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

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  • ChristopherElvinHeadofPrivateEquityProducts

    PrivateCapitalin2017KeyFindingsfromthe2017PreqinGlobalAlternaAvesReports

  • 2016Round-Up

  • www.preqin.com

    PrivateCapitalhasevolved

  • www.preqin.com

    InvestorPor

  • www.preqin.com

    PrivateCapitalAUMataRecordHigh-$4.5tn

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    4,500

    5,000

    Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16

    NaturalResources

    Infrastructure

    RealEstate

    PrivateDebt

    PrivateEquity

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    PrivateCapitalFundraisingClosetoPre-GFCLevels

    0

    100

    200

    300

    400

    500

    600

    700

    800

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

    AggregateCapitalRaised($bn

    )AnnualAggregatePrivateCapitalRaisedbyAssetClass,2004-2016

    NaturalResources

    Infrastructure

    PrivateDebt

    RealEstate

    PrivateEquity

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    ButCapitalBecomingMoreConcentrated

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1800

    2010 2011 2012 2013 2014 2015 2016

    GlobalAnnualPrivateCapitalFundraising,2010to2016

    No.ofFundsClosed AggregateCapitalRaised($bn)

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    RecordLevelsofCapitaltoInvest

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    1,600

    1,800

    Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16

    DryPo

    wde

    r($b

    n)

    PrivateCapitalDryPowderoverTimebyAssetClass,2005-2016

    NaturalResources

    Infrastructure

    RealEstate

    PrivateDebt

    PrivateEquity

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    RecordNumberofBuyoutDealsbutValueDrops

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    0

    500

    1000

    1500

    2000

    2500

    3000

    3500

    4000

    4500

    2012 2013 2014 2015 2016

    DealValue

    ($bn

    )

    No.ofD

    eals

    PE-BackedBuyoutDeals,2012-2016

    No.ofDeals AggregateDealValue($bn)

    0

    100

    200

    300

    400

    500

    600

    0

    500

    1000

    1500

    2000

    2500

    2012 2013 2014 2015 2016

    ExitVa

    lue($bn

    )

    No.ofE

    xits

    PE-BackedBuyoutExits,2012-2016

    No.ofExits AggregateExitValue($bn)

    Source:PrivateEquityOnline

  • www.preqin.com

    VentureCapitalDealAcRvity>$100bnfor2ndYear

    -

    20

    40

    60

    80

    100

    120

    140

    160

    -

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    2012 2013 2014 2015 2016

    DealValue

    ($bn

    )

    No.ofD

    eals

    VentureCapitalDeals,2012-2016

    No.ofDeals AggregateDealValue($bn)

    -

    20

    40

    60

    80

    100

    120

    140

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    2012 2013 2014 2015 2016

    No.ofE

    xits

    VentureCapitalExits,2012-2016

    No.ofExits AggregateExitValue($bn)

    Source:PrivateEquityOnline

  • www.preqin.com

    RealEstateExitAcRvityHitsNewHighs

    -

    50

    100

    150

    200

    250

    300

    -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    2012 2013 2014 2015 2016

    DealValue

    ($bn

    )

    No.ofD

    eals

    PE-RealEstateDeals,2012-2016

    No.ofDeals AggregateDealValue($bn)

    0

    50

    100

    150

    200

    250

    0

    500

    1000

    1500

    2000

    2500

    2012 2013 2014 2015 2016

    ExitVa

    lue($bn

    )

    No.ofE

    xits

    PE-RealEstateExits,2012-2016

    No.ofExits AggregateExitValue($bn)

    Source:RealEstateOnline

  • www.preqin.com

    Morethan7,900LimitedPartners

    49%

    28%

    15%

    8%

    PrivateCapitalLimitedPartnerUniversebyLocaAon

    NorthAmerica

    Europe

    AsiaPacific

    RestofWorld

  • www.preqin.com

    LimitedPartnerEvoluRon

  • ChallengesToday

  • www.preqin.com

    KeyChallenges/IssuesforPrivateCapitalFundManagersin2017

    Source:2017PreqinGlobalAlternaAvesReports

    PrivateEquity PrivateDebt RealEstate Infrastructure NaturalResources

    Valuations Valuations Valuations ValuationsOngoingVolatility/UncertaintyinGlobalMarkets

    ExitEnvironment FundraisingOngoingVolatility/UncertaintyinGlobalMarkets

    DealFlow Fundraising

    OngoingVolatility/Uncertaintyin

    GlobalMarketsDealFlow Fundraising

    OngoingVolatility/UncertaintyinGlobalMarkets

    PublicPerceptionofIndustry

  • www.preqin.com

    PrivateCapital:NotImmunefromLowerReturnEnvironment

    -5%

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    1YeartoJun-13

    1YeartoDec-13

    1YeartoJun-14

    1YeartoDec-14

    1YeartoJun-15

    1YeartoDec-15

    1YeartoJun-16

    Med

    ianAn

    nualize

    dRe

    turn

    RollingOneYearPrivateCapitalHorizonIRRs

    RealEstate

    Buyout

    VentureCapital

    MezzaninePrivateEquity

    DistressedPrivateEquity

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    PrivateCapitalOutperformedintheLongTerm

    0

    50

    100

    150

    200

    250

    300

    350

    Inde

    xRe

    turns(Re

    basedto100)

    PrEQInPrivateCapitalQuarterlyIndexvs.S&P500

    PrivateCapital

    S&P500Index

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    DryPowderatRecordLevelsbutCapitalOverhangisDecreasing

    4.64.4

    3.4 3.5

    4.1

    3.5

    2.3

    2.7

    3.6

    2.42.1

    2.52.8

    2.5

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    3.5

    4.0

    4.5

    5.0

    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

    RaAo

    RaRoofYear-endPrivateCapitalDryPowdertoPriorYearTotalCapitalCalled

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    FundraisingMoreCompeRRveThanEver&InvestorsareFindingSourcingFundsMoreChallenging

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

    Infrastructure

    RealEstate

    HedgeFunds

    PrivateEquity

    LPsViewsonCurrentFundraisingClimateTodayvs.12MonthsAgo

    MoreChallenging NoChange LessChallenging

    Source:2017PreqinGlobalAlternaAvesReports

  • Outlookfor2017

  • www.preqin.com

    Nearly3,000PrivateCapitalFundsinMarket

  • www.preqin.com

    DistribuRonsConRnuingtoOutstripCall-Ups

    0

    100

    200

    300

    400

    500

    600

    700

    800

    900

    1000

    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H12016

    PrivateCapital:CapitalCalledUpandDistributed,2000-2016

    CapitalCalledUp($bn)

    CapitalDistributed($bn)

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    InsRtuRonalPlansfor2017

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    AndfortheLongerTerm

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    FundManagersConfidentinFindingValue

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    Infrastructure

    RealEstate

    PrivateEquity

    FundManagersExpectedInvestmentsin2017vs2016

    MoreCapital

    SameAmountofCapital

    LessCapital

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    InvestorPerformanceExpectaRons

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    RealEstate

    Infrastructure

    PrivateEquity

    PrivateDebt

    HedgeFunds

    NaturalResources

    InsAtuAonalInvestors'ReturnExpectaAonsforAlternaAveAssetsin2017Comparedwith2016

    WillPerformBeier

    WillPerformAbouttheSame

    WillPerformWorse

    Source:2017PreqinGlobalAlternaAvesReports

  • www.preqin.com

    KeyTakeaways PrivateCapitalinrobusthealthexcellentlong-termreturnsdrivenrapidAUMgrowth

    ClearcurrentconcernsovervaluaAons;LPsandGPsalikecauAousaboutforward-lookingprospects

    ButcommiiedtofurtherincreasingallocaAonsrisk/rewardairacAveasever

    FundraisinghighlycompeAAveandcapitalbecomingincreasinglyconcentratedbutdistribuAonsandLPsaAsfacAonconAnuingtodrive

    Deal/ExitacAvity-SAllasellersmarketbutwiderpoliAcal/financialinstabilitymaycauseshiningofthescales

  • www.preqin.com

    DataSources

    Freereportsavailablefromwww.preqin.com/research Preqinsonlineservices:www.preqin.com/services