ANNUAL REVIEW 2018 Waking up to impact A Recognized Leader LenderLender of of the the year Year in inEurope Europe Ares Management is a global alternative asset manager built around three scaled businesses that collaborate to consistently deliver innovative, solutions-oriented results across market cycles. credit private equity real estate www.aresmgmt.com | www.arescapitalcorp.com The performance, awards/ratings noted herein may related only to selected funds/strategies and may not be representative of any client’s given experience and should not be viewed as indicative of Ares’ past performance or its funds’ future performance. REF: AM-00162 AresFullpageAds_Artwork.indd 2 2/12/19 11:50 AM Impact is everything ISSN 1474–8800 MARCH 2019 injected extra impetus into the movement, but TOBY Senior Editor, Private Equity MITCHENALL has also raised questions about definition. Who Toby Mitchenall, Tel: +44 207 566 5447 EDITOR'S [email protected] LETTER should be allowed to raise capital under the Senior Special Projects Editor “impact” label? It is currently a broad church, Graeme Kerr, Tel: +44 203 862 7491 [email protected] housing everything from philanthropically- Senior Editor, Private Equity, Americas driven capital that does not require “market” Isobel Markham, Tel: +1 646 380 6194 [email protected] returns at one end, to sleeves of existing port- Senior Reporters folios screened for their contribution to posi- Rod James, Tel: +44 207 566 5453 [email protected] tive change at the other. Carmela Mendoza, Tel: +852 2153 3148 One of our most read stories of 2018 broke the The definitional grey-ness is evident in the [email protected] news that KKR was joining the impact investing impact category of our annual awards. It is Reporter Alex Lynn, Tel: +44 207 566 5463 fray. Reporter Alex Lynn found reference to the won this year by Actis. It is a firm founded [email protected] firm’s first impact vehicle in an obscure regula- with impact in its DNA having spun out from Contributors Brian Bonilla, Sophie Colby, Marine Cole, tory filing and followed the thread from there. a development finance institution (see p. 41), Sheikh Jahan, Raymond Lau, Adam Le, Muhammad Obaid, Victoria Robson, It clearly struck a nerve: only two pieces of but you’d be hard pressed to find a mention of Craig Savitzky, Stephen Schultz, Chin Yuen content generated more trac to our site in the i-word anywhere on its website. Managing Editor – Production Mike Simlett, Tel: +44 20 7566 5457 what was our busiest year yet: the Rainmaker At the largest annual gathering of impact [email protected] 50 (a list of influential individual fundraisers) folk, hosted by PEI and the Global Impact Head of Design Miriam Vysna, Tel: +44 20 7566 5433 and the results of our annual awards. Investing Network, I asked Sir Ronald Cohen, [email protected] The curiosity of our subscribers is mir- the godfather of impact investing, whether Head of Marketing Solutions Alistair Robinson rored by growing investor interest. Pioneer- another big theme or the year – the downfall Tel: +44 20 7566 5454 [email protected] ing impact managers, such as LeapFrog Invest- of the Abraaj Group (see p. 4) – would dent Subscriptions and Reprints ments and Bridges Fund Management, have the image of impact (Abraaj squarely pitched Andre Anderson, +1 646 545 6296 [email protected] now been joined in the strategy by established itself as an impact investor). Short answer: he Daniele Lorusso, +44 207 566 5432 private equity franchises. Partners Group, Bain said it would not. [email protected] Capital, Goldman Sachs and, probably most Perhaps ultimately the lack of definition of Sigi Fung, +852 2153 3140 [email protected] notably, TPG Capital are all either raising or impact will prove a benefit to the entire PE For subscription information visit managing impact capital. Among the newer industry. Which of our award winners (see p. www.privateequityinternational.com. entrants into the segment TPG stands out. 34) would say their investments do not bring Director, Digital Product Development Having raised a $2 billion debut fund from a positive impact? In the modern era of ESG Amanda Janis, Tel: +44 207 566 4270 [email protected] high-profile limited partners such as the monitoring and value creation, one would hope Editorial Director Washington State Investment Board, Swedish the answer is none. Philip Borel, Tel: +44 207 566 5434 [email protected] pension fund Andra AP-fonden, Regents of the Director of Research & Analytics University of California and UBS Group and Congratulations to all our winners. Dan Gunner, [email protected] made 25 investments, it is now out raising up Head of Investor Research Nicole Douglas, [email protected] to $3.5 billion for a follow-up. It is this rapid Enjoy the review. Publishing Director progress in the institutional space that led us Paul McLean, [email protected] to select TPG’s Bill McGlashan as our Private Chief Executive Tim McLoughlin, [email protected] Equity Game Changer of the Year (See p. 37). Managing Director — Americas Like-minded investors have been banging Toby Mitchenall Colm Gilmore, [email protected] the drum for impact for around a decade. The Managing Director — Asia e: [email protected] Chris Petersen, [email protected] arrival of mainstream private equity firms has CONTENTS STORIES OF THE YEAR KEY THEMES 2018 4 Abraaj’s downfall 26 The best value creators 67 The year in fundraising 2018 Operational Excellence Awards Private equity fundraising slowed 6 China’s booming buyout market were among the toughest ever for in 2018, with fewer, larger funds entries, the judges said dominating the market 8 GP-leds: Going solo 28 A year in Friday’s letter 72 Secondaries: Deals surge in size 10 The retail apocalypse The highlights from our weekly Fundraising fell back last year in the column delivering insight into the secondaries market, but deal volume 12 The Pan-Asian fundraising industry’s most important issues hit new records, setting the stage for goldrush new milestones in 2019 30 Seven new PE stories in 2019 14 The great C-corp debate What’s going to make the headlines 76 North America: The deals this year? PEI turns its hand to crystal keep on turning 16 Impact reaches tipping point ball gazing US private equity activity is likely to continue apace whatever happens to 18 Tokyo rising 32 Privately spoken the economic and credit cycles The pick of our monthly feature 20 Blackstone’s $1trn man interview with some of the biggest 78 Europe: Big funds and Brexit names in private equity bargains 22 A mega year for new strategies Hefty funds coming to market and the 88 Quotables potential for cheap deals after Brexit 24 Lyceum Capital’s rebirth The best soundbites of the year are on the minds of PE practitioners 80 Asia: China shapes the region Asian private equity in 2019 will see THE PRIVATE EQUITY INTERNATIONAL AWARDS 2018 a reshaping of dealflow and strong investment activity in China and Japan 82 LP Perspectives: Seven sentiments that matter Here are the charts that tell us what LPs think of today’s major talking points 72 34 Introduction 38 Global 36 The roll of honour 42 EMEA 37 The Private Equity Game Changer 52 Americas of the Year 57 Asia-Pacific 80 NEW YORK Private Equity International is published © PEI 2019 be aware that external contributors 130 West 42nd Street, Suite 450 10 times a year by PEI. may represent firms that may have New York, NY 10036 No statement in this magazine is to an interest in companies and/or +1 212 633 1919 To find out more about PEI please visit: be construed as a recommendation their securities mentioned in their Fax: +1 212 633 2904 www.thisisPEI.com to buy or sell securities. 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