july 2017 private equity capital briefing...• the latest report from the american investment...

Private Equity Capital Briefing July 2017

Monthly insights and intelligence on PE trends

More IPOs could be on the way

Regulators look for ways to reverse the decline in initial public offerings

The Private Equity Capital Briefing has been designed to help you remain current on capital market trends. It captures key insights from subject-matter professionals across EY firms and distills this intelligence into a succinct and user-friendly publication.

Private Equity Capital Briefingcan provide perspectives on both recent developments and the longer-term outlook for private equity (PE) fundraising, acquisitions and exits, as well as trends in global M&A, cross-border deal flows, IPOs and the debt and bond markets.

Please feel free to reach out to any of the subject-matter contacts listed on the back page of this document if you wish to discuss any of the topics covered.

ContentsSection 1 Private equity: fundraising 4

Private equity: acquisitions 5Private equity: exits 6

Section 2 Infrastructure 7Section 3 Private Credit 8Section 2 M&A 9Section 3 IPOs 11Section 4 Loans 12Section 5 Bonds 13

AppendicesAppendix A PE activity by geography 15Appendix B M&A activity monthly flash 22Appendix C M&A multiples and bid premium 23Appendix D Capital Confidence Barometer 24

1.i. Private equity: fundraising

Executive summary • Despite expectations at the beginning of the year that fundraising might slow in 2017, fundraising activity remains strong.

Firms have closed 403 funds valued at US$305b, up 10% from a year ago.

• Particular strength is evident in the Americas and Asia-Pacific.

• Dry powder continues to set records. Buyout firms have US$578b in capital available for new deals.

Current stateFundraising• PE fundraising moderated slightly in the second quarter, with PE

firms raising US$151b, down 2% from last quarter, but in line with the same period in 2016. Year-to-date, PE firms have raised US$305b, up 11% from the same period a year ago.

• The expectation at the beginning of this year was that the industry might begin to see a slowdown in the pace of commitments. However, midway through the year, there has been little indication that investors are slowing down, despite cyclical headwinds such as slowing exits and distributions to LPs.

• Demand remains particularly strong for large buyout funds. Apollo Global Management is preparing to close the world's largest buyout fund in history, having already raised a reported US$23.5b. London-based CVC Capital Partners raised US$18.1b in June, the biggest fund ever raised by a European manager, while KKR closed record Asia and North American funds on US$9.3b and US$13.9b, respectively.

• From a regional perspective, funds focused on the Asia-Pacific and Americas markets have remained the strongest. Firms focused on the US have raised US$192b so far this year, up 28% from the same period a year ago. Firms focused on Asia-Pacific have closed with US$32b in commitments, up 31% from last year. After an extremely strong 2016m funds focused on the EMEA region have seen a decline. Funds have closed with US$76b in commitments, down 23% from a year ago.

Dry powder• PE firms have record amounts of dry powder to deploy into the

market. Firms have US$578b in capital available for new buyout deals, far exceeding the US$476b they held in 2007-2008.

• Adding in other fund types, such as distressed, venture, growth, and mezzanine, and the industry currently has nearly US$1.6t in available capital.

Environment and horizon• A number of investment funds have been raised in recent years

seeking to acquire stakes in PE managers. Dyal Capital Partners was formed as a subsidiary of Neuberger Berman in 2010 for the purpose of taking minority stakes in institutional alternative asset managers. The firm recently raised its third fund, closing with US$5.3b. Goldman Sachs’ Petershill group is reportedly targeting US$2b to pursue a strategy similar to Dyal, and has already announced stakes in Accel-KKR, ArcLight and Riverstone Holdings. The latest announced acquisition was from Blackstone, which raised US$3.3b in 2014 for Blackstone Strategic Capital Holdings; in June, the firm announced that it had acquired a minority stake in LA-based Leonard Green & Partners.

• The latest report from the American Investment Council shows continued outperformance for the asset class over the long term. Through the end of the fourth quarter 2016, PE total returns for public pensions outpaced both the Russell 3000 and S&P 500 indices over a 10-year time frame, generating 10.3% on a net basis (versus 7.1% for the Russell 3000, and 6.9% for the S&P 500). Separate research published in the Journal of Finance by professors Tim Jenkinson of the University of Oxford, Steven Kaplan of the University of Chicago and Bob Harris of the University of Virginia showed similar dynamics, finding only three years (1994, 2007 and 2008) where the median PE fund underperformed the public markets. However, the study also noted that the level of outperformance has been steadily declining, making manager selection and tactical allocation decisions more important than ever.

4

Source: Preqin

Global PE dry powder by region since 2000 (in US$b)

Source: Preqin

Private Equity Capital Briefing

Top funds raised 2Q 2017

Fund Type Target (in US$b)

Raised (in US$b)

Firmnationality

CVC Capital Partners Fund VII Buyout 14.0 18.1 UK

Global Infrastructure Partners III

Infrastructure 12.5 15.8 US

Silver Lake Partners V Buyout 12.5 15.0 US

KKR Americas Fund XII Buyout 10.0 13.9 US

Vista Equity Partners Fund VI Buyout 8.0 11.0 US

Clayton Dubilier & Rice X Buyout 8.5 9.4 US

KKR Asian Fund III Buyout 7.0 9.3 US

Blackstone Real Estate Partners Europe V

Real Estate 7.8 8.7 US

Strategic Partners VII Secondaries 5.5 7.5 US

Guoxin Fund I Buyout NA 7.2 China

$0

$50

$100

$150

$200

$250

$300

$350

North America Europe RoW

Global PE fundraising by quarter (in US$b)

Source: Preqin

0

50

100

150

200

250

300

$0$20$40$60$80

$100$120$140$160$180

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Value Number of funds

1.ii. Private equity: acquisitions

Executive summary• PE acquisition activity remains strong, with firms announcing 672 deals valued at US$147.6b YTD, in line with last year.

• Asia-Pac has seen particular strength, with activity up 77% by value versus a year ago.

• Firms are focusing on larger deals – transactions in the US$1-US$3b range are up 20% versus last year.

• Consumer goods, Technology, Financials, and Health care remain the most active sectors for PE.

Current state• PE firms announced 340 deals valued at US$87.4b in the second

quarter, down 13% from the same period last year. Year-to-date however, PE activity is up 2% from 2016, with firms announcing 672 deals valued at US$147.6b.

• The Asia-Pacific region has seen particular strength. Firms have announced deals valued at US$36.5b for targets in the region, up 77% from the same period last year. By contrast, both the Americas and EMEA have seen declines in value — 6% and 11% respectively versus last year.

• Firms are focusing on larger deals, particularly those valued between US$1b and US$3b, which have increased 20% versus last year. Deals at the lowest end of the spectrum — sub-US$250m — have declined 30% by value over the same period.

• Consumer goods, financials and health care remain active sectors for PE, collectively accounting for 40% of investment value this year. Technology remains active as well — however, the space has seen a drop-off in the aggregate value of deals announced this year. In 2016, technology deals accounted for 29% of aggregate deal activity, versus just 19% YTD.

• Sycamore Partners’ US$6.5b deal for Staples Inc. in 2Q17 was the largest buyout so far this year. The deal represents a bet on a struggling retail brand with shrinking sales as it faces online competition and the digital transformation of office culture. For Staples, this is a return to private equity ownership having been backed by Bain Capital, which took Staples public in 1989.

Environment and horizon• Some Chinese conglomerates are adopting the financing strategies

of private equity firms by using leverage and complex derivatives for overseas acquisitions. In the past year for example, HNA Group has used share-backed financing and derivatives arranged by banks in order to rapidly build stakes in companies, including hotel firm Hilton Worldwide Holdings Inc., which it bought from Blackstone.

• Secondaries funds raised a record US$13.6b during the first quarter, which has contributed to a strong pricing environment, according to Greenhill & Co. On average, secondaries priced at 89% of net asset value last year. Buyout funds again priced higher than any other strategy at 95% of NAV. Activity is expected to increase over the next two years as those newly raised funds are put to work.

5


Source: Dealogic

Date Target Value (in US$b)

Sector Acquiror

28-Jun-17 Staples Inc 6.8 Consumer goods

Sycamore Partners LP

28-Apr-17 Belle International Holdings Ltd.

5.8 Consumer goods

Hillhouse Capital Management Ltd.,Wisdom Man Ventures Ltd.,CDH Investments Ltd.

20-Jun-17 ParexelInternational Corp.

5.0 Health care Pamplona Capital Management LLP

9-May-17 West Corp. 4.9 Telecom Apollo Global Management LLC

5-Jun-17 Sponda Oyj 4.1 Real estate Blackstone Group LP

24-May-17 Q-Park NV 3.3 Industrials KKR & Co. LP

25-Apr-17 Nord Anglia Education Inc.

3.0 Consumerservices

Canada Pension Plan Investment Board

6-Jun-17 HD Supply Holdings Inc. (Waterworks business unit)

2.5 Materials Clayton Dubilier & Rice LLC

7-Jun-17 Vocus Group Ltd. 2.4 Telecom KKR & Co. LP

18-May-17 Fairfax Media Ltd. 2.2 Consumerservices

Hellman & Friedman LLC

Top PE deals 2Q 2017

Global PE acquisitions by quarter (in US$b)

PE deal value by sector — YTD 2016 vs. YTD 2017 (as a percentage of total)

Source: Dealogic

Source: Dealogic

Source: Dealogic

0100200300400500600700

$0$20$40$60$80

$100$120

Q11

1Q

211

Q31

1Q

411

Q11

2Q

212

Q31

2Q

412

Q11

3Q

213

Q31

3Q

413

Q11

4Q

214

Q31

4Q

414

Q11

5Q

215

Q31

5Q

415

Q11

6Q

216

Q31

6Q

416

Q11

7Q

217

Value Number of deals

Industry 2016 Value

2016 Volume

2017 Value

2017 Volume

Consumer goods 8% 12% 19% 13%

Technology 29% 20% 17% 20%

Financials 6% 7% 11% 7%

Health care 11% 10% 10% 8%

Telecom 2% 2% 8% 2%

Consumer services 6% 14% 7% 16%

Industrials 11% 8% 6% 9%

Materials 6% 14% 6% 13%

Real estate 7% 3% 5% 3%

Utilities 8% 2% 5% 3%

Oil and gas 5% 3% 4% 2%

Retail 2% 4% 2% 5%

Global PE acquisitions by size (in US$b)

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

Less than US$250m US$250m-US$1b US$1b-US$3b More than US$3b

2016 2017

1.iii. Private equity: exits

Executive summary• Exit activity has rebounded in 2017 — firms have exited 491 companies valued at US$179b, up 18% from last year, as firms

look to take advantage of continued high valuations.

• While activity is up across all exit routes, IPOs have seen the largest increase, up 52% by value versus last year.

• Activity has been particularly robust in the Americas region, which is up 35% by value from a year ago.

Current state• PE exit value has increased modestly in 2017 as PE firms avail

themselves of robust M&A and equities market to continue to sell down their portfolios. PE firms have exited 491 companies valued at US$179b, up 18% by value versus the same period last year.

• Activity has been driven in particular by a number of large exits in the Americas region, which is up 35% by value versus a year ago; by contrast, the value of exits declined 7% in Asia-Pacific and was flat in EMEA.

• Sales by M&A have accounted for 87% of PE exits YTD; PE firms announced 277 sales to strategic acquires with an aggregate value of US$117b, up 11% from a year ago. Sales to PE firms increased 26% by value, to US$39.8b.

• IPO activity has increased markedly versus last year. Companies backed by PE firms have executed 64 IPOs in the first half of the year, up 36% from last year. Proceeds raised were US$21.9b, up 52% from last year.

Environment and horizon• The new US SEC chairman, Jay Clayton, is exploring ways to make

going public more attractive for companies in an effort to reverse the steep decline in IPOs. According to Clayton’s prepared remarks to an industry board that advises the agency on investors, “High-quality companies may choose to go public at a later stage, after much of their early growth has already been achieved.” He added, “This ultimately results in fewer opportunities for Main Street Americans to share in our economy's growth, at a time when we are asking them to do more on their own to save and invest for their future and their children's futures.”

• PE firms have used low-cost debt to take almost US$2.9b in dividend recaps from European portfolio companies so far this year, quadrupling the same period in 2016, according to S&P Global Market Intelligence data. The rise in dividend recaps has coincided with a fall in the volume of private equity exits in the region, which fell to US$90b so far this year from US$198b in the same period of 2016.

• The US Supreme Court has restricted the SEC’s efforts to penalize PE managers over fees that the government considers poorly disclosed to investors. The opinion said the SEC has just five years to object to fees or expenses, down from a full history, likely lowering any future settlements.

Exits by quarter and type (US$b)

6


Source: Dealogic

Announced CompanyValue

(US$b)Sector Sponsor Type

2-Jun-17 Logicor Europe Ltd.

13.8 Real estate Blackstone Group LP

M&A Exit

15-May-17 Patheon NV 7.2 Health care

JLL Partners LLC M&A Exit

8-May-17 Tribune Media Co.

6.6 Telecom Angelo, Gordon & Co. LP; Oaktree Capital Management, LP

M&A Exit

9-May-17 West Corp. 4.9 Telecom Thomas H Lee Partners LP; Quadrangle Group LLC; Apollo Global Management LLC

M&A Exit

25-Apr-17 AdvancePierreFoods Holdings Inc.

4.3 Consumer goods

Oaktree Capital Management, LP

M&A Exit

Source: Dealogic

PE exits by type and region (US$b)

Comparison of PE M&A exits since 2011, strategic vs. secondary transactions

Period Strategic Deal Value (US$b) Volume Secondary Deal

Value (US$b) Volume

2011 $178.0 646 $58.6 307

2012 $147.7 595 $71.3 332

2013 $150.0 624 $58.9 309

2014 $293.7 721 $77.4 368

2015 $284.1 699 $86.3 367

2016 $232.1 587 $70.5 341

YTD 2016 $105.3 296 $31.6 152

YTD 2017 $117.0 277 $39.8 150

YTD % change 11% -6% 26% -1%

Source: Dealogic

0

5

10

15

20

$0.0$1.0$2.0$3.0$4.0$5.0$6.0$7.0$8.0

Jan16

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Aug16

Sep16

Oct16

Nov16

Dec16

Jan17

Feb17

Mare17

Apr17

May17

Jun17

IPO exits Number of deals

PE-backed IPOs by month (US$b)Source: Dealogic

050100150200250300350400

$0$20$40$60$80

$100$120$140$160

2010

Q1

2010

Q2

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

M&A exits IPO exits Number of deals

2. Infrastructure

Executive summary• The first half of the year saw infrastructure funds raise US$39.1b in committed capital, up 59% from the first half of last year.

• The bulk of funds were raised in the first quarter. Q2 saw a marked drop-off in activity.

• Deal activity declined 37% versus a year ago, driven by fewer deals in the greenfield and brownfield stage.

• A recent survey by Coller Capital found infrastructure to be the most attractive asset class for LPs over the next 12 months.

Current state• Fundraising for infrastructure funds remains strong, with firms closing 35

funds valued at US$39.1b in the first half of 2017, up 59% from the same period a year ago, and down just 6% from the second half of last year (which is notable given the number of funds targeted to close on Dec. 31).

• There was a substantial difference between quarters – the first quarter of 2017 accounted for more than 80% of the capital raised this year; Q2 saw just 13 funds close, with aggregate commitments of US$7.4b.

• Funds focused on the US and European markets saw the largest increases — 111% and 93%, respectively — while funds focused on Asia-Pacific saw a marked decline in funds raised versus last year.

• Firms announced deals valued at US$137b during the first half of the year, down 37% from a year ago. While deals for existing assets increased modestly (16%), deals in the greenfield and brownfield spaces declined markedly, down 75% and 91% respectively versus last year.

Environment and horizon• According to Coller Capital’s Global Private Equity Barometer, Summer

2017 LPs are more interested in infrastructure than any other private capital asset class. Forty-six percent of LPs surveyed indicated they expect to increase their allocations to infrastructure over the next 12 months, versus 28% for private equity, 37% for real estate and 40% for private credit.

• Renewable energy is poised to disrupt the power and utility sector as it overcomes high cost and intermittency of most renewable technologies. Falling costs in the offshore wind sector are beginning to deliver subsidy-free clean power, at scale, across northern Europe. In energy storage, electric vehicles have driven investment in battery technology leading to dramatic price declines of lithium-ion batteries by 80% over the last five years and storage capacity is set to grow at a cumulative average rate of 44%, according to Bloomberg New Energy Finance (BNEF).

• While the Trump administration has promised to spend US$1t on infrastructure in the US, a lack of skilled workers could make it difficult to deliver. A joint report from the US Chamber of Commerce and construction materials manufacturer USG Corporation shows two-thirds of contractors say they will hire new employees in the next six months, but almost all of them (95%) had a moderate to difficult time finding skilled workers for their job openings in the second quarter of 2017. More companies in the Northeast anticipated worsened conditions, with 59% predicting that hiring ability would worsen compared to just 27% in the West. The biggest shortage is in concrete workers, according to the report. Millwork, masonry, electrical and plumbing round out the top five skilled jobs contractors are struggling to hire.

Infrastructure fundraising by region – 1H16 versus 1H17 (unlisted funds, US$b)

7


Source: Preqin

Source: Preqin

Top infrastructure funds raised 2017 YTD

Infrastructure deals by value (US$b)

Source: Preqin

0

10

20

30

40

50

60

70

$0$5

$10$15$20$25$30$35$40$45

Value No. of funds

Infrastructure fundraising (US$b)

Source: Preqin

Fund Target (in US$b)

Raised (in US$b)

Stage

Global Infrastructure Partners III 12.5 15.8 Brownfield

EQT Infrastructure III 3.3 4.2 Brownfield, greenfield, secondary stage

Actis Energy Infrastructure Fund IV 2.0 2.8 Brownfield, secondary stage

Pan-European Infrastructure Fund II 2.2 2.0 Brownfield, greenfield, secondary stage

QIC Global Infrastructure Fund 1.3 1.8 Brownfield, greenfield

iCON Infrastructure Partners IV 1.1 1.4 Brownfield, secondary stage

GIB Offshore Wind Fund 1.6 1.3 Secondary stage

Castlelake Aviation III 1.0

European Diversified Infrastructure Fund II Series One

774m 747m Brownfield

Northleaf Infrastructure Capital Partners II

462m 724m Brownfield, greenfield

US: 1H16 – US$9.8b

1H17 – US$20.7bChange – 111%

Europe: 1H16 – US$6.4b

1H17 – US$12.4bChange – 93%

Asia Pacific: 1H16 – US$7.7b1H17 – US$0.7bChange – (91%)

Multi-regional and RoW: 1H16 – US0.6b1H17 – US$5.3bChange – 734%

$0

$50

$100

$150

$200

$250

$300

3. Private credit

Executive summary• Fundraising for credit strategies remains strong, led by direct lending. Overall, PE firms closed funds valued at US$41.8b in

the first half of the year, up 29% from 1H16.

• Direct lending strategies accounted for 47% of total fundraising, up from 44% of the total last year, and up from roughly 10%five years ago.

• Firms have announced deals valued at US$66.7b, in line with last year.

Current state• Fundraising for the private credit market remained strong in the first

half of 2017, with 54 funds valued at US$41.8b closed so far this year. This represented an increase of 29% versus the same period a year ago (but a decline from 2H16, when a number of closings from large mezzanine funds pushed fundraising for the asset class to record levels).

• Fundraising for direct lending funds remains particularly active, with firms closing funds valued at US$19.7b, an increase of 38% versus a year ago, and a record for funds of that type.

• Further evidence of the strong fundraising market is time spent fundraising. The average fund closed in 1H17 spent 18 months on the road, down from 20 months for the full year 2016. Additionally, 59% of funds closed with more than 100% of their target commitments, up from 56% that did so last year.

• Credit funds currently have more than US$208b in dry powder available for new deals, a figure that has remained relatively constant over the last 2½ years as firms aggressively deploy capital into the market.

• Through the end of June, firms announced 271 deals with a disclosed value of US$66.7b, on track to match last year’s value.

Environment and horizon• The outlook for a continued robust fundraising environment remains

strong, as continued low interest rates push more investors toward the asset class, and continued bank disintermediation creates attractive opportunities for funds, A recent Preqin survey conducted at the end of 2016 found that 70% of investment consultants to LPs planned on recommending increases to private credit allocations.

• In the US, competition in the space is expected to increase as overseas investors look to broaden their private credit strategies. Year to date, in additional to launching new funds, debt managers such as BNP Paribas SA and Bridgepoint have started to raise funds overseas with a focus on investing in the US. The increasing amount of available debt fueled by cheap prices will likely keep valuations at current levels or drive them higher.

• Outside the US, large investors such as BlackRock, Bain Capital and Avenue Capital are expanding their private credit businesses in Asia. Moreover, smaller investors and Asia-based PE firms are also allocating more capital to private credit as demand increases among small, fast-growing companies and for overseas acquisitions by Chinese companies.

Top credit funds closed YTD

8


Source: Preqin

Source: Preqin

Credit funds dry powder (US$b)

Fund Raised (US$b)

Type Primary geographic focus

Cerberus Institutional Partners VI 4.0 Distressed debt USHayfin Direct Lending Fund II 3.8 Direct lending Europe

Alcentra European Direct Lending Fund II

3.0 Direct lending Europe

Centerbridge Special Credit Partners III-Flex

2.9 Distressed debt US

Carlyle Strategic Partners IV 2.5 Distressed debt USMarlin Equity Partners V 2.5 Special situations US

Cerberus Levered Loan Opportunities Fund III

2.1 Direct lending US

Hayfin Special Opportunities Fund II 1.9 Special situations Europe

Permira Credit Solutions Fund III 1.9 Direct lending Europe

Varde Fund XII 1.7 Distressed debt US

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17$0

$10

$20

$30

$40

$50

$60

$70

PE credit fundraising by half-year (US$b)

Source: Preqin

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017$0

$50

$100

$150

$200

$250

Credit fundraising by fund type, as a percentage of total

Source: Preqin

38%

26%

36%

42%

0%5%10%15%20%25%30%35%40%45%

$0

$5

$10

$15

$20

$25

Direct lending Distressed debt Mezzanine Special situations

1H16 1H17 Percentage change 1H16 vs 1H17

Current state• The global M&A market remained robust during the first half of 2017, as

companies and private equity (PE) sought to buy into areas of growth. Both the near-term pickup in the European economy and the emerging opportunities being opened up by technological shifts were high on the agenda for dealmakers. This was against a backdrop of increasing intervention by governments and regulators, and a ratcheting of protectionist rhetoric across many markets.

• The headline deal value totaled US$1.4t, a decline of 4% against the same period last year. In terms of volume, 1H17 recorded 18,363 deals compared with 17,642 deals recorded at the same time last year. The modest decline in value can be attributed to a 16% fall in the value of megadeals so far this year. The crucial value range of US$1b−US$10b remains on a par with 2016.

• Technology was the top target sector in terms of deal volume, with 4,701 deals (worth US$187b) − the highest volume seen during the first half of the year since the dot-com bubble of 2000. Technology and digital disruption are set to remain the major drivers of the current M&A market. The first half of 2017 has seen a number of prolific deals and alliances between technology and non-technology companies as they seek to capitalize on the opportunities opened up by technological advances.

• Indicative of this was the recent high-profile US$13.7b Amazon acquisition of Whole Foods. Amazon is seeking not only to seize a digital advantage, but also potentially disrupt an entire grocery subsector. Currently, grocery remains one of the most under-penetrated ecommerce categories. The Amazon-Whole Foods merger is looks set to change that.

• Another deal that captured the headlines was Blackstone’s sale of European warehouse firm Logicor to China Investment Corporation for €12.25b (US$13.8b). The transaction cemented China's position as a player in European PE exits. The sale, the biggest PE real estate deal in Europe on record, scuppered plans that were being worked on for a

London IPO of Logicor later this year. 2016

Environment and horizon• The current M&A market is at a critical juncture in terms of how markets

will play out over the rest of 2017 and into 2018. Deal fundamentals, including cheap and available credit, high cash reserves, demanding stakeholders, lower than trend growth and technological disruption across sectors remain in place. However, substantial risks, including the potential for increased protectionism, and policy and geopolitical uncertainty, cloud the market outlook, making prediction of the future state of M&A difficult.

• Strategic growth has been the key deal driver through 2017, as companies look to retain their focus on expansion and tap into new areas of opportunity. Improving economic conditions, with a steady momentum reflected in a wide range of signals including purchasing managers indexes, industrial production, global trade and financial flows, underpin M&A activity.

• Cross-border deals will continue to drive M&A despite concerns about political risk and uncertainty. The appetite among companies to pursue deals across borders and into new markets has led to strong cross-border activity in 2017. Companies are taking such challenges in today’s hostile business environment in their stride, and making the moves they consider necessary to achieve revenue growth and access to new products and channels.

• The relentless drive to digital transformation will continue to push dealmaking in the coming months. Technology will remain at the center of the majority of corporate deals, with disruptive industries, such as artificial intelligence, machine learning and the internet of things, continuing to attract investor attention.

• Technology and digital disruption has also led to the reorganization of business models and changing customer behaviors, making it essential for executives to review their portfolios continually, with an aim to future-proof them. We may see a surge in divestments as companies reshape their portfolios and recycle capital to invest in new growth areas, be it geographic or new business areas.

Deal environment: by area (US$b)Last 12 months (LTM) to June 2017 versus LTM to June 2016Source: Dealogic and EY analysis.

Deal environment: by target sector and target area (% share of global value)LTM to June 2017Source: Dealogic and EY analysis; excludes real estate asset sales.

Note: because of rounding, percentages may not add up to total.

Top 10 announced deals by value, June 2017Source: Dealogic.

M&A analysis as at 1 July 2017.

Note: data is continually updated and therefore subject to change.

Figures have been rounded off to nearest decimal place.9

Executive summary• Global M&A remained firm in 1H17, with 18,363 deals worth US$1.4t.

• Technology led the dealmaking during 1H17, recording 4,701 deals worth US$187b.

• The M&A outlook for 2017 remains positive as companies look keen to conduct strategic reviews of their portfolio more frequently.

• Cross-border M&A should continue to increase further in 2017.

• The persistent push toward digital transformation will continue to drive dealmaking in the coming months.

4. M&A

Target Sector Country Acquiror Value (US$m)

Essity AB Consumer products and retail

Sweden Existing shareholders 26,666

Whole Foods Market Inc.

Consumer products and retail

US Amazon.com Inc. 13,739

Rice Energy Inc. Oil and gas US EQT Corp 8,202

Staples Inc. Consumer products and retail

US Sycamore Partners LP

6,790

Pharmacies (2,186 Rite Aid stores)

Consumer products and retail

US Walgreens Boots Alliance Inc.

5,175

Wirtgen Group Holding GmbH

Diversified industrial products

Germany Deere & Co 5,153

Parexel International Corp.

Life sciences US Pamplona Capital Management LLP

5,007

Black Knight Financial Services Inc.

Technology US Existing shareholders 4,678

Nestle SA (1.2672%) Consumer products and retail

Switzerland Third Point LLC 3,388

Suzhou QingfengInvestment Management Co Ltd.

Technology China Jiangsu Shagang Co Ltd.

3,371

Americas Asia-Pacific EMEA Total

Oil and gas 11% 2% 2% 14%Technology 6% 3% 5% 14%Consumer products and retail 7% 2% 4% 12%Diversified industrial products 3% 2% 3% 8%Life sciences 4% 1% 2% 7%Power and utilities 3% 2% 2% 7%Media and entertainment 4% 1% 1% 6%Automotive and transportation 1% 2% 2% 6%Banking and capital markets 2% 1% 2% 5%Others 9% 6% 5% 20%All sectors 49% 22% 28% 100%

Capital Briefing

-

1,000

2,000

3,000

Americas Asia-Pacific EMEA

LTM value PTM value

4.i. M&A: cross-border deal flow

Key cross-border M&A deal flow(LTM to June 2017)(Total = US$1.23t)

N America to:W Europe – $166b

UK&I – $57bMiddle East – $20b

Japan to:N America – $45b

UK&I - $35bW Europe – $10b

UK&I to:N America – $110bW Europe – $11b

Africa – $3bMiddle East – $3b

L America to:N America – $8b

UK&I - $1bRussia, CIS and CSE - $1b

Greater China andMongolia to:

N America – $45bOceania – $22b

W Europe – $20bW Europe to:N America – $83bL America - $16b

UK&I - $10b

Cross-border M&A deal flow (LTM to June 2017)(US$m)

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

# Acquiror refers to acquiror’s ultimate holding company.$ Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan.M&A analysis as at 1 July 2017. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

Key >US$100b >US$50b >US$10b

Intra-area cross-border deals

Target Acquiror# Africa SE Asia (including Korea)

Greater China and Mongolia$

Russia, CIS and CSE

W Europe (excluding UK&I)

India Japan Latin America

Middle East

North America

Oceania UK&I Inboundtotal

% versus PTM

Africa 1,941 14 4,251 1,575 3,584 26 1,077 - 16 7,151 872 3,310 23,819 63%

SE Asia (including Korea)

17 6,655 10,605 126 2,695 372 3,094 24 1,193 4,754 399 1,384 31,317 -7%

Greater China andMongolia $

- 2,166 25,413 450 1,317 - 6,458 37 - 5,144 870 195 42,050 -16%

Russia, CIS and CSE 204 373 3,457 3,113 9,799 1,086 8,844 1,048 11,652 1,625 1,759 1,331 44,289 43%

W Europe (excluding UK&I)

594 6,446 20,232 279 124,260 1,267 9,515 387 2,911 166,215 512 10,982 343,599 21%

India 700 6,974 3,472 12,922 1,330 - 3,105 - 274 5,564 58 26 34,424 86%

Japan - 279 1,889 - 320 151 - - - 2,722 29 - 5,390 -84%

Latin America 63 416 17,456 198 16,471 9 254 6,116 1,227 17,651 1,008 321 61,191 40%

Middle East 62 175 15,028 168 7,019 12 261 - 369 19,778 72 3,149 46,093 200%

North America 6,808 14,712 45,472 110 83,133 1,365 45,095 7,998 8,779 103,261 4,985 110,222 431,939 -10%

Oceania 907 1,863 21,502 - 2,207 67 1,731 - 484 3,092 1,248 1,576 34,677 -16%

UK&I 2,823 2,096 11,269 630 10,468 801 35,228 1,119 3,573 56,636 4,731 1,549 130,922 -47%

Outbound total 14,119 42,169 180,047 19,570 262,604 5,155 114,661 16,729 30,477 393,592 16,541 134,046 1,229,710 -5%

% versus previous 12 months (PTM)

50% 56% -17% 44% -39% -40% 114% -5% -53% 17% 30% 31% -5%

10 Capital Briefing

5. IPOs

Executive summary• Global IPO activity, in 1H17, registered a YOY increase of 78% and 99% in terms of number of deals and proceeds respectively.

• The Asia-Pacific region dominated global IPO activity, in terms of both number of deals and proceeds.

• June 2016 recorded the strongest IPO activity for the year to date (YTD) in terms of proceeds, with four US$1b+ deals.

• With the positive momentum of the first half, 2017 is poised to surpass 2016 global IPO levels in both number and proceeds as IPO pipelines continue to build and economic fundamentals improve in major developed economies.

11

Current state• Activity in 1H17 saw a rise of 78% by number of IPOs and 99% by

proceeds, compared with 1H16 (808 deals raising US$87.6b). 1H17 was the most active first half of the year by number of IPOs since 1H07 (which saw 941 IPOs raising US$146.0b). Furthermore, June 2017 was up by 56% in terms of both number of IPOs and proceeds as compared with June 2016. In fact, June 2017 also witnessed the highest monthly activity by proceeds this YTD.

• Asia-Pacific led global IPO activity both in terms of number of IPOs and proceeds in 1H17, accounting for a 68% and 44% share respectively. Greater China continued to drive activity in this region, by contributing 58% and 66% to the region’s activity in terms of number of deals and proceeds respectively.

• The Americas region saw a significant rise in IPO activity in 1H17,recording a YOY increase of 96% and 280% in terms of number of deals and proceeds respectively (100 deals raising US$26.1b). In particular, US exchanges witnessed a surge in IPO activity, with 84 deals raising US$23.0b, registering a YOY increase of 91% and 231% in terms of number of deals and proceeds respectively.

• IPO activity was steady in EMEA. The region ranked second and third in terms of global number of IPOs and proceeds respectively, in 1H17. It accounted for 20% of the global number of IPOs and 26% of proceeds this YTD.

• 1H17 saw 10 US$1b+ deals as compared with 6 deals in 1H16, with 4 deals in the Americas and 3 deals each in Asia-Pacific and the EMEA regions.

Environment and horizon• Global IPO activity should continue to strengthen in the second half of

2017, underpinned by rallies in many bull markets reaching all-time highs, while investor sentiment has brightened and the global outlook is positive. With the momentum built during the first half of the year, 2017 is poised to surpass 2016 global IPO levels in both number and proceeds.

• Asia-Pacific is expected to continue to be the world’s standout market in the second half of 2017, led by Greater China. This positive outlook is supported by a healthy pipeline of IPO-ready companies and an evolving regulatory landscape designed to attract new listings. However, activity levels on mainland exchanges may be affected if the Chinese regulator continues to slow the rate of approval of new listings in the coming months, in a bid to reduce pressure on the stock market.

• Despite geopolitical uncertainties in the first half of 2017, IPO activity in Europe is expected to increase in the second half of 2017, as accommodative monetary policy, soaring equity indices and low volatility are likely to encourage positive investor sentiment. However, Brexit and the recent election result that led to a hung UK parliament is likely to continue to deter IPO activity in the UK.

• The rest of 2017 looks promising for the US IPO market as we expect 2017 activity levels to surpass that of last year. While fiscal and policy regulation remains uncertain, the markets have been insulated against this and continue to experience low volatility, which is ideal for companies looking to list. As a result, the pipeline continues to strengthen as the post-IPO market performance of newly listed stocks remains steady.

• The Americas region is also expected to see heightened IPO activity in areas outside of the US, with recovery in the Mexican and Canadian markets.

• The outlook for Indian IPO activity is expected to be bullish for the remaining part of 2017, as several high-profile companies, including UTI Mutual Fund and SBI Life, are expected to launch IPOs amounting to more than US$5.0b.

Top 10 IPOs by proceeds, June 2017Source: Dealogic

Issuer name Issuer location Sector Exchange Proceeds(US$m)

Allied Irish Banks plc

IrelandBanking and capital markets

London 3,333

Altice USA Inc. USTelecommunications

New York 2,152

ALD S.A. FranceBanking and capital markets

Euronext 1,298

Guangzhou Rural Commercial Bank Co Ltd

ChinaBanking and capital markets

Hong Kong 1,035

Delivery Hero AG Germany TechnologyDeutsche Boerse

983

Unicaja Banco S.A. SpainBanking and capital markets

Bolsa de Madrid

781

WuXi Biologics (Cayman) Inc.

China Life sciences Hong Kong 587

Banco del Bajio S.A. MexicoBanking and capital markets

Mexican 482

EVRY ASA Norway Technology Oslo Bors 445

ZheshangSecurities Co. Ltd.

ChinaBanking and capital markets

Shanghai 409

IPO activity by sector and area (% share of global proceeds)LTM to June 2017Source: Dealogic; regional classification on the basis of issuer nationality.

Note: because of rounding, percentages may not add up to total.

Americas Asia-Pacific EMEA Total

Banking and capital markets 1% 14% 4% 19%

Technology 4% 6% 4% 14%

Real estate 2% 5% 3% 10%

Life sciences 1% 5% 3% 10%

Automotive and transportation 1% 6% 2% 9%

Consumer products and retail 2% 6% 1% 9%

Diversified industrial products 1% 5% 1% 7%

Oil and gas 4% 1% 0% 5%

Power and utilities 0% 2% 3% 5%

Others 4% 6% 2% 12%

Total 21% 56% 23% 100%

IPO activity by area (YOY % change)(LTM to June 2017 versus LTM to June 2016)Source: Dealogic; regional classification on the basis of issuer nationality.

-30%

-10%

10%

30%

50%

70%

-20% 0% 20% 40% 60% 80% 100%

Value

Vo

lum

e

Americas(including US)

EMEA

Global

Asia-Pacific

Capital Briefing

US

6. Loans

Executive summary

Global investment-grade loans (US$b)*Source: Thomson ONE.

Global high-yield loans (US$b)*Source: Thomson ONE.

Top arrangers ranking, YTD 2017 (US$b)Source: Thomson ONE.

Global loan issuance by industry, YTD June 2017Source: Thomson ONE.

Proceeds Issues

Bank of America Merrill Lynch 149.1 793

JP Morgan 138.3 694

Citi 128.3 476

Wells Fargo & Co 89.6 594

Barclays 88.9 399

All loans by region, YTD 2017 (US$b)Source: Thomson ONE.

Market share Proceeds Issues

Americas 63.5% 1,363.5 2,308

EMEA 20.8% 446.4 645

Asia-Pacific 15.8% 338.5 1,652

12

• Loan volume in June increased both in Europe and the US as refinancing continued to remain strong, further supported by an uptick in M&A volume.

• Refinancing and dividend recaps still account for more than 50% of total deals in both the US and Europe.

• European loan issuance continues to move toward the US-style covenant-lite (cov-lite) high-yield bond amid surging demand.

• The demand-supply imbalance continues to compress yields and loosen documentation.

• The CLO market had a strong quarter with CLO 2.0 issuance in 2Q17, reaching its highest quarterly volume to date.

Capital Briefing

Current state• In June, US$56.8b of loans were issued in the US and €10.3b in Europe,

taking the YTD global issuance to US$431b, up 71% from the same period in 2016. Monthly volume increased in June, after a slight decrease in May as M&A volume picked up.

• Refinancing and dividend recaps still accounted for more than half of deals in 1H 17 in both the US and Europe, although this is starting to shift as new-money M&A-driven deal flow rises.

• M&A volume increased in 2Q17 to 55% of all new European loan issuance, from 26% in 1Q17. In the US, M&A volume rose to 24%, from 21%.

• European loan issuance has been inclining toward US-style high-yield bond incurrence covenants instead of the typically more restrictive covenant package. For 2Q17, the share of cov-lite volume was 70% in both Europe and the US, substantially up from last year as demand continued to outpace supply.

• The demand-supply imbalance persists and drove lower yields and loosening documentation. Demand is bolstered by non-traditional leveraged investors as the leveraged loan market offers attractive returns amid a low rate environment.

• Following the trend in first lien issues, sponsors are increasingly pushing banks to underwrite second lien debt at much more favorable rates, with banks taking it up to be able to underwrite the first lien.

• CLO 2.0 issuance in 2Q17 reached its highest quarterly volume to date, with €6b priced from 15 deals. At the end of 1H17, the CLO market looks to be on track to surpass 2016’s record volume of €16.8b.

• Despite widening slightly in June, yields-to-maturity remain near record lows for both regions. The average clearing yield for single-B rated term loans widened in the US to 5.4% from 5.27%, and in Europe to 4.04% from 3.95%.

Environment and horizon• Pricing differentiation is a key feature of the European market. Investors

are beginning to pick and choose investments after an increase in deal flow. However, there is sufficient money in the market for all issues, albeit at a lower price point, enabling banks and borrowers to avoid any fallout from hung deals.

• The demand-supply gap is expected to persist. A fundamental change in the demand-supply dynamics would need to be driven either by extraordinarily strong M&A activity or by an external shock. Both of these scenarios seem unlikely in the current environment.

Opportunities• More US companies are likely to tap the European market as issuing dollars

becomes less cheap and banks show reluctance to provide swap lines.

• With a high amount of PE money looking for investment opportunities, and evidence of increasing supply to all new M&A-related buyout money in the second quarter, healthy levels of deal flow are likely to continue with a lower percentage of refinancings and more M&A.

*Data until 30 June 2017.

*Data until 30 June 2017.

0

200

400

600

0

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800

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Proceeds (LHS) Number of issues (RHS)

0

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2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

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0 100 200 300 400

Financials

Energy and power

Consumer staples

Industrials

High technology

Materials

Healthcare

Telecommunications

Consumer products and services

Media and entertainment

Real estate

Retail

Government and agencies Proceeds (US$b)

Current state• Global high-yield activity rose on a monthly basis following the trend in

May. High-yield issuance was US$21.6b in the US and €9.8 in Europe, taking the YTD total global issuance to US$191b, up 31% compared with the same period last year.

• The increase in global volumes was driven by a spike in European bond issuances, at 83% ahead of the same period of last year, while the US is 19% ahead. Both regions are well on track to reach 2016 volumes, with the US at 62% of 2016 issuance, and Europe at 82%.

• The bulk of new issuances were used to fund refinancing this year at 68% in the US and 62% in Europe. This is similar to 2016, when 63% of volume refinanced existing debt in both the US and Europe.

• High-yield issuance for M&A activity accounted for 22% of volume in US and 14% of volume in Europe.

• Despite an uptick in M&A-related deals, sponsor-driven LBO activity continues to favor the loan market over the bond market.

• Reverse Yankees continue to be an important part of the European market. Although volumes were lower in 2Q compared with 1Q, there have been a total of 15 such issues YTD, leaving it just five behind 2016’s full year record.

• The month of June saw a number of single-B issuers starting to come to the market, providing investors with a wider choice of spreads to choose from.

• During the month of June, China opened its fixed income markets to foreign investors. They now have access to US$9.7t in Chinese debt; the third-largest bond market behind the US and Japan.

• Clearing yields for single-B rated bonds in 2Q17 widened in the US to 6.68% from 6.52% at the end of May. Yields also widened in Europe to 5.43% from 5.14%.

Environment and horizon• Led by the ECB and the US Federal Reserve, central banks globally have

hinted on a scale-back of the monetary stimulus programs. This caused a sell-off in bonds across the globe in the last week of June and resulted in a corresponding rise in bond yields.

• Sponsors continue to stay away from the bond market, with only 8% of the 2Q17 supply volume being sponsor backed.

Opportunities• Demand is expected to be strong, driven by high amounts of investable

cash looking for investment avenues.

• The prospect of the ECB changing its policy stance to reduce the flow of easy money is a significant factor impacting the markets after President Mario Draghi's comments in the last week of June.

• Issuance is expected to be driven by more refinancings, further bolstered by an uptick in M&A-driven volumes, which have already seen an increase in June.

• Reverse Yankees are expected to continue to remain active as the cost benefit from swapping dollars to euros remains low.

0 50 100 150 200

Energy and power

Industrials

High technology

Telecommunications

Real estate

Consumer staples

Healthcare

Consumer products and services

Materials

Retail

Media and entertainment

Proceeds (US$b)

Executive summary

Euro bond issuancesSource: Thomson ONE.

US bond issuancesSource: Thomson ONE.

Top 10 corporate bond issuers, YTD June 2017 (US$b)Source: Thomson ONE.

Global bond issuance by industry, YTD 2017Source: Thomson ONE.

Issuer Nation Industry Proceeds

AT&T Inc. US Telecommunications 22.2

Apple Inc. US High technology 21.8

China Railway Corporation

China Industrials 17.5

Microsoft Corporation US High technology 17.0

Broadcom Corporation US High technology 13.6

Verizon Communications Inc.

US Telecommunications 13.5

Qualcomm Inc. US Telecommunications 11.0

Becton, Dickinson and Company

US Health care 10.5

General Electric US Industrials 8.7

State Power Investment Corporation

China Energy and power 8.6

0

50

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50

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250

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Aug16

Sep16

Oct16

Nov16

Dec16

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Feb17

Mar17

Apr17

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Jun17

Proceeds (US$b) (LHS) Number of issues (RHS)

13

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Sep16

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Feb17

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Apr17

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Jun17

Proceeds (US$b) (LHS) Number of issues (RHS)

7. Bonds

• Global high-yield activity rose on a monthly basis in June, with an increase in Europe and a slight decline in the US.

• The increase in global volumes was driven by a spike in European bond issuance.

• Good market conditions prevailed, driven by strong demand from investors in search of yields.

• Clearing yields for single-B rated bonds widened in both the US and Europe.

• The prospect of the European Central Bank (ECB) scaling back its monetary stimulus programes caused a sell-off in global bond markets in the last week of June.

Capital Briefing

AppendicesAppendices

Dry powder — buyout funds — by region (in US$b)

Global PE fundraising (in US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin

0

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017

Commitments (US$b) Number of funds

0%

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12%

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16%

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017

North America Europe

Asia-Pacific and rest of world Asia-Pacific and rest of world as percentage of total

Private Equity Capital Briefing15

Source: Preqin

Source: Dealogic

Global PE value and volume — quarterly trend (in US$b)

PE acquisitions by year (in US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic

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$80

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$120

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17


Private Equity Capital Briefing16

0

500

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017


17

Americas PE acquisitions — the top deals with disclosed financial terms in 2Q 2017

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

0

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Source: Dealogic

Announcementdate

Completiondate

Company Sector Value (US$b) Acquiror

28-Jun-17 Staples Inc. Consumer goods 6.8 Sycamore Partners LP

20-Jun-17 Parexel International Corp. Health care 5.0 Pamplona Capital Management LLP

9-May-17 West Corp. Telecom 4.9 Apollo Global Management LLC

6-Jun-17HD Supply Holdings Inc.(Waterworks business unit) Materials 2.5 Clayton Dubilier & Rice LLC

17-Apr-17 22-Jun-17 EagleClaw Midstream Services LLC Utilities 2.0 Blackstone Group LP

14-Apr-17 14-Apr-17 Ascend Learning LLC Technology 2.0Blackstone Group LP and Canada Pension Plan Investment Board

5-Jun-17 Albany Molecular Research Inc. Health care 1.6Carlyle Group LP and GTCR Golder Rauner LLC

10-Apr-17 Intrawest Resorts Holdings Inc. Consumer goods 1.4Aspen Skiing Co. LLC and KSL Capital Partners LLC

3-May-17 Kofax Ltd. Technology 1.4 Thoma Bravo LLC

31-May-17 Idera Inc. Technology 1.1 HGGC LLC

Source: Dealogic

Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Source: Dealogic

18


Announcement date

Completion date

Company Sector Value (US$b) Acquiror

5-Jun-17 Sponda Oyj Real estate 4.1 Blackstone Group LP

24-May-17 Q-Park NV Industrials 3.3 KKR & Co LP

12-Apr-17 Refresco Group NV Consumer goods 2.2 PAI Partners SAS

2-May-17 19-May-17 Affinity Water Ltd. Utilities 1.9

Allianz Capital Partners GmbH, Dutch Infrastructure Fund BV and HICL Infrastructure Co. Ltd.

28-Jun-17 28-Jun-17 Visma AS (minority stake) Technology 1.8

GIC Pte Ltd., Intermediate Capital Group plc, HgCapital LLP and Montagu Private Equity LLP

20-Apr-17 20-Apr-17

Mubadala Development Co. PJSC (private equity portfolio worth US$2.5b) Financials 1.8 Ardian SA

16-Jun-17Aernnova Aerospace SA (minority stake) Industrials 1.0

TowerBrook Capital Partners LP,Peninsula Capital Advisors LLP and Torreal SA

28-Apr-17 Breitling SA Consumer goods 0.8CVC Capital Partners Ltd. and Breitling’s management

24-Jun-17Otto Bock HealthCare GmbH(minority stake) Health care 0.7 EQT Partners AB

2-May-17Robert Bosch Starter Motors Generators Holding GmbH Industrials 0.6

Zhengzhou Coal Mining Machinery Group Co. Ltd. and China Renaissance Capital Investment Inc.

Source: Dealogic

EMEA PE acquisitions — the top deals with disclosed financial terms in 2Q 2017

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Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

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19 Private Equity Capital Briefing

Announcement date

Completion date

Company Sector Value (US$) Acquiror

28-Apr-17Belle International Holdings Ltd. Consumer goods 5.8

Hillhouse Capital Management Ltd., Wisdom Man Ventures Ltd. andCDH Investments Ltd.

25-Apr-17 Nord Anglia Education Inc. Consumer Services 3.0Canada Pension Plan Investment Board

7-Jun-17 Vocus Group Ltd. Telecom 2.4 KKR & Co. LP

18-May-17Fairfax Media Ltd. (Bid no. 3) Consumer services 2.2 Hellman & Friedman LLC

8-May-17Fairfax Media Ltd. (Bid no. 2) Consumer services 2.1

TPG Capital LP, Ontario Teachers' Pension Plan Board

26-Apr-17 Hitachi Kokusai Electric Inc. Telecom 1.5 KKR & Co. LP

28-Jun-17 Croesus Retail Trust Real estate 1.2 Blackstone Group LP

8-Jun-17iNova Pharmaceuticals (Australia) Pty. Ltd. Health care 0.9

Pacific Equity Partners Pty Ltd. and Carlyle Group LP

23-May-17ICON Consolidated Holdings Pty. Ltd. Health care 0.7

QIC Ltd., Pagoda Investment Advisors PteLtd. and Goldman Sachs Private Equity Group

21-May-17 21-May-17

E-Land Retail Co. Ltd. (Division of home furnishing wholesale) Consumer goods 0.6 MBK Partners Ltd.

Source: Dealogic

Asia-Pac PE acquisitions — the top deals with disclosed financial terms in 2Q 2017

Source: Dealogic

Global PE-backed IPOs — value and volume — quarterly trend (in US$b)

Appendix AGlobal PE exit activity

Global PE-backed exits by M&A — value and volume — quarterly trend (in US$b)

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Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top exits 2Q 2017

Americas PE exits (in US$b)

Announcementor filing date

Completion or priced

date

Company Sector Value (US$b) Sponsor Type

15-May-17 Patheon NV Health care 7.2 JLL Partners LLC M&A

8-May-17 Tribune Media Co. Telecom 6.6Angelo Gordon & Co.;Oaktree Capital Management, LP M&A

9-May-17 West Corp. Telecom 4.9

Thomas H Lee Partners LP;Quadrangle Group LLC;Apollo Global Management LLC M&A

25-Apr-17 7-Jun-17AdvancePierre Foods Holdings Inc. Consumer goods 4.3 Oaktree Capital Management, LP M&A

21-Jun-17 21-Jun-17 Altice USA Inc. Consumer goods 2.2

Canada Pension Plan Investment Board-CPPIB;BC Partners LLP IPO

4-May-17Capital Bank Financial Corp. Financials 2.1 Crestview Partners LP M&A

6-Jun-17Houston Fuel Oil Terminal Inc. Oil and gas 2.1 Alinda Capital Partners LLC M&A

17-Apr-17 22-Jun-17EagleClaw Midstream Services LLC Utilities 2.0

Blackstone Group LP;EnCap Investments LP M&A

14-Apr-17 14-Apr-17 Ascend Learning LLC Technology 2.0

Canada Pension Plan Investment Board;Blackstone Group LP;Providence Equity Partners LLC M&A

11-May-17

XP Investimentos Corretora de Cambio Titulos e Valores Mobiliarios SA Financials 2.0 General Atlantic LLC M&A

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M&A value IPO value M&A volume IPO volume

21

Source: Dealogic


Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top exits 2Q 2017

EMEA PE exits (in US$b)


Completion orpriced date


2-Jun-17 Logicor Europe Ltd. Real estate 13.8 Blackstone Group LP M&A

15-May-17

Bureau van DijkElectronic Publishing BV Technology 3.3 EQT Partners AB M&A

2-May-17 19-May-17 Affinity Water Ltd. Utilities 1.9Partners Group Holding AG;Allianz Capital Partners GmbH M&A

28-Jun-17 28-Jun-17 Visma AS Technology 1.8

Cinven Ltd;Intermediate Capital Group plc;Montagu Private Equity LLP;HgCapital LLP;KKR & Co LP M&A

24-Apr-17AWAS Aviation Capital dac Financials 1.8

Canada Pension Plan Investment Board-CPPIB;Terra Firma Capital Partners Ltd M&A

18-Apr-17 Weetabix Ltd. Consumer goods 1.8 Baring Private Equity Asia Ltd M&A

29-Jun-17 29-Jun-17 Delivery Hero AG Technology 1.0

Insight Venture Management LLC;General Atlantic LLC IPO

1-Apr-17

Property portfolio (90 retail properties, Germany) Real estate 0.7 CORESTATE Capital AG M&A

17-Apr-17 Geneba Properties NV Real estate 0.6 Catalyst Capital Group Inc M&A

9-Jun-17 Irca SpA Consumer goods 0.6Carlyle Group LP;Ardian SA M&A

0

20

40

60

80

100

120

140

160

$0

$10

$20

$30

$40

$50

$60

$70



22

Source: Dealogic


Capital Briefing23

Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Asia-Pacific PE exits — top exits 2017

Asia-Pacific PE exits (in US$b)

0

5

10

15

20

25

30

35

40

45

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45



Source: Dealogic



Completion orpriced date


11-May-17 11-May-17ING Life Insurance Korea Ltd. Financials 1.0 MBK Partners Ltd IPO

23-May-17ICON Consolidated Holdings Pty. Ltd. Health care 0.7

Quadrant Private Equity Pty Ltd M&A

13-Jun-17 13-Jun-17WuXi Biologics (Cayman) Inc. Health care 0.6 Boyu Capital Advisory Co Ltd IPO

6-Apr-17 6-Apr-17Zhejiang UniviewTechnologies Co. Ltd. Technology 0.5 Bain Capital LLC M&A

22-May-17 22-May-17SPi Global Solutions Inc. Consumer services 0.3

CVC Capital Partners Ltd;Partners Group Holding AG M&A

25-May-17Retail Apparel Group Pty. Ltd. Materials 0.2 Navis Capital Partners M&A

28-Apr-17 31-May-17 Katitas Co. Ltd. Industrials 0.2 Advantage Partners LLP M&A

25-Apr-17Polymatech Japan Co. Ltd. Industrials 0.2 CITIC Capital Holdings Ltd M&A

9-May-17ReLIA Bioengineering (Shenzhen) Co. Ltd. Health care 0.2

Shanghai Yunfeng Investment Management Co Ltd M&A

26-Apr-17

Hitachi Kokusai Electric Inc (post-LBO business) Telecom 0.2

Japan Industrial Partners Inc;KKR & Co LP M&A

Appendix BM&A activity monthly flash

Volume Value Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2017(to June 17)

vs. 2016(to June 16)

2017(to June 17)

vs. 2016(to June 16)

LTM(to June 17

vs. PTM(to June 16)

LTM (to June 17)

vs. PTM(to June 16)

M&A activity by areas and regions

Global 18,363 -2% 1,410,342 -4% 36,119 -3% 3,430,042 -9%

Americas 6,614 -6% 739,130 -13% 13,114 -8% 1,972,598 -10%

Canada 934 -34% 91,061 -17% 2,181 -18% 216,862 11%

MeCAR 113 6% 8,339 -22% 223 -9% 17,426 -38%

SA region 371 -11% 30,669 -12% 785 -19% 77,323 4%

US 5,658 2% 645,464 -15% 10,867 -5% 1,787,700 -11%

EMEA 6,921 -1% 537,371 10% 13,125 -1% 1,227,563 -4%

Africa 307 -10% 14,450 -38% 562 -14% 38,861 -1%

CIS 457 -10% 11,327 -30% 860 -5% 59,479 7%

CSE 410 -30% 14,164 -22% 798 -28% 46,879 13%

GSA 1,469 30% 113,589 -37% 2,557 10% 243,518 -16%

Israel 166 24% 19,837 189% 266 -1% 35,583 -32%

Mediterranean 801 9% 111,217 72% 1,428 0% 168,103 3%

MENA 135 -28% 23,975 84% 252 -29% 74,940 150%

Nordics 810 8% 45,932 15% 1,461 12% 81,403 21%

UK&I 1,663 -8% 112,918 48% 3,566 1% 345,594 -15%

WEM 1,609 -7% 142,147 54% 3,102 -1% 281,908 -24%

Asia-Pacific 6,895 2% 407,303 -18% 14,018 2% 1,020,807 -9%

ASEAN 944 0% 27,202 -37% 1,840 3% 70,527 -12%

Greater China 2,849 11% 245,945 -27% 5,941 11% 577,262 -22%

India 651 3% 33,139 45% 1,158 -11% 80,640 63%

Japan 1,623 3% 55,827 -10% 3,207 3% 178,051 10%

Korea 475 -30% 35,420 14% 1,045 -24% 68,029 11%

Oceania 760 -4% 43,822 40% 1,645 -2% 112,053 43%

M&A activity by sectorsAerospace and defense 177 -2% 22,841 67% 361 -2% 40,552 6%

Automotive and transportation 1,302 5% 115,622 -17% 2,530 2% 231,519 -21%

Banking and capital markets 1,104 -10% 113,143 -16% 2,162 -12% 264,115 -33%

Consumer products and retail 2,613 -6% 251,127 62% 5,200 -5% 485,856 -9%

Diversified industrial products 2,453 1% 137,727 -49% 4,930 1% 407,583 -22%

Government and public sector 316 1% 8,024 5% 612 -4% 28,127 21%

Health care 604 3% 29,229 14% 1,151 -3% 60,644 22%

Insurance 513 -2% 42,479 -9% 1,025 -7% 133,774 -21%

Life sciences 1,196 -3% 162,232 -38% 2,383 -5% 273,835 -45%

Media and entertainment 1,176 -6% 45,677 -27% 2,311 -9% 229,094 19%

Mining and metals 963 -13% 47,324 -9% 2,006 -6% 113,420 -17%

Oil and gas 678 -5% 186,885 75% 1,413 -2% 514,639 88%

Other sectors 2,147 3% 48,904 -30% 4,084 -4% 118,402 -15%

Power and utilities 730 7% 80,723 -26% 1,477 3% 250,354 6%

Real estate 1,758 0% 92,685 -6% 3,470 4% 230,930 10%

Technology 5,321 6% 220,985 -28% 9,954 2% 554,713 -25%

Telecommunications 360 3% 68,379 69% 705 -5% 293,453 122%

Wealth and asset management 440 -15% 26,312 25% 943 -7% 55,925 44%

24

Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region. Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped.M&A analysis as at 1 July 2017. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

Capital Briefing

2016 2017

J F M A M J J A S O N D J F M A M J J A S O N D

2015 2016 2017

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J

Appendix CM&A multiples and bid premium

Deal multiples greater than 30x and bid premium greater than 100% have been excluded from calculation of median.M&A analysis as at 1 July 2017. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

25

Median deal multiple — EV / EBITDA

Global Americas Asia-Pacific EMEA

LTM(to June 17)

PTM(to June 16)

LTM(to June 17)

PTM(to June 16)

LTM(to June 17)

PTM(to June 16)

LTM(to June 17)

PTM(to June 16)

Aerospace and defense 7.6x 13.8x 11.9x 9.9x 4.4x 14.4x 11.7x 14.2x

Automotive and transportation 10.5x 9.1x 8.9x 9.9x 11.1x 9.9x 10.6x 8.4x

Consumer products and retail 10.0x 10.7x 10.5x 10.4x 10.0x 11.7x 9.2x 10.0x

Diversified industrial products 10.1x 9.5x 10.5x 9.2x 10.9x 10.2x 9.0x 9.3x

Financial services 10.3x 10.8x 13.0x 12.3x 7.8x 8.0x 7.5x 9.5x

Government and public sector 8.6x 8.8x 8.6x 8.2x 10.5x 11.1x 7.7x 9.5x

Health care 13.3x 10.9x 12.9x 11.8x 17.5x 10.9x 12.6x 10.8x

Life sciences 9.5x 12.4x 10.5x 9.5x 10.2x 14.5x 9.0x 12.5x

Media and entertainment 6.9x 8.7x 9.8x 7.5x 6.1x 10.8x 6.9x 9.6x

Mining and metals 10.0x 8.0x 11.6x 7.8x 13.6x 7.7x 5.4x 9.3x

Oil and gas 10.2x 9.9x 10.5x 11.3x 10.8x 10.8x 9.7x 7.9x

Other sectors 9.9x 10.9x 12.8x 10.6x 15.0x 15.7x 7.6x 9.8x

Power and utilities 11.6x 10.7x 4.3x 8.9x 10.3x 8.9x 12.5x 12.1x

Real estate 10.8x 9.4x 12.9x 9.4x 12.4x 8.5x 9.6x 10.0x

Technology 11.4x 11.2x 12.6x 13.5x 11.7x 11.3x 10.2x 10.3x

Telecommunications 8.2x 7.6x 7.7x 12.1x 10.0x 7.6x 8.2x 7.2x

Total 10.2x 10.2x 11.5x 10.3x 10.5x 10.7x 9.1x 9.7x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEA

LTM(to June 17)

PTM(to June 16)

LTM(to June 17)

PTM(to June 16)

LTM(to June 17)

PTM(to June 16)

LTM(to June 17)

PTM(to June 16)

Aerospace and defense 31% 31% 37% 60% 6% 31% 31% 15%

Automotive and transportation

19% 15% 27% 21% 18% 13% 8% 8%

Consumer products and retail 18% 22% 27% 32% 16% 17% 20% 25%

Diversified industrial products 23% 21% 27% 24% 23% 17% 17% 24%

Financial services 19% 23% 26% 30% 14% 10% 15% 13%

Government and public sector 27% 27% 31% 44% 16% 28% 23% 16%

Health care 28% 32% 36% 46% 14% 19% 14% 11%

Life sciences 21% 14% 21% 34% 21% 11% 22% 11%

Media and entertainment 21% 29% 24% 33% 20% 20% 14% 30%

Mining and metals 18% 28% 17% 39% 18% 25% 19% 11%

Oil and gas 23% 18% 32% 33% 17% 13% 28% 14%

Other sectors 10% 22% 15% 23% 5% 18% 11% 22%

Power and utilities 26% 20% 27% 22% 35% 16% 6% 52%

Real estate 25% 16% 26% 23% 25% 17% 24% 13%

Technology 25% 23% 33% 34% 18% 17% 25% 17%

Telecommunications 11% 21% 41% 29% 9% 25% 10% 15%

Total 22% 23% 28% 31% 19% 17% 18% 17%

Capital Briefing

Appendix DCapital Confidence Barometer (April 2017): by area

Respondents who expect their company to pursue acquisitions in the next 12 months

40%

56%59%

50%

57% 56%

0%

25%

50%

75%

100%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17

34%

57%

67%

54%

62%

81%

0%

25%

50%

75%

100%


30%

50% 48%44%

47% 46%

0%

25%

50%

75%

100%


Global Americas EMEA

57%

45% 44%

38%

47% 46%

0%

25%

50%

75%

100%


Asia-Pacific China Germany

28%

51%56%

50%

61%

28%

0%

25%

50%

75%

100%


Japan UK US

16%

58%

52%

59%

48%

42%

0%

25%

50%

75%

100%


33%

61%

74%

57%

75%

63%

0%

25%

50%

75%

100%


26 Capital Briefing

56%

43%40%

43%

49%

38%

0%

25%

50%

75%

100%


68%

51%

43%

35%

61%

31%

0%

25%

50%

75%

100%


Notes


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