Private Equity. Panel Detail: Monday, May 2, :30 AM - 10:45 AM

Transcription

1 Private Equity Panel Detail: Monday, May 2, 211 9:3 AM - 1:45 AM Speakers: Leon Black, Founding Partner, Apollo Management, LP David Bonderman, Founding Partner, TPG Capital Jonathan Nelson, CEO and Founder, Providence Equity Partners Jonathan Sokoloff, Managing Partner, Leonard Green & Partners Scott Sperling, Co-President, Thomas H. Lee Partners, L.P. Moderator: Maria Bartiromo, Anchor, CNBC

2 Carlyle IPO a Game-Changer? (US$) Blackstone share price Jun-7 Jun-8 Jun-9 Jun-1 Jun-11 (US$) Apollo share price Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Source: Bloomberg.

3 PE is one of the better-performing asset classes Median Returns of Pension Plans by Asset Class as of 3 June % 3% 25% 2% 15% 1% 5% % -5% -1% -15% Source: Preqin and Bain. Fixed Income Hedge Funds Listed Equity Private Equity Real Estate Total Investment Portfolio 1 Year 3 Years 5 Years

4 Global private equity fundraising still stalling Quarterly: 25Q1 212Q1 US$ billions Global private equity fundraising by quarter $25 27 Q2 market peak: $213 billion $2 $15 $1 212 Q1: $62 billion $5 $ Source: Preqin.

5 Global private equity fundraising by region US$ billions Asia and Rest of World Europe North America Q 212 Source: Preqin.

6 Which types of funds are raising the most cash? Global private equity fundraising by fund type Q1 212 (US$ billions) Infrastructure Fund of funds Growth Other Secondaries $2.6 $1.9 $1.7 $3.2 Mezzanine $3. $5.6 $6.8 $8.8 $9.7 $18.5 Buyout Source: Preqin. Distressed PE Real estate Venture

7 Average time required to close funds Average number of months Q1 Source: Preqin. Year of fund close

8 Investors are still exhibiting an interest in PE Timeframe for investors' next intended commitments to private equity funds Proportion of investors that feel their private equity fund investment has lived up to expectations Not Before % % H % Opportunistic 17.3% H % Percent End of Source: Preqin.

9 Global private equity buyout deals Number of deals Number of deals (left axis) Aggregate value of deals (right axis) US$ billions Q1 27 Q1 28 Q1 29 Q1 21 Q1 211 Q1 212 Source: Preqin.

10 Global number of PE-backed exits by type Smaller exits elevated during 1Q 212 Global number of private equity-backed exits Trade sale Sale to GP restructuring IPO Aggregate Exit Value ($bn) Exit value (US$ billions) Q1 26 Q1 27 Q1 28 Q1 29 Q1 21 Q1 211 Q Source: Preqin.

11 82% of deals in Q1 212 were small-cap (<$25mn ) Percent No. deals Deal value less than $1m $1-249m $25-499m $5-999m $1bn or more Source: Preqin.

12 Add-on acquisitions will remain elevated Maintaining the levels of activity of Q4 211 Percent % 17% 15% 13% 8% 35% 62% 44% No. deals Deal value Buyout Add-on Growth capital Public to private Source: Preqin.

13 Sector breakdown of U.S. PE-backed deals 26% of deal value was completed in energy in Q1 212 Breakdown of aggregate value of US PE-backed deals in Q1 212 by industry (US$ billions) IT, $1.8 Food, $.5 Other, $1.3 Industrials, $3.4 Energy, $6.7 Business services, $5.2 Healthcare, $1.8 Telecome, $2.6 Consumer, $2.9 Source: Preqin 13

14 23% of all deals were completed in the industrials sector Breakdown of US 365 PE-backed deals in 1Q 212 Food, 18 Other, 18 Telecome, 22 Energy, 25 Industrials, 84 Source: Preqin Healthcare, 36 IT, 44 Consumer, 55 Business services, 62 14

15 4 Dry powder in global buyout funds US$ billions 6 5 $45 $51 $58 $462 4 $38 $365 3 $259 2 $187 $178 1 Source: Preqin

16 Breakdown of funds of funds in market By target fund size Percent 4% Number of funds raising money 35% 3% 25% 2% 15% 1% 5% % Up to $1mn $11-25mn $251-5mn $51-75mn $751-1,mn $1,1mn+ Source: Preqin.

17 Emerging markets continue to attract LPs Asia is attractive to 6% investors, North America to 42% Proportion of respondents (Percent) Countries and regions within emerging markets that investors view as presenting attractive opportunities Source: Preqin

18 Global bond and equity market issuance still below pre-crisis levels Corporate bond issuance Fund raised through IPOs US$ trillions $2.7 $2.8 $ $3.3 $2.5 $2.4 US$ billions 35 3 $ $295 $96 $113 $285 $17 Emerging economies Advanced economies Sources: Ernst & Young, S&P Fixed Income Research.

19 US

20 Non-bank institutions are playing an ever-larger role in U.S. financial sector Share of financial sector assets, 197 to 211 Percent 75 6 Banks (left axis) Percent Non-bank financial institutions (right axis) Source: Federal Reserve.

21 Private equity deal flow by year 211 PE investment in US well above 29 lows US$ billions Capital invested (left axis) Number of deals closed (right axis) Number of deals 3, , 2,5 2, 1,5 1, 5 Source: PitchBook.

22 Capital flow into IT, healthcare, and energy rose Percentage of deal volume (capital) by industry 1% 9% 8% 7% 6% $27 $13 $25 5% $86 $17 4% $15 $23 $11 $7 3% $28 $5 $2 $11 $15 $5 2% $2 $8 $16 $9 $42 $5 $6 $29 $49 $2 $1 $14 $26 1% $55 $7 % Source: PitchBook. US$ billions Business Products and Services (B2B) Consumer Products and Services (B2C) Energy Financial Services Healthcare Information Technology Materials & Resources

23 Sector breakdown of US PE deals US$ billions US PE sector breakout US$ millions Sector breakdown of 211 PE-backed IPOs Source: Dealogic

24 Large deals* began to remerge Percentage of deal volume (capital) by deal size 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % $14.31 $34.6 $17.35 $22.69 Source: PitchBook. * Denotes deals more than USD 1 billion $47.7 $39.33 $21.75 $28.1 $ $6.11 $41.23 $ $82.63 $86.54 $38.45 $2.45 $29.78 $28.46 $47.73 $18.51 $3.45 $38.83 $36.5 $25.8 $6.85 $37.69 $7.26 $7.75 $7.94 $5.98 $1.67 $11.24 $11.88 $1.77 $12.81 $4.55 $35.55 $33.1 $39.92 $24.29 $39.4 $41.62 $26.6 $17.33 $23.57 $19.44 $4.42 $ Under $5M $5M-$25M $25M-$5M $5M-$1B $1B-$2.5B $2.5B+ US$ billions

25 EBITDA multiples of U.S. buyout transactions 1x 8x 6x 4x 2x x Debt / EBITDA Equity / EBITDA Total deal size / EBITDA Source: PitchBook.

26 Median buyout size hits new record Median capital invested in U.S. private equity transactions US$ millions Source: PitchBook.

27 Percentage of debt used in buyouts 75% 7% 65% 6% 63% 71% 67% 67% 57% 61% 62% 59% 61% 55% 5% 45% 4% 52% 49% 56% 55% 56% 57% 56% 52% 51% 57% 46% 35% Source: PitchBook.

28 Private equity investors exited $18bn in 211 Percentage of P.E. exit volume (count) by exit type 1% 8% 6% % 2% % Corporate acquisition IPO Secondary buyout Source: PitchBook.

29 Corporate acquisitions hit a record high Median deal size of $24 million in 211 $4 $35 Median exit value (USD millions) $339 $3 $27 $291 $25 $2 Corporate Acquisition $191 Secondary Buyout $221 $24 $191 $15 $151 $1 $92 $15 $5 $43 $ Source: PitchBook.

30 Increase in holding length in the U.S. PE Market (# of years held) 6 Median time from buyout to exit Source: PitchBook.

31 PE investors sitting on $425B of dry powder $14 $12 $1 $8 $6 $4 $2 $ US$ Billions $ $77.64 $24.22 $425 Billion $76.11 $67.8 $ Cumulative Overhang Under $1M $1M-$25M $25M-$5M $5M-$1B $1B-$5B $5B+ $6 $5 $4 $3 $2 $1 $ Source: PitchBook.

32 Private equity returns have climbed back to pre-crisis levels 25% 15% 5% -5% -15% -25% -35% -8% -29% -31% -31% U.S. PE 1-Year Median Rolling Horizon IRR 2% 21% 22% 16% 17% 15% 13% 6% 12% 5% 8% -5% -5% * -18% -1% One year IRR as of year ending December 31st *Through 2Q 211 Buyout Fund of Funds Mezzanine Source: PitchBook.

33 Total U.S. sponsored loan volume $14B $12B $1B $8B $6B $4B $2B $B $19.2 $87.1 loan values (left axis) $52.6 $ $ $21.9 $11.2 $1.3 $1.4 Number of loans(right axis) $28.8 $27.2 $ $13.5 $7.1 $ $ $48.6 $ $18.5 $21.2 $ Q7 1Q8 1Q9 1Q1 1Q11 1Q Source: S&P Leveraged Commentary & Data. Includes all sponsored loan volume (leveraged buyouts, acquisitions, refinancing, recaps, etc). Reflects only transactions financed in the syndicated debt markets.

34 Visible demand for debt capital $14 $9 $4 Debt Maturities: Leveraged Loans (US$ billions) $1, $8 $6 $4 $2 $4 Leveraged Finance Demand (US$ billions) $446 $846 -$ $ Refi(1) Private Equity(2) Visible Demand Source: S&P Leveraged Commentary and Data

35 Collapse of the shadow banking market US$ billions Global CLO issuance Supply of capital drastically reduced; CLOs provided $24B of capital between (55% of all lending ) before market died in Q1 212 Source: S&P Leveraged Commentary and Data 12 6

36 Industry participants exit Source: Chatham capital

37 Average LBO purchase price multiples Purchase price multiples x 6.6x 7.1x 7.3x 8.4x 8.4x 9.7x 9.1x 7.7x 8.5x 4 2 Source: Standard & Poor s

38 Purchase price and equity contribution of large corporate LBO loans Purchase price breakdown* 12.x Equity Contribution* Purchase Price Breakdown* Equity contribution* 5% 1.x 8.x 6.x 7.9x 8.1x 7.7x 6.3x 6.1x 6.5x 7.1x 7.4x 8.2x 8.6x 9.8x 9.5x 7.9x 8.5x 9.1x 8.6x 45% 4% 35% 3% 25% 4.x 2% 15% 2.x 1% 5%.x Q12 Senior Debt/EBITDA Sub Debt/EBITDA Equity/EBITDA Others Equity Contribution % *Equity component of Purchase Price Breakdown represents total equity (new + rollover). Equity Contribution includes only new equity. Source: PitchBook. 1

39 Purchase price and equity contribution of middle market LBO loans Purchase Price Breakdown* Equity contribution 12.x 1.x 8.x 6.x 4.x 2.x.x Senior Debt/EBITDA Sub Debt/EBITDA Equity/EBITDA Others Equity Contribution 7.6x 7.5x 9.3x 8.5x 8.1x 8.3x 8.4x 8.2x 7.1x 6.9x 7.x 7.2x 6.7x 6.6x 7.3x 5.9x Q12 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % *Equity component of Purchase Price Breakdown represents total equity (new + rollover). Equity Contribution includes only new equity. Source: PitchBook. 1

40 Private equity fundraising in the U.S. 26 funds ($2bn) closed during 1Q 12 US$ billions 35 Capital raised (left) # of funds closed (right) 314 Number of funds Source: PitchBook.

41 New general partners (GPs) are entering the private equity Industry % 32% 32% Number of funds closed by year 29% 26% % Experienced GP First Time GP % of First Time GPs 3% 35% 3% 25% 2% 15% 1% 5% % Source: PitchBook.