Private Equity Spotlight

Transcription

1 Private Equity Spotlight May 2007 / Volume 3 - Issue 5 Welcome to the latest edition of Private Equity Spotlight, the monthly newsletter from Preqin, providing insights into private equity performance, investors and fundraising. Private Equity Spotlight combines information from our online products Performance Analyst, Investor Intelligence & Funds in Market. FEATURE ARTICLE page 01 Private Equity - Superior Returns This month s feature article examines the performance of private equity funds vs. listed stocks, based upon analysis taken from our latest publication, The 2007 Private Equity Performance Monitor - the most in-depth study of private equity performance ever undertaken. FUNDRAISING page 05 This month s Fundraising Spotlight looks at the latest news for venture, buyout and private equity real estate funds, as well as examining the market for private equity mega funds. INVESTOR SPOTLIGHT page 11 This month we examine the top Canadian LPs: How has the Canadian market grown? Is there potential for further growth? Who are the biggest investors in the region? What are the latest trends? No. of Funds on Road Venture Buyout Funds of Funds Real Estate Other Total Europe ROW INVESTOR NEWS page 13 All the latest news on investors in private equity: Helvetia Patria Versicherungen selling portfolio of private equity fund interests on the secondary market. TMNFI aiming to increase its exposure to private equity opportunities in Japan and the rest of the world SBCERA commits to distressed debt funds OTPP sees high returns from private equity investments SUBSCRIPTIONS Albany Ventures is set to start making private equity fund investments on behalf of the Alliance Trust If you would like to receive Private Equity Spotlight each month please spotlight@preqin.com. Subscribers to Performance Analyst and Investor Intelligence receive additional information not available in the free version. If you would like further details please sales@preqin.com Publisher: Private Equity Intelligence Ltd Fleet House, 8-12 New Bridge Street, London. EC4V 6AL Tel: +44 (0) w: OUT NOW The 2007 Private Equity Performance Monitor More information available at: PERFORMANCE INVESTORS FUNDRAISING

2 Private Equity Spotlight...the data points to a clear and unambiguous conclusion: investors returns from private equity have far exceeded the stock market. Feature Article: This month s feature article is based upon analysis taken from our latest publication, The 2007 Private Equity Performance Monitor. The analysis and listings in this year s Monitor are based upon data from our largest ever sample of funds, with net returns data for over 3,400 private equity funds of all types being used in order to produce the most in-depth study of private equity performance ever undertaken. A History of Superior Returns The industry s growth has been driven by its investment performance, and the resulting LP appetite for greater allocations. Despite this, debate continues in academic and financial circles as to how LPs private equity returns compare with those from listed equities. Part of the debate is clearly generated by the challenges of comparing a long term, illiquid investment like private equity with listed stocks. However, at Preqin we believe that the data points to a clear and unambiguous conclusion: investors returns from private equity have far exceeded the stock market. The most direct comparison is to compare listed private equity with other listed stocks. Although only a small proportion of private equity investment vehicles are listed (perhaps 5% of the total), they nevertheless now have an aggregate capitalization of around EUR 85 billion, and Swiss company LPX has created a family of indices to track their performance. These indices in particular the flagship LPX50 - demonstrate that total returns from listed private equity have been good compared to returns from other leading indices (see Fig. A), whether measured on an absolute or risk adjusted basis. Most private equity investments are, of course, made through limited partnerships, not listed vehicles. Preqin compared the performance of these limited partnerships with listed private equity investments on the basis of IRRs from inception to date. Our total sample of limited partnerships now includes net returns data for more than 3,400 private equity funds of all types and sizes globally, accounting for just over 70% of the total universe of private equity funds by value. The money-weighted benchmark gives the best estimate of the returns that an LP is likely to earn on a well-diversified portfolio of fund interests, and this was Fig. A: Return of LPX vs Selected Global Incides (Dec Dec 2006) Source: LPX Private Equity Intelligence Ltd. / May 2007

3 Private Equity Spotlight compared with the cumulative return from the LPX over the same period. The results are shown in Fig. B, with returns from limited partnerships generally exceeding those from listed private equity by a significant 5 10% per annum in most years. (The unlisted benchmark lags a year or so behind the LPX50 for the simple reason that partnership investments are made over a period of years. The most recent vintage years are also affected by the well known J-curve.) The conclusions are clear: investment in private equity limited partnerships has delivered better returns than listed private equity, which in turn has done very well in comparison with other listed stocks. Performance Persistence and Manager Selection Average returns are only part of the story, however. The most successful LPs manage to consistently earn superior returns by investing with the best private equity Fig. B: LPX50 Annualised Return vs. Preqin All Private Equity Money Weighted IRR Source: LPX Fig. C: All Private Equity - Relationship between Predecessor and Successor Fund Quartile Private Equity Intelligence Ltd. / May 2007

4 Private Equity Spotlight firms. Their success hinges on two factors unique to the private equity asset class: Dispersion of returns: the gap between the best private equity funds and the rest is huge, around 10% per year between the median and first / third quartiles. In other words, a fund needs to beat the median return by at least 10% per year to make it into the first quartile, or to fall short by 10% per year to fall into the bottom quartile. The leverage from choosing the right funds or the penalty for choosing the wrong ones is large. Persistence of returns: not only is the gap between the best funds and the rest very high, but these differences tend to persist over time. Preqin analyzed the odds on a firm s next fund being Q1 / Q2 / etc. based upon the performance of the firm s current fund. There is a consistent pattern across all types of private equity fund, including fund of funds: the best firms are remarkably consistent in their ability to produce superior performance fund after fund. Conversely, it is quite unlikely for a firm whose current fund is performing poorly to turn this around to a Q1 performance next time. (See Fig. C) In conclusion, private equity has delivered excellent net returns to its investors, and continues to do so. LPs target allocations are growing, and new investors continue to enter the asset class. Effective manager selection is vital for success, and the track record of funds and firms is therefore a necessary ingredient of LPs planning and due diligence. We are grateful to LPX for their assistance with performance information on the LPX50 index. For more information please visit: This month s feature article draws upon the 2007 Performance Monitor. This year s Monitor gives our most comprehensive ever analysis of private equity performance, with vital returns data for over 1,000 firms and over 3,400 funds. For further details please visit Private Equity Intelligence Ltd. / May 2007

5 2007 Private Equity Performance Monitor Your Essential Guide to Private Equity and Venture Capital Fund Performance Transparent performance data for over 3,000 private equity and venture capital funds of all geographies and types Detailed analysis of market trends and benchmarks, with in-depth analysis by individual fund type, sections examining risk, plus a study into the relative performance of private equity compared with other asset classes historically Detailed profiles for over 1,000 separate private equity firms worldwide View which GPs deliver consistent good performance Quartile rankings - see who the top performers are More information is available at: Order before Friday May 25th to benefit from a special 25% pre-publication discount PUBLICATION ORDER FORM: Complete this form and return it by post/fax I would like to order the 2007 Private Equity Performance Monitor at the special pre-publication discount: shipping $995 + $40 shipping shipping I would like to order the 2007 Performance Package (Publication plus 12 month s access to Performance Analyst Online): 1, shipping $2,595 + $40 shipping 1, shipping (Prices include 50% discount on full publication price) Additional Copies shipping $180 + $20 shipping shipping (Shipping Costs will not exceed a maximum of: 15 / $60 / 37 per order) Name: Firm: Job Title: Address: City: Post/Zip Code: Country: Telephone: Payment Options: Cheque enclosed (please make the cheque payable to Private Equity Intelligence ) Credit Card Visa Amex MasterCard Card No: Expiration Date: Name on Card: Private Equity Intelligence - Fleet House, 8-12 New Bridge Street, London, EC4V 6AL w: / e: info@preqin.com / t: +44 (0) / f: +44 (0) or Private Equity Intelligence Ltd. / May 2007

6 Funds In Market Buyout BUYOUT FUNDS ON THE ROAD FINAL CLOSES BAROMETER Europe ROW Total No. on Road Total Target Value ($bn) Average Target Size ($mn) , BUYOUT FUNDS ON THE ROAD Fund Manager Target Size (mn) GP Location KKR Fund 2006 Apollo Investment Fund VII Carlyle Partners V Apax Europe VII PAI Europe V Thomas H Lee VI Silver Lake Partners III Carlyle Europe Partners III Terra Firma Capital Partners III Fortress Investment Fund V Kohlberg Kravis Roberts Apollo Management Carlyle Group Apax Partners PAI Partners Thomas H Lee Partners Silver Lake Carlyle Group Terra Firma Capital Fortress Investment 16,625 D 15,000 D 15,000 D 8,500 EUR 7,000 EUR 9,000 D 8,000 D 5,000 EUR 4,000 EUR 5,000 D UK France UK RECENTLY CLOSED BUYOUT FUNDS Hellman & Friedman VI: Manager: Hellman & Friedman Target Size (mn): 8,000 D First Close (mn): 2,700 D (November-2006) Final Close (mn): 8,400 D (April-2007) Geographic Focus:, Europe Industry Focus: Communications, Media, Financial Services, Software, Information Services Lawyer: Simpson, Thacher & Bartlett Sample Investors: Alaska Permanent Fund Corporation, CalPERS, IPERF, Irish NPRF, Kentucky Retirement Systems, LACERS, New Mexico Public Employees' Retirement Association, PA SERS, Washington State Investment Board Quadrant Private Equity No.2: Manager: Quadrant Capital Target Size (mn): 400 AUD Final Close (mn): 500 AUD (April-2007) Geographic Focus: Australia, New Zealand Industry Focus: Any Sample Investors: Vantage Private Equity Growth GS Capital Partners VI: Manager: Goldman Sachs Private Equity Group Target Size (mn): 19,000 D First Close (mn): 12,000 D (January-2007) Final Close (mn): 20,000 D (April-2007) Geographic Focus: Global Industry Focus: Any Sun Capital Partners V: Manager: Sun Capital Partners Target Size (mn): 6,000 D Final Close (mn): 6,000 D (April-2007) Geographic Focus: North America, West Europe Industry Focus: Technology, Telecoms, Industrial, Retail, Manufacturing, Construction, Media, Entertainment, Food Lawyer: Kirkland & Ellis Sample Investors: CalPERS, Ohio State University Endowment, SFERS, Sports Venture Partners, Mexico Public Employees' Retirement Association Private Equity Intelligence Ltd. / May 2007

7 Funds In Market Venture VENTURE FUNDS ON THE ROAD FINAL CLOSES BAROMETER Europe ROW Total No. on Road Total Target Value ($bn) Average Target Size ($mn) VENTURE FUNDS ON THE ROAD Fund Manager Target Size (mn) GP Location Citigroup International Growth II AIG Highstar Capital III Pine Brook Road Partners I Cyrte Investments TMT Fund Bertelsmann InSight Capital Partners VI Vector Fund IV Pangaea One Patenterprise Energy Fund I Battery Ventures VIII Citigroup VC International AIG Global Investment Group Pine Brook Road Partners Cryte Investments Bertelsmann Capital Ventures InSight Capital Partners Vector Capital Cartesian Capital Group Patenterprise Battery Ventures 3,500 D 2,000 D 2,000 D 1,500 EUR 1,000 EUR 1,200 D 1,000 D 1,000 D 1,000 CHF 750 D UK Netherlands Germany Switzerland RECENTLY CLOSED VENTURE FUNDS Draper Fisher Jurvetson IX: Manager: Draper Fisher Jurvetson Target Size (mn): 600 D First Close (mn): 454 D (February-2007) Final Close (mn): 600 D (April-2007) Geographic Focus: North America Industry Focus: Telecoms, IT, Life Sciences, Internet, Nanotechnology, Clean Technology Venrock Associates V: Manager: Venrock Associates Target Size (mn): 500 D First Close (mn): 250 D (February-2007) Final Close (mn): 600 D (April-2007) Geographic Focus: North America, Asia Industry Focus: Technology, Healthcare, IT, Infrastructure, Medical Devices Charles River XIII: Manager: Charles River Ventures Target Size (mn): 275 D First Close (mn): 186 D (February-2007) Final Close (mn): 285 D (April-2007) Geographic Focus: North America Industry Focus: Technology, Consumer Services, Media, IT, Intellectual Property Sample Investors: University of Minnesota Foundation Kleiner Perkins Caufield & Byers China Fund: Manager: Kleiner Perkins Caufield & Byers Final Close (mn): 360 D (April-2007) Geographic Focus: Greater China Industry Focus: Technology, Healthcare, Consumer Products, Consumer Services, Communications, Media, Internet, Wireless Private Equity Intelligence Ltd. / May 2007

8 Funds In Market Real Estate REAL ESTATE FUNDS ON THE ROAD FINAL CLOSES BAROMETER Europe ROW Total No. on Road Total Target Value ($bn) Average Target Size ($mn) REAL ESTATE FUNDS ON THE ROAD Fund Manager Target Size (mn) GP Location Blackstone Real Estate Partners VI Morgan Stanley Real Estate Fund VI Intl Beacon Capital Strategic Partners V Walton Street Real Estate VI Capri Urban Investors IR European Retail Property Fund Carlyle Realty Partners V TA Realty Associates VIII Coleyzo II Aberdeen European Shopping Property Fund Blackstone Group Morgan Stanley Real Estate Beacon Capital Partners Walton Street Capital Capri Capital NEINVER Carlyle Group TA Associates Realty Colony Capital Aberdeen Property Investors 10,000 D 8,000 D 3,000 D 2,500 D 2,000 D 1,4000 EUR 1,500 D 1,500 D 1,000 EUR 1,000 EUR Spain Sweden RECENTLY CLOSED REAL ESTATE FUNDS AEW Value Investors II: Manager: AEW Capital Management Type: Value-Added Target Size (mn): 500 D Final Close (mn): 651 D (May-2007) Geographic Focus: North America Sample Investors: Los Angeles Fire and Police Pension Capman Real Estate Fund II: Manager: CapMan Real Estate Type: Opportunistic Target Size (mn): 150 EUR First Close (mn): 67 EUR (September-2006) Second Close (mn): 139 EUR (February-2007) Final Close (mn): 150 EUR (April-2007) Geographic Focus: Finland, Europe System, Orange County Employees' Retirement System, Employees' Retirement System of Rhode Island, Seattle City Employees' Retirement System Covenant Apartment Fund V: Manager: Covenant Capital Group Middle East Opportunities Fund II: Manager: Corporate Finance House Type: Value-Added Target Size (mn): 50 D First Close (mn): 30 D (July-2006) Final Close (mn): 35 D (March-2007) Geographic Focus: Jordan, Lebanon, Dubai, Qatar, Middle East Type: Value-Added Target Size (mn): 150 D First Close (mn): 37 D (January-2006) Second Close (mn): 62 D (July-2006) Final Close (mn): 160 D (May-2007) Geographic Focus: North America Sample Investor: State of Connecticut Retirement Plans and Trust Funds Private Equity Intelligence Ltd. / May 2007

9 Funds In Market Private Equity Mega Funds Over the past few years private equity mega funds have grown in terms of both fund size, and in terms of the number of mega fund vehicles that are being raised, with the ten largest funds raised in 2006 accounting for a massive 25% of the overall fundraising total for the industry during that year. Fundraising in 2007 is continuing this trend, with April seeing the largest fund ever raised: GS Capital Partners VI on $20 billion. We examine here both the biggest funds currently in market (excluding buyout and venture funds), and also the largest mega funds ever raised historically. LARGEST PRIVATE EQUITY FUNDS CURRENTLY ON THE ROAD (other than buyout and venture funds): Fund Manager Type Target Size (Mn) Manager Country Warburg Pincus Private Equity X Warburg Pincus Balanced 15,000 D Cerberus Institutional Partners (Series Four) Cerberus Capital Management Distressed Debt 6,500 D MatlinPatterson Global Opportunities III Matlin Patterson Global Advisors Distressed Debt 4,500 D Avenue Special Situations V Avenue Capital Group Distressed Debt 4,000 D AXA Secondary Fund IV AXA Private Equity Secondaries 2,700 EUR France Alinda Capital Partners I Alinda Capital Partners Infrastructure 3,000 D Morgan Stanley Infrastructure Morgan Stanley Infrastructure 3,000 D MHR Institutional Partners III MHR Fund Management Distressed Debt 3,000 D OCM Opportunities Fund VII Oaktree Capital Management Distressed Debt 3,000 D LS Power Equity Partners II LS Power Group Infrastructure 2,500 D LARGEST PRIVATE EQUITY FUNDS EVER RAISED: Fund Manager Type Target Size (Mn) Final Close Date Manager Country GS Capital Partners VI Goldman Sachs Private Equity Buyout 20,000 D Apr-07 Blackstone Capital Partners V Blackstone Group Buyout 15,600 D Jul-06 Texas Pacific Group Partners V Texas Pacific Group Buyout 15,000 D Jun-06 Permira IV Permira Buyout 11,100 D Sep-06 UK Providence Equity Partners VI Providence Equity Partners Buyout 12,000 D Feb-07 Apollo Investment Fund VI Apollo Management Buyout 10,100 D Feb-06 Cinven IV Cinven Buyout 6,500 EUR Jun-06 UK GS Capital Partners V Goldman Sachs Private Equity Buyout 8,500 D Apr-05 Hellman & Friedman VI Hellman & Friedman Buyout 8,400 D Apr-07 Warburg Pincus IX Warburg Pincus Balanced 8,000 D Aug-05 Bain Capital Fund IX Bain Capital Buyout 8,000 D Mar-06 CVC European Equity IV CVC Capital Partners Buyout 6,000 EUR Jul-05 UK Carlyle Partners IV Carlyle Group Buyout 7,850 D Mar-05 First Reserve Fund XI First Reserve Corporation Natural Res. 7,800 D Aug-06 BC European Cap VIII BC Partners Buyout 5,800 EUR May-05 UK Private Equity Intelligence Ltd. / May 2007

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12 Investor Spotlight: Canada Investor Spotlight is your monthly update on investors in Private Equity. See how key investors are changing their allocations and which new investors are coming into the market. Each month we analyse investors in a specific segment - this month we look at Canadian LPs. Back in December 2005, our Investor Spotlight article looked at the investment strategies of a handful of the largest Canadian LPs investing in private equity funds. In this month s Investor Spotlight we focus once again on Canada and examine whether any significant changes have occurred in the last 18 months and who is currently investing most heavily in the private equity market. Canadian private equity investors are often somewhat overshadowed by their larger neighbours, however, they play a significant role in the global private equity market. Our Investor Intelligence database identifies 102 active Canadian-based investors who currently have an aggregate allocation to private equity in excess of CAD 52 billion, a figure that equates to 4.8% of all private equity allocations worldwide. If all of the Canadian investors on our system were to fill their current target allocations to private equity, they have the potential to commit a further CAD 47 billion to the market. At the end of 2005, CPP Investment Board was top of the list of Canadian LPs with the largest commitment to the asset class. Since then, the private equity market has gone from strength to strength, with more and more investors and capital entering the asset class and fund sizes growing accordingly. CPP Investment Board has invested heavily in the, UK and Canada during this period of high growth, doubling its commitment to the asset class from CAD 10 billion in 2005 to CAD 20 billion today. CPP Investment Board intentionally over commits to private equity funds and has a minimum of 6.4% of its assets invested in the asset class at any one time. As can be seen in Figure 1, CPP is still the largest Canadian investor in private equity in terms of capital committed. Ontario Teachers Pension Plan (OTPP) and OMERS Capital Partners have also taken advantage of the favourable market conditions and, like CPP Investment Board, have invested steadily over the last 18 months, more than doubling, and in OMERS s case trebling, their allocations from CAD 7.3 billion to CAD 15 billion and CAD 2 billion to CAD 6.1 billion respectively. Over the course of 2006 OMERS committed a massive CAD 1.4 billion to private equity managers, its largest ever annual amount. For 2007, OMERS is set to invest between 800 million and 1 billion CAD to continue with its program of focusing on private equity investments, believing the asset class is better positioned to generate strong, predictable returns than other alternative investments. Over the last 18 months investment strategies have had to adapt to the increased competition within the asset class and some investors are now turning to less developed markets for investment opportunities, whilst at the same time using foreign investments to add further diversification to their private equity portfolios. In 2006, the Local Authorities Pension Plan (LAPP) gave Alberta Investment Management (AIM) a foreign investment mandate of 3% of its total assets. LAPP s separate pool of foreign private equity investment capital illustrates the pension fund s global investment strategy which AIM has full discretion over and can ask to increase the mandate size to 5% at any time. Likewise, in February of this year OMERS allocated CAD 200 million for investments in Asia in order to increase its exposure to the region and has set a long term vision of having between 4 and 8% of its private equity assets committed to Asia-focused private equity funds in the future. Furthermore both PSP Investments and the University of Toronto Asset Management Corp (UTAM) are currently employing global investment strategies in the hope of adding further diversification to their private equity portfolios. Not all Canadian investors have been as taken with the prospect of emerging markets as others. The Hospitals of Ontario Pension Plan (HOPP) remains focused on the, Canadian and European markets, where it still believes excellent investment opportunities can be found despite the increased competition. CDP Capital is also implementing a similar geographic investment focus and although it will consider emerging market investment opportunities it is not likely to invest in the near future. One Canadian LP to be especially active in the 18 months since we last focused on Canada is UTAM. Having only started investing in the asset class in 2000, UTAM has managed to build relationships with a large number of private Private Equity Intelligence Ltd. / May 2007

13 Investor Spotlight: Canada equity and private debt investment managers, including Blackstone Group, Centerbridge Capital Partners, Goldman Sachs, KKR, Madison Dearborn, Pantheon Ventures and Providence Equity Partners amongst others. UTAM is set to commit more capital in the near future in an attempt to fill the remaining 6% of its 10% target allocation. As in any market, the ability to adapt investment strategies to suit the changing market is key. At the end of 2006, CDP Capital reduced the number of GPs in its portfolio from 110 to 45 in order to build stronger relationships with topperforming GPs and thus invest larger amounts of money with what it feels are the best managers available. The importance of good relationships with top flight fund managers is often emphasised as a key ingredient to success within the industry and this is certainly a common feature in many of the Canadian LPs portfolios. British Columbia Investment Management Corporation (BcIMC) has a long standing partnership with two of Europe s premier investment managers, Cinven and Advent International with whom it regularly reinvests. In total BcIMC has existing relationships with 58 GPs, including Texas Pacific Group, HarbourVest Partners, Pantheon Ventures, Adams Street Partners, AIG and Blackstone Group to name but a few. Likewise, Ontario Teachers Pension Plan places huge emphasis on the importance of the LP - GP relationship and through its investment arm, Teachers Private Capital, makes a lot of direct private equity investments in order to build relationships with GPs, with whom it can then partner later in co-investments. To build on its existing relationships, TPC has recently opened an office in London to use as a base to scout for partnership commitment opportunities as well as direct investments. This strategy is also employed by both BcIMC and OMERS. One similar trend that is evident in all of the investment plans of our sample of Canadian LPs is that they regard the future of the market positively and are set to carry on investing in private equity vehicles. In fact, in most cases investors are not just looking to maintain their current commitment level but are instead set to increase their allocations to the asset class. As already mentioned earlier, OMERS is set to invest a further CAD 500 million during 2007, and HOPP in the next 12 months is looking to commit a further CAD 100 to 600 million in 1 to 4 new vehicles. Additionally, OTTP is set to continue investing to provide the retirement system with access to specialist industries or markets that it would not be able to access easily itself through its direct investments. Despite many of the Canadian LPs having significantly increased the amount they have committed to the private equity industry recently, they clearly believe that the market will continue to offer good investment opportunities and the potential for high returns, and have responded accordingly by increasing target allocations further still. Figure 1: A sample of 10 of the largest Canadian LPs by commitment to private equity: Investor Name Commitment to PE (CAD mn) Dec-05 May-07 Assets under management (CAD mn) Current Commitment to PE (% of AUM) CPP Investment Board 10,000 20, , Ontario Teachers Pension Plan 7,300 15, , CDP Capital Private Equity Group 9,800 9,825 13, OMERS Capital Partners 2,000 6,147 61, Public Sector Pension Investment Board n/a 3,730 28, TD Capital Private Equity Investors n/a 2,331 2, British Columbia Invest. Management Corp. 1,500 1,908 76, The Hospitals of Ontario Pension Plan n/a 1,300 28, Local Authorities Pension Plan n/a , University of Toronto Asset Management Corp. n/a 215 5, Private Equity Intelligence Ltd. / May 2007

14 Investor News Swiss insurance company Helvetia Patria Versicherungen is selling its entire portfolio of private equity fund interests on the secondary market. Helvetia stopped investing in private equity funds in 2003/2004, and is now looking to sell CHF million worth of private equity fund interests. Its advisor, Swissbased Strategic Capital Management (SCM), is handling the sale. Helvetia stated it is selling due to a need to balance its investment portfolio. It is possible that Helvetia will return to the private equity asset class and make new fund commitments in the longer term. The CAD 105 billion Ontario Teachers' Pension Plan (OTPP) saw returns of 26.9% from its private equity investments last year, far greater than those in other asset classes and will continue to make significant commitments throughout OTPP uses private equity funds to gain exposure to specialist industries or markets that it cannot access through its direct investment program. Tokio Marine and Nichido Fire Insurance (TMNFI) is aiming to increase its exposure to private equity opportunities in Japan and the rest of the world so that such investments form up to 60% of its portfolio. - and Europe-focused funds currently account for 65% of its portfolio and, as a result, greater exposure to Asia will be at the expense of future commitments to these more traditional markets. In particular, this will affect future investment in Europe, which will fall from its current level of 25% to a target of 15-20% of TMNFI's portfolio. Funds focused on Japan make up 30% of the portfolio but may increase to 40%. 5% of TMNFI's portfolio is currently dedicated to funds focused on the rest of the world, but this section could rise to as much as 20%. TMNFI currently has a target allocation to private equity of 5% of its 3.3 trillion total assets. The D 46.2 billion Boeing Company Pension Fund is looking to increase its exposure to private equity to 6% of assets following an asset allocation study carried out last year. The increased allocation will be at the expense of public equities. These changes are being made in an effort to achieve greater diversification of investments and to manage risk more effectively. Following its acquisition in November 2006 by Alliance Trust, private equity firm Albany Ventures is set to start making private equity fund investments on behalf of the Trust. Albany Ventures will manage Alliance Trust s private equity portfolio, currently GBP 36 million in size, and is in the process of deciding on the strategy that it will pursue in terms of future direct and fund investments for the Trust. Alliance Trust has a 15% target allocation to private equity, which means Albany Ventures assets under management are expected to rise by up to GBP 400 million. A decision is expected to be made on the future strategy andtimescale of private equity investments by July New Mexico State Investment Council (SIC) has increased its allocation for private equity vehicles operating in the state of New Mexico. SIC manages the private equity investments of the D 4.5 billion Severance Tax Permanent Fund (STPF). It is through this fund that SIC makes its commitments to vehicles that are focused on acquiring or investing in New Mexico-based companies. As SIC had almost met the 6% target allocation to private equity and co-investments for the STPF, a new target of 9% has been approved. Sun Mountain Capital acts as advisor for these investments for the STPF. San Bernardino County Employees' Retirement Association (SBCERA) has committed to three distressed debt funds. The D 5.7 billion pension fund has committed D 10 million each to MatlinPatterson Global Opportunities III, Catalyst Fund II and Tennenbaum Opportunities Fund V. These commitments bring SBCERA closer to its aim, set in 2006, of investing D 45 million in funds focused on distressed debt opportunities. The remaining D 15 million will be used for a future opportunity. Newly formed joint venture CAM NewMarkets Partners has launched a fund of funds focusing on emerging market private equity funds. The German based private equity fund of funds shop CAM Private Equity has joined forces with the based NewMarkets Partners to set up the new firm. The new vehicle, CAM NewMarkets Partners 1, is expected to raise D 400 million and will be investing in buyout funds in areas such as Asia, Eastern Europe, Latin America and South Africa. Each month Spotlight provides a selection of the recent news on LP More news and updates are available online for Investor Intelligence subscribers. Contact us for more information - info@preqin.com Private Equity Intelligence Ltd. / May 2007

15 In The Spotlight: Private Equity Intelligence Private Equity Intelligence is a financial information business focused on the private equity industry. We provide private equity and venture capital firms, fund of funds, investors and advisors with products and services within four main areas: Fund Performance, Investors, Fundraising and Fund Terms. FUND PERFORMANCE: We provide performance data for 3,400 private equity funds worldwide. For each individual fund you see the amount called, distributed, unrealised value, value multiple and net IRR. Performance is measured on a net-to-lp basis. Fund performance is available through our online database Performance Analyst and our publication The 2007 Private Equity Performance Monitor. INVESTORS: View profiles for 3,500 global LPs complete with information on background, contact details including key people, program size, investment plans, investment preferences, current portfolio and funds previously invested with. This information is available through our online database Investor Intelligence and our publication The Limited Partner Universe. FUND RAISING See information on over 1,000 private equity funds worldwide who are currently raising capital. Get details of funds likely to be raising in the near future and view funds closed over the last year including sample investors. This information is available through our online database Funds in Market and our annual publication The Global Fundraising Review. FUND TERMS: See valuable information on fees, costs and key terms for all types of funds, based upon an exhaustive analysis of data from over 1,000 funds. Ensure that negotiated terms are in line with industry best practice. This information is available through our publication The 2007 Fund Terms Advisor, which also gives access to our online service showing benchmark figures based upon key fund features Private Equity Intelligence Ltd. / May 2007