing 3. Private credit

Executive summary • Fundraising for private credit funds declined modestly in the first half of the year to US$45b, down 9% from the same period a year ago. • Direct lending strategies have been a major driver of fundraising recently, but interest in distressed vehicles is rising. • The outlook for private credit vehicles remains strong, with 400 private debt funds at various stages of the fundraising process seeking more than US$180b from investors.

Current state Private credit fundraising (US$b) • Fundraising for private credit softened in the first half of 2018 Source: Preqin. after a record year last year. Firms closed 55 funds valued at $80 120 US$45b for the asset class in 1H18, down 9% from the same 100 $60 period a year ago. 80 • Direct lending strategies have been a major driver of fundraising $40 60 in recent years, driven by increasing interest from pension funds 40 $20 and other large investors. However, the first half of 2018 saw a 20 rise in vehicles targeting the distressed space, as some investors $0 0 seek to position themselves for a potential downturn after one of the longest and largest economic expansions on record. Fundraising for such vehicles hit US$17.4b in the first half of 2018, outpacing the US$14.6b raised for direct lending. Commitments Number of funds closed • Dry powder for credit funds continues its rise. Currently, credit fund have more than US$250b in capital available for new deals, Credit fundraising by type, 1H17 vs.. 1H18 (as a percentage of up from approximately US$220b just 18 months ago. Sixty-three total) percent of these assets are targeting opportunities in North Source: Preqin. America, while 30% are targeting opportunities in Europe and another 7% are seeking opportunities in Asia-Pacific and other 1H17 1H18 emerging markets.

Other, Other, Top credit funds raised YTD 2018 Mezzanine, 14% 15% Direct 12% Direct Mezzanine, Source: Preqin. lending, lending, 13% 33% Commitments 45% Fund (US$b) Type Distressed GSO Capital Solutions Fund III 7.4 Distressed debt debt, 29% Distressed Clearlake Capital Partners V 3.6 Special situations debt, 39% CVI Credit Value Fund IV 3.0 Distressed debt Strategic Value Special Situations 2.9 Distressed debt Fund IV The growth of credit dry powder since 2009 (US$b) KKR Private Credit Opportunities 2.2 Mezzanine Source: Preqin. Partners II Guggenheim Private Debt Fund II 2.0 Direct lending $300

AlbaCore Partners I 1.8 Direct lending $250 Summit Partners Credit Fund III 1.5 Direct lending Alchemy Special Opportunities 1.2 Distressed debt $200 Fund IV $150 Capzanine IV (Private Debt) 1.2 Direct lending $100

$50 Environment and horizon • Despite modest softening in fundraising over the last six months, $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun-18 the outlook for private credit vehicles remains strong. Currently, there are nearly 400 private debt funds at various stages of the fundraising process; in aggregate, they are seeking more than US$184b from investors, who continue to clamor for exposure to Private credit fundraising by region in YTD 2018 (US$b) the space. Source: Preqin. • Pitchbook reported that private debt funds outperformed Bloomberg Barclays US Corporate High Yield Index in 10 of the $29.7 15 vintages between 2001-2015. Private debt funds were able to return capital faster to their investors as their historical median distribution-to-paid-in (DPI) reached 1.0x in its sixth year, compared with the eighth year for PE. The primary reason for the speedier return of capital is its strategy to rely on interest $12.8 payments, rather than principal appreciation.

$1.9

North America Europe Asia and RoW*

Note: *Rest of the world

9 Private Equity Capital Briefing 4. M&A

Executive summary • Global M&A value was at a record level in 1H18, with 16,854 deals worth US$2.3t. • Megadeals (US$10b+) were a prominent feature, with 33 in the year so far — the highest number ever recorded in the first half of the year. • After a stellar first half of 2018, the M&A outlook is expected to remain robust for the remainder of the year, driven by surplus cash with corporates and rising PE buyouts. • A major trend is large companies merging with older rivals to compete with increasing competition and technological disruption through scale.

Current state • Global M&A activity reached new highs in the first half of 2018, totaling US$2.3t in value. The deal value was up by 66% from Global deal value and volume (year to date (YTD) last five years) same time last year. There were 1,750 deals worth more than Source: Dealogic and EY analysis. US$100m compared with 1,635 recorded at the same time in 2017 – an increase of 7% YOY. 2,500 2,000 • The continued upbeat momentum of megadeals (US$10b+) has 2,000 led to a rise in global deal value. So far, 2018 has witnessed 33 1,500 megadeals – a record-high level. Deals above the US$10b mark 1,500 account for 38% of the total transaction value announced this 1,000 year. 1,000 500 • In 1H18, technology was the top-performing target sector, by 500 both deal value and volume, reaching 4,979 deals worth US$306b. However, bigger deals were focussed on life sciences 0 0 2013 2014 2015 2016 2017 2018 and media & entertainment. This includes the acquisition of Irish Value (LHS) Volume* (RHS) drugmaker Shire by Japan’s Takeda and the ongoing bidding war between Comcast and Disney. *Volume based on deals greater than US$100m. • Despite geopolitical tensions, cross-border deal value increased in line with global deal value (65%) in 1H18 as compared with 1H17. The UK remained the second most popular target nation for M&A, behind the US, with 350% increase in deal value from Deal environment: by target area (US$b) the same period in 2017. 1H 2018 vs. 1H 2017 Source: Dealogic and EY analysis.

1,100

Environment and horizon 900 • The M&A outlook remains robust for the second half of 2018, 700 despite complexities arising from protectionism and geopolitical headwinds. Deal fundamentals, including the availability of cash 500 with corporates, strong balance sheets, rising private equity buyouts and a strong deal pipeline all point to healthy deal 300 activity in the near term.

• Rising protectionist sentiment is becoming a concern for the 100 global business community. It has had a negative impact on Americas Asia-Pacific EMEA

Chinese outbound M&A activity, but the material impact on global 1H17 1H18 deal value is expected to be less significant. However, the sentiment inevitably feeds through to the M&A market, increasing deal scrutiny and lengthening deal timelines. • As companies continue to face technological disruption from Top 10 announced deals YTD 2018 by value digital, cloud, analytics, Internet of things or Artificial Source: Dealogic and EY analysis. intelligence, they have had to review their business models more Month Target Sector Nation Acquiror Value frequently and forge more strategic business combinations. (US$m) April Shire plc Life sciences UK Takeda Pharmaceutical Co Ltd Established players are acquiring companies with technological 81,455 expertise that they can then use to develop new offerings, June Twenty-First Century Fox Media and US Comcast Corp Inc entertainment 78,484 redefine industry boundaries and drive topline growth. Acquiring March Express Scripts Holding Co Insurance US Cigna Corp next-generation technology will continue to be the main trigger 69,829 April Sprint Corp Telecommunications US T-Mobile US Inc for deal activity. 59,889 March innogy SE Power and utilities Germany E.ON SE • One of the major trends that may become more prominent is 54,577 large companies merging with old rivals to tackle rising February Sky plc Media and UK Comcast Corp entertainment 41,452 competition within the industry through scale. This trend has April Sky plc Media and UK Walt Disney Co been exhibited frequently across sectors, including consumer entertainment 37,149 April Andeavor Corp Oil and gas US Marathon Petroleum Corp products and retail, media and entertainment, health care and 35,600 life sciences. The main barrier to such deals is increasing March Abertis Infraestructuras Automotive and Spain Atlantia SpA SA transportation 29,748 competition scrutiny. Companies need to be able to convince January Altice USA Inc Media and US Existing Shareholders; Next LP regulators that there will be benefits to customers, outlining any entertainment 28,553 divestitures as part of the deal narrative, as required. M&A analysis as at 1 July 2018. Note: data is continually updated and therefore subject to change. Figures have been rounded off to nearest decimal place.

10 Capital Briefing 4.i. M&A: cross-border deal flow

Key cross-border M&A deal flow (LTM to June 2018) (Total = US$1.2t)

UK&I to: W Europe – $36b N America – $25b Greater China and N America to: Mongolia to: UK&I – $125b W Europe – $56b W Europe – $50b Oceania – $24b Latin America – $22b W Europe to: N America – $16b N America – $98b Japan to: UK&I – $27b UK&I - $88b L America - $15b N America – $30b

L America to: N America – $4b Middle East - $2b

Key

>$100b

>$50b

>$10b Note: all figures are in US$.

Cross-border M&A deal flow (LTM to June 2018) (US$m)

Target Acquiror# Africa SE Asia Greater Russia, W Europe India Japan Latin Middle North Oceania UK&I Inbound %  vs. (including China and CIS and (excluding America East America total PTM Korea) Mongolia$ CSE UK&I) Africa 1,433 148 875 143 2,474 10 590 - 1,030 1,330 166 1,134 9,334 -59%

SE Asia (including 327 4,866 12,818 4 1,220 326 8,426 - 27 4,456 640 3,328 36,436 29% Korea) Greater China and 29 3,713 25,719 - 829 - 9,531 - 662 6,864 348 1,004 48,698 35% Mongolia $ Russia, CIS and CSE - 176 2,631 7,422 7,074 17 1,808 94 7,999 1,455 30 1,235 29,941 -26%

W Europe (excluding 1,061 10,491 56,505 371 126,737 682 3,148 27 2,926 49,882 1,879 35,763 289,472 -9% UK&I) India 251 3,121 3,360 38 3,559 32 3,495 - 418 19,312 6 237 33,828 25%

Japan - 689 984 - - 515 - - 6 503 - - 2,698 -51%

Latin America 193 334 12,607 - 15,292 - 1,763 5,358 358 22,221 367 734 59,226 0%

Middle East 187 3,119 2,572 - 5,015 1,259 1,086 1,526 2,902 16,415 500 731 35,312 -22%

North America 1,163 5,187 15,523 801 97,764 988 30,221 4,117 1,172 72,073 7,532 25,261 261,801 -39%

Oceania 20 3,360 24,397 0 7,558 43 2,589 110 453 14,100 552 148 53,329 66%

UK&I 2,173 1,078 3,654 309 27,015 99 87,791 12 212 125,153 1,638 10,065 259,199 99%

Outbound total 6,838 36,282 161,645 9,087 294,535 3,971 150,448 11,243 18,164 333,765 13,657 79,639 1,119,275 -5%

%  versus previous -52% 0% -3% -53% 35% -17% 31% -32% -49% -16% -6% -42% -5% 12 months (PTM)

# Acquiror refers to acquiror’s ultimate holding company. $ Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan. Key >US$100b >US$50b >US$10b M&A analysis as at 1 July 2018. Source: Dealogic. All Rights Reserved. Intra-area cross-border deals Note: data is continually updated and therefore subject to change.

11 Capital Briefing 5. IPOs

Executive summary • Global IPO activity saw mixed results in 1H18. While IPO activity registered a YOY decrease of 18% in terms of number of deals, it increased 9% by proceeds. • There were 15 mega IPOs in 1H18 compared with 11 in 1H17, indicating better valuations despite uncertainties and risks. • While Asia-Pacific saw a notable decline in deal number in 1H18 compared with 1H17, EMEA saw a slight decline in deal number but an increase in proceeds. The Americas saw a marked increase in deal number and proceeds, mainly driven by US activity. • Global IPO activity is expected to be driven by strong equity markets, solid corporate earnings and healthy pipelines across sectors and markets.

Current state Top 10 IPOs by proceeds, 1H18 • After a strong 1Q18, risks and uncertainties returned to the IPO Source: Dealogic. market in 2Q18 as geopolitical frictions and shifting trade Issuer name Issuer Sector Exchange Proceeds policies softened IPO confidence in many parts of the world, location (US$m) resulting in mixed IPO activity for 1H18. While activity was Siemens Healthineers AG Germany Life sciences Deutsche Boerse 5,200 down by 18% in terms of number of deals, it was up by 9% by Foxconn Industrial Internet China Technology Shanghai (SSE) 4,257 proceeds compared with 1H17. With 682 IPOs raising US$97.4b Co. Ltd. United in 1H18, we saw the highest proceeds for the first half of the AXA Equitable Holdings Inc Insurance New York (NYSE) 3,157 year since 1H15 (704 IPOs raising US$110.1b). States • Despite investor appetite for IPOs across the Asia-Pacific PagSeguro Digital Ltd. Brazil Technology New York (NYSE) 2,606 region, 1H18 volumes declined 29% while proceeds were down Media and iQIYI Inc. China NASDAQ 2,424 13% compared with 1H17. However, Asia-Pacific still accounted entertainment for a 59% share of global IPOs and 35% of global IPO proceeds in DWS Group GmbH & Co. Wealth and asset 1H18. Eight of the 10 most active exchanges by deal numbers Germany Deutsche Boerse 1,638 were from this region in 1H18. KGaA Management Fibra E - Grupo Automotive and • EMEA IPO markets got off to a strong start in 1Q18, but Aeroportuario de la Ciudad Mexico Mexican (BMV) 1,474 transportation ongoing geopolitical uncertainty and shifting trade policies had de Mexico EMEA investors proceeding with caution in 2Q18. Despite a 12% United ADT Inc. Other sectors New York (NYSE) 1,470 decline in deal volumes in 1H18, deal proceeds rose 9% States compared with 1H17. United VICI Properties Inc. Real estate New York (NYSE) 1,392 • US markets kept a strong pace in 1H18, accounting for the States Ho Chi Minh Vinhomes JSC Vietnam Real estate 1,349 majority of IPOs by volume and proceeds across the Americas. (HOSE) The US saw 108 IPOs in 1H18 raising US$32.1b, an increase of 29% and 39% by number of deals and proceeds respectively. The momentum has been strong in the US market, with IPOs posting Quarterly IPO activity by number of deals and proceeds average first-day returns above 10% and share price (1Q16 to 2Q18) performance post-IPO exceeding broad equity indices. Source: Dealogic.

600 70

Environment and horizon 60 500 496 • Global IPO activity is expected to be driven by strong equity 437 50 markets, solid corporate earnings and healthy pipelines across 400 394 367 386 sectors and markets despite witnessing a decline in 1H18 335 347 40 300 compared with 1H17. However, increasing economic and political 262 272 30 uncertainty is likely to cause issuers and investors to take a wait- 200 192 20 and-see approach or pursue multitrack strategies to fulfil their capital needs. 100 10 $14 $30 $38 $53 $34 $56 $43 $60 $50 $48 • Momentum continues to build for US IPO activity in 2H18, 0 0 driven by the strong post-IPO performance of 2017 and 2018 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 IPOs. However, IPO windows will continue to narrow as Proceeds (US$b) Number of deals congressional elections draw closer in the US. A higher level of activity is also expected from Canada, Brazil and Mexico in 2H18. IPO activity by sector and area (% share of global deal numbers) • Geopolitical uncertainty and trade issues could dampen investor LTM to June 2018 enthusiasm for Greater China IPOs in 2H18. However, repatriation of technology unicorns by the Chinese Government Source: Dealogic; regional classification on the basis of exchange nationality. Note: because of rounding, percentages may not add up to total. could propel a number of mega IPOs onto the Hong Kong and Americas Asia-Pacific EMEA Total mainland China IPO markets in 2H18. With combined valuations estimated as high as US$1t, 2018 could become a blockbuster Technology 3% 9% 5% 17% year for Greater China IPOs. Real estate 1% 9% 3% 13% Consumer products and retail 1% 10% 2% 13% • As we head into second half of 2018, the outlook for EMEA IPO activity is less certain than it was in 1H18. Geopolitical Diversified industrial products 1% 10% 1% 12% uncertainties and shifts in trade policies across Europe and Life sciences 5% 3% 2% 10% globally are creating concerns among investors, and many Automotive and transportation 0% 5% 1% 6% European issuers taking a wait-and-see approach. A flurry of Other sectors 0% 4% 1% 6% activity in the UK is expected in 2H18 as issuers look to complete Mining and metals 1% 4% 1% 6% their IPOs before Brexit comes into force. MENA IPO activity is Banking and capital markets 1% 2% 1% 4% expected to increase in 2H18 due to an increasing number of Others 2% 8% 3% 14% listings by government or quasi-government enterprises. Total 17% 63% 20% 100%

12 Capital Briefing 6. Loans

M&A supply dominates loan market dynamics in 2Q18 • The second quarter was the busiest for global leveraged loan issuance since the record US$247m in 1Q17, and the fourth-highest quarterly figure ever. • M&A-related financings were the main driver behind a jump in leveraged loan issuance in the second quarter. • The recent surge in M&A-related financings was driven by the global M&A boom. Total announced acquisitions in Europe and the US combined for the half-year to June 18 increased by 81% (vs.. 1H17) to US$1.2t. The positive trend in M&A-related financings is also expected to continue in the third quarter.

Trends and outlook Leveraged loan new-issue volume (US$b) Source: LCD comps. • The second quarter was the busiest for global leveraged loan issuance since the record US$247m in 1Q17, and the fourth- 2016: US$559 2017: US$787 1H18:US$446 highest quarterly figure ever. 300 • There was an increase of 19% in new-issue volume in the US 247 250 234 market during 2Q18 compared with 1Q18, while new-issue 212 volume was down by 26% in the European market. 192 200 177 171 162 • M&A-related financings were the main driver behind a jump in 147 144 leveraged loan issuance in the second quarter: 150 106 • M&A-related financings accounted for more than 55% of total 100 leveraged loan activity in 2Q18 in the US. Similarly, M&A-

related financings also drove the European market, 50 accounting for more than 80% of total leveraged loan activity in 2Q18. 0 • Total announced acquisitions in Europe and the US combined for 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 the half-year to June 18 increased by 81% (vs.. 1H17) to Europe US US$1.2t. • Private equity-backed companies looking to grow through YTD leveraged loan volume by purpose acquisitions have been highly active in the US leveraged loan Source: LCD comps. market in 2018. PE firms are increasingly focused on growing existing portfolio companies through acquisitions that can help reduce the average cost of a transaction over time.

• The European leveraged loan market saw more of a balance M&A M&A between issuers and investors in 2Q18, and this is expected to Refinancing Refinancing continue in the coming quarters. Generally, investors have Europe US demanded higher yields, partly to compensate for increased Dividend recap Dividend recap volatility, but in the loan market, the significant new money Other Other supply has left investors under less pressure to buy the market. • Documentation is also a challenge in the European market; as a result, a large proportion of transactions in the last month have had to tighten terms in order to get deals done. YTD leveraged loan volume by industry (top 5) • The gap between YTMs for US and European TLBs rated B on a Source: LCD comps. rolling-three-month basis has continued to widen, caused primarily by a ballooning gap in the underlying base rate. • Total syndicated lending in Asia-Pacific, excluding Japan, showed Services and retail Services and retail a steep 31% decline YOY to US$94.17b in the second quarter, the lowest quarterly volume in the past five years, as the Computers & Computers and electronics electronics combination of China's slowdown in its economic growth rate, fewer M&A financings and increased bond issuance hit loan Industrial Europe Industrial US volumes. Food and Health care Pro forma debt/EBITDA ratio beverage Source: LCD comps. Health care Entertainment & leisure 5.8x 5.6x YTM at issue for TLBs rated B (rolling 3-months) 5.4x Source: LCD comps. 5.2x 7% 5.0x 4.8x 6% 4.6x 4.4x 5% 4.2x Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 4% 17 17 17 17 17 17 17 18 18 18 18 18 18

Europe US 3% Jun Jul 17 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 17 17 17 17 17 17 18 18 18 18 18 18

Europe US 13 Capital Briefing 7. Bonds

Volatility puts pressure on high-yield bond issuance in 2Q18 • Overall, the global high-yield market saw a slowdown in 2Q18 driven by a slower US market, even as the European high-yield market saw a healthy new-issue volume. • Borrowers have been faced with a rising cost of financing in the 2Q18, which saw the largest quarter-on-quarter increase in the average new-issue yield in the last five years. • Amid the rising rates environment, the market saw a gradual movement towards longer term debt issuance.

Trends and outlook High-yield new-issue volume (US$b) • The global high-yield market saw a slowdown in 2Q18, primarily Source: LCD comps. due to the US market. However, new-issue volumes remained 2016: US$288 2017: US$386 1H18:US$161 healthy by historic standards in the European high-yield market. • US high-yield issuance declined in 2Q18, as leveraged borrowers 120 108 materially increased the proportion of leveraged loans in their 102 102 capital structures due to high volatility and fast-rising rates in the 100 91 88 84 86 bond market. 80 73 • The 10-year US Treasury yield breached the 3% threshold while 58 political issues in Italy and geopolitical concerns also contributed 60 44 to the decline in volumes. 40 • Refinancing efforts have driven roughly two-thirds of total US high-yield issuance volume in 2018 thus far. 20

• Power moved further away from borrowers in the 2Q18 as new- 0 issue yields shot wider, a stream of deals tightened covenants, 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 and those unwilling to meet investor demands had to postpone their transactions, leading to a record number of pulled deals in Europe US the quarter. Global YTD high-yield volume by purpose • Despite this backdrop, new-issue volumes were healthy in the Source: LCD comps. European high-yield market as companies still flocked to market to refinance. 2Q18 total was the third-largest quarterly volume recorded during the last three years. Refinancing Refinancing • Borrowers have been faced with a rising cost of financing in the 2Q18, which saw the largest quarter-on-quarter increase in the Acquisition- Acquisition- related average new-issue yield in the last five years. related Europe US Corporate Corporate • Whilst spreads have indeed widened generally in the last 4- Purpose Purpose 6months, it’s also true that US Treasury yields have increased, Other Other which has driven increases in bond yields overall. • Overall, in the rising rates environment, issuers have been keen to lock in longer-term financing. Although there is still reluctance from high-yield investors for 10-year debt, in 2018 so far the YTD high-yield volume by industry (top 5) market has continued to edge out beyond 7-years towards 8–9 Source: LCD comps. year dated transactions.

• US high-grade new-issue volumes remain comfortably behind the Computers and Oil & gas record 2018 equivalent volume. Refinancing-driven issuances electronics were down due to increased volatility in rates in 2Q18 compared Automotive Healthcare with the previous year. M&A-related bond placements remained a key part of issuance in 2Q18. Financial services Financial services US • Cross-border supply has increased in the European market in Europe 2018, reflecting the growing depth of the European market and Professional and Telecommunications its ability to take price risk amid a lower yield environment. business services

Telecommunications Chemicals US High grade bond issuances (US$b) Source: LCD comps. New-Issue yields 500 Source: LCD comps. 8% 383 400 350 321 323 327 322 322 287 6% 300 246 204 200 4%

100

2% 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

Europe senior B-rated bonds Europe senior BB-rated bonds M&A and LBO Other US senior BB-rated bonds US senior B-rated bonds 14 Capital Briefing Appendices Appendix A Global PE fundraising activity

Global PE fundraising (US$b)

$800 1,400

$700 1,200

$600 1,000

$500 800 $400 600 $300

400 $200

$100 200

$0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018

Commitments Number of funds closed

Source: Preqin.

Dry powder — buyout funds — by region (in US$b)

$700

$600

$500

$400

$300

$200

$100

$0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018

North America Europe Asia-Pacific Rest of the world

Source: Preqin.

12 Private Equity Capital Briefing Appendix A Global PE acquisition activity

PE acquisitions by year — value and volume — quarterly trend (US$b)

$800 4,000

$700 3,500

$600 3,000

$500 2,500

$400 2,000

$300 1,500

$200 1,000

$100 500

$0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018

Deal value Number of deals

Source: Dealogic.

Global PE value and volume — quarterly trend (US$b)

$160 700

$140 600

$120 500

$100 400

$80

300 $60

200 $40

100 $20

$0 0 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 2012 2012 201 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018

Deal value Number of deals

Source: Dealogic.

13 Private Equity Capital Briefing Appendix A Global PE acquisition activity by region — Americas

Americas PE acquisitions — value and volume — quarterly trend (US$b)

$90 350

$80 300

$70

250 $60

200 $50

$40 150

$30 100

$20

50 $10

Deal value Number of deals

Source: Dealogic.

Americas PE acquisitions — the top deals with disclosed financial terms 1H18

Announcement Completion Value Company Sector Acquiror date date (US$b)

Blackstone Group LP; Thomson Reuters Corp. Canada Pension Plan 30-Jan-18 Technology 17.5 (Financial & Risk business) Investment Board-CPPIB; GIC Pte Ltd.

11-Jun-18 Envision Healthcare Corp. Health care 9.5 KKR & Co. LP

29-May-18 BMC Software Inc. Technology 8.3 KKR & Co. LP

07-May-18 Gramercy Property Trust Real estate 7.6 Blackstone Group LP

21-May-18 LaSalle Hotel Properties Real estate 4.9 Blackstone Group LP BC Partners LLP; Existing Management; 22-Apr-18 03-Jun-18 GFL Environmental Inc. Utilities 4.0 Ontario Teacher’s Pension Plan Francisco Partners Management LP; 09-Apr-18 VeriFone Systems Inc. Technology 3.5 British Columbia Investment Management Corp Blackhawk Network Holdings Silver Lake Group LLC; 16-Jan-18 Technology 3.2 Inc. P2 Capital Partners LLC

30-Apr-18 Financial Engines Inc. Financials 3.2 Hellman & Friedman LLC

General Electric Co. (Industrial engine business); 25Source:-Jun -Dealogic18 Industrials 3.2 Advent International Corp. GE Jenbacher GmbH & Co. OG

14 Private Equity Capital Briefing Appendix A Global PE acquisition activity by region — EMEA

EMEA PE acquisitions – value and volume — quarterly trend (US$b)

$50 300

$45

250 $40

$35 200

$30

$25 150

$20

100 $15

$10 50

Deal value Number of deals

Source: Dealogic.

EMEA PE acquisitions — the top deals with disclosed financial terms 1H18

Announcement Completion Value Company Sector Acquiror date date (US$b) Akzo Nobel NV (specialty Carlyle Group LP; 27-Mar-18 Materials 12.5 chemicals business) GIC Pte Ltd

PFA Pension Forsikrings A/S; Macquarie Infrastructure & Real Assets Pty Ltd; 12-Feb-18 09-Apr-18 TDC A/S Telecom 10.7 Arbejdsmarkedets Tillaegspension – ATP; Pensionskassernes Administration A/S – PKA

CVC Advisers Ltd.; Public Sector Pension Investment 29-Jun-18 Recordati SpA Health care 7.3 Board – PSP INVESTMENTS; StepStone Group LP Partners Group Holding AG; Caisse de Depot et Placement du Quebec-CDPQ; 25-May-18 Techem GmbH Consumer services 5.3 Existing Management; Ontario Teachers’ Pension Plan Board

CVC Capital Partners Ltd. 22-Feb-18 18-May-18 Gas Natural SDG SA Utilities 4.6 Corporacion Financiera Alba SA

11-May-18 11-Jul-18 ZPG plc Technology 3.2 Silver Lake Group LLC

Hispania Activos 05Source:-Apr- Dealogic18 Real estate 2.7 Blackstone Group LP Inmobiliarios SOCIMI SA

17-Apr-18 Zentiva NV Health care 2.3 Advent International Corp. 18-May-18 Mehilainen Oy Health care 2.1 CVC Capital Partners Ltd. Altice France SA 20-Jun-18 Telecom 2.0 KKR & Co. LP (Telecommunication towers)

15 Private Equity Capital Briefing Appendix A Global PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions — value and volume — quarterly trend (US$b)

$50 140

$45 120 $40

$35 100

$30 80

$25

60 $20

$15 40

$10 20 $5

Deal value Number of deals Source: Dealogic.

Asia-Pacific PE acquisitions — the top deals with disclosed financial terms 1H18

Announcement Completion Value Company Sector Acquiror date date (US$b)

Consortium including Warburg Pincus LLC; Ant Small & Micro Temasek Holdings (Pte) Ltd.; Primavera Capital 08-Jun-18 08-Jun-18 Financial Services Technology 14.0 Management Ltd.; Carlyle Group LP; Group Co. Ltd. Canada Pension Plan Investment Board-CPPIB; Silver Lake Group LLC; General Atlantic LLC

Westscheme Pty Ltd.; Canada Pension Plan 26-Apr-18 Healthscope Ltd. Health care 3.9 Investment Board-CPPIB; BGH Capital Pty Ltd.; Ontario Teachers' Pension Plan Board; GIC Pte Ltd. China Biologic 19-Jun-18 Health care 3.7 CITIC Capital Holdings Ltd. Products Holdings Inc. 28-May-18 Investa Office Fund Real estate 3.1 Blackstone Group LP SK Telecom Co. Ltd.; Macquarie Infrastructure & 06-May-18 ADT Caps Co. Ltd. Consumer services 2.7 Real Assets Pty Ltd. TPG Capital LP; Carlyle Group LP; Baidu Financial 28-Apr-18 Technology 1.9 Taikang Insurance Group Inc.; Agricultural Bank of Services Group China Ltd. National Highways Authority of India 01-Mar-18 01-Mar-18 Industrials 1.4 Macquarie Infrastructure & Real Assets Pty Ltd. (NHAI) (648 kms of highways) Indiabulls Properties Pvt Ltd. 24-Mar-18 29-Mar-18 Materials 1.4 Blackstone Group LP Indiabulls Real Estate Co. Pvt Ltd. Sirtex Medical Ltd CDH Investments Ltd.; China Grand 04-May-18 Health care 1.4 Source: Dealogic (Bid No 2) Pharmaceutical & Healthcare Holdings Ltd. Baring Private Equity Asia Ltd.; MBK Partners Ltd.; 02-Jan-18 eHi Car Services Ltd. Industrials 1.4 Existing Management; Dongfeng Asset Management Co. Ltd.; Redstone Capital Partners

16 Private Equity Capital Briefing Appendix A Global PE exit activity

Global PE-backed exits by M&A — value and volume — quarterly trend (US$b)

$120 350

300 $100

250 $80

200

$60

150

$40 100

$20 50

Source: Dealogic.

Global PE-backed IPOs — value and volume — quarterly trend (US$b)

$45 90

$40 80

$35 70

$30 60

$25 50

$20 40

$15 30

$10 20

$5 10

Deal value Number of deals

Source: Dealogic.

17 Private Equity Capital Briefing Appendix A Global PE exit activity — Americas

Americas PE exits — value and volume — quarterly trend (US$b)

$90 180

$80 160

$70 140

$60 120

$50 100

$40 80

$30 60

$20 40

$10 20

Source: Dealogic.

Americas PE exits — top exits with disclosed values 1H18

Announcement Completion or Value Company Sector Sponsor Type or filing date priced date (US$b)

21-Dec-17 18-Jan-18 ADT Inc. Consumer services 10.5 Apollo Global Management LLC IPO

GIC Special Investments Pte Ltd.; Golden Gate Capital Corp.; 29-May-18 BMC Software Inc. Technology 8.3 Bain Capital LLC; M&A Insight Venture Management LLC; KKR & Co. LP Blue Buffalo Pet 23-Feb-18 24-Apr-18 Consumer goods 8.0 Invus Group LLC M&A Products Inc.

Gates Industrial Corp. 24-Jan-18 27-Dec-17 Industrials 5.5 Blackstone Group LP IPO plc

27-Apr-18 23-May-18 GreenSky Inc. Technology 4.5 TPG Capital LP IPO

Ceridian HCM Holding 26-Mar-18 25-Apr-18 Technology 3.0 Thomas H Lee Partners LP IPO Inc.

Berkshire Partners LLC; 27-Apr-18 23-May-18 SRS Distribution Inc. Materials 3.0 M&A Leonard Green & Partners LP Charlesbank Capital Partners LLC; 19-Jun-18 Varsity Brands LLC Consumer goods 2.5 Bain Capital LLC; M&A Partners Group Holding AG Goldman Sachs Capital Partners; Hearthside Food Charlesbank Capital Partners LLC; 17-Apr-18 24-May-18 Consumer goods 2.4 M&A Solutions LLC Partners Group Holding AG; Vestar Capital Partners LLC CI Capital Partners LLC; 31-Jan-18 16-Apr-18 Ply Gem Holdings Inc. Materials 2.4 M&A Source: Dealogic Clayton Dubilier & Rice LLC

18 Private Equity Capital Briefing 22 Appendix A Global PE exit activity — EMEA

EMEA PE exits — value and volume — quarterly trend (US$b)

$70 180

160 $60

140 $50 120

$40 100

$30 80

60 $20 40

$10 20

Source: Dealogic.

EMEA PE exits — top exits with disclosed values 1H18

Announcement Completion or Value Company Sector Sponsor Type or filing date priced date (US$b)

27-Feb-18 12-Jun-18 Adyen BV Technology 8.3 General Atlantic LLC IPO

Partners Group Holding AG; 25-May-18 Techem GmbH Consumer services 5.4 Macquarie Infrastructure & Real M&A Assets Pty Ltd.

21-Apr-18 10-Jul-18 Sky Betting & Gaming Consumer goods 5.0 CVC Advisers Ltd. M&A

Summit Partners LP; 07-Nov-17 10-May-18 Avast plc Technology 3.2 IPO CVC Advisers Ltd.

Italo-Nuovo Trasporto 05-Feb-18 26-Apr-18 Industrials 3.0 Peninsula Capital Advisors LLP M&A Viaggiatori SpA

04-May-18 Vivo Energy plc Oil and gas 2.7 Helios Investment Partners LLP IPO

11-Jun-18 11-Jun-18 AniCura AB Health care 2.4 Nordic Capital Svenska AB M&A

Interoute Crestview Partners LP; 26-Feb-18 31-May-18 Telecom 2.3 M&A Communications Ltd. Aleph Capital Partners LLP

17-May-18 iZettle AB Technology 2.2 MCI Capital SA M&A

KKR & Co LP; 18-May18 Mehilainen Oy Health care 2.1 Triton Advisers Ltd; M&A CVC Advisers Ltd

Source: Dealogic

18 Private Equity Capital Briefing 23 Appendix A Global PE exit activity — Asia-Pacific

EMEA PE exits — value and volume — quarterly trend (US$b)

$45 60

$40 50 $35

$30 40

$25 30 $20

$15 20

$10 10 $5

Source: Dealogic.

Asia-Pacific PE exits — top exits with disclosed values 1H18

Announcement Completion or Value Company Sector Sponsor Type or filing date priced date (US$b) Beijing Mobike Warburg Pincus LLC; 04-Apr-18 04-Apr-18 Technology 3.7 M&A Technology Co. Ltd. TPG Capital LP Carlyle Group LP; 06-May-18 ADT Caps Co. Ltd. Consumer services 2.8 Macquarie Infrastructure & Real M&A Assets Pty Ltd. COFCO Capital 25-Apr-18 Consumer goods 1.9 Hony Capital Management Ltd. M&A Investment Co. Ltd.

26-Jun-18 Wanda Media Co. Ltd. Consumer goods 1.5 Hony Capital Management Ltd. M&A

Greater China 14-Mar-18 14-Mar-18 Intermodal Industrials 1.4 Carlyle Group LP M&A Investments LLC Olympus Capital Holdings Asia (Hong Aster DM Healthcare 24-Jun-16 17-Feb-18 Health care 1.3 Kong) Ltd.; IPO Ltd. True North Managers LLP

11-Jan-18 Capital First Ltd. Financials 1.2 Warburg Pincus LLC M&A

18-May-18 Viva Industrial Trust Real estate 1.1 Warburg Pincus LLC M&A

I-MED Radiology EQT Partners AB; 27-Jan-18 21-Feb-18 Health care 1.0 M&A Network Ltd. Permira Ltd.

Intelenet Global 14-Jun-18 Consumer services 1.0 Blackstone Group LP M&A Services Pvt Ltd

Source: Dealogic

18 Private Equity Capital Briefing 24 Appendix B M&A activity monthly flash

Volume Value Volume Value

Calendar YTD % ∆ Calendar YTD % ∆ LTM LTM % ∆ LTM LTM % ∆ YTD YTD

2017 2018 2016 2017 2018

J F M A M J J A S O N D J F M A M J J A S O N D J A S O N D J F M A M J J A S O N D J F M A M J

2018 vs. 2017 2018 vs. 2017 LTM vs. PTM LTM vs. PTM (to June 18) (to June 17) (to June 18) (to June 17) (to June 18 (to June 17) (to June 18) (to June 17)

M&A activity by areas and regions

Global 16,854 -14% 2,300,111 66% 35,631 -4% 4,002,073 19%

Americas 5,939 -16% 1,265,266 66% 12,357 -9% 2,173,476 10% Canada 870 -17% 90,121 -4% 1,805 -21% 166,586 -24% MeCAR 156 -21% 7,042 -31% 312 -17% 30,517 18% SA region 265 -19% 37,140 -9% 594 -12% 88,593 9% US 5,068 -15% 1,174,130 80% 10,472 -6% 1,977,084 12%

EMEA 6,146 -18% 837,238 68% 12,755 -7% 1,291,955 8% Africa 194 -41% 8,238 -45% 499 -14% 20,901 -47% CIS 448 -16% 20,099 115% 1,039 10% 29,147 -49% CSE 449 -4% 22,884 51% 941 10% 36,657 -21% GSA 1,168 -25% 184,665 81% 2,523 -5% 297,935 29% Israel 190 10% 18,547 1% 373 36% 30,888 -11% Mediterranean 658 -27% 136,195 77% 1,310 -14% 182,149 36% MENA 126 -12% 29,870 2% 232 -10% 40,355 -49% Nordics 740 -17% 67,354 38% 1,524 -1% 147,557 77% UK&I 1,585 -9% 337,023 187% 3,051 -16% 465,156 33% WEM 1,443 -16% 117,620 -16% 3,025 -6% 217,686 -24%

Asia-Pacific 6,578 -7% 637,337 61% 14,247 1% 1,196,777 21% ASEAN 612 -35% 42,086 55% 1,475 -19% 100,026 49% Greater China 2,954 3% 328,203 37% 6,357 7% 680,891 21% India 582 -15% 66,937 98% 1,037 -13% 95,370 36% Japan 1,755 2% 152,544 173% 3,566 7% 237,330 33% Korea 401 -17% 30,100 -14% 1,097 4% 64,187 -5% Oceania 617 -20% 60,068 66% 1,448 -12% 97,543 -3%

M&A activity by sectors Aerospace and Defense 176 -9% 25,791 30% 372 -1% 86,818 104% Automotive and 1,132 -18% 159,986 93% 2,362 -10% 254,771 26% Transportation Banking and Capital Markets 908 -20% 127,675 7% 2,016 -8% 228,236 -18% Consumer Products and Retail 2,304 -17% 224,925 -8% 5,001 -6% 483,462 1% Diversified Industrial Products 2,283 -11% 230,627 67% 4,817 -4% 443,324 9% Govt., Public Sector 311 -7% 17,026 119% 607 -3% 37,264 34% Health Care 584 -10% 50,689 54% 1,169 -3% 79,182 21% Insurance 546 2% 159,987 277% 1,128 8% 334,948 173% Life Sciences 1,214 -4% 263,198 55% 2,518 3% 366,556 30% Media and Entertainment 957 -24% 244,558 378% 2,105 -12% 393,084 75% Mining & Metals 678 -33% 49,675 16% 1,658 -19% 97,227 -3% Oil & Gas 538 -24% 217,607 14% 1,178 -19% 365,757 -30% Other Sectors 1,838 -19% 62,817 22% 3,739 -11% 120,228 0% Power and Utilities 653 -18% 206,674 145% 1,482 -4% 349,761 49% Real Estate 1,546 -18% 139,783 51% 3,312 -8% 267,112 16% Technology 5,359 -5% 346,531 53% 10,993 6% 670,147 18% Telecommunications 292 -22% 146,042 88% 645 -10% 227,963 -20% Wealth and Asset 349 -24% 42,194 57% 806 -15% 71,836 38% Management

Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region. Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped. M&A analysis as at 1 July 2018. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

25 Capital Briefing Appendix C M&A multiples and bid premium

Median deal multiple — EV/EBITDA Global Americas Asia-Pacific EMEA LTM PTM LTM PTM LTM PTM LTM PTM (to June 18) (to June 17) (to June 18) (to June 17) (to June 18) (to June 17) (to June 18) (to June 17) Aerospace and Defense 8.3x 9.7x 19.8x 11.9x 7.9x 4.6x - 12.0x

Automotive and Transportation 11.2x 10.2x 10.0x 9.8x 11.5x 10.2x 11.4x 10.5x

Consumer Products and Retail 10.2x 9.7x 9.7x 10.5x 10.8x 10.0x 10.0x 9.2x

Diversified Industrial Products 10.9x 10.0x 10.7x 10.0x 12.5x 11.8x 9.4x 8.8x

Financial Services 11.2x 10.3x 12.3x 13.6x 10.6x 7.8x 9.8x 7.5x

Govt, Public Sector 10.1x 8.6x 11.1x 8.6x 9.1x 10.5x 8.3x 7.7x

Health care 13.4x 13.3x 12.6x 11.8x 16.5x 18.2x 12.9x 11.3x

Life Sciences 10.7x 9.2x 9.5x 11.0x 12.7x 9.8x 10.5x 8.9x

Media and Entertainment 9.4x 6.9x 14.0x 9.8x 10.8x 5.6x 6.6x 6.8x

Mining and Metals 10.7x 10.0x 11.5x 11.5x 12.3x 14.2x 6.7x 5.4x

Oil and Gas 10.4x 10.4x 11.9x 10.4x 10.6x 11.5x 9.7x 10.2x

Other Sectors 10.2x 9.7x 10.7x 12.7x 9.9x 15.0x 11.3x 7.9x

Power and Utilities 13.4x 11.1x 9.1x 4.6x 17.1x 8.5x 11.7x 12.5x

Real Estate 9.5x 10.7x 10.6x 12.9x 8.6x 12.4x 8.3x 9.6x

Technology 11.8x 11.4x 11.5x 12.4x 12.0x 12.0x 11.4x 10.2x

Telecommunications 7.9x 8.4x 16.6x 7.9x 7.3x 10.2x 8.6x 8.4x

Total 10.7x 10.2x 11.0x 11.2x 11.4x 10.7x 9.6x 9.1x

Median bid premium to four-week stock price Global Americas Asia-Pacific EMEA LTM PTM LTM PTM LTM PTM LTM PTM (to June 18) (to June 17) (to June 18) (to June 17) (to June 18) (to June 17) (to June 18) (to June 17) Aerospace and Defense 24% 29% 28% 37% 20% 12% - 29%

Automotive and 19% 19% 25% 21% 19% 18% 12% 20% Transportation

Consumer Products and Retail 19% 18% 19% 26% 20% 16% 13% 16%

Diversified Industrial Products 18% 23% 22% 30% 17% 23% 13% 15%

Financial Services 21% 18% 26% 28% 16% 13% 15% 14%

Govt, Public Sector 16% 23% 42% - 16% 16% - 23%

Health care 25% 26% 37% 36% 19% 14% 21% 13%

Life Sciences 19% 21% 15% 27% 20% 19% 20% 22%

Media and Entertainment 24% 21% 33% 24% 23% 20% 11% 18%

Mining and Metals 19% 18% 19% 18% 10% 11% 27% 19%

Oil and Gas 20% 24% 20% 30% 16% 20% 35% 28%

Other Sectors 18% 12% 15% 15% 19% 17% 10% 11%

Power and Utilities 18% 26% 24% 27% 17% 35% - 6%

Real Estate 20% 25% 15% 26% 26% 24% 15% 24%

Technology 18% 26% 22% 35% 18% 18% 14% 22%

Telecommunications 27% 11% 24% 36% 11% 7% 40% 10%

Total 20% 21% 22% 29% 19% 18% 18% 17%

Deal multiples greater than 30x and bid premium greater than 100% have been excluded from calculation of median. M&A analysis as at 1 July 2018. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

26 Capital Briefing Notes

27 Private Equity Capital Briefing Notes

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