2012 Global Private Equity Report Contents

Editor’s Foreword 5 Evolution of Fundraising Market in 2011 34 Overview of Current Fundraising Market 37 Section One: The 2012 Preqin Global Private North American Fundraising 38 Equity Report European Fundraising 39 Keynote Address - Moose Guen, CEO, 7 Asia and Rest of World Fundraising 40 MVision Buyout Fundraising 41 Distressed PE Fundraising 42 Section Two: Overview of the Private Equity Growth Fundraising 43 Industry Mezzanine Fundraising 44 Introduction - The Year Ahead - Helen Kenyon, 11 Natural Resources Fundraising 45 Preqin Venture Fundraising 46 Overcoming the Challenges - Mark Florman, 12 Chief Executive, BVCA Section Six: Placement Agents Emerging Markets: Room to Grow - Sarah 13 Overview of Placement Agent Use in 2011 47 Alexander, President and CEO, EMPEA Profile of the Placement Agent Industry 49 Moving Forward on Shifting Sands - Steve 14 Judge and Bronwyn Bailey, PEGCC Reputation and Regulation: Changing the 15 Section Seven: Fund Administrators Face of Private Equity - Dörte Höppner, Fund Administrators 51 Secretary-General, EVCA Section Eight: Fund Auditors Section Three: Assets under Management, Dry Fund Auditors 53 Powder, Employment and Compensation Assets under Management and Dry Powder 17 Section Nine: Deals Employment and Compensation 19 Talking Deals - Vineet Pruthi, Senior Managing 55 Director, Lincolnshire Management Section Four: General Partners Overview of PE-Backed Buyouts and Exits 56 League Tables - Largest GPs 21 Make-up of PE-Backed Buyout Deals in 2011 60 by Type, Value and Industry Buyout GPs - Key Stats and Facts 25 Most Active Debt Providers and Deal Advisors 62 Distressed PE GPs - Key Stats and Facts 26 Largest PE-Backed Buyouts and Exits 63 Growth GPs - Key Stats and Facts 27 Mezzanine GPs - Key Stats and Facts 28 Section Ten: Performance Natural Resources GPs - Key Stats and Facts 29 Examination of Private Equity Performance 65 Venture GPs - Key Stats and Facts 30 Private Equity Horizon Returns 69 Consistent Performing Fund Managers 70 Section Five: Fundraising Private Equity Returns for Pension Funds 73 Weathering the Storm: How to Maintain the 31 Private Equity Benchmarks 74 GP/LP Relationship in Tough Times - Tripp Brower, Partner, Capstone Partners

Section Eleven: Investors Listed Private Equity Funds of Funds 111 Overview of Limited Partner Universe 77 Make-up of Investors in Recently Closed 79 Section Seventeen: Secondaries Funds Review of the Secondary Market and Investor 113 Investor Appetite for Private Equity in 2012 - 81 Appetite in 2012 December 2011 LP Survey Results Perspectives on the Secondary Market - 116 League Tables - Largest Investors by Region 87 François Gamblin, CEO, Secondcap League Tables - Largest Investors by Type 88 Secondaries Intermediaries 118 Investors to Watch in 2012 89 Secondaries GPs - Key Stats and Facts 119 Fundraising Review - Secondaries 120 Section Twelve: Investment Consultants Investment Consultants in Private Equity 91 Section Eighteen: Preqin Products Order Forms 121 Section Thirteen: Fund Terms and Conditions Mid-Market Focus - Sam Kay, Investment 93 Funds Partner, Travers Smith Overview of Fund Terms and Conditions 94 Investor Attitudes towards Fund Terms and 97 Conditions - December 2011 LP Survey Results Sample of 25 Leading Law Firms in Fund 99 Formation

Section Fourteen: Sovereign Wealth Funds Sovereign Wealth Funds Investing in Private 101 Equity

Section Fifteen: Cleantech Cleantech Fundraising Market in 2011 103 Cleantech Funds in Market 104 Overview of Private Equity Cleantech Fund 105 Managers Investors in Cleantech Funds 106

Section Sixteen: Funds of Funds Review of Private Equity Funds of Funds 107 Fund of Funds Managers - Key Stats and 108 Facts Fundraising Review - Funds of Funds 110

Moving Forward on Shifting Sands - Steve Judge, Interim President and CEO, PEGCC - Bronwyn Bailey, Vice President of Research, PEGCC

One year ago, the PEGCC wrote about requested information on Form Private pay two levels of tax. The solution that a number of legislative challenges facing Fund (“Form PF”) annually within 120 adds simplicity to the current tax code is private equity. Many of the debates days of the end of the fiscal year, rather to revise the law so all forms of business over tax policy and regulatory reform than quarterly within 15 days of the end are subject to only one level of taxation, anticipated in early 2011 continue today. of the quarter as originally proposed. The instead of requiring double taxation on We expect that additional financial SEC’s final Form PF rule also removed more enterprises. regulations affecting private equity will several requirements that would have be finalized this year and the industry been unworkable and unnecessary for (2) Based on estimates from Ernst & will continue to face key battles in the private equity advisers. Finally, the SEC Young, flow-through businesses would area of tax policy. Congressional efforts changed the threshold for a “large private see their tax burden rise by 8% ($27bn) to reduce the public debt and increase fund adviser” for private equity advisers per year under budget neutral, corporate- US competitiveness will expedite a to $2bn from $1bn in AUM. only tax reform. This added burden on comprehensive review of tax policy, many companies that are the engines and policymakers will debate various A number of other financial regulations of job creation would hinder economic ways to finance tax reforms. However, have yet to be finalized. Proposed growth. the context of these debates will likely Volcker Rule regulations released in change due to increased scrutiny of the October might impact the ability of private 2. Interest Deductibility industry’s business practices, resulting equity firms to raise capital from certain The tax treatment of interest on from a Presidential contest that includes groups of investors, including non-US corporate debt is also likely to come a candidate who was a successful private banking entities, insurance companies’ under scrutiny this year as a potential equity general partner. Throughout these general and separate accounts, bank- source of additional revenue to finance discussions, the PE industry will need sponsored “customer funds”, and bank- a lower corporate tax rate. Reducing the to aggressively promote the value of its affiliated pension plans. Another critical deductibility of interest would decrease investments. regulatory issue is the Financial Stability incentives for corporations to finance Oversight Council’s second proposed expansion and capital investment with The Politics of Private Equity rule on designation of certain non-bank debt. Although private equity firms and financial companies as “systemically funds generally have little to no leverage, The political discourse around financial important financial institutions” (SIFIs), many private equity portfolio companies regulations and tax policy will likely be which would subject them to capital do utilize debt in their operations. The shaped by the upcoming elections. For requirements. The PEGCC has provided PEGCC believes that reforming the tax the first time in US history, a founder of comments on both regulatory proposals. code in this manner would have negative a major private equity firm has become consequences for US businesses, capital a front-runner for the Republican Tax Reform markets and economic growth. Presidential nomination. As a result, the scrutiny of Mr. Romney’s past career Two issues on the Congressional 3. Carried Interest has put the business model of the entire agenda watched closely by investors, President Obama and some private equity industry under a political ratings agencies and the public will Congressional Democrats continue microscope. The increased attention be reducing the federal deficit and to advocate taxing carried interest as to the industry will likely heighten fundamental tax reform. In the context of ordinary income, rather than as long-term uncertainty around regulators’ and these discussions, at least three specific capital gains. Last fall, the bipartisan Joint legislators’ decisions on issues important policy areas are of interest to private Select Committee on Deficit Reduction to private equity. The result will be a more equity. While it is not guaranteed that any (a.k.a. the “supercommittee”) could not challenging environment to promote the of these proposals will move forward, the find a compromise solution for filling a interests of the private equity industry in PEGCC plans to engage actively on all $1.2tn deficit gap over the next 10 years. the regulatory and tax policy discussions three areas in 2012. Some Democrats and Republicans anticipated for 2012. may continue to seek alternative deficit 1. Taxation of Flow-Through Entities reduction plans in 2012 that could implicate the tax treatment of carried Regulatory Issues Some have suggested that imposing an entity level tax on flow-through interest as a revenue source. Regulatory actions in the Dodd Frank entities, such as business partnerships, would help to reduce tax rates on “C During this election year, the PEGCC Act moved forward in 2011 on multiple will continue to correct misconceptions fronts. The private equity industry made corporations”, i.e. corporations with no limit on the number of shareholders. and to provide facts about the industry, progress to reduce the burdens of certain while also pushing forth the views of the proposed rules but other significant The PEGCC strongly opposes such a proposal for the following reasons: private equity industry on issues related challenges remain. One notable positive to tax and regulatory reform. The year development is that the SEC will only 2012 will be an exciting and challenging require private equity fund advisers to file (1) Under current tax law, partnerships pay one level of tax and C corporations one for our organization and the industry.

Employment and Compensation

Number of Active Private Equity Firms Fig. 3.5: Number of Active Private Equity Firms over Time (by Vintage of First Fund Raised) The fall in fundraising over the past three years has affected the number of new 5,000 firms entering the private equity market to raise a fund for the first time. Fig. 3.5 4,500 shows the number of new fund managers 4,000 joining the sector each year (calculated using the vintage of their first fund to 3,500 represent their year of establishment). New 3,000 Any firms that have not raised a fund in the past 10 years are considered to have 2,500 become inactive. 2,000 Existing At the height of the fundraising boom Number of Firms 1,500 in 2007 a large number of firms were establishing private equity funds for 1,000 the first time. More than 450 new firms joined the sector in that year, the highest 500 number of any year. Since then, however, 0 the number of firms raising a fund for

the first time has fallen significantly, 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 with only around 150 new firms in 2011 as of November. (The 2011 figure only Fig. 3.6: Average Number of Employees by Firm Assets under Management includes firms that have reached one or more interim closes on their debut funds 250 in order to begin making investments.) 231.6 With a number of firms becoming inactive due to last having raised a fund 10 years ago, this means that the total number of 200 active firms in the industry has remained Average No. of at a similar level to 2010, at around 4,500 Staff 150 managers.

When analyzing the number of firms 100 86.8 85.8 Average No. of over time by fund type and geographic Staff per $1bn location, it is clear that a significant AUM 43.7 proportion of the firms dropping out of the 50 38.0 31.2 industry were venture capital firms that 22.0 15.5 20.8 last raised funds in the tech bubble and 9.2 12.6 10.5 have since been unable to raise further 0 capital from investors. 4.9bn 9.9bn - - 499mn 999mn $10bn - - orMore $250mn $1 $5

Employment Levels at Private Equity Firms Lessthan $250 $500 When private equity firms that do not raise, or have not yet raised, distinct of the industry, taking into consideration with the assets under management of private equity funds (i.e. those that firms managing capital committed by the firms in question, as Fig. 3.6 shows. manage corporate or personal capital institutional and other large investors. Firms with less than $250 mn in assets and those that manage third-party capital Beneath this lies a further tranche of under management have an average of without pooling into commingled private smaller firms that invest lesser sums 9.2 employees, while firms with more investment vehicles) are included, of capital, raising money from private than $10 bn in total assets employ the total number of active firms under sources. an average of more than 230 people. consideration increases from the 4,500 However, the larger firms tend to have previously mentioned to more than 7,500. Economies of Scale far fewer employees per $1 bn in assets In total, these firms employ an estimated under management than the smaller 85,000 people. It is important to note that The number of employees at private firms, thus benefiting from economies of our estimate here constitutes the “core” equity firms naturally varies significantly scale when it comes to charging

Fig. 4.3: Annual Private Equity Capital Raised: New vs. Existing GPs

100%

90% Fund Manager Profiles is the 80% industry’s leading source of profiles Capital 70% and data on private equity fund Raised by managers. It contains detailed 73% Existing 60% 78% profiles for over 6,200 fund managers 84% 86% 86% 86% 85% GPs 87% 87% specializing in buyout, venture 50% capital, mezzanine, distressed debt Capital and other private equity investments, 40% Raised by New GPs and includes more than 23,000 key 30% contacts at these firms. 20% To find out more, please visit: Proportion of Total Capital Raised Total Proportion of 27% 10% 22% 13% 16% 14% 14% 13% 14% 15% www.preqin.com/fmp 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year of Final Close

Fig. 4.4: Buyout - 20 Largest GPs by Total Funds Raised in Last 10 Years Fig. 4.5: Buyout - 20 Largest GPs by Estimated Dry Powder

Total Funds Estimated Firm Raised in Firm Rank Firm Name Dry Powder Rank Firm Name Headquarters Last 10 Headquarters ($bn)* Years ($bn)* 1 Blackstone Group 15.8 US 1 Blackstone Group 44.2 US 2 Carlyle Group 11.4 US 2 TPG 43.9 US 3 CVC Capital Partners 9.1 UK 3 Carlyle Group 42.5 US 4 Hellman & Friedman 9.0 US 4 Kohlberg Kravis Roberts 41.6 US 5 BC Partners 8.9 UK 5 CVC Capital Partners 33.0 UK 6 Goldman Sachs 8.5 US 6 Bain Capital 31.6 US 7 TPG 7.6 US 7 Goldman Sachs 29.1 US 8 Bain Capital 7.1 US 8 Apollo Global Management 24.8 US 9 Advent International 6.6 US 9 Apax Partners 24.1 UK 10 EQT Partners 6.5 Sweden 10 Hellman & Friedman 20.7 US 11 Kohlberg Kravis Roberts 6.3 US 11 Advent International 20.5 US 12 Permira 18.0 UK 12 Berkshire Partners 4.8 US 13 Providence Equity Partners 16.4 US 13 Bridgepoint Capital 4.5 UK Charterhouse Capital 14 BC Partners 15.9 UK 14 4.4 UK Partners 15 EQT Partners 15.7 Sweden 15 Silver Lake 4.3 US 16 JC Flowers & Co 14.4 US 16 Apollo Global Management 4.1 US 17 Silver Lake 14.1 US 17 Summit Partners 4.0 US 18 3i 13.4 UK 18 TA Associates 3.6 US Charterhouse Capital 19 13.1 UK Partners 19 Montagu Private Equity 3.6 UK 20 Bridgepoint Capital 12.8 UK 20 Lindsay Goldberg 3.4 US

* All tables exclude funds of funds and secondary funds of funds

Growth GPs Key Stats and Facts

Fig. 4.26: Breakdown of Growth Firms by Number of Funds Raised Fig. 4.27: Number of Firms Actively Managing Growth Funds by Country

GP Headquarters No. of Firms

6% 2% US 87

1 Fund China 56 India 39 31% 2-3 Funds UK 26 61% Hong Kong 21 4-5 Funds France 15

6 Funds or More Singapore 14 Italy 12 South Korea 12 Australia 9

Fig. 4.28: Growth Firms’ Industry Preferences for Underlying Fig. 4.29: Breakdown of Growth Firms by Maximum Equity Investment Investments Size

60% 70% 66% 48% 50% 60% 45% 43% 44% 40% 40% 40% 50%

30% 22% 40% 20% 17% 16% 30% Proportion of Firms 10% 6% 20% 17% 0%

Proportion of Firms 14%

10% 4% Materials Utilities Industrials Foodand and Agriculture RealEstate Energy and and Energy Information Information Consumer Consumer Technology HealthCare 0% Discretionary $0-50mn $51-100mn $101-500mn > $500mn Business Services Business Telecoms, Media Media Telecoms, Communications Maximum Equity Investment Size Fig. 4.30: 10 Largest Growth Funds Raised of All Time

Fund Firm Name Year Closed Fund Size (bn) GP Location Citigroup International Growth Partnership II Citi Venture Capital International 2008 4.3 USD UK Technology Crossover Ventures VII Technology Crossover Ventures 2007 3.0 USD US Baring Asia Private Equity Fund V Baring Private Equity Asia 2011 2.5 USD Hong Kong 3i Growth Capital Fund 3i 2010 1.2 EUR UK CDH China Fund III CDH China Management Company 2007 1.6 USD China Citigroup International Growth Partnership Citi Venture Capital International 2005 1.6 USD UK Baring Asia Private Equity Fund IV Baring Private Equity Asia 2008 1.5 USD Hong Kong TPG Star TPG 2008 1.5 USD US China Science & Merchants Capital Shanxi Energy Industry Investment Fund 2009 10.0 CNY China Management CDH China Fund IV CDH China Management Company 2010 1.5 USD China

Overview of Current Fundraising Market

As of the start of 2012 there are a record by 713 North America-focused funds in Recent data highlights the fact that 1,814 funds in market targeting aggregate January 2011. The aggregate capital the fundraising climate is especially capital commitments of $744.2bn. These sought by primarily Europe-focused challenging at present, with a record figures represent a 14% increase in the funds has increased by 38% to $197.1bn number of funds currently on the road number of funds on the road and a 24% from the beginning of 2011, and there competing for capital commitments from increase in the aggregate capital sought has been a marginal rise in the number an investor community that remains from the beginning of 2011. Fig. 5.9 of funds, from 389 in January 2011 to 412 cautious about making new private equity shows that the beginning of 2012 marks at the start of 2012. investments. However, it is also worth the first rise in aggregate capital sought noting that 40% of private equity funds since 2009, when 1,624 funds were For the second consecutive year, Asia currently seeking capital have already targeting a record $888.4bn in aggregate and Rest of World-focused vehicles achieved at least one interim close, capital. The January 2012 figure of 1,814 outnumber their European counterparts. having secured commitments totalling funds on the road is a new record for the There are currently 604 funds focused $126.7bn towards their fundraising private equity industry. primarily on Asia and Rest of World targets, which demonstrates that there targeting an aggregate $198.8bn, is still a flow of capital commitments Fig. 5.10 reveals that buyout funds are reflecting increases of 23% and 17% entering the marketplace. seeking the largest amount of capital respectively on January 2011 figures. of all fund types, with $177.4bn being Within this category, targeted by 230 vehicles. In terms of Asia makes up the Fig. 5.9: Private Equity Funds in Market over Time, 2008 - 2012 aggregate capital sought, this represents greatest proportion, a substantial 81% increase from the with 379 funds in 2,000 1,814 $98.0bn targeted by 180 funds in January market targeting 1,800 2011. Real estate funds are seeking the $123.3bn in 1,624 1,594 second largest amount of capital from the aggregate capital. 1,600 1,561

highest number of funds, with $164.5bn Latin America- 1,400 sought by 450 vehicles. Aggregate focused funds 1,304 No. Funds Raising capital targeted by real estate funds in are targeting the 1,200 market has increased by 18% from one second highest 1,000 year ago, and the number of funds on the amount of capital, 888.4 800 744.2 road has risen by nearly 5%. $21.5bn, and funds 705.0 698.5 Aggregate Target 601.8 ($bn) targeting the Middle 600 Regional Focus East and Israel are 400 seeking a combined As shown in Fig. 5.11, 798 primarily North $15.7bn. 200

America-focused funds are seeking 0 $348.3bn in capital commitments. This is January 2008 January 2009 January 2010 January 2011 January 2012 a 21% rise from the $288.5bn targeted

Fig. 5.10: Composition of Current Fundraising Market by Fund Type Fig. 5.11: Composition of Current Fundraising Market by Fund Primary Geographic Focus

500 900 450 450 798 800 400 370 No. Funds Raising 700 350 604 300 600 No. Funds 250 230 Raising 500 194 200 177.4 185 164.5 412 144 Aggregate Target 400 150 ($bn) 348.3 93.2 100 300 Aggregate 66 60 60 54.6 59.4 48.8 Target ($bn) 50 47.6 27 21.6 28 29.8 197.1 198.8 20.0 27.3 200 0 100 Other Buyout Growth Venture Natural

Resources 0 Mezzanine RealEstate Secondaries DistressedPE

Infrastructure North America Europe Asia and Rest of World Fund of Funds of Fund Primary Geographic Focus

Private Equity Benchmarks

Fund Type: Buyout Benchmark Type: Median Geographic Focus: All Regions As At: 30 Jun 11

Median Fund Multiple Quartiles (X) IRR Quartiles (%) IRR Max/Min (%) No. Vintage Called Dist (%) Value Funds Q1 Median Q3 Q1 Median Q3 Max Min (%) DPI (%) RVPI 2011 7 4.0 0.0 30.5 n/m 0.30 n/m n/m n/m n/m n/m n/m 2010 21 20.0 0.0 94.5 1.07 0.97 0.91 n/m n/m n/m n/m n/m 2009 28 39.2 0.0 104.1 1.25 1.09 0.99 n/m n/m n/m n/m n/m 2008 51 47.7 5.1 95.8 1.30 1.10 0.94 21.9 6.9 -2.4 45.7 -23.8 2007 46 71.1 14.2 99.5 1.32 1.20 1.01 14.7 8.5 1.1 54.5 -30.0 2006 65 88.9 16.0 94.0 1.30 1.15 1.04 11.9 6.4 1.6 28.0 -29.1 2005 61 93.9 42.6 85.8 1.60 1.35 1.18 16.6 10.1 6.0 76.9 -12.1 2004 35 92.2 83.6 83.1 2.13 1.67 1.27 27.3 16.9 11.2 81.7 -7.8 2003 26 98.5 114.4 58.6 2.45 1.79 1.46 33.3 18.3 9.6 59.0 -60.4 2002 19 99.5 164.4 28.0 2.24 1.92 1.28 38.3 25.7 7.8 72.0 -2.0 2001 24 96.0 179.1 18.9 2.75 1.97 1.51 43.3 24.7 13.9 94.1 6.1 2000 51 97.2 164.3 21.8 2.29 1.84 1.52 26.0 20.7 12.0 57.5 4.6 1999 36 99.3 138.8 6.9 2.03 1.55 1.12 17.1 12.1 6.3 37.4 -25.1 1998 36 100.0 143.8 0.5 1.84 1.48 0.98 17.2 8.7 -2.5 31.3 -100.0 1997 33 100.0 160.6 0.0 2.14 1.61 1.10 22.3 8.7 1.3 84.0 -19.1 1996 19 98.0 179.9 0.0 2.36 1.81 0.77 22.6 16.9 -3.3 147.4 -8.9 1995 24 100.0 137.2 0.0 2.18 1.37 1.14 30.0 9.7 2.3 59.9 -8.6 1994 27 100.0 188.7 0.0 2.47 1.89 1.51 36.3 22.6 11.0 92.2 -1.4 1993 16 100.0 201.5 0.0 2.88 2.02 1.38 23.2 16.7 7.7 58.0 0.8 1992 17 100.0 207.4 0.0 3.22 2.08 1.56 37.6 21.2 7.9 60.6 -49.9 1991 10 100.0 246.5 0.0 3.65 2.47 2.02 49.0 25.3 20.2 54.7 -0.5 1990 19 100.0 214.7 0.0 3.42 2.15 1.38 29.4 19.5 9.3 72.0 2.4

Fund Type: Buyout by Fund Size Benchmark Type: Median Geographic Focus: All Regions

Mega Buyout Large Buyout Mid-Market Buyout Small Buyout Median Fund Weighted Fund Median Fund Weighted Fund Median Fund Weighted Fund Median Fund Weighted Fund Vintage Multiple IRR Multiple IRR Multiple IRR Multiple IRR Multiple IRR Multiple IRR Multiple IRR Multiple IRR (X) (%) (X) (%) (X) (%) (X) (%) (X) (%) (X) (%) (X) (%) (X) (%) 2010 n/m n/m n/m n/m 0.94 n/m 0.96 n/m 0.92 n/m 0.89 n/m 0.97 n/m 0.91 n/m 2009 1.06 n/m 1.07 n/m 1.03 n/m 1.06 n/m 1.02 n/m 1.09 n/m 1.06 n/m 1.07 n/m 2008 1.00 -0.3 1.09 5.2 1.15 15.9 1.09 13.3 1.04 4.1 1.03 5.6 1.13 9.9 1.17 9.1 2007 1.14 5.6 1.08 2.5 1.14 8.2 1.13 7.5 1.19 9.9 1.18 6.6 1.13 8.1 1.12 7.2 2006 1.10 2.8 1.07 0.8 1.21 7.5 1.14 5.0 1.15 6.6 1.17 5.8 1.19 7.7 1.15 3.7 2005 1.45 10.4 1.48 10.0 1.31 7.7 1.33 11.7 1.28 8.1 1.33 9.5 1.41 14.2 1.54 18.0 2004 1.63 12.3 1.75 18.5 1.43 17.0 1.38 20.7 1.65 13.5 1.81 21.7 1.57 14.9 1.60 16.6 2003 1.89 29.5 2.06 29.6 1.99 19.1 2.06 19.1 1.62 12.5 1.67 14.5 1.64 11.3 1.67 18.5 2002 1.97 32.5 1.91 27.8 1.90 22.5 1.83 19.7 1.55 17.3 1.58 16.4 1.80 18.5 1.82 21.6 2001 2.12 28.9 2.39 30.8 1.90 25.8 2.10 26.6 2.00 24.6 2.14 26.5 1.98 33.4 2.04 25.1 2000 1.86 18.2 1.91 18.4 1.63 13.5 1.64 13.0 1.97 21.0 1.91 20.2 1.97 17.9 1.89 16.4 1999 1.84 14.7 1.73 10.7 1.51 1.2 1.46 2.0 1.62 10.1 1.76 12.1 1.37 14.5 1.38 10.5 1998 1.45 5.9 1.42 5.0 1.38 8.1 1.33 1.9 1.39 7.1 1.39 2.2 1.62 11.4 1.67 10.8 1997 1.62 9.9 1.41 5.7 1.64 11.8 1.78 18.0 1.10 1.5 1.12 2.3 1.58 9.9 1.42 7.8

Definition used for Mega, Large, Mid-Market, Small Buyout: Small Mid Large Mega Vintage 1992-1996 ≤ $200mn $201-$500mn > $501mn - Vintage 1997-2004 ≤ $300mn $301-$750mn $751-$2,000mn > $2,000mn Vintage 2005-2011 ≤ $500mn $501-$1,500mn $1,501-$4,500mn > $4,500mn

Investor Appetite for Private Equity in 2012

2011 has been another challenging year Fig. 11.11: Amount of Capital Investors Committed in 2011 Compared to 2010 for fundraising, and the number of funds reaching a final close over the course of Significantly More the year has remained low; 616 funds Capital in 2011 than in 2010 closed having raised an aggregate 12% 15% $265.6bn in commitments over the course Slightly More Capital in of the year. However, there have been 11% 2011 than in 2010 signs of improvement; our conversations 18% with investors have revealed that the Same Amount of vast majority of LPs are seeking new Capital in 2011 as in 2010 opportunities and many are picking up 17% the pace of their commitments. Preqin Slightly Less Capital in interviewed 100 prominent investors 2011 than in 2010 from around the world in December 2011 27% to find out about their attitudes towards Significantly Less Capital the current private equity market and in 2011 than in 2010 their plans for investment in the asset class going forward. Did Not Invest in 2010 but Investing in 2011 Investor Appetite in 2011

Two-thirds of investors we spoke to made new commitments over the course Fig. 11.12: Proportion of Investors At, Above or Below Their Target Allocations to Private Equity of 2011, which is an increase from the 100% 58% of investors that had made new 13% commitments over the course of 2010 90% 19% 16% in a similar study conducted at the same time last year. 80% Above Target 70% Furthermore, as Fig. 11.11 illustrates, Allocation a third of investors committed more 60% 54% 45% 49% capital in 2011 than they did in 2010, At Target 50% and 27% committed the same amount Allocation over the course of 2011 as they did in 40% 2010. Although 28% of investors slowed Below Target 30% the pace of new commitments in 2011 Allocation compared to 2010, it is worth noting Proportion of Respondents 20% that 12% of investors that made new 33% 36% 35% commitments in 2011 did not invest in 10% any new funds in 2010, suggesting an increase in overall investor appetite for 0% Dec-2010 Jun-2011 Dec-2011 committing to new funds.

Forty-nine percent of investors are currently at their targeted level of for the last three years and so have a lot returns of 200-400 basis points above exposure to the asset class, as Fig. of dry powder to invest at the moment.” public market returns. 11.12 demonstrates, and 16% are above their target allocation. Over a third (35%) Investors’ Returns Expectations On the whole, investors have been of LPs are currently below their target satisfied with the returns their private allocations to private equity; therefore the Fig. 11.13 shows that 95% of investors equity investments have achieved. As majority of investors are likely to continue expect their private equity investments Fig. 11.14 illustrates, three-quarters of to make new commitments to private to achieve returns above their public investors feel their private equity fund equity funds in order to build or maintain market benchmark. Sixty-three percent investments have met their expectations, their level of exposure to the asset class. of investors expect returns of more than and a further 6% feel that their private One Danish investor we spoke to that is 400 basis points over the public markets equity investments have exceeded below its target allocation commented: from their private equity portfolio and their expectations. Many investors have “[We] have had a hesitant PE program a further quarter of investors expect adjusted their expectations in light of

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Asia Square Tower 1 Credit Card Amex Mastercard Firm: #07-04 8 Marina View Visa Job Title: Singapore 018960 Please invoice me Address: 303 Twin Dolphin Drive Suite 600 Card Number: Redwood City CA 94065 Name on Card: Fax: +1 440 445 9595 Expiration Date: +44 (0)870 330 5892 City: +65 6407 1001 Security Code: Post/Zip: Email: [email protected] Country:

Telephone: Telephone: +1 212 350 0100 +44 (0)20 7645 8888 +65 6407 1011 Email: +1 650 632 4345 American Express, four digit Visa and Mastercard, last code printed on the front of three digits printed on the the card. signature strip.