Private Capital in 2017 Key Findings from the 2017 Preqin Global - PowerPoint PPT Presentation

Private Capital in 2017 Key Findings from the 2017 Preqin Global AlternaAves Reports Christopher Elvin Head of Private Equity Products

2016 Round-Up

Private Capital has evolved www.preqin.com

Investor Por<olios Becoming Ever More Diversified Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Private Capital AUM at a Record High - $4.5tn 5,000 4,500 4,000 Natural Resources 3,500 Infrastructure 3,000 2,500 Real Estate 2,000 Private Debt 1,500 1,000 Private Equity 500 0 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Private Capital Fundraising Close to Pre-GFC Levels Annual Aggregate Private Capital Raised by Asset Class, 2004 - 2016 800 Natural Resources 700 Infrastructure Aggregate Capital Raised ($bn) Private Debt 600 Real Estate 500 Private Equity 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

But Capital Becoming More Concentrated Global Annual Private Capital Fundraising, 2010 to 2016 1800 1600 1400 1200 1000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 No. of Funds Closed Aggregate Capital Raised ($bn) Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Record Levels of Capital to Invest Private Capital Dry Powder over Time by Asset Class, 2005 - 2016 1,800 Natural Resources 1,600 1,400 Infrastructure 1,200 Dry Powder ($bn) Real Estate 1,000 800 Private Debt 600 400 Private Equity 200 0 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Record Number of Buyout Deals but Value Drops PE-Backed Buyout Deals, 2012-2016 PE-Backed Buyout Exits, 2012-2016 4500 450 2500 600 4000 400 500 2000 3500 350 3000 300 400 Deal Value ($bn) Exit Value ($bn) No. of Deals No. of Exits 1500 2500 250 300 2000 200 1000 1500 150 200 1000 100 500 100 500 50 0 0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 No. of Exits Aggregate Exit Value ($bn) No. of Deals Aggregate Deal Value ($bn) Source: Private Equity Online www.preqin.com

Venture Capital Deal AcRvity >$100bn for 2 nd Year Venture Capital Deals, 2012-2016 Venture Capital Exits, 2012-2016 1600 140 14,000 160 140 1400 12,000 120 120 1200 10,000 100 Deal Value ($bn) 100 1000 No. of Deals No. of Exits 8,000 80 80 800 6,000 60 60 600 4,000 40 40 400 2,000 20 20 200 - - 0 - 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 No. of Exits Aggregate Exit Value ($bn) No. of Deals Aggregate Deal Value ($bn) Source: Private Equity Online www.preqin.com

Real Estate Exit AcRvity Hits New Highs PE-Real Estate Exits, 2012-2016 PE-Real Estate Deals, 2012-2016 2500 250 4,000 300 3,500 250 2000 200 3,000 200 Deal Value ($bn) Exit Value ($bn) 2,500 No. of Deals No. of Exits 1500 150 2,000 150 1000 100 1,500 100 1,000 500 50 50 500 - - 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 No. of Deals Aggregate Deal Value ($bn) No. of Exits Aggregate Exit Value ($bn) Source: Real Estate Online www.preqin.com

More than 7,900 Limited Partners Private Capital Limited Partner Universe by LocaAon 8% North America 15% Europe Asia Pacific 49% Rest of World 28% www.preqin.com

Limited Partner EvoluRon www.preqin.com

Challenges Today

Key Challenges / Issues for Private Capital Fund Managers in 2017 Private Equity Private Debt Real Estate Infrastructure Natural Resources Ongoing Volatility/ Valuations Valuations Valuations Valuations Uncertainty in Global Markets Ongoing Volatility/ Exit Environment Fundraising Uncertainty in Deal Flow Fundraising Global Markets Ongoing Ongoing Volatility/ Public Perception of Volatility/Uncertainty in Deal Flow Fundraising Uncertainty in Industry Global Markets Global Markets Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Private Capital: Not Immune from Lower Return Environment Rolling One Year Private Capital Horizon IRRs 30% Real Estate 25% Median Annualized Return 20% Buyout 15% Venture Capital 10% Mezzanine Private Equity 5% Distressed Private 0% Equity -5% 1 Year to 1 Year to 1 Year to 1 Year to 1 Year to 1 Year to 1 Year to Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Private Capital Outperformed in the Long Term PrEQIn Private Capital Quarterly Index vs. S&P 500 350 300 Index Returns (Rebased to 100) Private Capital 250 200 150 100 S&P 500 Index 50 0 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Dry Powder at Record Levels but Capital Overhang is Decreasing RaRo of Year-end Private Capital Dry Powder to Prior Year Total Capital Called 5.0 4.6 4.5 4.4 4.1 4.0 3.6 3.5 3.5 3.5 3.4 3.0 2.8 RaAo 2.7 2.5 2.5 2.5 2.4 2.3 2.1 2.0 1.5 1.0 0.5 0.0 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Fundraising More CompeRRve Than Ever & Investors are Finding Sourcing Funds More Challenging LPs Views on Current Fundraising Climate Today vs. 12 Months Ago Private Equity Hedge Funds Real Estate Infrastructure 0% 20% 40% 60% 80% 100% More Challenging No Change Less Challenging Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Outlook for 2017

Nearly 3,000 Private Capital Funds in Market www.preqin.com

DistribuRons ConRnuing to Outstrip Call-Ups Private Capital: Capital Called Up and Distributed, 2000 -2016 1000 900 800 Capital Called Up ($bn) 700 600 Capital Distributed 500 ($bn) 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 2016 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

InsRtuRonal Plans for 2017 Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

And for the Longer Term Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Fund Managers Confident in Finding Value Fund Managers Expected Investments in 2017 vs 2016 More Capital Private Equity Same Amount of Capital Real Estate Less Capital Infrastructure 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Investor Performance ExpectaRons InsAtuAonal Investors' Return ExpectaAons for AlternaAve Assets in 2017 Compared with 2016 Natural Resources Will Perform Beier Hedge Funds Private Debt Will Perform About the Same Private Equity Infrastructure Will Perform Worse Real Estate 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: 2017 Preqin Global AlternaAves Reports www.preqin.com

Key Takeaways Private Capital in robust health – excellent long-term returns driven rapid AUM growth • Clear current concerns over valuaAons; LPs and GPs alike cauAous about forward- • looking prospects Ø But commiied to further increasing allocaAons – risk/reward airacAve as ever Fundraising highly compeAAve and capital becoming increasingly concentrated but • distribuAons and LP saAsfacAon conAnuing to drive Deal/Exit acAvity - SAll a seller’s market but wider poliAcal/financial instability may • cause shining of the scales www.preqin.com

Data Sources • Free reports available from www.preqin.com/research • Preqin’s online services: www.preqin.com/services www.preqin.com