Private Equity

Panel Detail:

Monday, May 2, 2011 9:30 AM - 10:45 AM

Speakers: Leon Black, Founding Partner, Apollo Management, LP David Bonderman, Founding Partner, TPG Capital Jonathan Nelson, CEO and Founder, Providence Equity Partners Jonathan Sokoloff, Managing Partner, Leonard Green & Partners Scott Sperling, Co-President, Thomas H. Lee Partners, L.P.

Moderator:

Maria Bartiromo , Anchor, CNBC

Carlyle IPO a Game-Changer?

0

5

10

15

20

25

30

35

40

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

Blackstone share price

8

10

12

14

16

18

20

Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

Apollo share price

Source: Bloomberg.

(US$) (US$)

PE is one of the better-performing asset classes

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

1 Year 3 Years 5 Years

Fixed Income

Hedge Funds

Listed Equity

Private Equity

Real Estate

Total Investment Portfolio

Median Returns of Pension Plans by Asset Class as of 30 June 2011

Source: Preqin and Bain.

Global private equity fundraising still stalling Quarterly: 2005Q1 – 2012Q1

Source: Preqin.

$0

$50

$100

$150

$200

$250

US$ billions Global private equity fundraising by quarter

2007 Q2 market peak: $213 billion

2012 Q1: $62 billion

Global private equity fundraising by region

Source: Preqin.

63.6142.5

194.8

319.0386.7 391.4

176.4 155.2 146.5

33.6

34.8

49.4

109.6

138.6

173.7 167.9

88.458.8 59.5

15.1

9.2

19.8

54.4

86.3

107.8 120.4

40.860.9 59.6

13.2

107.7

211.7

358.9

543.9

668.1 679.7

305.6274.8 265.6

61.8

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q 2012

US$ billions

North America

EuropeAsia and Rest of World

Which types of funds are raising the most cash?

Source: Preqin.

Buyout

VentureReal estate

Distressed PE

Mezzanine

Secondaries

InfrastructureFund of funds Growth Other

Global private equity fundraising by fund typeQ1 2012 (US$ billions)

$18.5

$9.7 $6.8

$2.6 $1.9

$3.0

$3.2

$5.6

$8.8

$1.7

Average time required to close funds

Source: Preqin.

10.2 10.4 10.8

13.3

16.1

18.5

20.9

0

2

4

6

8

10

12

14

16

18

20

22

2006 2007 2008 2009 2010 2011 2012 Q1

Year of fund close

Average number of months

Investors are still exhibiting an interest in PE

H1 201262.5%

H2 201210.6%

20132.9%

Not Before 20146.7%

Opportunistic17.3%

Source: Preqin.

7 7 10 6

71 7078

75

22 2313 19

0102030405060708090

100

End of 2008 2009 2010 2011

Percent

Timeframe for investors' next intended

commitments to private equity funds

Proportion of investors that feel their private equity

fund investment has lived up to expectations

Global private equity buyout deals

Source: Preqin.

728

912

725779

627

724

637

432

357

429 447510 491

632 636

712683

761721

669 669169.7

272.8

126.571.8

49.5

80.1

40.6

16.0 11.9 15.9 22.0

44.329.8

55.264.7 69.1

58.8

81.3

61.8 57.746.3

0

50

100

150

200

250

300

0

200

400

600

800

1000

1200

Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012

Number of deals (left axis)

Aggregate value of deals (right axis)

US$ billionsNumber of deals

Global number of PE-backed exits by type Smaller exits elevated during 1Q 2012

Source: Preqin.

24.6

33.2 34.0

64.557.6

76.070.9

52.6

24.2

59.0

20.012.5

5.413.3 11.6

52.4

32.1

54.9 57.0

82.3 80.4

125.7

56.7

41.846.4

0

20

40

60

80

100

120

140

0

50

100

150

200

250

300

350

400

450

500

Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012

Trade sale

Sale to GP

restructuring

IPO

Aggregate Exit Value ($bn)

Global number of private equity-backed exits Exit value (US$ billions)

82% of deals in Q1 2012 were small-cap (<$250mn )

62

9

20

13

10

14

4

12

4

52

0

10

20

30

40

50

60

70

80

90

100

No. deals Deal value

Percent

less than $100m $100-249m $250-499m $500-999m $1bn or more

Source: Preqin.

Add-on acquisitions will remain elevated Maintaining the levels of activity of Q4 2011

44%

62%

35%8%

15%

13%

6%17%

0

10

20

30

40

50

60

70

80

90

100

No. deals Deal value

Percent

Buyout Add-on Growth capital Public to private

Source: Preqin.

Sector breakdown of U.S. PE-backed deals 26% of deal value was completed in energy in Q1 2012

13

Industrials, $3.4

Business services, $5.2

Consumer, $2.9

IT, $1.8

Healthcare, $1.8

Energy, $6.7

Telecome, $2.6

Food, $0.5

Other, $1.3

Breakdown of aggregate value of US PE-backed deals in Q1 2012 by industry (US$ billions)

Source: Preqin

23% of all deals were completed

in the industrials sector

14

Industrials, 84

Business services, 62

Consumer, 55

IT, 44

Healthcare, 36

Energy, 25

Telecome, 22

Food, 18 Other, 18

Breakdown of US 365 PE-backed deals in 1Q 2012

Source: Preqin

Dry powder in global buyout funds

Source: Preqin

$187 $178

$259

$380

$450

$501 $508 $462

$365

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009 2010 2011

US$ billions

4

Breakdown of funds of funds in market By target fund size

Source: Preqin.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Up to $100mn $101-250mn $251-500mn $501-750mn $751-1,000mn $1,001mn+

Percent Number of funds raising money

Emerging markets continue to attract LPs Asia is attractive to 60% investors , North America to 42%

Countries and regions within emerging

markets that investors view as presenting

attractive opportunities

05

101520253035404550

Proportion of respondents (Percent)

Source: Preqin

Global bond and equity market issuance

still below pre-crisis levels

$2.7$2.8

$2.4

$3.3

$2.5 $2.4

0.0

0.6

1.2

1.8

2.4

3.0

3.6

2006 2007 2008 2009 2010 2011

Corporate bond issuance

US$ trillions

$267

$295

$96$113

$285

$170

0

50

100

150

200

250

300

350

2006 2007 2008 2009 2010 2011

Emergingeconomies

Advancedeconomies

Fund raised through IPOs

US$ billions

Sources: Ernst & Young, S&P Fixed Income Research.

US

Non-bank institutions are playing an

ever-larger role in U.S. financial sector Share of financial sector assets, 1970 to 2011

Source: Federal Reserve.

0

5

10

15

20

25

0

15

30

45

60

75

1970 1975 1980 1985 1990 1995 2000 2005 2010

PercentPercent

Banks (left axis)

Non-bank financial institutions(right axis)

Private equity deal flow by year 2011 PE investment in US well above 2009 lows

Source: PitchBook.

40 83126

174

305

571

196

62

161 147843

1225

1686

2032

2517

3040

2228

1393

1828

1738

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

100

200

300

400

500

600

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US$ billions

Number of deals closed(right axis)

Capital invested (left axis)

Number of deals

Capital flow into IT, healthcare, and energy rose Percentage of deal volume (capital) by industry

Source: PitchBook.

$5 $6

$9$29 $49

$55 $7

$10 $14 $26

$2 $8$11 $15

$50

$42$20

$5$16

$28$2

$7$11

$15

$27

$86

$23

$13

$17

$25

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Business Productsand Services (B2B)

Consumer Productsand Services (B2C)

Energy

Financial Services

Healthcare

InformationTechnology

Materials &Resources

US$ billions

Sector breakdown of US PE deals

Sector breakdown of 2011 PE-backed IPOs US PE sector breakout

Source: Dealogic

US$ billions US$ millions

Large deals* began to remerge Percentage of deal volume (capital) by deal size

$6.85 $7.26 $7.75 $7.94 $5.98 $4.55 $4.42 $3.38

$29.78 $30.45

$36.05 $37.69

$25.80

$12.81

$23.57 $19.44

$22.69

$28.10

$28.46

$38.83

$18.51

$10.77

$24.29 $17.33

$17.35

$21.75

$41.23

$47.73

$20.45

$11.88

$39.92

$26.06

$34.60

$39.33

$60.11

$82.63

$38.45

$11.24

$33.10

$41.62

$14.31

$47.07

$131.34

$355.95

$86.54

$10.67 $35.55

$39.40

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004 2005 2006 2007 2008 2009 2010 2011

Under $50M $50M-$250M $250M-$500M $500M-$1B $1B-$2.5B $2.5B+

Source: PitchBook.

* Denotes deals more than USD 1 billion

US$

billions

Source: PitchBook.

EBITDA multiples of U.S. buyout transactions

3.8 4.05.3 5.0

5.9

7.6

4.43.3

4.66.2

2.12.9

2.3 3.2

3.11.2

5.0

3.2

2.7

2.8

5.9

6.97.6

8.29.0 8.8

9.5

6.57.3

9.1

0x

2x

4x

6x

8x

10x

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Debt / EBITDA Equity / EBITDA Total deal size / EBITDA

Source: PitchBook.

Median buyout size hits new record

4050 52

60

76

100

66

40

100

130

0

20

40

60

80

100

120

140

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

US$ millions

Median capital invested in U.S. private equity transactions

Source: PitchBook.

Percentage of debt used in buyouts

63%

71%

55%

67% 67%

56%

61% 62%

59%61%

52%

49%

56%56% 57%

57%

52% 51%

57%

46%

35%

40%

45%

50%

55%

60%

65%

70%

75%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Private equity investors exited $108bn in 2011 Percentage of P.E. exit volume (count) by exit type

Source: PitchBook.

96101 158 187 219 266

229150

252 240

24

2757 67 66 51

14

24

40 30

3156 102 123 164 193

10733

142 150

0%

20%

40%

60%

80%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Corporate acquisition IPO Secondary buyout

Corporate acquisitions hit a record high Median deal size of $240 million in 2011

$43

$92

$151

$105

$221

$240

$191

$270 $291

$339

$191

$-

$50

$100

$150

$200

$250

$300

$350

$400

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Corporate Acquisition Secondary Buyout

Median exit value (USD millions)

Source: PitchBook.

Increase in holding length

in the U.S. PE Market

4.37

3.82

4.384.16

3.67 3.573.84 3.93

4.684.81

0

1

2

3

4

5

6

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Median time from buyout to exit

Source: PitchBook.

(# of years held)

PE investors sitting on $425B of dry powder

$24.22

$77.64

$114.98

$67.80 $63.46 $76.11

$0

$100

$200

$300

$400

$500

$600

$0

$20

$40

$60

$80

$100

$120

$140

2006 2007 2008 2009 2010 2011

Cumulative Overhang Under $100M $100M-$250M $250M-$500M

$500M-$1B $1B-$5B $5B+

US$ Billions

$425 Billion

Source: PitchBook.

Private equity returns have climbed

back to pre-crisis levels

-8%

6%

16% 20% 21%

17%

-18%

-5%

13% 15%

-31% -31%

-10%

8%

22%

-29%

-5% 5%

12%

-35%

-25%

-15%

-5%

5%

15%

25%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

Buyout Fund of Funds Mezzanine

One year IRR as of year

ending December 31st *Through 2Q 2011

U.S. PE 1-Year Median Rolling Horizon IRR

Source: PitchBook.

Total U.S. sponsored loan volume

Source: S&P Leveraged Commentary & Data.

Includes all sponsored loan volume (leveraged buyouts, acquisitions, refinancing, recaps, etc).

Reflects only transactions financed in the syndicated debt markets.

$87.1

$109.2

$44.8

$52.6

$24.1

$21.9

$11.2 $1.3 $1.4 $7.1 $3.3

$13.5 $20.3

$28.8 $27.2

$43.3

$85.9

$48.6

$18.5 $21.2

$52.0

158

178

66 58

43 41

23 6 7 16

13

32

66

80

62

89

118

103

50 51

107

0

20

40

60

80

100

120

140

160

180

$0B

$20B

$40B

$60B

$80B

$100B

$120B

$140B

1Q07 1Q08 1Q09 1Q10 1Q11 1Q12

loan values (left axis)

Number of loans(right axis)

Visible demand for debt capital

$400 $446

$846

$0

$200

$400

$600

$800

$1,000

Refi(1) PrivateEquity(2)

VisibleDemand

Leveraged Finance Demand (US$ billions)

-$10

$40

$90

$140

2013 2014 2015 2016 2017

Debt Maturities: Leveraged Loans (US$ billions)

Source: S&P Leveraged Commentary and Data

13 14 10 11 17

26

52

98 90

12

1 3 12

6

0

20

40

60

80

100

120

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q12012

US$ billions Global CLO issuance

Source: S&P Leveraged Commentary and Data

Supply of capital drastically

reduced; CLOs provided $240B of

capital between 2005 – 2007 (55%

of all lending ) before market died

in 2008

Collapse of the shadow banking market

Industry participants exit

Source: Chatham capital

Average LBO purchase price multiples

6.0x6.6x

7.1x 7.3x

8.4x 8.4x

9.7x9.1x

7.7x8.5x

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Purchaseprice multiples

Source: Standard & Poor’s.

Purchase price and equity contribution

of large corporate LBO loans

1

*Equity component of Purchase Price Breakdown represents total equity (new + rollover). Equity Contribution includes only new equity.

Equity Contribution*

Purchase price breakdown*

7.9x 8.1x

7.7x

6.3x 6.1x 6.5x

7.1x 7.4x

8.2x 8.6x

9.8x 9.5x

7.9x 8.5x

9.1x 8.6x

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12

Senior Debt/EBITDA Sub Debt/EBITDA Equity/EBITDA Others Equity Contribution

Equity contribution*

Purchase Price Breakdown*

Source: PitchBook.

Purchase price and equity contribution

of middle market LBO loans

1

7.6x 7.5x 7.1x 6.9x

5.9x

6.7x 7.0x 7.2x

8.5x 8.1x

9.3x

8.3x

6.6x

8.4x 8.2x

7.3x

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12

Senior Debt/EBITDA Sub Debt/EBITDA Equity/EBITDA

Others Equity Contribution

*Equity component of Purchase Price Breakdown represents total equity (new + rollover). Equity Contribution includes only new equity.

Purchase Price Breakdown* Equity contribution

Source: PitchBook.

Source: PitchBook.

Private equity fundraising in the U.S. 26 funds ($20bn) closed during 1Q 12

79 44 90 142 224 313 312 152 89 93

142117

161

252 261

314

273

136 138 141

0

50

100

150

200

250

300

350

0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Capital raised (left) # of funds closed (right)US$ billions Number of funds

New general partners (GPs) are entering

the private equity Industry

Number of funds closed by year

Source: PitchBook.

98 80 110180 193

229 211

100 112 99

44 3751

72 68

8562

36 26 42

31% 32% 32%29%

26%

19%

30%

0%

5%

10%

15%

20%

25%

30%

35%

0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Experienced GP First Time GP % of First Time GPs