Preqin Private Equity Spotlight October 2010

8/8/2019 Preqin Private Equity Spotlight October 2010

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AIFM Directive 2010 Conference

Tuesday 30 November 2010

Central London

www.aifmdirective.co.uk

Dear Spotlight Subscriber,

Preqin is delighted to have arranged a special invitation and 20% discount for Preqin Spotlight readers who would like to

attend Private Equity Forums AIFM Directive 2010 Conference in London, on Tuesday 30 November 2010. Please quote ref.

PreqinAIFM book your place for just 364.40 Member of trade body (RRP 455.50) / 396.00 Non-member (RRP 495.00).

The AIFMD is still not a done deal and a number of issues remain subject to negotiation and are critical to the alternative assets

industry, including but not limited to; the disproportionate burden the disclosure regime would place on SMEs, the third country

issue and the implication article 27a would have on management buy-outs. Everyone engaged in the sector will need to

become familiar with the details and likely impact of the new legislation.

Through company case studies, in-depth presentations and panel discussions, Private Equity Forum's AIFM Directive 2010

Conference will provide you with clarification on the next series of changes to ensure you are aware of the necessary key

actions and deadlines.

Confirmed speakers include:

Godfrey Bloom MEP - Coordinator for the Europe of Freedom and Democracy Group on the Economic and Monetary Affairs

Committee in the European Parliament UK Independence Party (UKIP)

Jarrod Cowley-Grimmond, Director, Finance Sector Development, Commerce & Employment Department States of

Guernsey

James Greig, Partner PricewaterhouseCoopers Legal (PwC Legal)

Sam Kay, Partner Head of Investment Funds Travers SmithJustin Partington, Commercial Director Ipes (UK) Limited

Joanna Perkins, Director, Financial Markets Law Committee (FMLC) established by the Bank of England

Ian Sayers, Director General Association of Investment Companies (AIC)

Jarkko Syyrila, Director International Relations Investment Management Association (IMA)

Conference chairs:

Martin Arnold, Private Equity Correspondent Financial Times (FT)

Paul Hodkinson, Editor Private Equity News (PEN)

I will also be participating in a panel discussion at the conference, and hope to have an opportunity to connect with you there.

Best Regards,

Tim FriedmanHead of Communications

Preqin

To register For sponsorship opportunities:

Tel: +44 (0)845 463 7621 Tel: +44 (0)845 269 7842

Email: [email protected] Email: [email protected]


2/16

Private EquitySpotlightOctober 2010

Secondaries Spotlight:Fund type preferences of buyers and

sellers in the secondary market.

Page 11.

Conferences Spotlight:The months private equity events.

Page 12.

Investor News:

All the latest news on private equityinvestors.

Page 14.

Regulars

Fundraising Spotlight:In Q3 2010 private equity fundraisingincreased from the previous quarter,but by how much? And what is the

outlook in terms of funds on the road,going into the final quarter of the year?

Page 7.

Performance Spotlight:

Preqin has analyzed the returns

generated by private equity partnerships

as at 31 March 2010. The NAV of all

private equity funds has changed, but to

what?

Page 9.

Deals Spotlight:Q3 2010 was the strongest quarterfor deals since the collapse of

Lehman Brothers. We examine thecharacteristics of deals made in thequarter and in particular the shifttowards European-based deals.

Page 10.

Feature

Overview of Alternatives Investment Consultants

A growing number of institutions active in private equity and other alternatives areutilizing investment consultants to help them make decisions about allocations andspecific investments. We conducted a survey to see how satisfied these investors are

with their consultants. Page 3.

Q3 2010 Special

Preqin has moved!

Please note, that as of 18th October,2010 Preqins London address haschanged:

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Tel: +44 (0)20 7645 8888

You can download all the data in this months Spotlight in Excel.Wherever you see this symbol, the data is available for freedownload on Excel. Just click on the symbol and your downloadwill begin automatically. You are welcome to use the data in anypresentations you are preparing, please cite Preqin as the source.

Welcome to the latest edition

of Private Equity Spotlight, the

monthly newsletter from Preqin

providing insights into private

equity performance, investors and

undraising. Private Equity Spotlight

combines information from our onlineproducts Performance Analyst,

nvestor Intelligence, Fund Manager

Profiles, Funds in Market, Secondary

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The 2011 Preqin AlternativesInvestment Consultant Review

FEATURED PUBLICATION:

The 2011 Preqin Alternatives

Investment Consultant Review

More information available at:

www.preqin.com/aic

October 2010Volume 6 - Issue 10

alternative assets.intelligent data.


3/16

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4/164 Private Equity Spotlight, October 2010 2010 Preqin Ltd. www.preqin.com

4

Investment consultants are an integral part of the investment process

in the alternatives space. They can be a necessary and useful

intermediary or advisor on an investors dealings across an array

of asset types, providing services such as manager search and

selection, asset allocation and investment policy development, and

performance monitoring. They are ever present in all regions of theworld and advise a diverse range of institutional investors, with client

types ranging from those with relatively small investment portfolios,

such as high-net-worth individuals and single family offices, to

those with more complex and larger portfolios, such as insurance

companies and pension funds.

Investment consultants perform an important role within the

alternative assets industry. Investors benefit from the advice and

guidance their consultants provide, as well as the access they can

gain through their consultants to specific managers or funds. Fund

managers can also benefit from establishing relationships with

consultants as this can be an important step towards garneringcommitments from their clients.

This article examines some of the vital attributes of the investment

consulting industry using data from the soon-to-be-released 2011

Preqin Alternatives Investment Consultant Review.

Overview of the Industry

The Preqin Investment Consultant database has information on

more than 300 investment consultants which are active in the

alternatives space. As Fig. 1 shows, 13% offer consulting services

on a discretionary-only basis and a further 39% offer their services

on a non-discretionary-only basis. Just under half offirms (48%) offer

both types of service.

The majority (65%) of investment consultants are headquartered in

North America. A further 29% are based in Europe and the remaining

6% in Asia and Rest of World. Though few investment consultants

active in the alternatives space are headquartered in Asia and Rest

Source: Preqin

Fig. 1: Breakdown of Alternatives Investment Consultants byNature of Services Provided

77%

72%

59%

42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Private Equity Hedge Funds Real Estate Infrastructure

Source: Preqin

Fig. 2: Proportion of Alternatives Investment Consultants Offering

Services by Asset Class

ProportionofFirms

Feature Overview of Alternatives Investment Consultants Download Data

Investment consultants are being utilized by a growing number of institutions active in alternatives, DamiSogunro looks at how satisfied these investors are and what this means for the investment consultantspace.

Overview of Alternatives Investment

Consultants
http://www.preqin.com/go.aspx?lid=1374http://www.preqin.com/go.aspx?lid=1374



5

of World, largerfirms which are headquartered in North America or

Europe often have satellite offices in other regions of the world, in

places such as Australia, Singapore and China.

Of all the consultants active in alternatives, 64% advise investors

on their activity in private equity, 59% on hedge funds, 49% on real

estate and 34% on infrastructure, as shown in Fig. 2. While somefirms specialize in investments in one asset class only, others advise

investors across the whole spectrum of alternative asset classes.

Review and Performance of Investment Consultants

Preqin undertook a survey of 120 leading institutional investors that

make use of the services of an investment consultant for some or all

of their investments in the alternatives space, the full results of which

can be seen in the 2011 Preqin Alternatives Investment Consultant

Review. The split of respondents is representative of the global make-

up of institutional investors in alternatives by type, size, and location.

Investors were asked questions on performance-related issues and

their investment consultant review procedure.

Survey respondents were asked to rank the level of importance they

place on several of the key attributes they consider when assessing

and reviewing investment consultants. Each attribute was ranked on

a scale of one to five, with one denoting a low level of importance

and five denoting a high level of importance. Fig. 3 shows how LP

opinions in this area have changed over the past couple of years. On

average, attributes of the most importance to clients when reviewing

investment consultants have continued to be both the consultants

ability to demonstrate a good track record in fund selection and its

ability to provide a good level of customer service. In 2010, survey

respondents gave these attributes an average importance rating of

4.7 and 4.5 respectively.

Surprisingly, the lowest average importance rating was given to the

need for consultants to have an international presence; this was given

an average rating of 3.9 in 2008, 3.5 in 2009, and 3.4 in 2010. It is

possible that investors are more cautious about making investments

outside of their domestic region. Alternatively, those looking to invest

internationally may be seeking local advisors.

Value for Money of Investment Consultants

Many investors have placed the costs incurred by their investment

portfolios under increasing scrutiny and consequently the ability

of investment consultants to provide top quality services at acompetitive price is also of increasing importance to investors. Survey

respondents gave the need for consultants to charge a competitive

level of fees an average rating of 4.1, rising significantly from the 3.2

average importance rating this attribute was given in our 2008 survey.

In order to assess how well consultants were measuring up to this

requirement, investors were asked whether or not they felt their

consultants provided good value for money. Fig. 4 shows that overall,

27% of respondents felt their consultants provide excellent value

for money and a further two-thirds rated them as above average or

average. Only a small percentage of survey respondents (1%) feel

the services their consultants supply represent poor value for money.

When the asset classes are considered separately, the proportion

of respondents that felt their advisor offered good value for money

varied greatly. 72% felt that their private equity consultants provide

excellent or above average value for money, while a much smaller

11%

19%

46%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Very Likely Possibly Unlikely Definitely Not

Source: Preqin

Fig. 5: Likelihood of Investors Seeking New or Additional Adviceon Alternative Investments in the Next 12 Months

ProportionofInvestors

Likelihood of Investor Seeking New or Additional Advice in theNext 12 Months

4.54.3 4.3

3.2

3.94.2 4.2 4.3

3.9

3.5

4.74.5

4.1 4.1

3.4

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

ProvenStrong

TrackRecordin

FundSelection

Client

Communication/

GoodCustomer

Service

Good

Relationships

withTop

Managers

CompetitivePrice

International

Presence

2008

2009

2010

Source: Preqin

Fig. 3: Attributes Clients Consider When Reviewing AlternativesInvestment Consultants

AverageRatingof

Importance

27% 21% 15%

35%27%

34% 46%

8%

37%

30%

33%30%

69%

20%40%

5% 3% 8% 6%3%1% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Overall

HedgeFund

Consultants

Infrastructure

Consultants

PrivateEquity

Consultants

RealEstate

Consultants

Poor

Below Average

Average

Above Average

Excellent

Source: Preqin

Fig. 4: Alternatives Investment Consultants Success in ProvidingGood Value for Money

ProportionofAssetClass

Respondents

Feature Overview of Alternatives Investment Consultants Download Data



23% believed that their infrastructure advisors service was of this

standard. 27% and 30% of real estate advisors were felt to offer

excellent or above average value for money respectively, while

hedge fund consultants were rated as providing either excellent or

above average value for money by 67% of respondents.

Seeking New Advice?Investors were also asked about the likelihood that they would seek

new or additional advice on alternative investments in the next 12

months. As shown in Fig. 5, just under a third of respondents may

seek new or additional advice at some point over the next 12 months.

Investors could be motivated to seek a new consultant by a number

of factors, such as an increase in the rate of investments, a change

in strategy, dissatisfaction with their current consultant, or as a result

of a statutory requirement to issue RFPs for consultants at certain

points in time. Fig. 5 also shows that 46% stated that it was unlikely

that they would be seeking new investment consultants in the coming

year and 24% stated that they would definitely not be seeking a new

consultant or additional advice.

Future Outlook

Overall, our survey found that the majority of investors rated their

consultant(s) as having above average performance in most key

areas, such as value for money and customer service, showing

that alternatives investment consultants are generally meeting the

needs of their clients. Little movement in terms of the relationships

investors maintain with consultants is also to be expected: 70% of

investors are unlikely to seek new or additional advice and just 11%

indicated that that it was very likely for them to do so. In terms of

client satisfaction, only 6% of respondents expressed dissatisfaction

with their consultant(s) by rating the value for money they provide as

below average or poor.

Considering these statistics, investors currently appear to be largely

content with their investment consultants. It is also clear that the key

attributes that investors look for in their investment consultants are

the provision of a good level of customer service and communication,

and evidence of their ability to identify and select the top performing

managers for their clients while remaining competitive in the fees

they charge for their services.

The 2011 Alternatives Investment Consultant Review

The 2011 Preqin Alternatives Investment ConsultantReview is a necessary guide for all fund marketers andfund managers looking for information on the alternativeinvestment consultant industry. The Review containsprofiles for over 300 consulting firms, with informationon the asset classes they cover, services on offer, keyfinancial information, and direct contact information forthe relevant contacts, alongside details showing whichconsultants are being retained by over 1,700 investors.

Feature Overview of Alternatives Investment Consultants

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For more information or to purchase the publication with apre-publication discount, please visit:www.preqin.com/aic

Data Source:

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The 2011 Preqin Alternatives Investment Consultant Review is a necessary guide for all fund marketers and fund managers

looking for information on the alternative investment consultant industry.

Key content includes:

Vital analysis on all aspects of the alternatives investment consultant universe.Includes key trends plus information on the markets make-up.

Specific intelligence on activity in private equity, real estate, hedge funds andinfrastructure included in all analysis and profiles.

Comprehensive profiles for over 300 investment consultants. Profiles include key individual contact information, areas of speciality, plans for

2011 and beyond, financial information, service coverage etc. Details for over 1,500 sample clients. See who is advising whom for each area of

alternatives. See which firms operate a buy-list, which firms considerfirst-time managers, and

what they look for when considering new opportunities. Results of our in-depth survey showing investor satisfaction with their consultants

and other key information. League tables.

The 2011 Preqin AlternativesInvestment Consultant Review

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alternative assets.intelligent data.



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An unbeatable insight into project outlook, anticipated returns, raising capital and

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Value creation for private equity and

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Fundraising Q3 2010 Fundraising Overview Download Data

In Q3 2010, 83 private equity funds worldwide reached

a final close, raising an aggregate $59bn (Fig. 1). This

represents a 20% increase on the amount raised in the

previous quarter, during which quarterly fundraising fell to a

six-year low. Although improved from the previous quarter,

Q3 private equity fundraising fell short of the $66bn raised

in Q1 of this year. The figures suggest that the fundraising

market remains challenging for managers currently on theroad.

The length of time that funds which closed in Q3 2010

spent on the road is indicative of the difficult market

conditions faced by fund managers. Over a quarter of the

funds that reached a final close in Q3 2010 were in market

for 19-24 months, as shown in Fig. 2. A further 36% had

been on the road for between 25 and 36 months, while 3%

had been fundraising for over three years, as illustrated in

Fig. 2. Fundraising generally took longer for funds closed

in Q3 2010 than in the previous quarter: the proportion of

funds that reached a final close in 12 months or less fell

from 24% to 15%.

Buyout funds raised the most capital in Q3 2010, with 13

such funds raising an aggregate $21bn (Fig. 3). Although

one fewer buyout fund closed than in the previous quarter,

the aggregate capital raised by buyout funds increased

significantly from Q2, when 14 such funds raised an aggregate

$13.9bn. The second-largest amount of capital raised in Q3 2010

was accounted for by real estate funds, with 18 such funds raising

a combined $8.7bn. Venture funds were the most abundant and

$3.7 bn was raised by the 20 funds of this type that closed during

the quarter. Infrastructure fund closes were the least numerous, but

6%

9%

19%

27%

21%

15%

3%

0%

5%

10%

15%

20%

25%

30%

1-6 Mon th s 7-12Months

13-18Months

19-24Months

25-30Months

31-36Months

37Months +

Fig. 2: Time Spent on the Road for Funds Closed in Q3 2010

AggregateCapitalRaised($bn)

Time Spent on the Road

ProportionofFundsClosed

222119

38

5652485163

9581

108121

139149

126124

207

123

196

170

198

123

162

76

94

595666

4959

0

50

100

150

200

250

Q12003

Q22003

Q32003

Q42003

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

Q12006

Q22006

Q32006

Q42006

Q12007

Q22007

Q32007

Q42007

Q12008

Q22008

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Fig. 1: All Private Equity Fundraising by Quarter,

Q1 2003 - Q3 2010

Private equity fundraising in Q3 2010 was up from Q2 but by how much? Claire Wilson investigates.

Fundraising Spotlight: Q3 2010 Overview



the three funds that did close during the quarter raised the third-largest

amount of aggregate capital, $8.4bn.

Register Today: Call: +44 (0) 20 7017 7790 Fax: +44 (0) 20 7017 7824 Email: [email protected] the latest programme and to register, please visit: www.informaglobalevents.com/KM2550PES1

New updates for 2010-11,including:

Regional Outlook Economic Outlook for the CEE

Region CEE Private Equity: A Research

Based Overview

General Partner Outlook for CEE Limited Partner View of

Opportunities in CEE

Financing Deals How are deals being financed? The role of Mezzanine

Fundraising Raising a CEE Fund LPs Commitments to Funds

Country Focuses Russia Poland SEE/Turkey Baltics

Plus Exit Strategies Distressed Opportunities Restructurings Regulation The Mid-Market Legal Update

Hear from over 30 leading industry expertsincluding:

Date: 2nd & 3rd November 2010, London

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Post-Conference Workshop:

StructuringFinance

inCEE LeveragedBuy Outs

4th November 2010, London

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4th Annual

Martin Prohazka

GAIN CAPITAL

Indrek Kaldoja

SWEDFUND

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RIVERSIDE EUROPE

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EQUITY ASSOSCIATION

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Sean GlodekDARBY OVERSEASINVESTMENTS

Private EquityCEE 2010 Fundraising & Deal Structuresin the New Fund Cycle

13

4

18

3

20

5

11

54

21.1

8.9 8.7 8.4

3.7 3.72.9

1.0 0.6

0

5

10

15

20

25

Buyout

Distressed

Debt

RealEstate

Infrastructure

Venture

Secondaries

Fundof

Funds

Mezzanine

Other

No. FundsRaised

AggregateCapitalRaised($bn)

Fig. 3: Private Equity Fundraising by Type, Q3 2010

Fund Type

Data Source:

Preqins Funds in Market database contains details of over

1,500 private equity funds on the road seeking capital, plus

information on every vehicle that has closed since 2003. For

more information about this product and how it can assist you,

please visit:

www.preqin.com/fim

Fundraising Q3 2010 Fundraising Overview Download Data



Funds on the Road in Q4 2010Fundraising

Helen Wilson examines the number and type of funds on the road at the start of Q4 2010.

Fundraising Spotlight: Funds on the Road

Download Data

Q4 2010 sees the first quarter-on-quarter increase in the

aggregate capital targeted by funds on the road for over a year

and a half. Throughout 2010 the number and aggregate target of

private equity vehicles on the road had been in decline, but going

into the final quarter of the year there are 1,547 funds targeting

an aggregate $571bn, marking a 2% increase from the previous

quarter in the capital targeted.

Despite this increase there are still fewer vehicles on the road

and less capital being targeted than at the beginning of the year,

as can be seen in Fig. 1. At the start of the year 1,582 funds

were seeking to raise an aggregate $691bn, 17% more capital

than is being targeted by funds on the road as of Q4 2010. The

average target size of funds in market has also decreased over

this period. In Q1 2010 the average target of a fund in market

stood at $440mn; as of Q4 2010 it stands at $370mn. These

figures show that the difficult fundraising conditions in the wake

of the financial crisis are yet to ease and a significant number of

fund managers with vehicles on the road are having to reduce

their fundraising targets as a result.

A large proportion of the funds in market are primarily focused

on North America, with 696 such vehicles targeting an aggregate

$275bn, as shown in Fig. 2. Primarily North America-focused

funds account for 45% of the number of funds in market and

nearly half of the aggregate target capital. Such funds also have

the largest average target size out of all funds in market, with the

average fund target of a North America-focused fund standing

at $400mn, compared to $360mn for Europe-focused funds and

$340mn for Asia and Rest of World-focused funds.

Asia and Rest of World-focused funds are targeting the second-

largest amount of capital. 485 such vehicles are seeking $165bnin aggregate commitments, accounting for 31% of the number of

funds and 29% of the aggregate targeted capital of all funds in

market.

There are currently 366 primarily Europe-focused funds on the

road targeting an aggregate $131bn in investor capital. Europe-

focused funds account for 23% of the global targeted capital and

24% of the number of funds on the road.

The largest fund currently in market is BC European Cap IX, a

European-focused buyout fund targeting capital commitmentsof 6bn. The fund, which is managed by London-based firm

BC Partners, plans to invest in a diverse range of industries

throughout Europe.

1,304

1,6241,673

1,6221,574 1,582 1,562 1,522 1,547

705

889 887807 754

691636

560 571

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010

No. Fundson Road

AggregateTarget($bn)

696

366

485

275

131165

0

100

200

300

400

500

600

700

800

North America Europe Asia and Rest of World

No. Fundson Road

AggregateTarget($bn)

Fig. 1: Funds in Market by Quarter, Q4 2008 - Q4 2010

Primary Geographic Focus

Fig. 2: Composition of Funds in Market by Primary

Geographic Focus

Data Source:

Preqins Funds in Market database contains details of over

1,500 private equity funds on the road seeking capital, plus

information on every vehicle that has closed since 2003. For

more information about this product and how it can assist you,

please visit:

www.preqin.com/fim



Performance Performance of Private Equity Funds Download Data

Sam Meakin looks at the performance of private equity firms as at 31 March, 2010.

Performance Spotlight

Using data from Performance Analyst, Preqin has analyzed the

returns generated by private equity partnerships as at 31 March 2010

in order to provide an independent and unbiased assessment of the

industrys performance. Preqin currently holds transparent net-to-LP

performance data for over 5,200 private equity funds of all types and

geographic focus. In terms of aggregate value, this represents around

70% of all capital ever raised by the industry.

Fig. 1 shows the change in net asset value (NAV) between successive

quarters from Q2 2009 to Q1 2010. The industrys fund valuations

have consistently increased quarter on quarter throughout the period.

The largest change occurred over Q3 2009, when the non-weighted

average change in net asset value for all private equity funds was

4.1%, and the weighted change was 6.7%. This weighted change

takes into account fund sizes, suggesting that larger funds have

outperformed smaller funds in each of the four quarters shown. Q1

2010 data shows an increase of 2.2% in the weighted metric and 1.7%

in the non-weighted. However, it is important to note that larger funds

had previously been more adversely affected by the financial crisis

than smaller funds.

Fig. 2 shows the horizon IRR of all private equity funds over the one-,

three- and five-year periods compared to the returns achieved by

three public indices benchmarks. The overall private equity horizon

IRR for the one-year period to 31 March 2010 stands at 21.8%, an

improvement on the 13.8% posted as of 31 December 2009 and

significantly better than the -9.2% as of Q3 2009 and the -27.6% as of

Q4 2008.

The one-year returns to Q1 2010 for the Standard & Poors 500,

MSCI Europe and MSCI Emerging Markets were 49.8%, 56.1%

and 81.1% respectively, higher than the one-year private equity

returns to Q1 2010. As with private equity, the public indices were allposting negative returns as of the first quarter of 2009 but have been

improving since.

Over the three-year period, the returns achieved by all four indices

are more closely bunched, and the private equity horizon IRR to 31

March 2010 is -0.3%, while the figure for the five-year period stands at

16.8%.The three- and five-year returns for the Standard & Poors 500

were -4.2% and 1.9% respectively.

2.7%

4.1%

3.4%

1.7%

5.0%

6.7%

5.4%

2.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Q2 2009 Q3 2009 Q4 2009 Q1 2010

Non-Weighted

Weighted

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1 year to Mar 2010 3 years to Mar2010

5 years to Mar2010

All PrivateEquity

S&P 500

MSCI Europe

MSCIEmergingMarkets

Fig. 1: All Private Equity Change in NAV by Quarter

AverageChangeinNAVfro

mP

reviousQuarter

AnnualizedReturns

Fig. 2: Private Equity Horizon IRR vs. Public Indices,

as of 31 March 2009

Data Source:

Preqins Performance Analyst database contains full metrics

for over 5,200 named vehicles. For more information about this

product and how it can assist you, please visit:

www.preqin.com/pa



A total of 515 private equity-backed buyout deals were

announced in Q3 2010 with an aggregate value of $66.7bn.

This represents a 29% increase in the aggregate value from Q2

2010, when 498 deals were announced with an aggregate value

of $51.9bn, and a notable 147% increase on the value reported

in Q1 2010, which saw 396 deals valued at $27bn. Deal flow

globally in Q3 2010 represents the strongest quarter for buyoutdeals in the post-credit crunch landscape, with the aggregate

value of deals announced in Q3 2010 more than treble the value

of deals seen during the same period in 2009.

Q3 2010 has seen aggregate deal value remain strong globally

in comparison to the previous year, with deal values in North

America and Europe significantly higher than during 2009. In

Q3 2010, North American aggregate deal value increased 6.5%

from the previous quarter, with 249 deals valued at $34.2 bn

announced in Q3 2010, up from the 233 buyouts valued at $32bn

in Q2 2010. Furthermore, Q3 2010 deal flow in North America

represents a significant 165% increase on the aggregate deal

value seen in the region in Q1 2010, and remains notably

higher than deal flow witnessed in the region during 2009.

However, North American deal flow remains significantly lower

in comparison to the buyout boom era of 2007, which saw

$124.3bn and $173.1bn in aggregate deal value during its first

and second quarter, respectively.

European aggregate deal value in Q3 2010 increased

significantly from the previous quarter, with 186 buyouts valued

at $26.3bn announced during the quarter, a notable 120%

increase from the $12bn in deal value witnessed during Q2 2010,

and close to treble the European aggregate deal value seen in

Q1 2010. Deal flow in Asia and Rest of World has continued tohover above the levels seen in 2009, with 80 deals valued at

$6.2bn announced in the region, a 62% increase from the $3.8bn

in value reported a year earlier in Q3 2009. However, the value

of deals in Asia and Rest of World has dipped slightly from the

$7.8bn in value witnessed during Q2 2010.

Q3 2010 PE-Backed DealsDeals

Manuel Carvalho looks at the strongest quarter for buyout deals in the post-credit crunch landscape.

Deals Spotlight: Q3 2010 PE-Backed Deals

Download Data

0.0

50.0

100.0

150.0

200.0

250.0

0

100

200

300

400

500

600

700

800

Q12007

Q22007

Q32007

Q42007

Q12008

Q22008

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Number of Deals Aggregate Deal Value ($bn)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Q12008

Q22008

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

NorthAmerica

Europe

Asia andRest ofWorld

Fig. 1: Quarterly Number and Value of Deals,

Q1 2007 - Q3 2010

Numbero

fDeals

AggregateDealValue($bn)

Fig. 2: Quarterly Aggregate Deal Value by Regional Focus,

Q1 2008 - Q3 2010

Aggregate

DealValue

($bn)

Preqins Deals Analyst database contains in-depth data

for over 15,000 buyout deals across the globe. For more

information about this product and how it can assist you,

please visit: www.preqin.com/deals



Source: Preqin

Fig. 1: Breakdown of Secondary Fund of Funds Managers byPrimary Regional Location

13%

39%

22%

13% 13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Less Than$100mn

$100-249mn $250-499mn $500-999mn $1bn or More

Source: Preqin

Fig. 2: Breakdown of Secondaries Funds Currently Fundraising byTarget Size

Prop

ortionofFunds

Secondaries News

Secondaries Spotlight

Secondaries Secondaries Spotlight

According to Preqins unique pricing model, a $10,000,000 commitment to the median 2008 venture fund - which would have called

$2,690,000 and has a reported net asset value (NAV) of $2,359,130 - would today fetch $1,941,304 on the secondary market, or

approximately 82% of its NAV.

CDP Capital Private Equity Group is bringing a private equity

portfolio to the secondary market.The asset manager, which is responsible for the private equityportfolio of the Caisse de dpt et placement du Qubec, is lookingto sell a $800 million portfolio of private equity fund stakes onthe secondary market. Although it is unknown exactly which fundstakes the asset manager is looking to sell, the portfolio reportedlyconsists of buyout and venture funds. CDP Capital Private EquityGroup has previously looked into selling a private equity portfoliothat comprised C$1-2 billion of commitments, with approximatelyhalf of them drawn down, but cancelled the sale at the beginning ofthe year.

Indiana Public Employees Retirement Fund has made acommitment to Lexington Capital Partners VII.The $14.2 billion pension fund committed $100 million to thesecondaries fund, which is targeting $5 billion from investors. Thevehicle seeks to purchase LP stakes in established global buyout,venture capital and mezzanine funds. As well as gaining exposure

to the secondary market through secondaries vehicles, the

retirement fund also actively purchases fund stakes directly on thesecondary market. It makes secondary investments for a numberof reasons, including favourable pricing, gaining access to funds ithas previously not had exposure to, and increasing its exposure tofunds it has already committed to.

Fig.1 shows a breakdown of the regional location ofsecondary fund of funds managers and private equity fund offunds managers raising dedicated secondaries funds. NorthAmerica-based managers dominate the market, comprising51% of all secondary fund of funds managers. Managersbased in Europe account for 45% of the total, whilemanagers based elsewhere make up the remaining 4%. Asthe private equity market in Asia continues to expand andmature, the number offirms managing secondaries vehicleslocated in Asia is expected to increase.

The breakdown of secondaries funds currently fundraisingby target size is shown in Fig. 2. 39% of secondaries fundscurrently in market are seeking $100-249 million frominvestors. 13% are targeting $1 billion or more in commitments.Another 13% are at the smaller end of the spectrum, seekingless than $100 million in capital commitments.

Data Source:

Secondary Market Monitor (SMM) is a service available

free of charge to accredited LPs. The service enables LPs

to obtain indicative pricing indications on all or part of their

private equity and private equity real estate portfolios.

www.preqin.com/smm

Download Data



Conferences

Conferences Spotlight: Forthcoming Events

Conference Dates Location Organizer

SuperReturn Middle East 17 - 20 October 2010 Abu Dhabi ICBI

Asset Allocation Forum in Alternatives 2010 18 October 2010 New York Catalyst Forum

Private Equity World Africa 2010 18 - 21 October 2010 Johannesburg Terrapinn

Alternative Investment Forum: Russia & CIS 18 - 20 October 2010 London Adam Smith Conferences

UK Pensions & Investments 18 - 20 October 2010 London Marcus Evans

Fund Forum Latin America 2010 19 - 21 October 2010 Sao Paulo ICBI

Southeast Asia Private Equity Investing Conference 19 - 22 October 2010 Ho Chi Minh City Thunderbird

NASBIC Annual Meeting & Private Equity Conference 24 - 26 October 2010 Palm Beach NASBIC

European Alternative & Institutional Investing Summit 25 - 27 October 2010 Monte Carlo Opal Financial Group

II Russian Private Equity Congress 28 October 2010 Moscow Cbonds-Congress

Endowment & Foundation Forum 1 - 3 November 2010 Boston Opal Financial Group

CEE Private Equity 2 - 3 November 2010 London IIR

AIS 2010 Abu Dhabi Showcase of Alternative

Investment Funds 3 - 4 November 2010 Abu Dhabi Leoron Events



Date: 24-25 November, 2010

Location: May Fair Hotel, London

Organiser: IIR

IIRs Mezzanine Finance Conference is the leadingevent in the industrys calendar. Each year, key industryplayers gather in London for this annual forum, toaddress the business critical issues impacting themezzanine market.

Information: www.informaglobalevents.com/mezz

Mezzanine Finance Conference 2010


Location: Shangri-La Hotel, Dubai, UAE

Organiser: Terrapinn

The 6th annual Private Equity World MENA conferenceis the regions leading event designed to bring togetherinvestors, SWFs, private equity and venture capitalfunds for 4 days of high level networking and discussion.Learn first-hand from leading regional and internationalprivate equity firms on their strategies for creating value,managing portfolios, delivering returns and buildinginvestment partnerships to tap into new industries andnew markets.

Information: www.terrapinn.com/2010/pemena/

Private Equity World MENA 2010

Date: 30 November, 2010

Location: Central London

Organiser: Private Equity Forum

Through company case studies, in-depth presentations

and panel discussions, Private Equity Forums AIFMDirective 2010 Conference will provide you withclarification on the next series of changes to ensure youare aware of the necessary key actions and deadlines.

Information: www.aifmdirective.co.uk

AIFM Directive 2010 Conference

Date: 29 November 1 December, 2010

Location: Majestic Barrire, Cannes, France

Organiser: Marcus Evans

The Alternative Investments Europe Summit 2010

gathers the regions forefront institutional investors toexplore next generation alternative investment strategiesin private equity, infrastructure, hedge funds andemerging asset classes.

Information: www.aie-summit.com/Preqinel

Alternative Investments Europe Summit 2010


Location: London

Organiser: IIR Events

IIRs 4th Annual Private Equity CEE Conferencebrings together an exceptional panel of Private EquityProfessionals, with contributions from some of theleading Limited Partners investing in the region.

Information: www.informaglobalevents.com/KM2550PES

CEE Private Equity

Date: 28 October, 2010

Location: Moscow, MICEX Stock Exchange

Organiser: Cbonds Congress

The conference targets representatives of assetmanagement companies running private equityinvestment funds, law and consulting firms, andcompanies interested in raising financing by means ofPrivate Equity, and people interested in the current statein the Russian stock market, its tendencies and outlook.

Information: www.cbonds-congress.com/events/66/

II Russian Private Equity Congress

Conferences


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Preqin Private Equity Spotlight October 2010

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Transcript of Preqin Private Equity Spotlight October 2010