private capital update - fundfinanceassociation...private capital outperforms in the long term 0 50...
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PrivateCapitalUpdate3rdAnnualEuropeanFundFinanceSymposium
HeadofPrivateEquityProductsChristopherElvin
11thOctober2017,London
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AboutPreqinPrivateEquity&VentureCapital HedgeFunds RealEstate PrivateDebtInfrastructure Natural
Resources
SanFrancisco NewYorkLondon
HongKong
ManilaSingapore
Clientsincludeover44,000industryprofessionalsfrom16,000firms
MulRaward-winningservice
Dataavailableviaonlinedatabases,publicaRonsandresearchreports
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DefiniEons
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2017,SoFar….
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GlobalPrivateCapitalAUMataRecordHigh-$4.8tn(Mar-17)
116 134 155 185 217288
401
533 528584
654728
793
913 9391,016
1,0791,129
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AssetsUnd
erM
anagem
ent($b
n)
NorthAmerica Europe Asia ROW
Europe-$1.1tn/23%ofTotal
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Europe-focusedPrivateCapitalFundraisingatPre-GFCLevels.$134bnraisedin2017YTD(asofOct)
41
3335
34
57
110
143
181 168
9266
79116
135 162156
195
134
0
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
AggregateCapitalRaised($bn
)
NorthAmerica Europe Asia RestofWorld
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ButCapitalisBecomingMoreConcentrated…$600mnAv.FundSizeofEurope-focusedvehiclesclosedin2017YTD(Oct)
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Av.Fun
dSize($
mn)
AggregateCapitalRaised($bn
)/No.ofFun
ds
Europe-focusedPrivateCapitalFundraising,2000-2017YTD(Oct)
No.ofFunds AggregateCapital($bn) Av.Fundsize($mn)
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RecordLevelsofCapitaltoInvest-$408bn
5173
89 84 93
145
196
244266 270
244 250232
309329 332
369
408
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DryPo
wde
r($b
n)
EuropeFocusedDrypowder
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EuropeanBuyoutDeals/Exits–SEllaSeller’sMarket
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AggregateDe
alValue
($bn
)
No.ofD
eals
EuropeanBuyoutDeals,2006-2017YTD
No.ofDeals AggregateDealValue(bnUSD)
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AggregateExitVa
lue($bn
)
No.ofE
xits
EuropeanBuyoutExits,2006-2017YTD
No.ofDeals AggregateDealValue(bnUSD)
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Investors
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8,300+LimitedPartnersGloballyInvesEnginPrivateCapitalFunds
Europe28%
NorthAmerica48%
Asia14%
ROW10%
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InvestorPorfoliosBecomingEverMoreDiversified
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LimitedPartnerEvoluEon
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Performance
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PrivateCapital:NotImmuneFromLowerReturnEnvironment
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1YeartoDec2013 1YeartoJun2014 1YeartoDec2014 1YeartoJun2015 1yeartoDec2015 1yeartoJun2016 1yeartoDec2016
Annu
alize
dRe
turn
RollingOneYearPrivateCapitalHorizonIRRs
Buyout
Venture
Mezzanine
RealEstate
DistressedPE
Infrastructure
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InvestorsLargelySaEsfiedwithHowFundsArePerforming…InComparisontoHedgeFunds
6% 6% 8% 11%24% 30%
55%
70% 73%80%
67%
59%56%
37%
25% 21%12%
22% 17% 15%8%
0%
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30%
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50%
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100%
RealEstate Infrastructure PrivateDebt PrivateEquity VentureCapital NaturalResources HedgeFunds
InsRtuRonalInvestorsViewsonAlternaRveAssetPerformance
FallenshortofexpectaRons MetexpectaRons ExceededexpectaRons
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PrivateCapitalOutperformsintheLongTerm
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xRe
turns(rebasedto100aso
f31De
c2000)
PrEQinPrivateCapitalQuarterlyIndexvs.S&P500
PrivateCapital S&P500Index
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Challenges
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PrivateCapitalManagersShareConcernsAroundDealPricingandFlow
PrivateEquity RealEstate PrivateDebt Infrastructure
DealPricing AssetPricing DealFlow AssetPricing
ExitEnvironment DealFlow CompeRRonfromNewManagers
DealFlow
Performance MarketVolaRlity DealPricing RegulaRon
KeyChallengesFacingFundManagers:
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InvestorsAgree
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FundManagersConfidentinFindingValue
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InvestorPerformanceExpectaEons
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Outlookfor2017
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Morethan636Europe-focusedPrivateCapitalFundsinMarkettargeEng$194bn
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Europe-focusedPrivateCapitalFundsinMarket,Jan2010toOct2017
No.ofFunds AggregateTargetCapital(BnUSD)
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FundraisingMoreCompeEEveThanEver&InvestorsAreFindingSourcingFundsMoreChallenging
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DistribuEonsConEnuingtoOutstripCall-UpsandDriveFundraising
-300
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$bnPrivateCapital–CapitalCalled&Distributed,2000toQ12017
AnnualCalled($bn) AnnualDistributed($bn) NetCapitalDistributed($bn)
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InsEtuEonalPlansfornext12months
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AndFortheLongerTerm
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WhereareLPslookingtoinvest?
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KeyTakeaways• EuropeanPrivateCapitalinrobusthealth–morestrategies,morefunds,moreAUM,moreinvestorsthaneverbefore.
• FundraisinghighlycompeRRveandcapitalbecomingincreasinglyconcentrated• Deal/exitacRvity-sRllaseller’smarket• Clearcurrentconcernsoverdealpricing/valuaRonsandthelongertermimpactonperformance.
• HoweverlongertermoutlookisposiRve:Ø GPsconfidentoffindingvalueØ MajorityofLPslookingtoincreaseallocaRonstomostassetclassesandputmoremoneytowork
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FurtherInformaEon
FollowusonTwimer:www.preqin.com/Twimer
FindusonLinkedIn:www.preqin.com/LinkedIn
ChristopherElvin–[email protected]
• Freereportsavailablefromwww.preqin.com/research
• Preqin’sonlineservices:www.preqin.com/services