february 1, 2006 fresno county employees' retirement association
TRANSCRIPT
February 1, 2006
Fresno County Employees' Retirement Association
This presentation is being furnished on a confidential basis solely for informational purposes and may not be reproduced or provided to others without the prior written consent of Warburg Pincus LLC. By accepting delivery of this presentation, each recipient agrees to the foregoing. This presentation does not constitute an offer to sell, nor a solicitation of an offer to buy, an interest in Warburg Pincus Private Equity IX, L.P. (“WP IX”) or any other Warburg Pincus private equity fund. This presentation may also include pro forma values and forward-looking statements relating to existing Warburg Pincus private equity funds, which are inherently uncertain and based on assumptions that could change as a result of company operating performance, capital markets risks and general economic conditions. The recipient acknowledges that it is aware that federal and state securities laws prohibit any person who has material, non-public information about a company from purchasing or selling securities of such a company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities.
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Warburg Pincus Over three decades of private equity investing $22 billion invested in 525 companies 58 partners currently investing $8 billion
Experienced investors
Industry and geographic specialization Venture capital to late stage Specialized investors create diversified funds
Compelling strategy
$13 billion in last 5 years $30 billion in last 10 years 2% of investments and 7% of distributions in US private
equity industry in last 10 years
Unparalleled distributions
30% net return for last 10 years 27% net IRR for mature funds Consistently top quartile in IRR and multiple
Leading performance
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145 investment professionals
Industry focused for decades Healthcare/Life Sciences, Natural Resources, Financial Services, Industrial,
Computer Software/Services, Communications Hardware/Services, Media/Business Services
Global presence New York (1966), Menlo Park London (1987), Frankfurt Hong Kong (1994), Beijing, Shanghai, Tokyo, Seoul, Mumbai
11 funds – $27 billion of committed capital
Recent Funds
WP IX (2005) $8.0B
WP VIII (2001) $5.3B
WPIP* (2000) $2.5B
WPEP (1998) $5.0B
WPVI* (1997) $.8B
Mature Funds
WPV (1994) $2.0B
WPI (1989) $1.8B
WPCC (1986) $1.2B
WPCP (1983) $341MM
WPA (1980) $101MM
EMWV (1971) $41MM
Experienced Investors
* International fund
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Leading Performance
1 Year 26.6% 19.9% 6.3% 0.4% 9.4%
3 Year 12.4% 7.6% 8.3% 12.0% 12.8%
5 Year 6.2% -0.5% (2.4)% (12.2)% 5.7%
10 Year 30.0% 12.6% 9.9% 8.2% 9.9%
20 Year 22.6% 14.2% 12.3% 10.2% 10.5%
30 Year 18.9% 14.3% 12.4% 11.1% N / A
Warburg Pincus S&P 500 Nasdaq Russell 2000*Private Equity
* Source: Venture Economics
As of June 30, 2005
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Unparalleled Distributions
1 year distributions $6 billion
3 year distributions $10 billion
5 year distributions $13 billion
10 year distributions $30 billion
2% of investments and 7% of distributions
of the US Private Equity Industry in the last 10 years
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Fresno County Investment SummaryAs of December 31, 2005 (estimate)
A BEst. Remaining
Total Capital % of Total Distrib. Value of Total Capital Invested Committed Received Capital Acct. NET IRRCommitted as of 12/31/2005 Funds Invested as of 12/31/2005 as of 12/31/2005 A + B Through 12/31/05
FULLY INVESTED FUNDS - NOT MATURE
Warburg, Pincus Equity Partners (1998) 20,000,000 20,000,000 100.0% 23,144,740 6,487,780 29,632,520 10.0%
INVESTING FUNDS
Warburg Pincus Private Equity VIII (2001) 25,000,000 23,000,000 92.0% 5,380,925 22,112,125 27,493,050 10.2%
TOTAL 45,000,000 43,000,000 28,525,665 28,599,905 57,125,570
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Realizations
Final Closing – September 1998
12 Year Term + 2 Year Extension
30 current and 147 total portfolio companies
3.2 years average life
Driving Returns
FHP
25% return in 2004
54% return in 2003
Carrying Value – 12/31/05 est. 15% gross IRR; 10% net IRR
$5.0 Billion, $6.1 Billion DistributedWarburg Pincus Equity Partners (1998)
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23%
6%
43%28%
18%
16%
3%18%
5%
31%
9%
11% 12%
77%
GrowthCapital
VentureCapital
Recaps/ Special Situations Natural
Resources
Communications Hardware/ Services
Health Care/ Life Sciences
Media/ Consumer
Goods
Computer Software/ Services
Asia
North America
EuropeLeveraged Buyouts Financial
Services/Real Estate
Industrial/ Other
Note 1: Cost of investments 1998 through 2005
By GeographyBy IndustryBy Stage
Warburg Pincus Equity Partners Breakdown
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Warburg Pincus Equity PartnersAs of 12/31/05 - estimate
Exited or Significantly Exited Investments ($ in millions)
27.7%2.7x142.184.7Start-up oil and gas exploration and production company with an initial focus in the waters off the Gulf of Mexico
35.9%4.6x206.157.5Acquires and develops oil and gas properties in the onshore continental United States
122.0%3.2x525.2238.1Leading regional thrift bank
70.1%4.5x354.7100.2Operates health maintenance organizations (HMOs)
50.2%5.3x776.8182.5Leading operator of telecommunication services businesses in India
69.8%8.0x401.157.2Develops, manufactures and markets medical devices for treatment of urological and gynecological disorders
IRRMultipleTotal Profit
Total InvestmentDescriptionCompany
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Warburg Pincus Equity PartnersAs of 12/31/05 - estimate
39.8%8.4x310.541.9Leading Central and Eastern European generic pharmaceutical company
48.4%4.3x326.6100.0Manufacturer and marketer of orthopedic implant devices for total joint reconstruction
55.0%15.8x1,142.977.0Provides neutral third-party services to the communications industry
104.3%4.4x84.925.1Global financial services company
35.7%3.3x36.816.0Branded children's clothing distributor
33.6%3.0x70.335.3Mortgage Bank in India
28.2%3.0x69.835.2Fourth largest cement manufacturer in India
Exited or Significantly Exited Investments ($ in millions)
IRRMultipleTotal Profit
Total InvestmentDescriptionCompany
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Warburg Pincus Equity PartnersAs of 12/31/05 - estimate
128.7%20.5x10.0Leads and operates skilled nursing facilities in Florida
-5.3%0.9x588.5
Medical device company focused on identifying and developing new technologies in underserved treatment markets for cardiovascular, neurovascular and peripheral vascular diseases
8.2%1.5x51.6Leading participant in oral drug delivery technology and production
-1.0%0.9x91.7Provider of software and marketing services to the automotive retail market
-2.9%0.9x78.6Outsource provider of document and information services to medical records departments
IRRMultipleTotal
InvestmentDescriptionCompany
Significant Remaining Investments ($ in millions)
FHP
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Warburg Pincus Equity PartnersAs of 12/31/05 - estimate
8.0%1.5x75.3Drug discovery and development company seeking to identify novel proteins from the human genome and develop those proteins as pharmaceutical products
0.0%1.0x72.3Platform for financial supply chain management
-2.7%0.9x25.2Specialty pharmaceutical company focused on the development of therapeutics for the treatment of bone and dermatological disorders
2.9%1.2x40.1Manufactures and markets optical storage media including recordable CDs, rewritable CDs and recordable DVDs
11.5%1.3x83.9Develops protein therapeutics for pulmonary and infectious diseases
0.0%1.0x32.5Internet product directory that links buyers and sellers of electrical, mechanical and optical components
Significant Remaining Investments ($ in millions)
IRRMultipleTotal
InvestmentDescriptionCompany
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$5.3 Billion, $1.1 Billion Distributed
Final Closing – April 2002
12 Year Term + 2 Year Extension
65 current and 79 total portfolio companies
1.6 years average life
Driving ReturnsRealizations
92% capital called
Carrying Value – 12/31/05 est. 20% gross IRR; 10% net IRR
Warburg Pincus Private Equity VIII (2001)
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36%
26%21%
17%
19%
8%
18%
14%
14%
14%
13%
8%6%
86%GrowthCapital
VentureCapital
Recaps/ Special Situations Natural
ResourcesCommunications Hardware/ Services
Health Care/ Life Sciences
Media/ Consumer
Goods
Computer Software/ Services
Asia
North America
EuropeLeveraged Buyouts
Financial Services/Real Estate
Industrial/ Other
Note 1: Cost of investments 2001 through 2005
By GeographyBy IndustryBy Stage
Warburg Pincus Private Equity VIII Breakdown
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47.1%1.6x88.4156.6Leading worldwide provider of digital speech imaging and speech recognition products
0.0%1.0x0.0300.0Leading luxury retailer that offers distinctive merchandise and superior customer servicecatering to the needs of the affluent customer
53.9%1.9x42.347.7Early-stage oil exploration and production company
11.6%1.4x8.319.3Manages coalition loyalty programs worldwide
0.0%1.0x0.053.5The leading domestic pharmaceutical group in China
26.4%2.6x352.5222.5Insurance and reinsurance company
IRRMultipleTotal Profit
Total InvestmentDescriptionCompany
Warburg Pincus Private Equity VIIIAs of 12/31/05 - estimate
Selected Investments ($ in millions)
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0.0%1.0x0.021.5Leading supplier of BPO services
12.1%1.3x88.9285.0Leading manufacturer of highly engineered aircraft components
0.0%1.0x0.0157.8Leading provider of core software and services for major communication service providers
58.3%1.8x165.5195.1Midstream energy company
0.0%1.0x0.067.8Provides transaction monitoring software to financial services companies
Warburg Pincus Private Equity VIIIAs of 12/31/05 - estimate
Selected Investments ($ in millions)
IRRMultipleTotal Profit
Total InvestmentDescriptionCompany
18
466 Lexington Avenue, 10th Floor
New York, NY 10017
Fax: 212-878-6167
www.warburgpincus.com
Barry E. Taylor
Managing Director
Tel: 650-798-0401
Rosanne Zimmerman
Managing Director
Tel: 212-878-9358
For Additional Information