Red Rocks Capital Private Equity Perspectives – October 2014 Page 1 of 6 www.redrockscapital.com

OCTOBER 2014 - RED ROCKS CAPITAL PRIVATE EQUITY PERSPECTIVES Alternatives Reality: 5 Year Cumulative Returns of Alternative Indices Global Listed Private Equity underperformed the S&P 500 and other indices in Q3. Euro currency weakness and the strengthening US dollar were a drag on performance as approximately 60% of GLPE constituents trade on foreign exchanges. This trend could continue if rising rates and an improving US economy continue to drive US currency values higher. Geopolitical risk also appears to be affecting global markets as higher risk market segments, like listed private equity, have sold off slightly more aggressively than traditional market indices.

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PRIVATE EQUITY MANAGER PROFILE

Name: Investor AB CEO: Borje Ekholm Ticker: INVEB SS Market Cap: SEK 194,131 million http://www.investorab.com/

Overview and Strategy: Investor AB owns significant interests in high-quality, Nordic-based companies both public and private. The company takes an active role in ownership and strives to create value through industrial experience, a broad network, and financial strength. Investor AB generates long-term total return to shareholders by building net asset value, operating efficiently, and paying a steadily rising dividend. Recent Developments: Investor AB’s portfolio company Electrolux recently acquired General Electric’s appliances business for approximately SEK 6 billion. The acquisition will strengthen Electrolux’s position significantly in the US market. Investor AB also recently acquired more 15.8 million more shares of portfolio company Wartsila to become its largest shareholder. “’Based on its leading market positions, strong growth potential and large exposure to emerging markets and aftermarket sales, we view Wärtsilä as an attractive long-term investment,” commented Investor’s CEO Borje Ekholm.

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CHART OF THE MONTH

Listed Private Equity (LPE) Discounts vs. Secondary LP Interests Pricing The chart below illustrates the price discount or premium relative to the NAV, or book value, of the investment vehicle, for listed private equity and secondary illiquid partnership interests. In many cases, investors in in listed private equity have exposure to the very same funds and managers available in an illiquid limited partner format. It is therefore not surprising that the pattern of discounts to NAV for LPE and secondary LP interests have tracked in a similar manner for the past 10 years, although LPE discounts of 10%-15% have persisted while secondary LP interests have closed to near zero.

Sources: LPEQ, J.P. Morgan Cazenova/Thomson Reuters Datastream/Cogent Partners

NOTABLE Silver Lake Reaps a Golden Return on Its Alibaba Stake After the I.P.O. The market debut of the Alibaba Group, the Chinese Internet titan, hit the stock markets like a meteor, ending its first day of public trading worth a staggering $231 billion. Six years ago, however, the e-commerce company was worth only a small fraction of that — and commanded little attention outside its home market. Still, Kenneth Y. Hao, a managing director of the American private equity firm Silver Lake, was determined to build a relationship with what he saw as a budding Internet behemoth and his persistence has paid off. Thanks to $500 million in investments that were made in 2011 and 2012, Silver Lake now sits on a stake worth more than $5.1 billion, after having reaped $278.8 million by selling a fraction of its holdings. http://dealbook.nytimes.com/2014/09/21/silver-lake-reaps-a-golden-return-on-its-alibaba-stake-after-the-i-p-o/

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Jimmy Choo to IPO Jimmy Choo Ltd, the luxury footwear brand made famous by Princess Diana and a host of Hollywood’s finest, is going public. Owned by private equity firm JAB Holdings, the luxury shoe brand would follow other luxury companies including Moncler SpA, Brunello Cucinelli SpA, and Salvatore Ferragamo SpA in selling a stake on the stock market to fund expansion. Choo was acquired by private equity investors three times before being bought by JAB in 2011. “This has the potential to be very much a Moncler-type phenomenon,” assuming Jimmy Choo plans to expand its product range and distribution, said Rahul Sharma, managing director of Neev Capital in London. http://www.bloomberg.com/news/2014-09-08/jimmy-choo-said-near-ipo-to-value-shoemaker-at-1-billion.html Eurazeo Raises €320m from Rexel Stake Sale French financial holding company Eurazeo said it raised €320 million ($412 million) from the sale of a remaining 7.13 percent of stake in electrical equipment supplier Rexel, a return that is 2.3 times its initial investment. The sale marks the final step of Eurazeo's gradual divestment in Rexel, which was initiated in 2012. http://www.reuters.com/article/2014/09/23/ray-rexel-idUSL6N0RO14820140923 Apax Sells TriZetto for $2.7 Billion, 3X Return Cognizant Technology Solutions Corp. agreed to buy TriZetto Corp. from Apax Partners for $2.7 billion in an all-cash deal to expand in health-care industry software. TriZetto was acquired by Apax, a London-based private equity firm, for $1.19 billion in 2008. The Englewood, Colorado-based company was built up through about 16 acquisitions in the last 15 years. TriZetto serves about 350 health-care plans and supplies software to almost 245,000 doctors and other care providers. http://www.bloomberg.com/news/2014-09-15/cognizant-to-buy-trizetto-for-2-7-billion-in-health-care-growth.html KKR-Backed First Data to Provide Infrastructure for ApplePay Since buying First Data in 2007 for $29.8 billion, including debt and fees, KKR’s original investment has lost about 20 percent in value. KKR was ready to divest part of the business when Frank Bisignano CEO of First Data, persuaded them to wait. This month, as Apple Inc. unveiled new iPhones featuring digital credit cards, his effort paid off: First Data will provide encryption technology for the transaction system, called Apple Pay, a deal that could attract new clients and help turn around a seven-year-old losing bet by KKR & Co. “This guy is the real deal,” said Scott Nuttall, KKR’s chief of asset management and capital markets. “He gets hard stuff done fast, to a level that I have never seen.” http://www.businessweek.com/news/2014-09-16/kkr-banks-on-bisignano-forging-apple-deal-at-first-data ISIS Equity Partners to Rebrand ISIS Equity Partners have used the ancient Egyptian goddess as their namesake since 1995. For obvious reasons, they have decided to change the name of their firm. President Obama has been calling the terrorist organization “ISIL,” however, the name has not caught on. The rebranding will be unveiled in the coming weeks. Stay tuned… http://www.isisep.com/2014/09/important-update/ 3i Receives £85m on the Sale of its Stake in Vedici 3i Group plc recently announced the sale of their stake in Vedici, a leader in private acute healthcare in France, to CVC Capital Partners. Proceeds to 3i Group from the transaction will be £85 million, representing a 43% uplift against a value of £58 million at March 31, 2014 and, in sterling terms, a money multiple of 2.0x on the original investment of £44 million. Vedici’s performance has benefitted from key operational effectiveness strategies supported by 3i, such as lean management, accelerated organic growth and pricing initiatives which have already delivered significant revenue and margin uplifts. http://www.3i.com/news/corporate-news/3i-receives-%C2%A385m-sale-its-stake-vedici The Franchisees Who Really Run Dunkin’ Donuts A fantastic Boston Globe Magazine piece on the secret world of Dunkin’ Donuts franchise kings. Some franchisees generate hundreds of millions of dollars in revenue per year. Or, put another way, more revenue than many of Silicon Valley's hottest tech startups. Dunkin’ was formerly owned by the private equity firms Bain Capital, Carlyle Group, and Thomas H. Lee Partners. http://www.bostonglobe.com/magazine/2014/09/17/the-secret-world-dunkin-donuts-franchise-kings/pb2UmxauJrZv08wcBig6CO/story.html

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Denver-based Ping Identity Gets $35 million Investment Boost from KKR Recent data breaches at high-profile companies such as Home Depot and Goodwill Stores have thrust Internet security back into the spotlight, and one local company appears to have products and growth prospects attract new capital. Denver-based Ping Identity announced a $35 million investment boost, led by global investment firm KKR and newcomer Ten Eleven Ventures, which also includes some of Ping's existing investors. The investment will be used to drive product innovation and expansion both stateside and internationally. http://www.denverpost.com/business/ci_26556583/denver-based-ping-identity-gets-35-million-investment Encana Buys Athlon Energy for $5.93 Billion in Oil Shift Encana Corp., Canada’s second-largest natural gas producer, agreed to buy Athlon Energy Inc. for $5.93 billion in cash, gaining a foothold in one of the most-prolific U.S. oil producing regions in Texas. Athlon, whose largest shareholder is private equity firm Apollo Global Management, produces about 30,000 barrels a day in the Permian Basin in Texas. Athlon began trading publicly for $20 a share last year. Apollo, which announced its partnership with Athlon in 2010, held a 26 percent stake as of August 6, according to data compiled by Bloomberg. http://www.businessweek.com/news/2014-09-29/encana-buys-athlon-energy-for-7-dot-1-billion-in-shift-toward-oil Oaktree to Start First Mutual Funds to Woo Individuals Oaktree Capital Group, the world’s biggest distressed-debt firm, is starting its first in-house mutual funds as it joins the largest private-fund managers in raising money from individual investors. The Los Angeles-based firm recently filed with the U.S. Securities and Exchange Commission to sell shares in the Oaktree High Yield Bond Fund and the Oaktree Emerging Markets Equity Fund. Other asset managers that are branching into the mutual-fund business include private-equity firms KKR and Carlyle Group. http://www.bloomberg.com/news/2014-09-15/oaktree-to-start-first-mutual-funds-to-woo-individuals.html Electra Partners Acquires The Original Bowling Company for £91 million Electra Partners recently announced that it has agreed to the acquisition of The Original Bowling Company, the UK's largest ten-pin bowling operator; total funding for the deal amounted to £91 million. The Original Bowling Company specializes in large, high quality bowling centers, predominantly located in leisure or retail parks, which offer a complete family entertainment experience with restaurants, licensed bars, and state-of-the-art family games arcades with 29 sites operating under the Bollywood Bowl brand and 14 sites under the AMF brand. http://www.electraequity.com/News/?itemid=MTU0MzE0MTEwOTM2MDE= KKR is Getting in on the DJ Craze Japan's Pioneer Corp is to sell its disc-jockeying audio equipment unit to private equity firm KKR & Co for around 59 billion yen ($550 million). Under this deal Pioneer said it would spin off its DJ unit, which makes equipment such as speakers, mixers and turntables, into a separate company called Pioneer DJ that it will then sell to KKR by the end of March next year. http://www.reuters.com/article/2014/09/16/us-pioneer-asset-idUSKBN0HB0G820140916

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IMPORTANT DISCLOSURES While every effort has been taken in the preparation of this document, Red Rocks Capital makes no representation to the accuracy or completeness of this research nor any statements or forecasts within this document. Listed Private Equity Companies are subject to various risks depending on their underlying investments, which could include, but are not limited to, additional liquidity risk, industry risk, non-U.S. security risk, currency risk, credit risk, managed portfolio risk and derivatives risk (derivatives risk is the risk that the value of the Listed Private Equity Companies derivative investments will fall because of pricing difficulties or lack of correlation with the underlying investment. There are inherent risks in investing in private equity companies, which encompass financial institutions or vehicles whose principal business is to invest in and lend capital to privately held companies. Generally, little public information exists for private and thinly traded companies and there is a risk that investors may not be able to make a fully informed investment decision. Listed Private Equity Companies may have relatively concentrated investment portfolios, consisting of a relatively small number of holdings. A consequence of this limited number of investments is that the aggregate returns realized may be adversely impacted by the poor performance of a small number of investments, or even a single investment, particularly if a company experiences the need to write down the value of an investment. The information presented is for illustrative and educational purposes only. You should not assume that an investment in the securities mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance does not guarantee future results. For private equity companies mentioned in this document, as of August 31, 2014: Red Rocks Capital holds positions with the following firms:

3i Group (III LN)

Apollo Global Management (APO)

Carlyle Group (CG)

Electra Private Equity (ELTA LN)

Eurazeo (RF FP)

Investor AB (INVEB SS)

KKR & Co. (KKR) Through Pantheon International Participations, PLC (PINR LN)

Silver Lake

CVC Capital Partners

Apax Red Rocks Capital has no positions or affiliations with the following firms:

Bain Capital

Encana Corporation

ISIS Equity Partners

JAB Holdings

Neev Capital

Ten Eleven Ventures

Thomas H. Lee Partners