2004 Gsm

ISBN# 1-893648-58-3 | THE PRIVATE EQUITY ANALYST GUIDE TO THE SECONDARY MARKET is published by the Alternative Investor, located at 888 Worcester Street, 3rd Floor, Wellesley, MA 02482.Cover price $595. Contact [email protected] >> COPYRIGHT © 2004 by Alternative Investor. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electron-ic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of Alternative Investor. Contents are based on information from sourcesbelieved to be reliable, but accuracy and completeness cannot be guaranteed. Alternative Investor, its officers, employees, or agents may hold positions in any of the securities mentioned herein.

The Private Equity Analyst Guide to the Secondary Market

2004 Edition

The Private Equity Analyst | Guide to the Secondary Market

EDITORIAL > Sree Vidya Bhaktavatsalam • Robert Dunn • Laura Kreutzer

PRODUCTION AND DESIGN > Tom Brady • Tuncel Gokcepinar • Tara M. Sapienza • Jodi Tsui

EDITOR > David M. Toll

DIRECTOR OF EDITORIAL SERVICES > Kenneth Andersen

PUBLISHER > Jim Beecher

San Francisco • Wellesley • London | Tel 781.304.1400 • Fax 781.304.1440 | www.AlternativeInvestor.Info


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I. ARTICLES

Secondary Market Begins Fulfilling High Expectations in 2003Sree Vidya Bhaktavatsalam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Secondary Prices: A Rising Tide | By Todd Konkel, CFA, Cogent Partners . . . . . . . . . . 8

The Secondary Market: Sellers Challenge Buyers to be More CreativeBy Brett A. Gordon and John M. Toomey Jr., HarbourVest Partners LLC. . . . . . . 12

Secondary Directs: How to Team with A WinnerBy Gretchen Knoell with Zachary Abrams, Lake Street Capital . . . . . . . . . . . . . . 16

The Anatomy of a Secondary Transaction: Issues for 2004 & BeyondBy Lawrence E. Penn III and A. Oliver Welsch-Lehmann,

The Camelot Group International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Making Money in Small Secondary TransactionsBy Chuck Stetson, David Parshall and Gunnar Fremuth,

Private Equity Investors, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

How to Select Secondary FundsBy Charles Soulignac, Fondinvest Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

II. SECONDARY MARKET TIMELINE | Fund-raising, deal volumne, 1990-2003 . . . 28-29

III. FIRM LISTINGS

Secondary Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Secondary-direct Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

IV. RANKINGS | Secondary Buyers by Assets Under Management . . . . . . . . . . . . . . . . . 65

V. INDEXES

by Firm Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

by Interests Sought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

by Contact Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

by Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

V. APPENDIX A

Top LPs in Secondary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Table of Contents

ers. In 2001 and 2002, the volume of secondary saleswas relatively weak partly because of sticker shock, assellers (especially those with younger fund interests tosell) balked at the low offers made by potential buyers.For their part, buyers were extremely picky about howmuch they would pay for fund interests, as the out-look for exits still looked extremely bleak.

But in 2003, “the gap between the price expecta-tions of the seller and the price point of the buyernarrowed,” says Principal Wilson S. Warren ofLexington Partners. Buyers were willing to pay morefor LBO fund portfolios, for example, in partbecause of an improving climate for exits, Mr.Warren says.

Managing Director Jay Pierrepont of PantheonVentures, the London and San Francisco-based sec-ondary buyer, says that in 2001 and 2002, many sell-ers had yet to go through writing down the values oftheir portfolios, and were alarmed at the steep discounts proposed by secondary buyers. Sellers alsohad a hard time promoting such sales to their boardsor shareholders, since they would almost immediate-ly result in large write-downs.

But now, after several quarters of gradual write-downs, the discounts are not as high, and sellers arepsychologically able to bring themselves to sell theirportfolios, Mr. Pierrepont says.

On the buy side, firms that have been amassingever-growing pools of capital in the last few years,were itching to put their money to work.

“There is a lot of demand from secondary buyers,especially as many have specific time limits to puttheir money to work,” says Lawrence E. Penn III, amanaging director at New York-based advisory firmThe Camelot Group International.

Deutsche Bank last year sold a roughly $500 mil-


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S econdary deal volume soared to recordheights last year, finally living up tothe lofty hopes that buyers had for it.

Banks and financial services companies drove thesales of limited partnership interests to new records in2003, as Deutsche Bank AG, UBS AG and others completed sales of fund portfolios that theystarted shopping around in the early 2000s. Banks—which accelerated their commitments to private equityin the late 1990s—strove to unload those assets tomeet capital reserve requirements and to reduce theirexposure to the volatility of the asset class.

Corporations continued to be active sellers of private equity portfolios, as they moved to cut invest-ment losses from venture-oriented investments madein the late 1990s and concentrate on their main-linebusinesses.

Pension funds, by and large, still sat on the fence,although we did see a handful of them start explor-ing options to dispose of problem investments.

All told, global secondary sales of fund interestsjumped to $4.6 billion last year, up from $1.9 billionthe previous year, according to statistics compiled bysecondary buyer Lexington Partners, New York. Lastyear’s tally dwarfed the $3 billion of secondary dealvolume in 2000— the previous record for secondarysales. (See timeline, pages 28-29.)

Meanwhile, secondary buyers stood ready to snapup assets with unprecedented amounts of cash attheir disposal: Over the last three years, secondarybuyers all over the world have collectively raisedmore than $10 billion.

Price Was RightWhy did we see so many secondary sales occur last

year? The price was right, according to secondary buy-

Secondary Market Begins FulfillingHigh Expectations in 2003By Sree Vidya Bhaktavatsalam, Editor

hold in reserve to guard against losses in their privateequity portfolios.

Also expected to sell interests this year is Germanbank Allianz AG, which has been looking to unloadthe private equity portfolio it inherited through theacquisition of Dresdner Bank.

lion portfolio of fund interests to Credit Suisse FirstBoston, New York. That portfolio was part of a nearly$3 billion portfolio that Deutsche Bank owned aspart of its acquisition of Bankers Trust in 1999,according to sources. Deutsche Bank continues tomanage limited partnership interests through itsthird-party funds of funds.

Deutsche Bank in late 2001 decided to scaledown its exposure to private equity in order toreduce volatility in its earnings statements, and tolower its cash reserve requirements.

In another large transaction last year, UBS sold astake in a $1.3 billion portfolio of fund interests toHarbourVest Partners LLC, Boston. The Swiss bankretained rights to a portion of the distributions fromthe portfolio of more than 50 LBO and venture capital funds. The portfolio’s estimated net assetvalue at the time of the sale was $750 million,according to one secondary buyer.

Such profit-sharing structures are likely tobecome more popular among sellers, especially thosethat want to reduce their exposure to the asset classbut still want to enjoy some upside from the improvingexit environment.

Surge of Deals to Continue

Secondary buyers expect 2004 to be anotherstrong year for secondary deal volume.

The year has already seen one large deal: AbbeyNational plc, one of London’s largest banks, inJanuary sold a portfolio to secondary firm CollerCapital, also of London. The estimated price tag onthe deal, which includes interests in 41 private equityfunds and 16 European companies, is $550 million.The bank in late 2002 decided to wind down its pri-vate equity portfolio, after a steep decline in its value.

A wave of consolidation among large banks isexpected to lead to deal flow this year. For example,the mergers between Bank One and J.P. MorganChase & Co., and between Bank of America andFleetBoston Financial Corp. are expected to resultin sizable sales. That’s in part because of regulatoryreasons. The federal government has raised the per-centage of capital that commercial banks have to

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Allianz AG

Allianz AG, which already has a sizable fund portfolio, acquired Dresdner Bank in 2002. As partof a plan to reorganize its private equity business,the bank plans to pare down the 4 billion euros($4.8 billion) Dresdner portfolio, sources say.

Bank of America/ FleetBoston

Financial Corp.

FleetBoston Financial Corp. has been exploringoptions to sell portions of its $3 billion portfoliosince 2002, after it suffered substantial losses inthe market downturn. After the merger with Bankof America, the combined $11 billion portfolioconsists of more than 800 partnership interests,and more than 600 LBO, mezzanine and venturecapital deals in North America, Europe, Asia andLatin America.

Connecticut State Retirement

& Trust Funds

The state is trying to sells roughly $450 millionworth of interests, in funds managed by Boston-based Triumph Capital. The founder and formerchairman of the firm has been sentenced to one yearin prison for improperly rewarding formerConnecticut state treasurer Paul Silvester in returnfor a commitment to a fund.

J.P. Morgan Chase & Co./BankOne

In part because of regulatory changes, J.P. MorganChase & Co. has been selling off portions of its$19 billion portfolio over the last five years.Thanks to the merger with BankOne, the com-bined entity is expected to go through with moresecondary sales: Together, the two banks managean estimated $25 billion in direct investments andfund investments.

Likely Sellers

are beginning to use the secondary market to prunetheir fund portfolios, and shed some problem invest-ments. Connecticut State Retirement & TrustFunds, Pennsylvania State Employees’ RetirementSystem, Philadelphia City Board of Pensions andInvestments and other investors recently sold theirinterests in a fund managed by Keystone VentureCapital Management Co.—a venture firm whoseformer general partner is being investigated for pos-sible securities fraud.

Meanwhile, Connecticut State Retirement &Trust Funds continues to try to sell its interests infunds managed by Boston-based Triumph Capital,whose founder and former chairman faces a one-yearprison sentence for improperly rewarding formerConnecticut state treasurer Paul Silvester in returnfor a commitment to a fund.

“We are seeing a slow trickle of interest from pension funds that are looking to rebalance theirportfolios by using the secondary market,” saysPantheon’s Mr. Pierrepont.

But for the secondary market to continue to growin the years to come, pension funds will have to showmore than a trickle of interest in the secondary market; it will have to be more like a flood.

About the author: Sree Vidya Bhaktavatsalam is an associateeditor with The Private Equity Analyst. Her responsibilitiesinclude covering the primary and secondary fund-raising markets, and secondary sales. Reach her at [email protected]

History has shown that secondary deal volumetends to show an uptick in the years following a surgein primary fund-raising. In the late 1980s, for exam-ple, a small bubble in fund-raising was followed by anoticeable increase in secondary sales. That’s because1.5 percent to 3 percent of all primary partnershipcommitments get traded on the secondary market,according to various estimates by secondary buyers.

Indeed, over the next two or three years, second-ary buyers say that the sale of fund interests promisesto be strong, given the phenomenal swell of primary fund-raising from 1999 to 2001. ManagingPartner Brent R. Nicklas of Lexington Partners antic-ipates that the fund-raising inventory from the bub-ble years should keep secondary buyers busy until atleast 2006.

“We’re still feeding off of the crest of the fund-raising wave,” he says, pointing to the nearly $400billion that was raised by private equity firms duringthat time period.

Who Will Drive Future Growth?The question remains what will fuel the growth of

the secondary market after secondary buyers finishfeeding off that crest, especially as primary fund-rais-ing volume has sharply fallen over the last two years.

For secondary firms, there is no doubt about theanswer: The biggest single group of limited part-ners—public pension funds—will need to startbecoming large sellers of fund interests.

There are some signs that public pension funds

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8

T he secondary market for privateequity has traditionally been abuyers’ market—one where a

small number of specialized buyers wereable to take advantage of seller motivationsand market opacity to acquire partnershipinterests at attractive prices.

Secondary funds have typically achieved historicreturns near 25 percent, well above the 13.4 percentaverage 10-year returns for all private equity. A num-ber of forces, including greater pricing transparencybrought by market intermediaries, increased compe-tition among secondary specialists, the entry of non-traditional secondary buyers and the use of leveragedstructures, are reshaping the secondary marketplace.These demand-side factors, combined with improv-ing market conditions, spell continued strengtheningof secondary transaction prices in 2004.

Secondary Buyers: New Faces at the Table

The most fundamental force driving the increasein secondary transaction prices is the explosivegrowth in the number and size of pools of secondarycapital. According to data from The Private EquityAnalyst, dedicated secondary firms have raised nearly$18 billion in capital in the past five years, three timesthe cumulative $6 billion raised in all previous years.Even these dramatic numbers grossly underestimatethe growth in capital seeking secondary transactions.Sophisticated private equity investors, attracted bythe returns generated by secondaries in the past, havebillions more available for potential deals.

Traditional fund-of-funds managers have enteredthe secondary market with a splash. Driven by therelatively quiet fund-raising environment of the past

few years, funds-of-funds managers with capital toinvest turned to the secondary market, buildingexpertise once held exclusively by dedicated special-ists. As a result of their success in the market, manyfund-of-funds managers are spending more timeseeking and negotiating secondary transactions. Forexample, HarbourVest Partners LLC, Boston, one ofthe largest fund-of-funds managers, invested $900million in secondary deals in 2003, up from $100million in 2001.

Endowments, foundations and pensions, bothdomestic and foreign, have also entered the market,affecting pricing by injecting additional demand andreducing the underwriting rates for transactions.Compared to both dedicated secondary firms andtraditional funds-of-funds managers, which mustconsider their own layer of fees and carried interestwhen projecting net returns to investors, non-tradi-tional buyers have a lower cost of capital. With lowerunderwriting rates, these new market participantscan outbid specialists in competitive situations. Ofnote is the widening range of transaction types thatnon-traditional secondary buyers are willing to pur-sue. Investors are no longer content to participateonly in transactions involving single limited partner-ship interests, and they are looking beyond dealssourced from general partners and limited partners.Last year, several multi-hundred million dollar port-folios, once the sole domain of secondary specialists,were purchased by non-traditional secondary buyers.

Reinforcing the effect of the increasing numberof secondary buyers is the continued presence of significant pools of capital managed by dedicatedsecondary firms. A number of secondary specialists,such as Coller Capital, London, and LexingtonPartners, New York, have large amounts of uncalled

Secondary Prices:A Rising TideBy Todd Konkel, CFA, Cogent Partners

capital to put to work in 2004 and 2005. In July2003, for example, Lexington Partners closed on $2billion in capital for its most recent secondary fund,Lexington Capital Partners V, L.P. Also, secondarybuyers who have exhausted their latest funds are likely to come back to the market to raise additionalcapital later this year. Goldman Sachs & Co., whichhas fully invested its $1.1 billion GS Vintage II sec-ondary fund, has indicated plans to raise nearly $1billion for its third secondary fund.

number of investors more bullish on the outlook fortheir private equity investments. For some institu-tional investors, the growth of public indices provideshope that general partners will be able to exit theirinvestments at favorable valuations. Similarly, recentincreases in venture-backed IPO and M&A activityhave encouraged venture investors. They believe thatthe opportunity for near-term liquidity may beimproving. Market indicators helping to drive thebullish outlook include the following:

• From October 9, 2002 through March 31,2004, the Nasdaq composite rose 79 percent, andthe Dow Jones Industrial Average rose more than 42percent.

• In the fourth quarter of 2003, venture-backedmerger and acquisition valuations (for deals with dis-closed values) were 29 percent higher than the averagedeal value for the same period a year ago (NVCA).

• In the fourth quarter 2003, there were 17 venture-backed IPOs in the U.S., equaling the com-bined total from the previous five quarters (NVCA).

• Similarly, in the fourth quarter 2003, therewere 14 buyout-backed IPOs in the U.S., equalingthe combined total from the previous four quarters(NVCA).

A recent statement by Mark Heeson, president ofthe National Venture Capital Association, echoes thesentiments of many venture fund investors: “Risingvaluations represent good news, as such a trend willsupport stronger private equity performance.” As aresult of this improved market outlook among insti-tutional investors, many potential sellers areapproaching the secondary market with elevatedpricing expectations.

Increased Distributions and Market Visibility

Both venture capital and buyout firms are gener-ating increased distributions after a long period ofrelatively little activity. Continued low interest rateshave allowed many buyout firms to recapitalizeinvestments and take money off the table. Accordingto Credit Suisse First Boston, private equity firmshave withdrawn more than $10 billion from their

9


Coller International Partners IV $2,600 Closed

Lexington Capital Partners V $2,000 Closed

CSFB Strategic Partners II $1,600 Closed

GS Vintage III $1,000 Planned

Paul Capital Partners VIII $800 Raising

Landmark Equity Partners XI $750 Raising

Pantheon Global Secondary Fund II $600 Raising

Auda Secondary Fund $400 Raising

TIFF Secondary Partners I $150 Closed

Recent Dedicated Secondary FundsFund Size ($M) Status

Leveraging the ReturnAs a result of competitive buy-side pressures,

many dedicated secondary buyers have been forced tolower their underwriting rates on secondary transac-tions. To maintain their projected fund returns andmitigate the impact of declining underwriting rates,secondary specialists are turning to leverage andstructured transactions. Structure and leverage bothenable secondary firms to compete more effectivelywith the new market entrants by achieving targetreturns and by solving complex issues that a sellermay face. However, the increase in leverage impliesthat these buyers are putting less equity capital towork in each deal, thus adding to the amount of equi-ty capital available for future secondary transactions.

Market RecoveryA number of market forces are also driving

increased prices in the secondary market. First, recentimprovements in the public markets have made a

Source: The Private Equity Analyst

price a buyer is willing to pay.Through the first quarter of 2003, large take-

downs by private equity funds, coupled withdepressed levels of distributions, placed a significantliquidity strain on many investors. As a result, limitedpartners with short-term liquidity needs were oftenwilling to sell their fund interests at sharp discountsin order to alleviate their cash flow strain and toavoid the obligations posed by future capital calls.

Beyond LiquidityRecent distributions from private equity partner-

ships, combined with public market gains, have less-ened pressure on investors to seek secondary sales for

investments over the past 13 months through specialdividends financed by selling junk bonds and issuingbank loans. Further, financial sponsors eager todeploy capital before the expiration of their invest-ment periods have led to increased sales of buyoutinvestments from one private equity fund to anoth-er. Meanwhile, venture firms have had increased success generating exits resulting from IPOs and venture-backed M&A activity.

The increased distributions by GPs give second-ary buyers improved visibility and confidence in theultimate performance of a potential fund invest-ment. As with any investment, a reduction in riskimproves the risk-adjusted return and increases the

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100

120

140

160

180

200

10/9/02 4/9/03 6/9/03 8/9/03 10/9/03 12/9/03

NasdaqDJIA

Nasdaq 100 = 1114.11DJIA 100 = 7286.27

Source: Cogent Partners

12/9/02 2/9/03 2/9/04 3/31/04

0

10

20

30

40

50

Buyout-Backed IPOsVenture-Backed IPOs

Total IPOs

Q302 Q402 Q103 Q203 Q303 Q403 Q104

2 17 7

4

26

1 1 32

0 5 69

19

1417

48

Source: NVCA

38

13 13

As Public Equity Markets Begin to Recover...

...The IPO Window Begins to Open

generally more reluctant to sell fund interests at a loss.Unburdened by short-term liquidity constraints,investors can selectively sell only those assets that gar-ner superior pricing in the market.

Down to Earth?The confluence of several simultaneous trends,

including demand-side forces and market dynamics,is transforming the private equity secondary market.From an ever-expanding buyer base to sellers withheightened pricing expectations, secondary transac-tion prices are being pushed upward. Secondary buy-ers who benefited from market conditions in previ-ous years may soon see the attractive prices andheady returns they have enjoyed for so long becomea thing of the past.

About the author: Todd Konkel is a vice president at CogentPartners, L.P., where he has managed secondary advisoryengagements and currently leads Cogent’s private equityresearch efforts. He is a CFA Charterholder. Reach him [email protected].

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0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

$16.0BContributionsDistributions

Q302 Q402 Q103 Q203 Q303

$10.5

$13.4

$3.2 $3.7

$7.7$6.6

$8.7

$6.0 $6.3 $6.9

Source: NVCA

U.S. Private Equity FundContributions and Distributions

liquidity reasons alone. Today, an increasing numberof institutional investors are using secondary transac-tions as a portfolio management tool. Investors maylook to secondary transactions as a means to trim theirportfolios back in order to focus on core general part-ner relationships or to manage asset allocation. Sellerswho use secondaries for such strategic purposes are


12

F or one of the first times in the histo-ry of the secondary market, thebreadth and depth of buyers provides

sellers with the opportunity to do more thansimply maximize price. As demonstrated bya number of recent transactions, a seller whothinks strategically can use a secondary saleto provide a solution to cash flow, earningsvolatility, and other challenges while stillenjoying the benefits of active participationin the private equity market.

Historical PerspectiveToday’s burgeoning secondary market is the

result of the tremendous inflow of capital to theprivate equity asset class in the late 1990s. The sec-ondary market of the late 1980s and the early1990s was simple: Sellers sold by necessity and alimited number of buyers bought. This may be anover-simplification, but surprisingly it is not farfrom the truth.

During the early days of the private equity sec-ondary market, sellers sold assets to generate liquidi-ty, to reduce funding obligations, to rebalance theirprivate and public equity portfolios, to divest assetsfrom underperforming managers, or to exit the assetclass entirely. Given that the private equity asset classwas considered highly illiquid, anyone interested inselling was branded distressed, and the prices offeredreflected this. With these motivations and a limitednumber of buyers, sellers quickly accepted the bestoffer available, and a cottage industry—private equitysecondaries—was created.

Like most good things, secondary buyers’ abilityto complete deals without attracting attention came

to an end. What caused this change? Too manyinvestors chasing Internet dreams…

The Secondary Market: SellersChallenge Buyers to be More Creative By Brett A. Gordon and John M. Toomey Jr., HarbourVest Partners LLC

U.S.Europe

$4.9$4.9

$9.3

$25.5

$23.7

$23.3

$45.2

0

50

100

150

200

$250B

1991 1992 1996 1997 1998 1999 2000$8.3 $16.4

$42.6$60.3

$94.9$114.2

$181.9

Source: Venture Economics, EVCA and NVCA

U.S. and European Private Equity Raised ($B)

Investors poured money into private equity dur-ing the late 1990s as everyone was hoping to benefitfrom the roaring public markets. After the bubbleburst in April 2000, many investors found them-selves unable or unwilling to honor their fundingcommitments to private equity funds.

Credit the bubble!The secondary market saw unprecedented deal

flow of over $10 billion per year in 2000, 2001, and2002, and this enormous increase attracted attention.New buyers with deep pockets entered the fray in2002 and 2003, and the secondary market was thrustto the forefront of the private equity asset class.Pundits believed that this was a short-term phenome-non, and that once the secondary industry digested thecapital overflow, it would return to its days of being a

cottage industry. However, buyers were not the onlyones to take notice. Potential sellers did as well.

The selling spree of the past few years has provento investors that private equity is no longer an illiq-uid investment. With this knowledge, new sellershave emerged, seeking alternative means to generateliquidity instead of simply holding their private equity assets until maturity.

A new breed of sellers

Sellers sensing opportunities sought to dispose ofall types of assets and portfolios: fully funded limitedpartnership interests, largely unfunded commitments,single assets, multiple assets, portfolios of direct deals,economic interests, and others to name a few. Notonly did the assets available for sale change, but theobjectives associated with a sale changed as well.

Obtaining the best price, achieving liquidity, andreducing exposure were admirable goals but theywere no longer enough for sellers. Publicly-tradedentities wanted to reduce the earnings volatilitycaused by these assets, but they wanted to somehowremain investors in the asset class and maintain relationships with the general partners. Other sellerswanted to rid themselves of their investments butwanted to participate in any potential upside asinsurance against an untimely sale. Large organiza-tions looked to sell assets and shut down internalpartnership and direct investment programs, butthey also wanted to ensure that any sale included asolution for existing employees.

With these new goals in mind, “cash at close” isno longer king. Sellers today are smarter, more strategic, and target numerous objectives as part ofany sale process. How can a seller of an illiquid assethave such lofty expectations?

An extraordinary amount of capital competingfor deal flow affords sellers the opportunity to satisfynumerous objectives as part of a sales process. For thetraditional secondary buyer, even more discouragingis that sophisticated sellers are finding ways to enticenew and non-traditional entrants into the market,creating opportunities for new types of buyers andnew types of transactions.

How do buyers compete?Buyers have become creative to remain competi-

tive—pledging to be value added limited partners,leveraging general partner relationships, and employ-ing innovative structures. They have also begun tospecialize within geography, asset type, industry, andtransaction size. Such specialization has helped insome instances, but it really has not allowed buyers todifferentiate themselves. Even the smallest of nicheshas a number of specialists and generalist firms competing for transactions.

In fact, competition for deals has only becomefiercer as traditional buyers, focused solely on eco-nomic returns, are now being forced to contend withnew entrants that have additional, non-economicmotives. For example, institutional investors willenter the secondary market and pay above marketprices for assets managed by top-tier managers, withthe goal of obtaining an allocation in the manager’snew and oversubscribed fund by becoming aninvestor in a prior fund.

Only time will tell if creativity and specializationare helping buyers stand out in such a competitivemarket. One thing is clear: Sellers are the greatestbeneficiary of the competitive nature of buyers.

So is this a good time to sell?With so much capital raised and the huge num-

ber of buyers competing for deals, sophisticated

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0

1.0

2.0

3.0

4.0

$5.0B

$0.0

51

$0.1

$0.8

66

$0.9

7

$1.0

18

$0.7

53

$0.4

24

$2.4

24

$1.6

47

$2.3

48$4

.436

$3.4

32

$2.9

99

$0.1

11

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03Source: The Private Equity Analyst

Global Secondary Capital Raised ($B)

nies. Institutional investors rely on HarbourVest fordiversification across all segments of the private equity asset class—venture capital, buyout, and mezzanine investments around the globe.

In 2003, HarbourVest completed a number ofsecondary transactions. The two most notable ofthese were co-leading a €1.6 billion management buyout of a direct investment portfolio and completinga structured transaction in which HarbourVestentered into a joint venture to purchase a portfolio ofpartnership investments representing $1.3 billion oforiginal commitments. Today, HarbourVest has over$2.0 billion available to acquire secondary positionsin private equity assets worldwide.

About the authors: Brett A. Gordon joined HarbourVest in1998, after serving as vice president of The Princeton Review ofBoston. Mr. Toomey joined the firm in 1997 after spending twoyears as an analyst at Smith Barney. For further information,please contact Brett Gordon at [email protected] or JohnToomey at [email protected].

sellers are forcing buyers to compete aggressively fortransactions. This rivalry allows sellers to satisfynumerous, diverse, and, some would argue, improb-able objectives.

For buyers, evolving demands of sellers may seemtroublesome at first, especially as new entrants con-tinue to infiltrate the market. However, buyers thatare willing to be creative and develop in-house sec-ondary expertise should also fare well in a more com-petitive and more complex secondary market.

HarbourVest a Big Player

In 1982, the HarbourVest Partners LLC teampioneered the formation of one of the first privateequity fund-of-funds. Over the past two decades, ourprofessionals have committed $4.9 billion to U.S.partnerships and $3.8 billion to non-U.S. partner-ships. We have also completed over $2.1 billion inpurchases of secondary partnership interests andinvested $2.0 billion directly into operating compa-

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16

O ne of the emerging segments ofthe secondary market, yet to befully mined, is secondary directs.

Unlike most secondary buyers, which acquireinterest in limited partnerships, secondary-directbuyers acquire interests directly in privately heldcompanies. They then pursue opportunities, justlike traditional venture capitalists, to generate liq-uidity. Our view is that secondary directs are thehidden gems of the secondary market, provided youhave the right manager. So how do you find theright manager? We recommend identifying one thatpossesses the combination of skills and relation-ships necessary to be successful in this specialty.

Choose a LeaderAs in the greater venture and buyout markets,

secondary-direct managers with leading brand-names have a distinct advantage over the multitudeof alternatives.

One of these advantages is credibility with thesellers and managers of the underlying portfoliocompanies. Imagine you are the treasurer of aFortune 500 company and you intend to sell yourCEO on the idea of divesting a substantial portfolioof assets. The process is expected to take three to sixmonths, cost $200,000 or more in legal bills, andpotentially impact your relationship with a largenumber of companies, some of which may be yourcustomers, suppliers or partners.

Naturally, you most likely want to tell the CEOthat the potential acquirer is one of the top second-ary-direct firms focused on the market, that the firmhas executed several transactions in the past withcompanies similar to yours (and have good referencesto show for it), and that the firm has a reputation for

sticking to its original bid and closing within a rea-sonable timeframe. In addition, you would recognizethat a secondary-direct manager needs the portfoliocompany managers to be open and honest regardingtheir underlying business strength, financing require-ments and future expectations. If the portfolio com-pany managers sees the buyer as a potential source offuture capital, that presents an additional incentiveto be forthcoming.

What makes a firm credible? The secondary-direct manager must have a track

record of success in buying, selling and restructuringcompanies. The seller is looking for discretion, cer-tainty of closure, and a positive experience for itsportfolio companies.

Indeed, quite often the seller is not exiting theventure business entirely, but rather selling some ofits non-strategic assets. A seller does not want to beperceived as selling cheap, and missing the up-side. Many sellers also are trying to reduce their administrative burden, as well as manage their tax write-offs.

To this end, certainty of closure within a specifictime frame is paramount. Because most sellers con-duct an auction, they need some assurance that thechosen bidder will hold to their terms and close in atimely manner. A secondary-direct firm’s reputationfor sticking to its terms weighs into the seller’sprocess and is often more important than price.Further, sellers prefer that the transfer be minimallydisruptive to themselves and their portfolio compa-nies. It is also attractive if sellers can convey a posi-tive message to their portfolio companies by sellingto a buyer who can provide follow-on capital andstrategic advice.

Secondary Directs: How to Team with A WinnerBy Gretchen Knoell with Zachary Abrams, Lake Street Capital

Relationships Have ValueThe best secondary-direct firms tend to have

strong relationships with potential sellers that canonly be achieved over time. The decision to sell tendsto be made slowly, as there are often substantial polit-ical considerations.

Sellers, not only corporations and banks but alsoventure capitalists selling the tail end of a fund, tendto have a lengthy internal process leading up to thedecision to sell. They often solicit feedback and getto know buyers during this process. So while itappears to be a wide-open process based upon well-established criteria, it is often the case that one of thebidders is actually the preferred buyer.

Our firm, Lake Street Capital, recently acquired aportfolio from a large technology company thatwanted to complete the deal (initial bids to closing)in four weeks so that it could recognize the tax benefits before the end of its fiscal year. The companyinitially solicited bids from five players but settled onthe firm that had the highest probability of sticking to its terms and closing on time, eventhough it was a materially lower bid. As with anyother segment of private equity, access to proprietarydeal flow is a competitive advantage. This is just oneexample of the power of relationships and trust.

Technology Vision, M&A Skills HelpOne of the primary attributes of a successful

venture capitalist is vision—the ability to deter-mine which technologies will become prevalent andwhich companies have the competitive advantagesin these technologies. Those of a successful buyoutfund manager include an understanding of complexfinancial engineering, the ability to negotiate theright price, and a willingness to walk away from thedeal due to terms. In order to be successful in thesecondary-direct market, a firm must combine allof these attributes.

Venture capitalists are charged with seeking outthe best companies and making a strong pitch to bethe one providing the financing. In the secondary-direct environment, buyers are provided with a fixedpool of assets and they must make an assessment as

to the following things: 1) the underlying potentialof the companies and the timing of future liquidityevents, 2) the value of the investments to the sellerand perhaps to other investors (because of the rightsof first refusal that often accompany the invest-ments), and 3) which companies will generate thebest returns from additional invested capital.

It is absolutely critical for a secondary-directbuyer to understand value creation and liquidityoptions. During the purchase process, the bidderneeds to understand existing value as well as theopportunity to create value through strategic adviceand follow-on investments. This is not about applyingarbitrary discounts to net asset values. The bidder needs toprioritize the companies in the portfolio for sale, conduct meaningful due diligence,and estimate potential exit valuations. This is partic-ularly complex given the numbers of companiesacross multiple industries in a typical portfolio.Understanding the potential for an exit and possess-ing the skills to help the portfolio companies achievetheir exits are critical.

After the deal is completed, disciplined, strategi-cally placed follow-on investments help drivereturns. The secondary-direct firm must be verycareful when determining whether to increase itsfinancial commitment. A typical fund must reserveone to two times the purchase price for follow-oninvestments. The manager can not fall in love witha technology or company. Rather, there needs to bea disciplined and methodical approach to making follow-on investments.

While the typical venture capitalist, and particu-larly the buyout professional, prefers taking large controlling positions in fewer companies, secondary-direct managers must be comfortable managing alarge portfolio with small minority stakes. Venturecapitalists traditionally play an active role in companystrategy and management, often taking seats on theboard. The typical corporate investor does not haveboard seats but instead has board observation rights.It is critical for secondary-direct buyers to prioritizethe companies where they can add value, and worktoward having influence with other investors and

17


months down the road. Our goal is to maximizeinternal rate of return through early liquidity.

If You Want to Invest, Then CommitThere are numerous business models and financial

structures floating around in the secondary-directmarket. These range from firms with establishedfunds to individuals or groups seeking financing ona deal-by-deal basis to individuals acting as brokersand approaching sellers without financing in place.It is our belief that institutional investors that wishto gain exposure to the secondary market are bestserved by committing capital to one or more funds.

The reasons for this are simple. A buyer with afund in place and capital to close will win over thosewho need to create and fund an entity to acquire aportfolio. As can be seen in any deal business, timingis critical and the ability to get a deal done quickly isoften valued over the higher price.

In addition, the time required to complete duediligence and negotiate terms of the financingpackage enables other buyers to compete for the

transaction and presents a level of uncertainty thatmakes many sellers uncomfortable. Another consideration is that the best deals may be too smallto justify a standalone investment entity in terms offees and overhead. This has the potential to create aconflict between the manager’s desire to pay the low-est price and his or her ability to garner the financing.

For these reasons, we believe the trend toward themost attractive deals going to well established man-agers with dedicated capital pools will continue asthe secondary- directs market grows and matures.

About the authors: Gretchen Knoell and Zachary Abrams arefounding partners of Lake Street Capital, one of the leading fundsfocused on the secondary direct market, funded by institutionalinvestors including Pantheon Ventures and Pomona Capital.Contacts can be reached at [email protected],[email protected], [email protected] [email protected].

with entrepreneurs. Consistent with traditional portfolio manage-

ment theory, there is an advantage to having morecompanies in the portfolio. It increases the probabilityof exits, and diversification helps to eliminate uniquerisk. In addition, the secondary-direct buyer is managing the portfolio for liquidity.

In this regard, not only do buyers need to under-stand complex term sheets, investor rights, and liquidity preferences, but they also need to havestrong negotiation skills in order to protect theirposition. In today’s financing environment of cram-down rounds, complex bridge loans, andrecapitalizations, investors’ interests are often notaligned; the early investor with a large ownershipstake has a different agenda than the recent investorwith high-preference dollars. Typically, it is impossi-ble to carry all the preference dollars forward, so thatinvestors with the most dollars invested are at oddswith those with the highest ownership positions.The secondary-direct buyer needs to understandwho holds what blocking rights and then use thoserights to maximize return. While industry knowl-edge is important, a proven track record in financialstructuring and liquidity creation is crucial. It is alsoimportant to align with other investors to gain thenecessary leverage to protect your position—sort ofa venture capital version of “Survivor.”

With respect to liquidity events, the secondary-direct buyer must be a dispassionate investor with arealistic view of acceptable returns. Recently, sever-al of our portfolio companies have received acquisi-tion offers from private companies where we hadthe option to either take our pro rata of cash on thebalance sheet or roll our investment into the newcompany. While these offers may involve a relative-ly modest return by venture capital standards (per-haps two to three times the invested capital), therelative impact to the portfolio on an internal rateof return basis is important to consider. We oftentake the cash today versus a potential exit 18 to 24

18



20

A ctivity in the secondary market hasreached unprecedented levels andthe recent growth rates show no

signs of slowing. New participants enter themarket on a daily basis and fund-raising, aswell as deal flow levels, are white-hot. Notonly has the secondary market establisheditself as a permanent fixture within the alternative asset segment, but participationappears to be virtually a must for all institu-tional investors, due to the clearly favorablereturns vis-à-vis primary market invest-ments. Accordingly, the secondary market—especially in the United States—is becomingmore competitive and efficient, clearly bene-fiting from the increasing involvement ofqualified specialty advisors.

Overview of the Market Over the past 20 years, private equity has been

one of the fastest-growing segments of the financialmarket. Private equity firms have raised recordamounts of capital from wealthy and institutionalinvestors. Throughout the 1990s, such investorsincreased their investment allocations to the alterna-tive asset classes, including private equity. A key partof that expansion was the unprecedented growth ofthe secondary market in private equity.

Recently, many investors have surpassed theirallocation targets in light of dramatically reduced val-uations and lack of exit opportunities. With littlecapacity for new commitments, many investors havebecome far more selective, which has created atougher fund-raising market for private equity firms.

Transaction volume in the secondary market has

increased consistently during the previous five yearsfrom approximately $1.5 billion in 1998 to a record$4.6 billion in 2003. The main factors fueling thisgrowth include the following:

• the slowdown in distributions from ventureand buyout funds;

• the desire on the part of limited partners tomanage portfolios more actively;

• the desire on the part of the investor to man-age general partner relationships more actively;

• the changing legal, tax and regulatory frame-work in different jurisdictions;

• mergers and acquisitions by institutionalinvestors, corporations and fund sponsors; and

• the changing needs of wealthy investors.Compared to primary private equity investments,

secondary market transactions usually offer strik-ingly favorable return propositions to prospectivebuyers, and generally yield key strategic advantagessuch as greater portfolio transparency and maturity.As a result, record amounts of dedicated secondarycapital have been raised over the previous four years.Currently, the total amount of dedicated secondarycapital exceeds $17 billion, and new participantscontinue to enter the market. Key to increased dealflow in the secondary market has recently been thesignificantly reduced average age of partnershipinterests sold. While the average age of limited part-nership interests sold exceeded seven years in 1998,recent transactions included an increasing number ofyounger funds, averaging three to four years old, during the first half of 2003. As far as average dealsizes are concerned, transactions recently tend to besmaller due to the considerably increased activity bywealth investors, endowments and foundations.Nevertheless, top-quartile deal sizes continue to aver-

The Anatomy of a SecondaryTransaction: Issues for 2004 & BeyondBy Lawrence E. Penn III with A. Oliver Welsch-Lehmann, The Camelot Group International

age over $250 million, which is not expected tochange near term.

Pressure on PensionsDespite the increasing growth of the secondary

market, and the steady growth in the number ofcompleted transactions across virtually all significantinvestor groups, including institutional investors,corporations, foundations and general partners, oneinvestor group has been largely absent from the secondary market to date despite their present pre-carious conditions.

That group is the 123 public pension systems inthe United States. As of August 2003, public pensionsystems in the United States are underfunded bymore than $180 billion (in total, the underfundingby public and private pension systems in the UnitedStates exceeds $300 billion, far exceeding theresources of the Pension Benefit GuaranteeCorporation). As a result of the combination ofincreased allocations to alternative investments, inconjunction with the challenging conditions in thepublic and private equity markets over the previousthree years, losses faced by U.S. pension systemsexceed billions of dollars.

In the aggregate, U.S. public pension assetsshrank 6 percent in 2002, while liabilities grew bymore than 10 percent. As a result, many pension systems significantly exceeded their allocations toalternative assets, including private equity. In view ofrising liquidity needs associated with increasing pen-sion pay-outs, many pension systems currently face adangerous dilemma, which is the need to activelymanage their private equity portfolios despite theinherent characteristics of the asset class--its longmaturities and lack of liquidity. In order to return totargeted allocation levels and achieve liquidity quick-ly, these pension systems have recently evaluated thepossibility of a transaction in the secondary marketfor private equity.

Challenges that pension fund managers need toovercome frequently include valuation misconcep-tions, as well as the lack of awareness of viable struc-turing options. Since the discontinuation of new

investments is generally insufficient to ensure areturn to allocation targets, a managed sale of privateequity interests in the secondary market under theprofessional guidance of a qualified secondary advi-sor is increasingly understood to be the sole viableoption for over-allocated public pension systems inthe United States.

Benefits of An AdvisorAdvisors help overcome major obstacles such as

frequently high seller reluctance in view of pricinguncertainties and lack of awareness relative to theoptimal transaction structure and management.Established players as well as new entrants know thatthe transfers of limited partnership interests as well asportfolios of direct company interests can be a time-consuming process that often requires complexstructures given widely-varying legal, tax, and regula-tory environments. Not unlike corporate M&Atransactions, most secondary sellers are unfamiliarwith the process, since secondary transactions occurinfrequently and the required up-to-date expertise ofthe market conditions and participants is not alwaysavailable in-house. Potential sellers often cite the lackof resources to allocate to the process, as well as theneed for confidentiality and the growing concern ofthe “embarrassment factor” inherent in a sale belowthe fair market value.

Qualified advisors facilitate transactions by providing a degree of standardization and consis-tency to transaction management. They address themarket’s need for a more formal and systematicmechanism for the exchange of limited partnershipinterests and portfolios of direct company interests.Their consistent methods of portfolio assessmentand valuation are as much of interest as are their professional and timely transaction execution.

Anatomy of a TransactionSecondary market advisory specialist firms man-

age all aspects of the secondary sale process and helpaccomplish widely varying investor objectives. Theseinclude the realization of fair value for investments,as well as the timely and professional completion of

21


aged auction” to ensure best value for the selling client.This phase generally comprises three to four weeks.

Transaction management and execution: Uponcompletion of the determination of the optimaltransaction structure, the completion of the relevanttransaction due diligence and completion of a con-cise offering memorandum, advisors guide the saleprocess through the creation of the relevant legalagreements, such as purchase and transfer agree-ments. Agreements can generally be drafted withoutoutside legal counsel. To ensure efficient and timelyexecution, top advisors provide detailed guidance onall important required steps to execute the transfer.These include determination of the salient transferconditions, including co-investor rights and consentsand the receipt thereof.

About the author: Lawrence E. Penn III is Managing Directorand Head of the Secondaries Practice at The Camelot GroupInternational. He can be contacted on (212) 332-7166 or [email protected]

a transaction in a highly confidential manner. Thetransaction management is generally divided in threedistinct phases—transaction origination, structuring,and execution.

Transaction origination: During this stage, advi-sors evaluate the specifics of the investor situationand motivation and determine the feasibility of atransaction. Here, it is important to analyze the specific objectives of the investor, and to provide up-to-date information relative to current marketconditions and recent realizations in the respectivesegment of the private equity industry.

Transaction structuring: In the structuring phase,good advisors determine the most efficient transactionstructure within the respective legal, tax, and regulato-ry environment and create an appropriate divestiturestrategy with specific milestones and targets.Subsequently, advisors reach out to a salient group ofhighly motivated buyers, picked in conjunction withthe seller, typically from a database of active purchasersaround the world. Advisors usually organize a “man-

22



24

R ecently, several sellers of small portfolios of private equity fundinterests told us they could not get

the attention of many traditional secondary buyers. It seemed that these deals were simply not worth their while. We believe thisis a function of the changing landscape ofthe secondary market. Small portfolios,which, today, we consider to be less than $25 million in net asset value or under $15 mil-lion in purchase price, have been eschewedin favor of the large secondary sales by banksand corporate investors.

What has changed? The large secondary sales by Abbey National, J.P.

Morgan Chase & Co., Lucent Technologies,NatWest and others have been one of the reasonsbehind secondary fund managers raising substantially

larger funds than in the past, including two dedicatedsecondary funds at $2 billion or more in commit-ments. In the three years from 2001 to 2003, nearly95% of the total $10.6 billion raised by secondaryfirms went to funds that raised more than $500 million, or an average of $1.1 billion per fund.

Large transactions, by their nature, can be all-con-suming. Since a large sale has such an impact on thebottom line of the seller, more and more of these bigdeals are becoming highly complex structured transac-tions. As a result, buyers must spend significantlymore time and resources on the business and legalaspects of the deal. In some cases, staff has been dedi-cated to a single transaction for many months, even ayear or more. Buyers, however, feel that the opportu-nity to purchase a large portfolio is commensuratelyrewarding and justifies their focus on these deals.

The changes in the size of secondary funds andcomplexity of large transactions have greatly impactedsmall transactions as they become less and less interest-ing to the large secondary funds. We are finding thatmany of the biggest firms, which in the past hadbeen interested in small transactions, are now lessinvolved in this area. Thus, sellers of small portfolioswho want to have a high level of service need to con-sider a buyer that will provide senior level attentionto their transaction.

What has stayed the same? Several secondary funds are now focusing and

have always primarily focused on small secondarytransations. They serve this portion of the market byproviding an equivalent degree of service to sellers of small portfolios as the large secondary funds do forlarge portfolios. This is critical because a small transaction of a single fund interest or a portfolio of

Making Money in Small SecondaryTransactionsBy Chuck Stetson, David Parshall and Gunnar Fremuth, Managing Directors, Private Equity Investors, Inc.

0

2.0

4.0

6.0

8.0

10.0

$12B

Less Than $500M$500M to $999M$1B or More

$7.1

$0.6

$2.1$3.2

$1.9

$0.4

$2.2 $0.3$0.0

$0.3

$3.0

$0.3

2001 2002 2003 3-year Total

5 Funds

6 Funds

4 Funds

Source: The Private Equity Analyst

Amount Raised by Secondary Funds From 2001 to 2003, by Fund Size ($B)

interests has the same analytical issues that a largetransaction has. Even when a buyer has an existingposition in the fund being sold, the buyer must conduct thorough due diligence. Companies in theportfolio are dynamic, often with significant changesoccurring from one quarter to the next in terms offinancial results and outlook for liquidity. Changes inthe market environment can have an equally signifi-cant impact, including on the exit strategy (such asaccessing the high-yield market to recapitalize compa-nies rather than push for a sale of the business), ontransaction values, and, of course, on exit timing.

Generally, a detailed legal review must be under-taken if the situation is new to the potential buyer.Purchase agreements must be crafted for the transac-tion and rights of first refusal, if applicable, must bedealt with appropriately. Sellers want to minimizeexecution risk and to ensure that a transaction can beclosed on a timely basis. This is also important togeneral partners as sales of interests in their funds area distraction from their businesses, and they want tospend the least time possible on such transactions.

Special Situations in SmallSecondary Transactions.

Some small secondary transactions are unique ornearly unique. For example, general partners of ven-ture capital and other private equity funds occasion-ally have approached us to wind down one or moreof their older funds – typically in the eleventh, twelthor later years. At such time, the fund may haveachieved a significant return already, and there maybe only a handful of portfolio companies left thathave any value (often representing less than 5 percentor 10 percent of the fund’s total invested capital). Atsome point, the original investors are ready to moveon as the return has already been earned and will notchange meaningfully; and the size of the remainingholdings is less and less significant. Original investorshave sometimes urged general partners to wrap upold funds, and general partners have approached us

in light of our extensive experience in this area.In such situations, we have found the analysis of

venture capital and other private equity funds thatneed to be wound down is similar to buying a limitedpartnership interest in that fund. The analysis focuseson the meaningful holdings, which by this point aremature and should have operating track records. Thedifferences are that instead of owning a small percent-age of the fund, we end up buying 100 percent of itand the co-investors of the portfolio companiesbecome increasingly important in managing the exitof the individual positions.

More recently, we have been asked by individualmanagers of corporate venture programs whether wecould assist them in by buying a portion or theirentire venture portfolio. Many of these programsinvested large amounts of capital over the past severalyears but the value has decreased significantly due toliquidations and valuation adjustments. The result isthat the portfolios being sold are typically small byour standards. This situation and analysis is similarto the wind-down of a venture capital fund that wehave just described, so the seller must find an appro-priate buyer willing to devote the time and resourcesto the transaction.

Investors, fund managers, and corporate ventureprograms all need to periodically adjust their portfo-lios or perhaps sell all of it. This can range fromdivesting a single limited partnership interest to aportfolio of many partnership interests or a portfolioof holdings in companies. If the transaction issmall—that is, under $25 million in net asset valueor $15 million in selling price—a small experiencedsecondary buyer can give a seller the attention neces-sary to complete the transaction in a fair, efficientand timely fashion.

About the Authors: Mr. Stetson and Mr. Parshall co-foundedPrivate Equity Investors in 1992, while Mr. Fremuth joined in1996. Reach them at (212) 750-1228, [email protected],[email protected], [email protected].

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26

T he typical secondary transactioninvolves the sale of an interest in alimited partnership that has been

60 percent to 65 percent drawn down, andthat was launched at least four years ago.Some secondary transactions involve thesale of a portfolio of direct interests incompanies. The portfolio may then bemanaged by the team that assembled it orby a new management team.

The secondary market dates back to the globaleconomic crisis of early 1990s, when many banksand corporations began selling illiquid assets, includ-ing interests in private equity funds. The interestfrom sellers, which in turn attracted buyers, led tothe evolution of an active secondary market.

Acquisitions of secondary positions offer the fol-lowing advantages to buyers:

• Secondary market positions can usually bepurchased at a discount to net asset value, especiallyif the purchaser is experienced and has developed aproprietary deal flow.

• Secondary investments are made in funds withsignificant sums already invested, eliminating therisk of investing in a blind pool.

• Secondary investments offer acceleration ofreturns, since portfolio companies are more matureand closer to exits (see chart, this page).

Before investing in a secondary fund, you shouldknow how they operate. Secondary buyers base theiranalysis on a particular fund in part on performanceof the fund– the interim IRR and the cash-on-cashmultiple achieved. Secondary buyers also go througha deep analysis of each underlying company. This letsthem predict the year of exit and the expected

amount of exit. Buyers also must determine the qual-ity and experience of the fund management team,examining the profiles of all of the professionals,along with their capacity to work together.

You should look for secondary buyers that havethe following qualities:

• demonstrated expertise;

• a systematic approach to evaluating underlyingcompanies;

• experience in a large number of transactions;

• experience in having secured its secondarytransactions with a high degree of confidentiality;

• the ability to deliver proposals quickly;

• flexibility in negotiating with the seller.The general partner of a fund almost always has

the right to approve of the buyer of a limited partner-ship interest. The GP typically prefers a buyer thatdown the road has the potential to commit to additional funds raised by the firm. In some cases,the GP may have negotiated the right to buy an

How to Select Secondary FundsBy Charles Soulignac, Fondinvest Capital

SecondaryPrimary

-90%

-60%

-30%

0%

30%

60%

90%

120%

150%

1 2 3 4 5 6 7 8 9 10 11Years

Source: Fondinvest Capital

Net

Cum

ulat

ive

Retu

rns

Performance of Primary and Secondary Fund of Funds

interest in its own fund before any other potentialbuyers are given a chance.

Development of the SecondaryMarket

Secondary buyers have raised significant amountsof money over the last months, especially comparedwith amounts raised five to six years ago.

This has to do with the rapid development of theprimary market over the last five years, and the factthat 2 percent to 5 percent of investors historicallyhave tended to seek early liquidity.

That said, the expected secondary deal volumeadmittedly has not kept pace with the volume of pri-mary fund-raising. One reason for that is that manysellers today are trying to unload interests in relativelyyoung venture funds, while secondary buyers tend toprefer more mature funds. The portfolio companiesof more mature funds are easier to evaluate, and thebuyer does not have to take on the liability of meetingcapital calls. Secondary deal volume in the UnitedStates should pick up as these primary funds ageenough to attract more interest from buyers.

In Europe, the secondary market is smaller than inthe United States, but its is expected to grow rapidlyin the coming years. In part that’s simply a result of thelarge amount of capital raised by private equity firmsfrom 1999 to 2002. Inevitably some of those investors

will want to sell their fund interests, if only to recyclethe proceeds into more promising funds. In addition,European banks have come under more regulatorypressure to ease their exposure to private equity.

Secondary Funds vs Funds of FundsPhilosophically, secondary funds are very differ-

ent from funds of funds.The primary market in which funds-of-funds

managers play requires long-term investments, fromeight to 12 years generally. Capital calls are spreadover a period of four to five years. On the otherhand, the secondary market is designed for oppor-tunists. Secondary buyers look for the speedy returnof cash, and their investment horizon is generally lessthan eight years.

Unlike fund commitments by funds-of-fundsmanagers, secondary opportunities require adapt-ability and quick decision-making. Usually, capitalcalls are limited to two to three years. In terms ofperformance, primary funds of funds strive to offerhigh cash multiples; secondary fund managers striveto offer high IRR levels but lower cash multiples.

About the author: Charles Soulignac is CEO of Fondinvestcapital, a Paris-based manager of funds of funds. He has been amember of the EVCA board of directors and investor relationscommittee. Reach him at [email protected].

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28

434

1990 1991 1992 1993 1994 1995 1996

1990Landmark Partners kicks off the decade by raising $93.2 million for its debut secondary offering, the first of 11 funds that the firm has gone on to assemble.

1991Paul Capital Partners bursts into the secondary business after acquiring Hillman Ventures Inc.’s $85 million venture portfolio.

1992 In a transaction that put secondary deals on the map, Landmark Partners agrees to purchase $125 million of LBO fund interests from Westinghouse Credit Corp.

1995Secondary fund-raising for the first time tops the $1 billion mark.

1994 Lexington Partners, then the New York affiliate of Landmark Partners, becomes an independent firm. Today, Lexington is among the largest managers of secondary funds.

Amount Raised by Secondary Fund Managers ($M)**

Secondary Deal Volume ($M)*

Includes only secondary sales of fund interests **Excludes money raised for secondary investing by managers of unds of funds; also excludes money available for secondary investing by firms that don't raise institutional funds.

$111 $145

$416$579

$51

$389$100

$506 $465

$1018

$879

$998$753

$455

Secondary Market Timeline 1990-2003


29

1997 1998 1999 2000 2001 2002

1998 Goldman Sachs & Co. enters the secondary business, raising $440 million for its debut offering.

2001Secondary fund-raising registers an all time high, with nine firms collectively raising $4.3 billion for their funds.

$424

$1917

Sources: Lexington Partners Inc., The Private Equity Analyst

2003Secondary sales of fund interests sets record, thanks to diverstitures by Deutsche Bank, UBS and others.

2000 In what was then the largest ever purchase of U.S. fund interests, Lexington Partners and Hamilton Lane Advisors Inc. buy a portion of Chase Capital Partners portfolio, with a net asset value of roughly $500 million.

$2424$2348

$4436

$3300

$1494

$2350 $2278

$710

$4610

$424

$1647

$3083

$1917

$2999

2003

2002Coller Capital raises largest secondary fund to date, with $2.5 billion in commitments.

Abbott Capital

Management, LLC

Main Office1211 Ave. of the Americas, Suite 4300, New York, NY 10036 Phone: (212) 757-2700 | Fax: (212) 757-0835www.abbottcapital.com | [email protected]

Key PersonnelMr. Thaddeus I. Gray, Managing Director

[email protected]. Jonathan D. Roth, Managing Director

[email protected]. Kathryn J. Stokel, Managing Director

[email protected]

OVERVIEWYear Founded 1986

Professionals Worldwide 30

Secondary Assets Under Management $300 million

Capital Invested in 2002 $20 million


FUND(S) BEING INVESTEDMinimum Investment $1 million

Maximum Investment $50 million

Participation in Syndicates No

Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsU.S. FundsNon-U.S. Funds

Access Capital Partners

Main Office73, Ave. des Champs-Elysees, Paris, 75008 FrancePhone: +33-1-5643-6100 | Fax: +33-1-5643-6101www.access-capital-partners.com | [email protected]

Branch OfficesP.O. Box 431, 13-15 Victoria Road, St Peter PortGuernsey, GY 132D Channel IslandPhone: +44 1481 713 843 | Fax: +44 1481 715 219


31

Secondary BuyersFirm Listings

Key PersonnelMr. Dominique Peninon, Managing Partner

[email protected]. Agnes Nahum, Partner

[email protected]. Philippe Poggioli, Partner

[email protected]


INVESTMENT CRITERIAParticipation in Syndicates No

Interest SoughtVenture FundsLBO FundsSpecial Situations FundsNon-U.S. Funds

SELECT INSTITUTIONAL BACKERSClients include banks, pension funds and individuals

Adams Street Partners LLC

Main OfficeOne N. Wacker Drive, Suite 2200, Chicago, IL 60606 Phone: (312) 553-7890 | Fax: (312) 553-7891www.adamsstreetpartners.com | [email protected]

Branch Offices20 Grosvenor Place, London, SW1X 7HN United KingdomPhone: +44 207 823 0640 | Fax: +44 207 823 0659

Key PersonnelMr. Ronan Cunningham (London Office)

[email protected]. Oliver Gardey, Partner (London Office)

[email protected]. Gregory Garrett, Partner, (Chicago Office)

[email protected]. Jason Gull, Partner, (Chicago Office)

[email protected]




Capital Invested in 2002 $68.7 million


*These funds make primary and secondary investments

Allianz Private Equity

Main OfficeGiselastrasse 4, Munich, 80802 GermanyPhone: +49 89 3800 18700 | Fax: +49 89 3800 19436www.allianz.com | [email protected]

Key PersonnelMs. Wanching Ang, Managing Director

[email protected]. James James, Managing Director

[email protected]



Interest SoughtVenture FundsLBO FundsSpecial Situations FundsStakes in Private CompaniesU.S. FundsNon-U.S. Funds

AlpInvest Partners Inc.

Main OfficeJachthavenweg 118, Amsterdam, 1081 KJ NetherlandsPhone: +31 20 540 7575 | Fax: +31 20 540 7505

Branch Offices600 Fifth Ave., 17th Floor, New York, NY 10020 Phone: (212) 332-6240 | Fax: (212) 332-6241

Key PersonnelMr. Tjarko Hektor, Partner, Head of Secondary Investments

[email protected]. Niels Kok, Senior Investment Manager

[email protected]



Secondary Assets Under Management $1.8 billion


INVESTMENT CRITERIAMinimum Investment $5 million

Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsStakes in Private CompaniesU.S. FundsNon-U.S. Funds

FUND(S) BEING INVESTED

» 2004 Adams Street Partnership Fund Program*

Size $921.75 millionYear Closed 2004

» Adams Street Global Opportunities

Secondary Fund

Size $210 millionYear Closed 2004



Participation in Syndicates Yes


AIG Global Investment Group

Main Office599 Lexington Ave., 25th Floor, New York, NY 10022 Phone: (646) 735-0520 | Fax: (646) [email protected]

Key PersonnelMr. Steven Costabile, CFA, Managing Director

[email protected]. Rory Chang, Vice President

[email protected]

OVERVIEWSecondary Assets Under Management $100 million







32


34


ARCIS Group

Main Office14, rue de Bassano, Paris, 75116 FrancePhone: +33 1 4723 8862 | Fax: +33 1 4723 8855www.arcisgroup.com | [email protected]

Branch Offices33 Cavendish Square, London, W1G 0BQ United KingdomPhone: +44 20 7290 5080 | Fax: +44 20 7290 5081

509 Madison Ave., Suite 812, New York, NY 10022 Phone: (212) 838-5577 | Fax: (212) 838-8858

Key PersonnelMr. Arnaud Isnard, Managing Partner

[email protected]. Henri Isnard, Managing Partner

[email protected]. Mark Burch, Partner

[email protected]. Pierre Nollet, Partner

[email protected]



Secondary Assets Under Management $350 milion




Auda Advisor Associates LLC

Main Office745 Fifth Ave., 29th Floor, New York, NY 10151 Phone: (212) 863-2300 | Fax: (212) 593-2974www.auda.net | [email protected]

Branch OfficesRua Pedrosa Alvarenga, 1221, 1° andar, Sao Paolo, 04531-012 BrazilPhone: +55 11 3071 0346 | Fax: +55 11 3071 1420

Av. Leandro N. Alem 584 Piso 12, Buenos Aires, C1001AAN ArgentinaPhone: +54 11 4312 6707 | Fax: +54 11 4311 2211

4 Park Place (St. James), London, SW1A 1LP United KingdomPhone: +44 207 898 9008 | Fax: +44 207 898 9249

Harald Quandt Haus, Am Pilgerrain 17, Bad Homburg, 61352 GermanyPhone: +49 6172 402 801 | Fax: +49 6172 402 809

Kungsgatan 7, Stockholm SE-111 43 SwedenPhone: +46 8 545 290 60 | Fax: +46 8 545 290 69

Key PersonnelMr. Marcel Giacometti, President

[email protected]. Stephen Wesson, Managing Director

[email protected]. Richard Lichter, Managing Director

[email protected]





» Auda Secondary Fund L.P.

Size TBAYear Closed Currently Fundraising

INVESTMENT CRITERIAMinimum Investment $2 million individual, $5 million institutional

Maximum Investment N/A


Interest SoughtVenture FundsLBO FundsMezzanine FundsU.S. FundsNon-U.S. Funds

AXA Private Equity

Main Office20, Place Vendôme, Paris, 75001 FrancePhone: +33 1 4445 9270 | Fax: +33 1 4445 9303 www.axaprivateequity.com

Branch Offices7 Newgate St., London, EC1A 7NX United KingdomPhone: +44 20 7003 1354 | Fax: +44 20 7575 8309

1370 Ave. of the Americas, New York, NY 10019 Phone: (212) 641-8604 | Fax: (212) 641-8616/17

Stifstrasse 30, Frankfurt am Main, 60313 GermanyPhone: +49 69 90025 16900 | Fax: +49 69 90025 15955

Key PersonnelMr. Vincent Gombault, Member of the Executive Committee, Head of

Fund of [email protected]

Mr. Christophe Florin, Managing [email protected]

Mr. Daniel Benin, Director [email protected]

Mr. Franck Nguyen, [email protected]

California State Teachers’

Retirement System

Main Office7667 Folsom Blvd., Suite 2500, Sacramento, CA 95826 Phone: (916) 229-3697 | Fax: (916) 229-3790www.calstrs.com | [email protected]

Key PersonnelMr. Richard Rose, Principal Investment Officer

[email protected]. Real Desrochers, Director of Alternative Investments

[email protected]





Participation in Syndicates


Canada Pension Plan

Investment Board

Main OfficeOne Queen St., East, Suite 2700, Toronto, M5C 2W5 CanadaPhone: (416) 868-4705 | Fax: (416) 868-4083www.cppib.ca

Key PersonnelMs. Stephanie Leaist, Manager Private Market Investments

[email protected]

CMS Fund Advisors Inc.

Main Office1926 Arch St., Philadelphia, PA 19103 Phone: (215) 246-3000 | Fax: (215) 246-3068www.cmsco.com

Key PersonnelMr. William A. Landman, Principal & CIO

[email protected]



Mr. Benoit Verbrugghe, [email protected]

Mr. Marc Lasserre, Senior Investment [email protected]

Mr. Stéphane Chevrier, Investment [email protected]

Mr. Xavier Belloir, Investment [email protected]

Mr. Barthélémy Pallu de Beaupuy, Investment [email protected]





» AXA Secondary Fund I


» AXA Secondary Fund II






California Public Employees’

Retirement System

Main Office400 P. St., Sacramento, CA 95814 Phone: (916) 326-3400 | Fax: (916) 326-3344www.calpers.ca.gov

Key PersonnelMr. Richard J. Hayes, Senior Investment Officer

[email protected]


35


Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsReal Estate FundsStakes in Private CompaniesU.S. FundsNon-U.S. Funds

Coller Capital

Main Office33 Cavendish Square, London, W1G OTT United KingdomPhone: +44 20 7631 8500 | Fax: +44 20 7631 8555www.collercapital.com | [email protected]

Branch Offices410 Park Ave., Suite 530, New York, NY 10022 Phone: (212) 644-8500 | Fax: (212) 644-9133

Key PersonnelMr. Jeremy Coller, Chief Executive Officer

[email protected]. Daniel DuPont, Partner

[email protected]. Susan Flynn, Partner

[email protected]. Axel Hansing, Partner

[email protected]. Tim Jones, Partner

[email protected]. Hiromichi Mizuno, Partner

[email protected]. Denis Mortier, Partner

[email protected]. Frank Morgan, Partner

[email protected]. Erwin Roex, Partner

[email protected]





» Coller International Partners IV

Size $2.6 billionYear Closed 2002

CSFB Strategic Partners

Main Office11 Madison Ave., 16th Floor, New York, NY 10010 Phone: (212) 538-7680 | Fax: (212) 538-0434

Key PersonnelMr. Stephen H. Can, Managing Director & Fund Head

[email protected]. James L. Paradise, Managing Director

[email protected]. Peter Song, Vice President

[email protected]





» CSFB Strategic Partners II, L.P.


» CSFB Strategic Partners II RE, L.P.


INVESTMENT CRITERIAMinimum Investment $.15 million



Interest SoughtLBO FundsMezzanine FundsReal Estate FundsU.S. FundsNon-U.S. Funds

SELECT INSTITUTIONAL BACKERSState and corporate pension plans and high-networth individuals

The Crossroads Group, a

Lehman Brothers Company

Main Office1717 Main St., Suite 2500, Dallas, TX 75201 Phone: (214) 698-2777 | Fax: (214) 698-2778www.crossroadsgroup.com | [email protected]

Branch Offices399 Park Ave., 9th Floor, New York, NY 10022 Phone: (212) 526-7000

Key PersonnelMr. Brad K. Heppner, Chairman & CEO

[email protected]. Anthony D. Tutrone, Managing Director

[email protected]. John P. Buser, Chief Operating Officer & CFO

[email protected]. Joseph A. Malick, General Counsel & Managing Director

[email protected]

36


>Continued on page 41

Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsReal Estate FundsStakes in Private CompaniesU.S. FundsNon-U.S. FundsSecondaries

FINAMA Private Equity

Main Office143, Boulevard Haussmann, 3rd Floor, Paris, 75008 FrancePhone: +33 1 44 56 59 96 | Fax: +33 1 44 56 59 92www.finama-pe.fr | [email protected]

Key PersonnelMr. Pierre-Michel Deléglise, Chief Executive Officer

[email protected]. Didier Levy-Rueff, Managing Partner

[email protected]. Marc-Antoine Voisard, Investment Manager

[email protected]. Lionel Bergeron, Investment Manager

[email protected]. Grégory Carite, Analyst

[email protected]. Romain Lobstein, Analyst

[email protected]. Frédéric Dosjoub, Analyst

[email protected]





» Quartilum II

Size $150 million (target size)Year Closed Currently raising

» Quartilum Secondary II

Size $50 million (target size)Year Closed Currently raising

» Quartilum I


INVESTMENT CRITERIAParticipation in Syndicates Yes

Interest SoughtVenture FundsLBO FundsU.S. FundsNon-U.S. Funds

Mr. Brien P. Smith, [email protected]

Mr. Christopher R. Frattaroli, [email protected]






» Lehman Crossroads Private Equity Asset

Allocation Fund XVII, L.P.*

Size $500 million


Maximum Investment $1 billion



DuPont Capital Management

Main OfficeOne Righter Parkway, Suite 3200, Wilmington, DE 19803 Phone: (302) 477-6000 | Fax: (302) 477-6010

Key PersonnelMr. Carmen J. Gigliotti, Senior Portfolio Manager

[email protected]. Michael T. Pilson, Portfolio Manager

[email protected]. Holly A. Lissner, Portfolio Manager

[email protected]. Brian S. Schneider, Senior Portfolio Manager

[email protected]. John W. Vander Vort, Portfolio Manager

[email protected]. Daryl B. Brown, Portfolio Analyst

[email protected]. Howard F. Searing, Portfolio Analyst

[email protected]. Eric A. Wilcomes, Portfolio Analyst

[email protected]



41


Goldman Sachs Asset

Management

Main Office32 Old Slip, 21st Floor, New York, NY 10005 Phone: (212) 855-0478 | Fax: (212) [email protected]

Key PersonnelMr. Geoffrey G. Clark, Managing Director, Secondary Investments

[email protected]. J. Christopher Kojima, Managing Director, Secondary Investments

[email protected]





Greenpark Capital Ltd.

Main Office2-5 Old Bond St., London, W1S 4PD United KingdomPhone: +44 20 7647 1400 | Fax: +44 20 7647 1440www.greenparkcapital.com | [email protected]

Key PersonnelMs. Marleen Groen, CEO

[email protected]. Joe Topley, Investment Director

[email protected]. Joanna Jordan, Operations/Investor Relations Director

[email protected]. Andrew French, Finance Director

[email protected]





» Greenpark International Investors I, L.P.

(& parallel funds)

Size $200 million Year Closed 2003

FONDINVEST CAPITAL

Main Office33 rue de La Baume, 2nd Floor, Paris, 75008 FrancePhone: +33 1 53 36 48 00 | Fax: +33 1 58 36 48 28www.fondinvest.com | [email protected]

Key PersonnelMr. Charles Soulignac, Chairman & CEO

[email protected]





» Fondinvest II*


» Fondinvest IV*


» Fondinvest VI*


INVESTMENT CRITERIAMinimum Investment $0.5 million



SELECT INSTITUTIONAL BACKERSLiberty Mutual Insurance Group

General Motors Investment

Management

Main Office767 Fifth Ave., 16th Floor, New York, NY 10153 Phone: (212) 418-6100 | Fax: (212) 418-3644

Key PersonnelMr. Charles Froland, Managing Director

[email protected]



42




Hamilton Lane Advisors Inc.

Main OfficeGSB Building, One Belmont Ave., 9th Floor, Bala Cynwyd, PA 19004 Phone: (610) 934-2222 | Fax: (610) 617-9853www.hamiltonlane.com | [email protected]

Branch Offices2nd Floor, Berkeley Square House, Berkeley SquareLondon, W1J 6BD United KingdomPhone: +44 20 7887 1460 | Fax: +44 20 7887 1461

Key PersonnelMr. Mario L. Giannini, CEO

[email protected]. Erik R. Hirsch, Chief Investment Officer

[email protected]






HarbourVest Partners LLC

Main OfficeOne Financial Center, 44th Floor, Boston, MA 02111 Phone: (617) 348-3707 | Fax: (617) 350-0305www.harbourvest.com

43


Greenpark Capital

Harvest Fund

Main Office96 Rothschild Blvd., Tel Aviv, 65224 IsraelPhone: +972 3 710 8282 | Fax: +972 3 710 8210www.evergreen.co.il | [email protected]

Key PersonnelMr. Shmuel Shilo, Fund Manager

[email protected]. Yohay Gold, Partner

[email protected]


Secondary Assets Under Management $115



» Harvest Fund I

Size $25 million

» Harvest Fund II

Size $90 million

Interest SoughtVenture FundsSecondary investments in Israeli or Israeli-related venture funds anddirect holdings in portfolios of Israeli high-tech companies.

Horsley Bridge Partners

Main Office505 Montgomery St., Suite 2100, San Francisco, CA 94111 Phone: (415) 986-7733 | Fax: (415) [email protected]

Key PersonnelMr. Dan Reeve, Managing Director

[email protected]




» Horsley Bridge Fund VII*

» Horsley Bridge International III*



Interest SoughtVenture FundsU.S. FundsNon-U.S. Funds

Branch OfficesHarbourVest Partners (U.K.) Limited, Berkeley Square House, 8th FloorBerkeley Square, London, W1J 6DB United KingdomPhone: +44 (0)20 7399 9820 | Fax: +44 (0)20 7399 9840

HarbourVest Partners (Asia) Limited, Citibank Tower, Suite 1207 3 Garden Road, Central, Hong KongPhone: +852 2525 2214 | Fax: +852 2525 2241

Key PersonnelMr. John Begg, Managing DirectorMr. Frederick Maynard, Managing DirectorMr. Brett Gordon, Principal, (617) 348-3764

[email protected]. Michael Taylor, PrincipalMr. John Toomey, Vice PresidentMr. Brian Buenneke, Senior AssociateMr. John Fiato, Senior AssociateMs. Christina Pamberg, Vice President

(HarbourVest Partners (U.K.) Limited), + 44 (0)20 7399 9820 [email protected]

Mr. Jeffrey Keay, Senior Associate (HarbourVest Partners (U.K.) Limited)Mr. Philip Bilden, Managing Director

(HarbourVest Partners (Asia) Limited), +852 2525 [email protected]

OVERVIEWYear Founded 1997, the team has been investing in secondaries since 1986

Professionals Worldwide 51 investment, 115 total



» HarbourVest International Private Equity

Partners IV - Partnership Fund*


» HarbourVest Partners VII - Venture

Partnership Fund*

Size $ 2.0 billionYear Closed 2004

» HarbourVest Partners VII - Buyout

Partnership Fund*

Size $ 2.0 billionYear Closed 2004

» Dover Street V




44


Branch OfficesFinsbury Dials, 20 Finsbury St., London, EC2Y 9AQ United KingdomPhone: + 44 20 7742 3754 | Fax: +44 20 7742 3563

Key PersonnelMr. Ted Beit, Portfolio Manager

[email protected]. Jarrod Fong, Portfolio Manager

[email protected]. Dana Haimoff, Portfolio Manager (London)

[email protected]





Interest SoughtVenture FundsLBO FundsMezzanine Funds

Landmark Partners Inc.

Main Office10 Mill Pond Lane, Simsbury, CT 6070 Phone: (860) 651-9760 | Fax: (860) 651-8890www.landmarkpartners.com | [email protected]

Branch Offices53 Davies St., London, W1K 5JH United KingdomPhone: +44 20 7152 6535 | Fax: +44 20 7152 6536

Key PersonnelMr. Francisco L. Borges, Managing Partner, President & CEO

[email protected]. James McConnell, Partner

[email protected]. Anthony J. Roscigno, Partner

[email protected]. Chad S. Alfeld, Partner

[email protected]. Scott Conners, Partner

[email protected]. R. Paul Mehlman, Partner

[email protected]. Timothy Haviland, COO

[email protected]. Robert J. Shanfield, Partner

[email protected]




INVESCO Private Capital Inc.

Main Office1166 Ave. of the Americas, 27th Floor, New York, NY 10036 Phone: (212) 278-9000 | Fax: (212) 278-9684www.invescoprivatecapital.com

Branch Offices30 Finsbury Square, London, EC2A 1AG United KingdomPhone: +44 20 7065 4000

4350 S. Monaco St., Denver, CO 90237Phone: (720) 624-6300 | Fax: (720) 720 624-1913/1914

525 University Ave., Suite 600, Palo Alto, CA 94301Phone: (650) 325-3600

Key PersonnelMr. Damian Witkowski, Senior Associate

[email protected]. Steve Hahn, Associate

[email protected]





» INVESCO Partnership Fund III*





Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsU.S. FundsNon-U.S. FundsTurnarounds

SELECT INSTITUTIONAL BACKERSWashington State Investment Board

J.P. Morgan Investment

Management

Main Office522 Fifth Ave., New York, NY 10036 Phone: (212) 837-1925 | Fax: (212) 837-1301www.jpmorganfleming.com/am

45



» Lexington Capital Partners V, L.P.

Size $2 billionYear Closed 2003




LGT Capital Partners Ltd.

Main OfficeChurerstrasse 122, Pfaeffikon, CH - 8808 SwitzerlandPhone: +41 55 415 94 15 | Fax: +41 55 415 92 00www.lgtcp.com | [email protected]

Branch OfficesLGT Capital Partners (USA) Inc., 245 Park Ave., 39th FloorNew York, NY 10167

Key PersonnelMr. Ivan Vercoutere, Partner

[email protected]. Wolfgang Müller, Vice President

[email protected]











» Landmark Equity Fund X


» Landmark Real Estate Fund IV






SELECT INSTITUTIONAL BACKERSHouston Firefighters’ Relief & Retirement, Memorial Sloan KetteringCancer Center, Pacific Life Insurance Company

Lexington Partners Inc.

Main Office660 Madison Ave., 23rd Floor, New York, NY 10021 Phone: (212) 754-0411 | Fax: (212) 754-1494www.lexingtonpartners.com | [email protected]

Branch Offices3000 Sand Hill Road, Building 1, Suite 220, Menlo Park, CA 94025 Phone: (650) 561-9600 | Fax: (650) 561-9696

111 Huntington Ave., Suite 3020, Boston, MA 2199 Phone: (617) 247-7010 | Fax: (617) 247-7050

42 Berkeley Square, London, W1L 5AW United KingdomPhone: +44 20 7318 0888 | Fax: +44 20 7318 0889

Key PersonnelMr. Brent R. Nicklas, Managing General Partner (New York, NY)Mr. Nick Harris, General Partner (Menlo Park, CA)Mr. Marshall W. Parke, General Partner (London)Mr. Lee J. Tesconi, General Partner (Boston, MA)Mr. Wilson S. Warren, Principal (New York, NY)Mr. Charles R. Grant, Principal (New York, NY)Mr. Philip S. Durden, (Menlo Park, CA)Mr. Pål B. Ristvedt, Vice President (London)






46


» Liquid Realty Partners II, LLC




Interest SoughtReal Estate FundsSpecial Situations FundsStakes in Private CompaniesU.S. FundsNon-U.S. FundsMezzanine Funds (Real Estate)

Montauk Advisors LLC

Main Office22 Walden Place, Huntington, NY 11743 Phone: (631) 425-1994 | Fax: (631) 425-1093www.montaukpartners.com

Liquid Realty Partners

Main Office44 Montgomery St., Suite 3705, San Francisco, CA 94104 Phone: (415) 296-9500 | Fax: (415) 296-9567www.liquidrealty.com | [email protected]

Branch Offices115 East 57th St., 11th Floor, New York, NY 10022 Phone: (212) 421-0797 | Fax: (212) 308-4130

Key PersonnelMr. Scott Landress, Managing Partner

[email protected]. Mark Berman, Managing Partner

[email protected]




» Liquid Realty Partners I, LLC


47


W. Capital Partners

Key PersonnelMr. David Braman, Senior Partner

[email protected]. Jay Pierrepont, Partner

[email protected]. B. Greg Bohannon, Partner

[email protected]. Ian G. Deas, Partner

[email protected]. Gary E. Hiatt, Partner

[email protected]. Susan Long McAndrews, Partner

[email protected]





» Pantheon Global Secondary Fund


» Pantheon USA Fund IV*


» Pantheon Asia Fund III*


» Pantheon Europe Fund III*


» Pantheon USA Fund V*




SELECT INSTITUTIONAL BACKERSBritish Columbia Investment Management Corp.

Partners Group

Main OfficeZugerstrasse 57, Baar-Zug, 6341 SwitzerlandPhone: +41 41 768 85 85 | Fax: +41 41 768 85 57www.partnersgroup.net | [email protected]

Branch Offices10529 Dacre Place, Littleton, CO 80124 Phone: (303) 799-1006 | Fax: (303) 799-1005

Key PersonnelMr. Brian M. Smith, General Partner

[email protected]. Edgar J. Pfohl, General Partner

[email protected]







» Montauk Partners II, L.P.






SELECT INSTITUTIONAL BACKERSPacific Life Insurance, CMS Companies

Pantheon Ventures Inc.

Main OfficeTransAmerica Center, 600 Montgomery St., 23rd FloorSan Francisco, CA 94111Phone: (415) 249-6200 | Fax: (415) 249-6299www.pantheonventures.com | [email protected]

Branch OfficesNorfolk House, 31 St. James SquareLondon, SW1Y 4JR United KingdomPhone: +44 20 7484 6200 | Fax: +44 20 7484 6201

480 Avenue Louise, Brussels, 1050 BelgiumPhone: +32 2 290 2020 | Fax: +32 2 290 2021

Two Exchange Square, 8 Connaught Place, Suite 1606, 16th FloorCentral, Hong Kong, ChinaPhone: +852 2810 8063 | Fax: +852 2526 0218

48


Key PersonnelMr. Albert Clerc, Managing DirectorMr. Vincent Dee, CFA, Associate

[email protected]




Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsU.S. FundsNon-U.S. FundsPathway takes an opportunistic approach to partnership selection.

SELECT INSTITUTIONAL BACKERSIowa Public Employees, Los Angeles County, Brisol Myers Squibb

Paul Capital Partners

Main Office50 California St., Suite 3000, San Francisco, CA 94111 Phone: (415) 283-4300 | Fax: (415) 283-4301www.paulcap.com | [email protected]


28, avenue de Messine, 2nd Floor, Paris, 75008 FrancePhone: +33 1 5353 0606 | Fax: +33 1 5353 0607

Picassoplatz 8, Basel, 4052 SwitzerlandPhone: +41 61 283 4460 | Fax: +41 61 283 4461

8 Clifford St., 3rd Floor, London, W1S 2LQ United KingdomPhone: +44 20 7851 6000 | Fax: +44 20 7734 8167

Key PersonnelMr. David de Weese, Partner

[email protected]. David Park, Partner

[email protected]. Guy Rico, Partner

[email protected]. Bryon Sheets, Partner

[email protected]. David York, Partner

[email protected]. Lisa Edgar, Principal

[email protected]. Michel Raoult, Principal

[email protected]. Brian Sullivan, Principal

[email protected]


Elizabeth House, St. Peter Port, Guernsey, Channel IslandsPhone: +44 1481 711 690 | Fax: +44 1481 730 947

Key PersonnelMr. Domenico Truncellito, Head Communications

[email protected]. Urs Wietlisbach, Chairman

[email protected]





» Partners Group Secondary, L.P.

Size €172 millionYear Closed Still Open

» Princess Private Equity Holding Limited*


» Pearl Holding Limited*

Size €660 millionYear Closed 2001

» P3 Certificate*

Size €340Year Closed 2000

» Partners Group Europe, L.P.*

Size €253 millionYear Closed 2004

» CSA Private Equity*

Size CHF 200 millionYear Closed 2001

INVESTMENT CRITERIAInterest SoughtVenture FundsLBO FundsNon-U.S. Funds

Pathway Capital

Management

Main Office5 Park Plaza, Suite 300, Irvine, CA 92614 Phone: (949) 622-1000 | Fax: (949) 622-1010www.pathwaycapital.com | [email protected]

Branch OfficesBuilding 3, Chiswick Park, 566 Chiswick High RoadLondon, W45 YA United KingdomPhone: +44 208 899 6099 | Fax: +44 208 899 6299

49









Pomona Capital

Main Office780 Third Ave., New York, NY 10017 Phone: (212) 593-3639 | Fax: (212) 593-3987www.pomonacapital.com | [email protected]

Branch Offices16 Hanover Square, London, W1R 9AJ United KingdomPhone: +44 20 7408 9433 | Fax: +44 20 7408 9434

Key PersonnelMr. Thomas A. Bradley, Partner

[email protected]. Brian S. Wright, Partner & Director/Europe

[email protected]



Secondary Assets Under Management $1 billion


» Pomona Capital V




SELECT INSTITUTIONAL BACKERSUniversity of Texas Investment Management Co., University ofWashington

Ms. Melanie Taylor, Business Development [email protected]

Mr. Simon Guenzl, [email protected]





» Paul Capital Partners VII, L.P.


» Paul Capital Top Tier Investments II, L.P.*






SELECT INSTITUTIONAL BACKERSInvestors include major U.S. and foreign pension plans, endowments,universities, corporate investors and high-net-worth individuals.

Permal Capital

Management LLC

Main Office111 Huntington Ave., Suite 2850, Boston, MA 02199-7610 Phone: (617) 399-9245 | Fax: (617) 267-5565www.permalcapital.com | [email protected]

Branch Offices900 Third Ave., 28th floor, New York, NY 10022 Phone: (212) 418-6548 | Fax: (212) 418-6510

Key PersonnelMr. C. Redington (Red) Barrett, III, President & Chief Executive Officer

[email protected]. Benjamin E. Marino, Vice President

[email protected]. Robert DiGeronimo, Vice President

[email protected]. Anthony M. Waters, Associate

[email protected]

50


Key PersonnelMr. Zachary Venegas, PartnerMr. Kabir Arghandiwal, PartnerMr. Scott Ogur, CFA, Partner

[email protected]





Trammell-Shott Capital

Management

Main Office350 Fifth Ave., Empire State Building, Suite 5714, New York, NY 10118 Phone: (212) 947-8610 | Fax: (212) [email protected]

Key PersonnelMr. Webb Trammell, Partner



INVESTMENT CRITERIAInterest SoughtVenture FundsLBO FundsMezzanine FundsStakes in Private CompaniesU.S. Funds

Non-U.S. Funds

VCFA Group/Venture Capital

Fund of America

Main Office509 Madison Ave., Suite 812, New York, NY 10022 Phone: (212) 838-5577 | Fax: (212) 838-7614www.vcfa.com | [email protected]

Branch Offices100 East Huron St., Suite 3704, Chicago, IL 60611 Phone: (312) 951-9655 | Fax: 100 Pine St., Suite 2820, San Francisco, CA 94111 Phone: (415) 296-0660 | Fax: (415) 296-0990

Key PersonnelMr. Dayton T. Carr, Founder & Managing Partner

[email protected]

Private Equity Investors Inc.

Main Office505 Park Ave., 4th Floor, New York, NY 10022 Phone: (212) 750-1228 | Fax: (212) 750-2685www.peifunds.com | [email protected]

Branch Offices601 Montgomery, Suite 700, San Francisco, CA 94111Phone: (415) 782-1414 | Fax: (415) 782-1415

Jitsugehsukan Kojimachi Building, 1-3-7 Kojimachi Chiyoda-kuTokyo 102-0083 JapanPhone: +81 3 5210 3601 | Fax: +81 3 5210 3160

Key PersonnelMr. Chuck Stetson, Managing Director

[email protected]. David B. Parshall, Managing Director

[email protected]. Gunnar B. Fremuth, Managing Director

[email protected]




Interest SoughtVenture FundsLBO FundsMezzanine FundsStakes in Private CompaniesU.S. Funds

San Francisco City & County

Employees’ Retirement

Main Office30 Van Ness Ave., Suite 3000, San Francisco, CA 91402 Phone: (415) 487-7003 | Fax: (415) 487-7014

Key PersonnelMr. Glen Schwartz, Senior Investment Officer

[email protected]


Scimitar Global Ventures

Main OfficeCapricorn Tower, 9th Floor, Sheikh Zayed Road P.O. Box 75135, Dubai,United Arab EmiratesPhone: +9714 403 7100 | Fax: +9714 332-9919www.scimitarventures.com

Branch Offices6 Landmark Square, Suite 400, Stamford, CT 06901Phone: (203) 359-5691 | Fax: (203) 359-5891

51


Thomas Weisel Partners LLC

Main OfficePacific Telesis Tower, One Montgomery St., San Francisco, CA 94104 Phone: (415) 364-2500 | Fax: (415) 364-2695www.tweisel.com

Branch OfficesTwo International Place, 26th Floor, Boston, MA 2110 Phone: (617) 488-4145 | Fax: (617) 753-6342

Key PersonnelMr. Clifford Meijer, Principal

[email protected]. Christy Richardson, Principal

[email protected]







» Thomas Weisel Global Growth Partners II(S), L.P.





Interest SoughtVenture FundsMezzanine FundsStakes in Private CompaniesU.S. Funds

Non-U.S. Funds

Willowridge Incorporated

Main Office25 East 86th St., New York, NY 10028-0553 Phone: (212) 369-4700 | Fax: (212) 369-5661www.willowridgeinc.com | [email protected]

Key PersonnelMr. Jerrold Newman, (212) 369-2888

[email protected] Mr. Timothy Brody, (212) 369-8922

[email protected]. Luisa Hunnewell, (212) 369-1220

[email protected]. James O’Mara, (212) 369-3211

[email protected]

Mr. Brett Byers, Managing [email protected]

Mr. Edward Hortick, Managing [email protected]

Mr. Steven J. Taubman, Managing [email protected]




» VCFA Venture Partners III, L.P.


» IVCGA IV, L.P.





Interest SoughtVenture FundsLBO FundsMezzanine FundsStakes in Private CompaniesU.S. FundsNon-U.S. Funds

SELECT INSTITUTIONAL BACKERSLiberty Mutual Insurance Group, Hannover Reinsurance Company,Cooperative Insurance Society, McDermott International, University ofRichmond Endowment, Haverford College Endowment

Venture Investment

Associates

Main Office88 Main St., P.O. Box 131, Peapack, NJ 7977 Phone: (908) 532-0020 | Fax: (908) [email protected]

Key PersonnelMr. Stathis Andris, PresidentMr. Jason Andris, Principal



Interest SoughtVenture FundsLBO Funds

52


Mr. Neville Page, Managing [email protected]

Mr. Ovidio Iglesias, Managing [email protected]







» WPMF V plus some separate accounts*






SELECT INSTITUTIONAL BACKERSBayer Corporation, Pension Fund Association (Japan), MN Services(Netherlands)

Wilton Asset Management

LLC, c/o SSGA

Main OfficeOne Lincoln St., Boston, MA 2110 Phone: (617) 664-2934 | Fax: (617) 664-2939www.ssga.com/about_ssga/wilton_asset_mgmt.html

Branch OfficesOne Righter Parkway, Wilmington, DE 19803

Key PersonnelMr. Joe Lyons

[email protected]. Carmen J. Gigliotti







» Amberbrook III LLC






Wilshire Private

Markets Group

Main Office1299 Ocean Ave., Suite 700, Santa Monica, CA 90401 Phone: (310) 451-3051 | Fax: (310) 458-0479www.wilshirepmg.com

Branch Offices210 Sixth Ave., Suite 3720, Pittsburgh, PA 15222 Phone: (412) 434-1580 | Fax: (412) 434-5249

Prins Hendriklaan 43, 1075 BA, Amsterdam, The NetherlandsPhone: +31 20 305 7530 | Fax: +31 20 305 7539

Level 6, AMP, 1 Hobart Place, Canberra, ACT 2601 AustraliaPhone: +61 2 6279 6000 | Fax: +61 2 6230 5144

101 East 52nd St., 20th Floor, New York, NY 10022 Phone: (212) 308-9500 | Fax: (212) 308-3930

Key PersonnelMr. Tom Lynch, Managing Director

[email protected] Mr. Jeff Ennis, Managing Director

Managing DirectorMr. Derek Minno, Managing Director

[email protected] Mr. Dan Allen, Managing Director

[email protected]

53


Average Size of Assets Managed by Clients$10 million to $99 million$100 million to $499 million$500 million to $999 million$1 billion +

Average Size of Secondary Deals$10 million to $99 million$100 million to $499 million$500 million to $999 million

Campbell Lutyens & Co. Ltd.

Main Office5 Clifford St., London, W1S 2LG United KingdomPhone: +44 20 7439 7191 | Fax: +44 20 7437 0153www.campbell-lutyens.com

Branch Offices230 Park Ave., 28th Floor, New York, NY 10022Phone: (212) 223-1798

Key PersonnelMr. Andrew Sealey, Managing Partner

[email protected]. John Campbell, Senior Partner

[email protected]. Eric Estes, Partner

[email protected]. Jean-Charles Charpentier, Partner

[email protected]. Andrew Bentley, Principal

[email protected]. Chris Davidsson, Principal

[email protected]. Jeff Couch, Principal

[email protected]. Pablo de la Infiesta, Principal

[email protected]



Services Provided Financial Advisory Campbell Lutyens provides spe-cialist advice on the sale or restructuring of private equity interests.These transactions include: the disposal of portfolios of private equityfunds or portfolios of direct private equity holdings; advice on therestructuring of individual funds or private equity holdings; and mergersand acquisitions of private equity managers. It also provides strategicadvice to institutions on their approach to the private equity asset class.Typical transactions range in size from €20 million to €500 million.

The Camelot Group

International LLC

Main Office45 Rockefeller Plaza, Suite 2000, New York, NY 10111Phone: (212) 332-7166 | Fax: (212) 937-3350www.thecamelotgroup.com | [email protected]

Branch OfficesSpear Tower- One Market, 35th Floor, San Francisco, CA 94105Phone: (415) 293-8263 | Fax: (415) 276-4769

Tower 42- International Financial Centre, Level 7London EC2N 1HN United KingdomPhone: ++44 207 877 0809 | Fax: +44 207 990 9100

Rue du Rhone 14, 4th Floor, CH-1204 SwitzerlandPhone: +41 22 819 1829 | Fax: +41 22 819 1998

Frankfurter Welle, An der Welle 4, Frankfurt D-60422 GermanyPhone: +49 69 7593 8441 | Fax: +49 69 2557 7084

Key PersonnelMr. Lawrence E. Penn, III, Managing Director, Head of Secondary

Advisory Practice, [email protected]. A. Oliver Welsch-Lehmann, Director

[email protected]. Angela Y. Benjamin, Executive Assistant

[email protected]

OVERVIEWProfessionals Worldwide 35

Services Provided The Camelot Group is an Investment and Advisoryfirm that provides independent and sophisticated advice to institutions,corporations, |partnerships, governments and individuals in theAlternative Asset and Private Equity Industries. We focus on consistentadvisory practices and precise execution of transactions. Our invest-ment and advisory practice targets acquisitions and divestitures of lim-ited partner interests and corporate assets in the Alternative Asset andPrivate Equity markets. Our core services consist of acquisitions anddivestitures of limited partnership interests, general partner and limitedpartner dispute resolution, capital-raising activities, corporate debttransactions and financial and strategic advice.

Types of ClientsWealthy IndividualsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsPublic Pension Funds


54

IntermediariesFirm Listings

Cogent Partners, L.P.

Main Office100 Crescent Court, Suite 500, Dallas, TX 75201Phone: (214) 871-5400 | Fax: (214) 871-5401www.cogent-partners.com | [email protected]

Branch Offices400 Madison Ave., Suite 16C, New York, NY 10017Phone: (646) 274-4940 | Fax: (646) 274-4941

Key PersonnelMr. Colin McGrady, Managing Director

[email protected]. Bill Murphy, Managing Director

[email protected]. Scott Myers, Managing Director

[email protected]. Stephen Sloan, Managing Director

[email protected]. Patrick Shattenkirk, Managing Director

[email protected]. Ian Charles, Vice President

[email protected]. Todd Konkel, Vice President

[email protected]. Brian Mooney, Vice President

[email protected]



Services Provided Cogent Partners is the world’s leading provider ofprivate equity investment banking and research services. In 2003,Cogent provided clients with liquidity and portfolio advisory services formore than $4 billion in aggregate private equity commitments.Specializing in advisory and execution of a wide range of portfolio mon-etization and management strategies, Cogent creates customized solu-tions for its clients through three primary areas of focus:

Secondary advisory servicesRecognized as the leader in private equity monetization services,Cogent has earned a reputation for effectively initiating, marketing,negotiating, structuring and closing sales of private equity assets. Ourteam utilizes its proprietary market and industry knowledge to evaluateand price client portfolios, engage the most appropriate potential buy-ers, negotiate on behalf of our clients, and provide structuring and legalexpertise.

Structured private equity productsCogent also offers an array of customized advisory and transaction serv-ices for collateralized fund obligations (CFOs) and other structured pri-vate equity vehicles. The firm and its professionals have been involvedin some of the largest and most complex CFOs completed to date.

Private equity research servicesCogent Analytics is a non-discretionary advisor that provides original pri-vate equity market research and fund analysis for a broad array of institu-tional investors clients. The firm uses proprietary algorithms and ratingmethodologies to evaluate fund and general partner performance and pro-vide our clients with an independent, unbiased assessment of the qualityof their partnership investments and overall private equity portfolios.

Types of ClientsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsGovernment and Public InstitutionsPublic Pension FundsPrivate Equity FirmsPrivate Equity Management Teams

Average Size of Assets Managed by Clients$10 million to $99 million$100 million to $499 million$500 million to $999 million

Average Size of Secondary Deals$10 million to $99 million$100 million to $499 million$100 million to $499 million

Capital Dynamics

Main OfficeMetallstrasse 9b, Zug, CH-6304 SwitzerlandPhone: +41 41 748 8444 | Fax: + 41 41 748 8440www.capdyn.com | [email protected]

Branch Offices399 Park Ave., 38th Floor, New York, NY 10022 Phone: (212) 798-3400 | Fax: (212) 798-3499

Key PersonnelMr. Filip Henzler, Principal

[email protected]. Helge Petermann, Director

[email protected]



Secondary Assets Under Management $1,500


Maximum Investment $150+ million


Interest SoughtVenture FundsLBO FundsMezzanine FundsSpecial Situations FundsReal Estate FundsU.S. FundsNon-U.S. FundsCapital Dynamics also specializes in structured solutions (securitizations, loans against private equity portfolios, etc.)

55


Types of ClientsPublic Pension FundsEndowments/FoundationsBanks/Financial InstitutionsFamily OfficesWealthy Individuals

Average Size of Assets Managed by Clients$100 million to $499 million$500 million to $999 million$1 billion +

Average Size of Secondary Deals$10 million to $99 million$100 million to $499 million$500 million to $999 million$1 billion +

Merrill Lynch Private Equity

Placements Group

Main Office4 World Financial Center, 250 Vessey St., 27th Floor, New York, NY 10080Phone: (212) 449-2682 | Fax: (212) 449-7969www.mlx.ml.com

Key PersonnelMr. Stan Lai, Director

[email protected]

OVERVIEWYear Founded1981

Services Provided Advisory services for secondary limited partnershipand direct interest sale transactions.

Types of ClientsWealthy IndividualsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsPublic Pension FundsPublic & Private Companies


Average Size of Secondary DealsUnder $10 million$10 million to $99 million$100 million to $499 million$500 million to $999 million$1 billion +

Types of ClientsWealthy IndividualsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsPublic Pension FundsCorporate Pension Funds

Average Size of Assets Managed by Clients$500 million to $999 million


CSFB Private Fund Group

Main Office11 Madison Ave., 13th Floor, New York, NY 10010Phone: (212) 325-2000www.csfb.com

Branch Offices650 California St., 32nd Floor, San Francisco, CA 94108Phone: (415) 249-2100

AT&T Corporate Center, 227 W. Monroe, 43rd Floor, Chicago, IL 60606Phone: (312) 750-3000

2200 Ross Ave., 29th Floor, Dallas, 75201Phone: (214) 979-4102

One Cabot Square, 6th Floor, London, E14 4QJPhone: +44 20 7888 8888

JT Trust Tower, 4-3-1 Toranomon, Minato-KU, Tokyo 105-6002 JapanPhone: +81 3 5404 9000

Key PersonnelMr. Joe Hill, Managing Director

[email protected]. Alex Moomjy, Managing Director

[email protected]. Katherine Courpas, Director

[email protected]. Margaret Marshall, Vice President

[email protected]. Robert Myers, Associate

[email protected]. Daniel Claster, Analyst

[email protected]


Professionals Worldwide 60+

Services Provided Placement agent of secondary private equity inter-ests, primary private equity limited partnership interests and other pri-vate fund financings.

56


Probitas Partners

Main Office417 Montgomery St. , Suite 910, San Francisco, CA 94104Phone: (415) 402-0700 | Fax: (415) 402-0052www.probitaspartners.com | [email protected]

Branch Offices1251 Avenue of the Americas, 44th Floor, New York, NY 10020Phone: (212) 403-3662 | Fax: (212) 403-3537

New Court, St. Swithin’s Lane, London, EC4P 4DUPhone: +44 20 7280 5801 | Fax: +44 20 7280 1866

Key PersonnelMr. Kelly DePonte, Principal

[email protected]. Craig Marmer, Partner

[email protected]. Dale Meyer, Partner (New York)

[email protected]. Nishant Saxena, Associate

[email protected]. Jefferson Stone, Vice President

[email protected]



Services Provided Probitas Partners provides advisory, agency andsophisticated structuring services to clients seeking liquidity and/or portfo-lio management solutions for alternative investment positions. Our suc-cess in Liquidity Management is built on the firm’s deep relationships withinvestors and fund managers, and on our ability to maintain strict confi-dentiality of information shared by sellers, general partners and prospec-tive purchasers through all phases of the liquidity process. LiquidityManagement can take a variety of forms that can be tailored to the indi-vidual needs of each investor: select secondary sales, "PrimarySecondaries", portfolio auctions, total return swaps, and portfolio securiti-zations. Probitas will oversee the entire sales and/or structuring process,working with legal counsel, general partners and potential purchasers toensure smooth execution and obtain the best results for the client.

Types of ClientsWealthy IndividualsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsPublic Pension FundsPublic & Private Corporations



The New York Private

Placement Network, LLC

(NYPPE)

Main Office55 Old Field Point Road, Greenwich, NY 6830Phone: (203) 422-5000 | Fax: (203) 422-2481www.nyppe.com | [email protected]

Branch Offices245 Park Ave., 39th Floor, New York, NY 10167Phone: (212) 672-1787 | Fax: (212) 792-4001

Key PersonnelMr. Dexter B. Blake, III, Managing Director

[email protected]. Laurence G Allen, Managing Member

[email protected]



Services Provided Transfer agent for secondary interests in privateequity partnerships and restricted securities of private and public com-panies. NYPPE provides specialized transfer, research, advisory, anddata services on over 2,100 private equity partnerships worldwide andover 1,000 restricted securities of private companies in the U.S.

Types of ClientsWealthy IndividualsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsPublic Pension FundsInsurance Companies, Governments, Corporations, RegulatoryOrganizations

Average Size of Assets Managed by ClientsUnder $10 million$10 million to $99 million$100 million to $499 million$500 million to $999 million$1 billion +

Average Size of Secondary DealsUnder $10 million$10 million to $99 million$100 million to $499 million$500 million to $999 million$1 billion +

57


community worldwide since 1992. As a natural extension of our fundrais-ing services to General Partners, Triago has developed a specialized prac-tice in secondary transaction over the years, as advisors to LimitedPartners whom seek to transfer or rebalance their private equity portfolios.• Discreet interface• Daily exposure and experience of the market• Covering single fund positions to diversified portfolios• A to Z guidance through the transfer process• Sellers, GPs and buyers from USA, Europe, Asia and the Middle East

Types of ClientsWealthy IndividualsBanks/Financial InstitutionsFamily OfficesEndowments/FoundationsPublic Pension Funds

Average Size of Assets Managed by ClientsUnder $10 million$10 million to $99 million$100 million to $499 million$500 million to $999 million$1 billion +

Average Size of Secondary DealsUnder $10 million$10 million to $99 million$100 million to $499 million$100 million to $499 million

Triago

Main Office1, boulevard de la Madeleine, Paris 75001 FrancePhone: +33 1 4703 0110 | Fax: + 33 1 4703 0699www.triago.com | [email protected]

Branch Offices630 Fifth Ave., 20th Floor, New York, NY 10111-2000Phone: (212) 332-3350 | Fax: (212) 332-3351

Key PersonnelMr. Mathieu Dréan, Partner

[email protected]. Firas Mallah, Associate

[email protected]. Bruno LaFleur, Associate

[email protected]. Stuart Sundlum, Advisor

[email protected]. Erin Sarret, General Counsel

[email protected]



Services Provided Triago has been a leading agent for the private equity

58


FUNDS MANAGED

» Industry Ventures Fund I, L.P.


FUND-RAISING PLANSThe firm plans to raise a new fund in 2004.

INVESTMENT CRITERIAMinimum $1 million

Maximum $100 million

Industry Preferences Software, IT Services, Internet Infrastructure andNetworking

INSTITUTIONAL BACKERSCSFB, Thomas Weisel Partners, Willowridge Investments, FamilyFoundations

Lake Street Capital, LLC

Main Office601 Montgomery St., 16th Floor, San Francisco, CA 94111Phone: (415) 291-0500 | Fax: (415) 837-3204www.lakestreetcapital.com

Key PersonnelMs. Gretchen Knoell, General Partner

[email protected]. Zachary Abrams, General Partner

[email protected]



Secondary Assets Under Management $300 million+

Description Lake Street Capital is focused on acquiring portfolios ofdirect venture investments in the secondary market. Once a portfolio isacquired, we continue to support the companies through follow-oninvestments as well as by providing strategic and financial advice. Weenhance our returns through our value-added, hands-on approach basedon our experience in corporate development combined with technologyinvestment banking and private equity.

FUND-RAISING PLANSThe firm plans to raise a new fund but details are undisclosed.

INSTITUTIONAL BACKERSPantheon Ventures, Pomona Capital

Industry Ventures LLC

Main Office650 California St., 24th Floor, San Francisco, CA 94108Phone: (415) 982-2953 | Fax: (415) 982-3027www.industryventures.com | [email protected]

Branch Offices6 Bayne Lane, Newburyport, MA 01950Phone: (978) 499-7606 | Fax: (978) 499-0686

Key PersonnelMr. Hans Swildens, Managing Director

[email protected]. Tom Litle, Managing Director

[email protected]. Ian Sobieski, Venture Advisor

[email protected]. Chris Sheehan, Venture Advisor

[email protected]. Rob Hayes, Venture Advisor

[email protected]. Aaron Day, Entrepreneur-in-Residence

[email protected]




Description Industry Ventures LLC is a venture capital firm that acquiresand manages emerging technology investments. The firm currently manages three limited partnerships representing $100 million ofcapital and over twenty portfolio companies. Our investment focus is toacquire direct and secondary investments in software, networking, and ITservice companies. We differ from typical venture partnerships by alsopurchasing individual venture investments and entire portfolios from cor-porations, financial institutions and other venture funds. Our managementteam’s experience and access to capital enable us to provide businesseswith the investment support, corporate development assistance, and man-agement advice necessary to maximize our investment returns.

FUNDS ACQUIRED

» EDS Ventures L.P.

Net Asset Value $45 millionYear Acquired 2003Original Manager Electronic Data Systems Year Originally Closed 1999

» Enron Ventures LLC

Net Asset Value $30 millionYear Acquired 2004Original Manager EnronYear Originally Closed 1999


59

Secondary-Direct ManagersFirm Listings

Original Manager Lucent Technologies

INVESTMENT CRITERIAIndustry Preferences Newtorking and Communications, Software &Services, Optical and Semiconductor Components

INSTITUTIONAL BACKERSColler Capital, BancBoston Capital, State of Michigan RetirementSystems and Abu Dhabi Investment Authority

Nova Capital Management

Main Office36 Dover Street, , London, W1S 4NHPhone: +44 20 7647 1800 | Fax: +44 20 7647 1801www.nova-cap.com

Key PersonnelMr. Michael Kelly, Joint Managing Director

[email protected]. David Williamson, Joint Managing Director

[email protected]


Description Nova Capital Management is a specialist managementcompany for private equity and venture capital portfolios.

PORTFOLIO ACQUIRED

» Transaction Price €100 millionYear Acquired 2002Original Manager LICA Development Capital

Peachtree Equity Partners

Main Office1170 Peachtree St., Suite 1610, Atlanta, GA 30309Phone: (404) 253-6388 | Fax: (404) 253-6377www.peachtreeequity.com | [email protected]

Key PersonnelMr. Matt Sullivan, Managing Director

[email protected]. Larry Deangelo, Managing Director

[email protected]. David Christopher, Principal

[email protected]




Description Peachtree Equity Partners is a $110 million Atlanta-basedprivate equity fund formed to acquire the private equity portfolio oflegacy Wachovia Corporation, and to make Structured Equity Investmentsin profitable, middle-market companies located primarily in the Southeast.The principals of Peachtree founded and managed the private equityinvestment business Wachovia Corporation.

MidOcean Partners

Main Office320 Park Ave., Suite 1700, New York, NY 10022Phone: (212) 497-1400www.midoceanpartners.com

Branch Offices1 Chester St., 3rd Floor, London SW1X 7HP United KingdomPhone: +44 20 7201 4300

Key PersonnelMr. Ted Virtue, CEO & Managing

[email protected]



Description MidOcean Partners is a New York and London based pri-vate equity firm that invests in stable growth middle market companiesin the United States and Europe. MidOcean was formed as an inde-pendent entity by the managers of DB Capital Partners, Deutsche Bank’sprivate equity group, to acquire Deutsche Bank’s late stage private equi-ty investments in the United States and Europe.

PORTFOLIO ACQUIRED

» Transaction Price $1.5 billionOriginal Manager Deutsche Bank AG

INSTITUTIONAL BACKERSNIB Capital Private Equity, Ontario Teachers’ Merchant Bank (OntarioTeachers’ Pension Plan), CPP Investment Board, HarbourVest Partners,Paul Capital Partners, Bregal, Coller Capital, Northwestern Mutual, TheYucaipa Companies and Presidential Life

New Venture Partners

Main Office98 Floral Ave., Murray Hill, NJ 7974Phone: (908) 464-0900 | Fax: (908) 464-8131www.nvpllc.com

Key PersonnelMr. Anthony Abrahams, CFO & PartnerMr. Andrew Garman, Managing PartnerMr. Stephen Socolof, Managing Partner Mr. Thomas Uhlman, Managing Partner



Description New Venture Partners, with a syndicate led by CollerCapital, acquired the former Lucent Technologies/Bell Labs portfolio of27 companies in December 2001, as the starting point for its independ-ent operation as a venture capital firm. The firm has since agreed tohelp manage a venture portfolio put together by a team at BritishTelecommunications plc.

PORTFOLIO ACQUIRED

» Transaction Price Under $100 millionYear Acquired 2001

60


INSTITUTIONAL BACKERSGoldman Sachs Vintage Funds

QTV Capital

Main Office12930 Saratoga Ave., Suite D-8, Saratoga, CA 95070Phone: (408) 865-0505 | Fax: (408) 865-1055 www.qtvcapital.com

Key PersonnelMr. Maury Domengeaux, Managing DirectorMr. Randall Meals, Managing DirectorMr. Steve Schlossareck, Managing Director


Description QTV Capital (QTV) is a private equity venture fund focusedon the storage infrastructure of the enterprise. The QTV team leveragestheir real-world business backgrounds and deep domain expertise tohelp entrepreneurs create and build successful companies. Founded inMarch of 2000, QTV Capital invests across the storage value-chain ininnovative start-ups that improve the capacity, reliability, flow, andsafekeeping of data throughout the enterprise.

FUNDS ACQUIRED

» Quantum Technology Ventures

Transaction Price $11 millionYear Acquired 2002Original Manager Quantum Corp.Year Originally Closed 2000

INVESTMENT CRITERIAIndustry Preferences Storage Components and Systems, Storage andSystem Networking, Data Management and Services Software, DataSecurity and Integrity, Enterprise Applications

INSTITUTIONAL BACKERSPantheon Ventures

Saints

Main Office475 Sansome St., Suite 1850, San Francisco, CA 94111Phone: (415) 773-2080 | Fax: (415) 835-5970www.saintsvc.com | [email protected]

Key PersonnelMr. Ken Sawyer, Managing Director

[email protected]. David Quinlivan, Managing Director

[email protected]. Lilian Shakelford, Managing Director

[email protected]. Ghia Griarte, Vice President

[email protected]


The funding for Peachtree was provided by the GS Vintage Funds, a seriesof investment partnerships managed by Goldman, Sachs & Co.’s PrivateEquity Group. The Goldman Sachs Private Equity Group manages over $10billion of capital devoted to private equity fund-of-funds strategies com-prising primary fund commitments, secondary investments and direct co-investments.

Peachtree pursues Structured Equity investments in established, profitablecompanies with $20 million to $200 million of revenue and a Minimum of$2 million of operating income. A typical investment will range from $5million to $15 million and can be in the form of debt, equity or a combina-tion of both. Peachtree’s investment style allows operating teas to accessvalue-added capital and retain management of their profitable companies.

FUNDS ACQUIRED

» Wachovia Capital Associates

Year Acquired 2002

INVESTMENT PLANSThe firm plans to raise a new fund but details are undisclosed.

INSTITUTIONAL BACKERSGoldman Sachs Vintage Funds

Protostar Partners LLC

Main Office13-15 West 54th St., 4th Floor, New York, NY 10019Phone: (646) 273-5200 | Fax: (646) [email protected]

Key PersonnelMr. Joseph Haviv, Managing MemberMr. Andrew Kohn, Partner

[email protected]. Kevin Haines, Partner

[email protected]. Helen Song, Partner

[email protected]. Chris Smith, Partner

[email protected]



Secondary Assets Under Management $1 billion

Description Protostar Partners is a New York based middle-market leveraged buyout firm dedicated to acquiring portfolios of direct privateequity investments. Protostar targets transactions ranging from $50 mil-lion to $250 million in equity value. Protostar’s One-Stop LiquiditySolution offers a unique offering to the market: in a single transaction,investors can gain liquidity on a broad range of buyout, venture capitaland fund investments. The firm offers a balanced mix of strategicinsight, operational capabilities and financial expertise, and is exclu-sively focused on building middle-market leaders.



Industry Preferences Industrial and Consumer Goods Companies

61


Key PersonnelMr. David Wachter, Managing Director

[email protected]. Steve Wertheimer, Managing Director

[email protected]. Robert Migliorino, Managing Director

[email protected]. John Kim

[email protected]




Description W Capital is a private equity firm providing liquidity alter-natives in the secondary market for direct private equity investments.Since its founding, W Capital has become a leading participant in pro-viding liquidity for the largest global corporations and financial institu-tions with close to $1 billion of invested Assets Under Management and$300 million of capital commitments.

Our experience, reputation and resources make us an ideal choice forcorporations, financial institutions and distressed limited partnershipswho desire to sell or restructure their private equity investment portfo-lios. By working with W Capital, current investors can generate cashand income from highly illiquid assets, reallocate assets into newstrategic areas and eliminate follow on capital requirements for non-strategic portfolio companies.

FUNDS ACQUIRED

» Tredegar Corporation

Net Asset Value $240 millionYear Acquired 2003Original Manager Tredegar Corporation

» 5 additional transactions, terms not disclosed

FUNDS MANAGED

» W Capital Partners I, L.P. and affiliates


» W Capital Partners, L.P


FUND-RAISING PLANSRecently completed fundraising.



Industry Preferences Diversified by sector. Acquire venture, growthand buyout.

INSTITUTIONAL BACKERSLeading worldwide institutional investors, pension funds, endowments,Foundations and family offices.

Secondary Assets Under Management $300+ million

Description Saints is a merchant venture capital firm headquartered in San Francisco that assists venture capital investors, financial institu-tions, mid-market buyout firms and corporations with immediate liquidity for their private investments.

FUNDS MANAGED

» Saints Ventures

Year Closed 2000

» Saints Capital I

Year Closed 2002

» Saints Capital II

Year Closed 2003

» Saints Capital III

Year Closed 2003

INVESTMENT CRITERIAMaximum $500 million

Industry Preferences IT, Healthcare, Industrial, Consumer, Retail,Communications

Vision Capital

Main Office54 Jermyn St., 5th Floor, London, SW1Y 6LX United KingdomPhone: +44 20 7389 6410 | Fax: +44 20 7389 6411 www.visioncapital.com | [email protected]

Key PersonnelMr. Julian Mash, Chief Executive Officer



Description Vision Capital, based in London, was founded in 1997 andspecialises in secondary direct portfolio acquisitions from private equityinvestors, as part of its focus on the whole private equity value chainfrom investors through private equity firms to their portfolio companies.It operates across multiple sectors, principally in Europe. The firm isbased in London with a team of 11 people with backgrounds rangingfrom private equity and investment banking to industry.

PORTFOLIO ACQUIRED

» Transaction Price $80 millionYear Acquired 2003Original Manager Morgan Grenfell Private Equity Ltd.

INSTITUTIONAL BACKERSGoldman Sachs Asset Management, Landmark Partners

W Capital Partners

Main Office245 Park Ave., 39th Floor, New York, NY 10167Phone: (212) 355-0770 | Fax: (212) 202-3979www.wcapgroup.com

62



65

Firm Rankings*

Secondary Buyers by Assets Under Management

1) Lexington Partners Inc. New York (212) 754-0411 $5,800

2) HarbourVest Partners LLC Boston (617) 348-3707 $4,100

3) Landmark Partners Inc. Simsbury, Conn. (860) 651-9760 $3,800

4) Coller Capital London +44 20 7631 8500 $3,500

5) Paul Capital Partners San Francisco (415) 283-4300 $3,200

6) CSFB Strategic Partners New York (212) 538-7680 $2,800

7) Goldman Sachs Asset Management New York (212) 855-0478 $2,500

8) AlpInvest Partners Inc. New York (212) 332-6240 $1,800

9) Pantheon Ventures Inc. San Francisco (415) 249-6200 $1,300

10) Partners Group Baar-Zug, Switzerland +41 41 768 85 85 $1,150

11) Pomona Capital New York (212) 593-3639 $1,000

12) PROTOSTAR Partners New York (646) 273-5200 $1,000

13) AXA Private Equity Paris +33 1 4445 9270 $700

14) FONDINVEST CAPITAL Paris +33 1 53 36 48 00 $500

15) LGT Capital Partners Ltd. Pfaeffikon, Switzerland +41 55 415 94 15 $500

16) Private Equity Investors, Inc. New York (212) 750-1228 $490

17) The Crossroads Group, a Lehman Brothers Company Dallas (214) 698-2777 $444

18) Adams Street Partners LLC Chicago (312) 553-7890 $400

19) ARCIS Group Paris +33 1 4723 8862 $350

20) Abbott Capital Management, LLC New York (212) 757-2700 $300

21) Lake Street Capital San Francisco (415) 291-0500 $300

22) Saints San Francisco (415) 773-2080 $300

23) W Capital New York (212) 355-0770 $300

24) Auda Advisor Associates LLC New York (212) 863-2300 $250

25) Greenpark Capital Ltd. London +44 20 7647 1400 $250

26) Liquid Realty Partners* San Francisco (415) 296-9500 $175

27) Thomas Weisel Partners LLC San Francisco (415) 364-2500 $140

28) FINAMA Private Equity Paris +33 1 44 56 59 96 $125

29) Harvest Fund Tel Aviv +972 3 710 8282 $115

30) Montauk Advisors LLC Huntington, N.Y. (631) 425-1994 $110

31) Peachtree Equity Partners Atlanta (404) 253-6388 $110

32) AIG Global Investment Group New York (646) 735-0520 $100

33) Industry Ventures San Francisco (415) 982-2953 $100

34) Permal Capital Management, LLC Boston (617) 399-9245 $100

35) Willowridge Incorporated New York (212) 369-4700 $100

36) INVESCO Private Capital Inc. New York (212) 278-9000 $15

37) Wilshire Private Markets Group Santa Monica, Calif. (310) 451-3051 $15

Firm Name/Location Phone Assets Under Management

*Liquid Realty acquires secondary interests in real estate funds only.


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Abbott Capital Management, LLC • • • • • •Access Capital Partners • • • •Adams Street Partners LLC • • • • • •AIG Global Investment Group • • • • • • •Allianz Private Equity • • • • • •AlpInvest Partners Inc. • • • • • • •ARCIS Group • • • • • • •Auda Advisor Associates LLC • • • • •AXA Private Equity • • • • • • •California State Teachers’ Retirement System • • • • •Capital Dynamics • • • • • • • •CMS Fund Advisors Inc. • • • • • • • •CSFB Strategic Partners • • • • •The Crossroads Group, a Lehman Brothers Company • • • • • • • •DuPont Capital Management • • • • • • • • •FINAMA Private Equity • • • •FONDINVEST CAPITAL • • • • • • •Goldman Sachs Asset Management • • • • • • •Greenpark Capital Ltd. • • • • •Hamilton Lane Advisors Inc. • • • • • •HarbourVest Partners LLC • • • • • • •Harvest Fund • •Horsley Bridge Partners • • •INVESCO Private Capital Inc. • • • • • • •J.P. Morgan Investment Management • • •Landmark Partners Inc. • • • • • • • •Lexington Partners Inc. • • • • • • •LGT Capital Partners Ltd. • • • • • •Liquid Realty Partners • • • • • •Montauk Advisors LLC • • • • • • •Ontario Teachers’ Merchant Bank • • • • • •Pacific Corporate Group, LLC • • • • • • • •Pantheon Ventures Inc. • • • • • •Partners Group • • •Pathway Capital Management • • • • • • •Paul Capital Partners • • • • • • •Permal Capital Management, LLC • • • • • • •Pomona Capital • • • • •Private Equity Investors, Inc. • • • • •Silicon Valley Bank •Trammell-Shott Capital Management • • • • • •VCFA Group/Venture Capital Fund of America • • • • • •Venture Investment Associates • •Thomas Weisel Partners LLC • • • • •Willowridge Incorporated • • • • • • • •Wilshire Private Markets Group • • • • • •Wilton Asset Management LLC, c/o SSGA

Firm Index by Interests SoughtAlphabetical by Firm Name

Type of Fund

Special Real Stakes inFirm Name Venture LBO Mezz. Situation Estate Private Cos. U.S. Non-U.S. Other


73

Appendix A

Investors That Have Backed Secondary Funds

Abbey National Treasury Services London 44 870 607 6000

Auda Advisor Associates LLC New York (212) 863-2300

Baxter International Inc. Deerfield, Ill. (847) 948-2000

California Public Employees’ Retirement (916) 326-3400System Sacramento, Calif.

Canada Pension Plan Investment Board (416) 868-4075Toronto

Castle Private Equity AG Vaduz, Liechtenstein 423 2 352929

Citigroup Private Equity/Travelers (212) 816-5519Insurance Co. New York

Colorado Fire & Police Pension Association (303) 770-3772Greenwood Village, Colo.

Colorado Public Employees’ Retirement (303) 832-9550Association Denver

E.I. du Pont de Nemours & Co. (302)477-6039Wilmington, Del.

Financial Institutions Retirement Fund (914) 694-1300White Plains, N.Y.

Florida State Board of Administration (850) 488-4406Tallahassee, Fla.

Friends Provident 44 870 607 1352Dorking, Surrey, United Kingdom

General Motors Asset Management New York (212) 418-6100

GIC Special Investments Pte Ltd (650) 593-3100Redwood City, Calif.

Golden LEAF Foundation Rocky Mount, N.C. (252) 442-7474

Granville Baird Capital Partners London 44 207 488 1212

Hannover Re Hannover, Germany 49 5 115 60 40

Hartford Municipal Employees’ Retirement (860) 757-9100Fund Hartford, Conn.

Haverford College Haverford, Penn. (610) 896-1223

Houston Firefighters’ Relief & Retirement (281) 372-5100Houston

IBM Retirement Fund White Plains, N.Y. (914) 642-3347

Illinois Municipal Retirement Fund (630) 368-5380Oak Brook, Ill.

Indiana University Foundation Bloomington, Ind. (812) 855-8311

Liberty Mutual Insurance Group Boston (617) 574-5868

Los Angeles County Employees’ Retirement (626) 564-6000Association Pasadena, Calif.

Massachusetts Institute of Technology (617) 452-3696Cambridge, Mass.

Massachusetts Pension Reserves (617) 946-8401Investment Trust Boston

Memorial Sloan Kettering Cancer Center (212) 639-3413New York

Metropolitan Life Insurance Co. New York (212) 578-8532

Michelin North America Inc. Greenville, S.C. (864) 458-6399

Michigan Department of Treasury (517) 373-4330Lansing, Mich.

Minnesota State Board of Investments (651) 296-3328St. Paul, Minn.

Montana Board of Investments Helena, Mont. (406) 444-0001

New Mexico State Investment Council (505) 424-2500Santa Fe, N.M.

New York State Common Retirement Fund (518) 486-4641Albany, N.Y.

New York State Teachers’ Retirement (518) 447-2741System Albany, N.Y.

NIB Capital Bank N.V. The Hague, Netherlands 31 703 425 425

Ohio Carpenters Health & Welfare Fund (330) 652-3475Niles, Ohio

Ohio Police & Fire Pension Fund (614) 628-8246Columbu, Ohio

Oregon State Treasury Salem, Ore. (503) 378-4111

Overseas Asset Management (Cayman) Ltd. (345) 949-8787George Town, Grand Cayman, Cayman Islands

Pacific Mutual Life Insurance Co. (949) 219-3096Newport Beach, Calif.

Pennsylvania Public School Employees (717) 787-8540Retirement Harrisburg, Pa.

Pennsylvania State Employees Retirement (717) 787-9008System Harrisburg, Pa.

Phoenix Life Insurance Co. Hartford, Conn. (860) 403-5594

Public Employees Retirement System of Ohio (614) 228-1151Columbus, Ohio

Rhode Island State Treasury Providence, R.I. (401) 222-2287

San Francisco Employees’ Retirement (415) 487-7003System San Francisco

State of Connecticut Retirement (860) 702-3162& Trust Funds Hartford, Conn.

Strategic Investment Solutions Inc. (415) 362-3484San Francisco

Teacher Retirement System of Texas (512) 542-6576Austin, Texas

TIAA-CREF New York (212) 490-9000

University of Texas Investment (512) 225-1600Management Co. Austin, Texas

University of Washington Seattle (206) 685-1822

Virginia Retirement System Richmond, Va. (804) 344-3161

Firm Name/Location Phone Number

2004 Gsm

Documents

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