Nordic Private Equity Summit Europe PE overview Sachin Date Private Equity Leader 20 June 2017
Europe market overview Stats at a glance Key Europe PE stats at a glance 2010 2011 2012 2013 2014 2015 2016 2017 YTD PE funds closed 185 180 197 213 218 225 214 65 Committed capital ($b) 58.6 70.4 93.3 120.5 132.7 124.4 161.8 38.3 Announced PE deals 859 895 867 841 895 746 658 250 Announced PE deal value ($b) 81.6 84.9 62.6 89.1 109.7 103.1 106.0 37.4 PE-backed M&A exits ($b) 78.5 80.3 59.8 82.0 104.9 100.9 106.4 42.0 PE-backed IPOs 9.9 3.0 1.4 15.2 28.2 28.8 15.8 3.7 Source: Preqin, Dealogic. YTD 2017 through June 2017
Fundraising remains strong for Europe-focused funds Record fundraising in 2016 second highest during the last 15 years Europe PE fund-raising by year (in US$b) Europe has seen straight years of successive increases in fundraising since 2010. Last year saw record US$162b raised by PE funds focused on the region. $180 $160 $140 $120 $100 $80 $60 $40 $20 400 350 300 250 200 150 100 50 Source: Preqn 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 0 Top 5 funds closed ytd 2017 Fund Firm Type Amount raised Close date AlpInvest Secondaries Fund VI AlpInvest Partners Secondaries 6.5 31-Mar-17 EQT Infrastructure III EQT Funds Management Infrastructure 4.2 23-Feb-17 HgCapital 8 HgCapital Buyout 3.1 15-Feb-17 EQT Mid Market Europe Orion European Real Estate Fund V EQT Buyout 1.8 30-May-17 Orion Capital Managers Real Estate 1.6 22-Mar-17 Source: Preqin
Dry powder is climbing At its highest point since 2010 Globally, the industry has US$1.5 trillion in capital available for deals 24% of this is focused on Europe. Global PE dry powder by region (in US$b) Europe US$368b US US$860b Asia-Pacific and the rest of world US$306b Source: Preqin European dry powder, All Private Equity by Europe Focus (in US$b) $400 $350 $300 $250 $200 $150 $100 $50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017 YTD Source: Preqin
Europe PE activity remains steady Deal value has remained steady during 2014-16; it has risen by 30% since 2010 Europe PE acquisitions by year (in US$b) PE acquisition activity continues to remain steady thought it has faced several volatile conditions such as BREXIT, Greek financial crisis, etc after the Great Recession. $300 $250 $200 Value (US$b) Volume 1400 1200 1000 While activity has yet to revisit the historic high of US$251b set in 2007, PE investments in 2016 climbed to US$106b (30% higher than in 2010), aided by positive economic fundamentals and significant amounts of dry powder. $150 $100 $50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 800 600 400 200 0 2017 has thus far seen US$37b in announced deals. Source: Dealogic Top 5 announced PE acquisitions In 2017 Company Value (Euro b) PE firm STADA Arzneimittel AG 5.2 Cinven-Bain consortium Sector Medical: Pharmaceuticals ENGIE E&P International S.A. (70% Stake) 4.7 Neptune Oil & Gas Limited Aon plc (benefits outsourcing division) 4.0 Blackstone Group LP Sponda Oyj 3.6 Blackstone Group LP Q-Park N.V. 3.0 Kohlberg Kravis Roberts & Co. L.P. Source: Mergermarket Energy Services (other) Real Estate Services (other)
Significance of secondary buyouts Secondaries dipped first time in last four years; PE firms were in exit mode while Strategics were competing aggressively for assets Value of Europe secondary buyouts by year (in US$b) Secondary activity remains high across Europe but has declined from 2015 when it was more than 40% of European PE deals. $60 $50 $40 $30 $20 $10 2010 2011 2012 2013 2014 2015 2016 2017 YTD Source: Dealogic Top 5 announced acquisitions In 2017 Company Value m) PE firm (acquiror) Cerba HealthCare SAS 1,800 Partners Group Holding AG; Public Sector Pension Investment Board PE firm (seller) PAI Partners SAS Zabka Polska sp. z o.o. 1296 CVC Capital Partners Limited Mid Europa Partners LLP ConvaTec Group PLC (19.95% Stake) 1170 Novo A/S Nordic Capital; Avista Capital Partners, LP Compania Logistica de Hidrocarburos CLH, S.A. (25% Stake) 1000 CVC Capital Partners Limited Ardian; Alberta Investment Management Corporation; Kutxabank S.A.; Abanca Corporacion Bancaria, S.A. Zenith Group Holdings Limited 879 Bridgepoint Advisers Limited HgCapital Source: Mergermarket
Valuations remain PE firms biggest challenge EBITDA multiples remain high Valuations trended higher in 2014, a result of an improved macro situation, a higher stock market, and corporates getting more involved in M&A. Valuations in 2017 were higher than last year especially in the middle market of $100-500m deals, usually the PE market domain. Multiples remain high for PE due to ever increasing dry powder and competition for good assets. Corporate M&A valuations declined during 2016 due to uncertainty because of BREXIT and other geopolitical factors. M&A multiples since 2000 (Enterprise value/ebitda of announced deals) $16 $14 $12 $10 $8 10,99 10,68 11,34 10,24 10,51 9,46 11,01 10,84 9,09 9,68 12,61 12,78 12,97 11,88 12,00 12,66 11,60 11,38 9,64 9,10 10,83 12,47 11,12 11,22 9,70 9,41 10,85 10,65 13,55 12,17 12,51 11,55 10,87 10,58 11,35 10,18 $6 $4 $2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD Total EV/EBITDA 100-500m (Middle Market) Source: Dealogic: includes 7,791 deals over the period with disclosed EV/Ebitda multiples for Europe-based targets Global Private Equity 2014 Trends and Stats
From PE houses to asset managers - PE firms continue to diversify Firms are expanding well beyond the traditional buyout model PE firms of all sizes continue to expand beyond the traditional buyout model into hedged strategies, credit, real estate, venture, and other asset classes. Capital Markets Among the drivers is the trend which has seen many LPs seek to rationalize their alternative investment portfolios and reduce the number of managers they back in order to streamline complexity and management fees paid to funds. Venture Advisory Private Equity Hedge Funds Infrastructure Fund-of-funds Real estate Distressed/ credit
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