Private Equity Capital Briefing - United States - EY

May 2017

Private Equity Capital Briefing Monthly insights and intelligence on PE trends

Fundraising continues its run Little indication that investors are slowing the pace of commitments

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 Briefing can 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.

Contents Section 1

Private equity: fundraising

4

Private equity: acquisitions

5

Private equity: exits

6

Section 2

M&A

7

Section 3

IPOs

9

Section 4

Loans

10

Section 5

Bonds

11

Appendices Appendix A

PE activity by geography

13

Appendix B

M&A activity monthly flash

22

Appendix C

M&A multiples and bid premium

23

Appendix D

Capital Confidence Barometer

24

1.i. Private equity: fundraising Executive summary • • •

PE fundraising is seeing its strongest start to a year since 2008. PE firms have closed 215 funds valued at US$189b so far in 2017. Buyout dry powder continues to climb, reaching US$563b in April. Despite expectations that fundraising might slow in 2017 in the face of growing dry powder, the market continues to see strong momentum as the secular trends driving capital into the asset class (such as new investors) win out versus the cyclical headwinds (slowing exits and distributions).

Current state Fundraising • PE fundraising is seeing its strongest start to the year since 2008. To date, PE firms have closed fund valued at US$189b, up 3% from the same period last year, and the highest since 2008, when firms closed funds valued at US$217b between January and the end of April. •

Fundraising for buyout funds has been particularly active. Buyout funds have raised US$84.1b so far this year, accounting for 44% of total PE fundraising, the highest percentage since 2006. Investor demand for the asset class was underscored by a couple of large funds that closed in April; Clayton, Dubilier & Rice reached a final close on its 10th flagship fund, with total commitments of US$9.35b, making it US$3b larger than its predecessor fund. Additionally, Silver Lake Partners closed its Fund V with US$15b in commitments. The fund surpassed its target by US$2.5b, and surpassed Silver Lake’s 2013 fund by nearly US$5b.

Dry powder •

Dry powder continues to grow. Buyout capital available for new deals reached US$563b in April 2017, up from $534b at the end of 2016, and up from US$470b at the end of 2015. Effectively putting those assets to constructive use remains the industry’s biggest challenge.

Environment and horizon •

•

•

•

The expectation at the beginning of the year was that the industry would begin to see some slowdown in the pace of fundraising as exits slowed and LPs looked for GPs to deploy a meaningful percentage of dry powder. However, four months in, there has been little indication that investors are slowing the pace of their commitments. Indeed, the secular trends driving capital into the asset class (such as new investors like retail and high net worth individuals, and the need for pension funds to bridge their funding gaps) are winning out versus the cyclical headwinds (slowing exits and distributions). A recent survey conducted by Preqin shows a shift from regiontargeted funds toward funds with a global purview. All single markets saw a decrease in investor appetite in 1Q17 versus 1Q16, while funds with a global purview saw an increase in anticipated activity, with 52% of active fund searches targeting global funds, versus 43% in the same period last year. More changes are in store for CalPERS, the US’ largest public pension fund. In April, longtime PE head Real Desrochers announced he was leaving the fund to pursue opportunities in the private sector. Desrochers joined CalPERS in 2010. His tenure saw CalPERS undertake a significant push toward manager consolidation, taking the fund from roughly 400 separate managers to approximately 100 by the mid-2016. The fund ultimately is seeking to reduce its manager relationships to 30 by 2020. The position will be filled on an interim basis by Sarah Corr, an investment director at the fund. CalPERS also disclosed that is was considering the removal of its standalone PE allocation target. In December 2016, the fund cuts its interim PE allocation to 8%, from 10%. In an April 17 meeting, the investment committee proposed to combine its private equity and public equity allocations into one, benchmarked against the FTSE AllWorld Index. A presentation released ahead of the meeting pointed to three other large investors that follow a similar model; the Ontario Teachers’ Pension Plan, CPPIB and the New Zealand Superannuation Fund. CalPERS is hoping to more effectively streamline the management and risk profiles of its PE and public portfolios by effecting the combination, saying the change will “enable potential portfolio construction capability to offset idiosyncratic regional, sector and company exposure.” A vote on the matter however, is not expected until early next year.

Global PE fundraising – YTD 2003 through YTD 2017 (in US$b) $250 $200 $150 $100 $50 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 Source: Preqin

Buyout funds — dry powder (US$b) $600 $500 $400 $300 $200 $100 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017

Source: Preqin

Regions targeted by LPs over the next 12 months – views from 1Q16 vs. 1Q17

North America: 1Q16 – 47% 1Q17 – 43%

Europe: 1Q16 – 56% 1Q17 – 39%

Asia-Pac 1Q16 – 25% 1Q17 – 15%

Global 1Q16 – 43% 1Q17 – 52%

Source: Preqin private equity quarterly update 1Q17

CalPERS current versus proposed allocations Liquidity, 4%

Inflation, 9% Infra and Forest, 2% Real estate, 11%

Global equity, 46%

PE , 8%

Global fixed income, 20%

Liquidity, 4%

Global equity, 54%

Inflation, 9% Real assets, 13%

Global fixed income, 20%

Source: CalPERS

4

Private Equity Capital Briefing

1.ii. Private equity: acquisitions Executive summary •

PE acquisition activity remains strong, up 20% on a year-to-date basis versus last year.

•

Deals in the middle market and large buyout space have remained steady over the last 16 months, averaging 21 deals per month.

•

Through the end of April, all regions have seen an increase in activity, with the greatest increase in EMEA.

Current state •

•

•

Global PE acquisitions since January 2016 (in US$b)

Deal activity remains strong. PE firms announced 101 deals valued at US$23.5b in April, bringing the YTD total to 429 deals valued at US$93.7b, up 20% from last year. Deals in the mid-market and large/megadeal space remain steady, averaging 21 per month so far this year, which is in line with the trend seen since the beginning of 2015. Through the end of April, all regions have seen an increase in PE activity: • • •

In the Americas, PE firms have announced 176 deals valued at US$37.4b, up 5% from last year. In EMEA, firms have announced 201 deals valued at US$36.7b, up 37% from last year. In Asia-Pac, CDH China Holdings Management Co. Ltd.’s US$5.8b acquisition of Belle International Holdings Ltd. drove the region’s aggregate deal value to US$19.7b, up 25% from the same period a year ago.

Number of deals US$200m and above

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0

180 160 140 120 100 80 60 40 20 0

Value

Number of deals

Source: Dealogic

Top PE deals YTD 2017

$35 $30

Date

$25 $20

Target

Belle International 28-Apr-17 Holdings Ltd.

$15

Sector

Nationality

Sponsor

Value (US$b)

Consumer products

China

CDH China Holdings Management Co. Ltd. $5.8

Germany

Cinven Ltd., Advent International Corp.

$10 $5

Jan 2015 Feb 2015 Mar 2015 Apr 2015 May 2015 Jun 2015 Jul 2015 Aug 2015 Sep 2015 Oct 2015 Nov 2015 Dec 2015 Jan 2016 Feb 2016 Mar 2016 Apr 2016 May 2016 Jun 2015 Jul 2016 Aug 2016 Sep 2015 Oct 2016 Nov 2016 Dec 2016 Jan 2017 Feb 2017 Mar 2017 Apr 2017

$0

Source: Dealogic

•

Technology, health care and consumer products continue to see the most activity from PE firms in 2017, collectively accounting for more than half PE investment by value this year.


•

Activist investor ValueAct Capital announced that it had taken a 5% stake in KKR, valued at roughly US$750m. Shares jumped more than 7% on the news. ValueAct compared the investment to similar stakes it has taken in other financial and professional services companies, including Morgan Stanley, Willis Towers Watson, and CBRE, describing them in a Bloomberg article as “ideal human capital businesses.” KKR said on its April 26 earnings call that it welcomed the investment, saying it believed they had a “shared vision and understanding” for the business. Mubadala Capital, the investment arm of Abu Dhabi’s SWF Mubadala Development Co., entered into an agreement with France-based Aridan last month that will see Mubadala move into the management of third-party assets. The deal reportedly had two components: an initial US2.5b investment by Ardian into a portfolio of existing Mubadala assets consisting of 14 LP interests in buyout and growth capital funds, and 14 direct investments made by Mubadala; and a second component consisting of a US$1.5b pool managed by Mubadala in which Ardian is the lead investor. Other SWFs have done similar deals. Last year, Temasek closed Astrea III, a co-investment vehicle designed to invest alongside buyout investors.

Stada Arzneimittel 12-Feb-17 AG Health care Aon Hewitt LLC (HR 10-Feb-17 BPO Platform) Technology 13-Mar-17 DH Corp.

$5.6

United States Blackstone Group LP $4.8 Vista Equity Partners LLC $3.4

Canada

27-Mar-17 Diversey Inc.

Technology Consumer products

$3.2

14-Mar-17 Air Methods Corp. USI Insurance 17-Mar-17 Services LLC

United States Bain Capital LLC American Securities Transportation United States LLC Insurance

United States KKR & Co. LP

$2.5

Netherlands

$2.2

Food and 12-Apr-17 Refresco Group NV beverage Eagleford Shale 12-Jan-17 assets Oil and gas

8-Jan-17

McDonald's China Management Ltd.

Dining and lodging

PAI Partners SAS

$2.5

United States Blackstone Group LP $2.1 Carlyle Group LP; CITIC Capital Partners China Ltd. $2.1

Sector breakdown Real estate, 5%

Oil and gas, 5% Materials, 6%

Retail, 2%

Industrials, 3% Technology, 17% Consumer goods, 23%

Financials, 12%

Utilities, 4% Telecom, 5%

Consumer services, 3%

Health care, 15%

Source: Dealogic

5 Private Equity Capital Briefing

1.iii. Private equity: exits Executive summary •

Strength in the IPO markets and increased activity by PE investors in seeking to acquire PE-backed assets has led to a 22% increase by value in exit activity versus last year. Thee bulk of exit activity is centered in the Americas, which has seen M&A exits increase by 55%, and IPOs increase more than 400% by value. Pent-up demand for public offerings suggests global IPOs will continue to rise in 2017.

• •

Current state •

Overall exit activity has increased 22% by value in 2017 versus the same period last year, driven by an increase in secondary buyouts and rising sentiment in the IPO markets. PE firms announced 311 exits valued at US$102.1b in the first four months of the year. April saw US$24.9b in announced deals, up 24% versus last year. Exit routes have shifted in recent months, with PE firms becoming increasingly active buyers. Secondary buyouts have totaled US$25.7b so far this year, up 77% from last year. Sales to strategic investors have remained flat over the same period, with US$63.8b in announced deals, up 2% from last year.

•

•

Activity has also been driven by strong tailwinds in the global IPO markets. After a quiet 2016, PE-backed IPO activity has increased markedly in the first four months of this year. PE firms have taken 38 companies public, raising proceeds of US$12.6b, up 94% from the same period a year ago. Activity was particularly robust in the oil and gas and life sciences spaces, with comparative weakness in consumer products and chemicals relative to the broader IPO market. The strong showing early this year has established a solid runway for the remainder of 2017. Increases in the Americas have been driving activity from a regional perspective. While M&A and IPO exit activity have declined in both AsiaPacific and Europe, the Americas region has seen a 55% YTD increase in exits via M&A and a 474% increase in exits via IPO.

•

PE exits by type and region (US$b) $60

PE exits by month (US$b) $50

120

$40

100 80

$30

60

$20

40

$10

20

$0

0

Value

Number of deals

Source: Dealogic

PE exits by type 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

$50 $40 % Strategic

$30

% PE

% IPO

Source: Dealogic

$20 $10

PE IPOs by month (US$b)

$0 Americas 2016 M&A

EMEA 2017 M&A

2016 IPOs

Asia-Pacific 2017 IPOs

$8

18 16 14 12 10 8 6 4 2 0

$7 $6

Source: Dealogic

$5 $4 $3


•

Exit activity should remain at a consistent pace through the balance of the year, as PE firms look to avail themselves of continued favorable conditions for exits. While PE inventories have been spent down from where they were a few years ago, PE firms continue to hold more than 14,000 companies across the globe. Activity will remain driven by both corporate acquirors seeking growth through M&A-focused strategies, as well as PE firms seeking to put more than US$560b in dry powder to work. Pent-up demand for public offerings suggests global IPOs will continue to rise in 2017. Performance and valuations are trending upward, with several major indices reaching all-time highs. Concurrently, volatility is low, underpinning positive IPO sentiment, which is also supported by the successful US listing of a large technology unicorn. As such, pipelines are full, particularly in Asia-Pacific. There are currently more than 70 PEbacked companies in registration that, in the aggregate, could raise more than US$11b in total proceeds.

$2 $1 $0

Value

Number of deals

Source: Dealogic

Top PE exits so far in 2017 Announce ment or filing date

Company

Sector

Value (US$b)

6-Jan-17 Invitation Homes Inc. AdvancePierre Foods 25-Apr-17 Holdings Inc. Surgical Care 9-Jan-17 Affiliates Inc. Jagged Peak Energy 19-Dec-16 Inc.

Real Estate Food and Beverage

$6.3

Health Care

$3.5

Oil and Gas

16-Mar-17 Alinta Holdings

Utilities

$4.3

Sponsor Blackstone Group LP Oaktree Capital Group LLC

Type

IPO M&A M&A

$3.2

TPG Capital LP Quantum Energy Partners

$3.1

TPG Capital LP

M&A

IPO

Source: Dealogic

6 Private Equity Capital Briefing

1. M&A Executive summary •

April continued the robust M&A market seen so far 2017, with US$212b of deals announced.

•

US$1b−US$10b deals are driving the current market, with 167 deals in this banding announced in 2017.

•

More than half of companies surveyed were looking to acquire in the next 12 months, according to EY Capital Confidence Barometer.

•

The M&A outlook for 2017 remains healthy as companies look keen to reorganize their portfolio more frequently.

•

Future-proofing will be an essential M&A driver as companies look for disruptive trends within their core and innovation outside their sectors.

Current state

Top 10 announced deals by value, April 2017

•

Source: Dealogic

•

•

•

The M&A market continued to perform at elevated levels, with US$212b of deals announced in April. Total value for 2017 is now 9% ahead of the same period in 2016. The volume of deals remained broadly flat compared with the prior year, at 2,327. The key value range driving M&A in 2017 is the US$1b−US$10b band. So far, 2017 has seen 167 deals in this range, compared with 149 in the same period in 2016 and 155 in 2015. This is a clear sign of boardroom optimism as companies pursue substantial acquisitions to boost strategic growth prospects. In France, billionaire Bernard Arnault moved to consolidate control over Christian Dior for €12.1b (US$13b), folding the fashion house’s operations into the LVMH luxury empire. The deal unites ownership of one of the most iconic fashion brands under one roof for the first time in decades. LVMH will also buy the Christian Dior couture brand from the Christian Dior holding company for €6.5b (US$7.1b). The two-part transaction, which comes amid a China-led revival in the luxury goods industry, simplifies a complicated ownership structure. This is a trend that may accelerate through 2017, both in the luxury fashion industry and in other sectors. US medical equipment supplier Becton Dickinson and Co. will acquire C.R. Bard Inc. in a US$24b deal, adding Bard's devices to its portfolio in the high-growth sectors of oncology and surgery. The transaction will build on BD’s leadership position in medication management and infection prevention with an expanded offering of solutions across the care continuum. It is the latest in a string of deals in the medical technology sector, as manufacturers turn to acquisitions to boost profit margins and respond better to ongoing product pricing pressures.


•

•

•

•

7

Near-term global dealmaking is expected to remain strong. According to EY 16th Global Capital Confidence Barometer (CCB), more than half (56%) of companies expect to actively pursue deals in the next 12 months − up six percentage points from a year ago. Improving economic conditions underpin deal activity — European M&A markets, in particular, have seen a strong start to 2017 as European companies on the buy-side return to the market. Boardroom agendas continue to be dominated by disruptive forces such as digital innovation and the search for growth, even while set against a backdrop of geopolitical or emerging policy concerns. Geopolitical issues may dominate the headlines, but boards are laser-focused on counter measures against disruption and seizing new routes to growth. The need to generate returns above gross domestic product levels is spurring executives to look even more favorably on M&A. “Geopolitical and policy uncertainty is a permanent feature of the boardroom, but technology-enabled disruption poses a greater challenge to many business models. The exponential pace of disruption and transformation is compelling executives to engage in M&A. Companies need to innovate to follow rapidly changing customer preferences, and buying assets can be the fastest way to radically reshape their business for future growth,” commented Steve Krouskos, EY Global Vice Chair, Transaction Advisory Services. Consequently, corporates are reorganizing their portfolios, creating a natural pipeline of deal opportunities. Amid rapid change, companies are building more agility into their strategies, with 73% increasing portfolio review processes to respond to or capitalize on disruptive forces in their sectors. Technology-fueled industry convergence and transformational customer changes are challenging executives to reassess and reinvent their businesses continually. Cross-border deals are likely to increase in the coming months. Despite concerns about increasing nationalism and protectionism, 2017 has seen a significant uptick in cross-border deals. Potential policy changes affecting market access could drive cross-border deals as companies look to protect and sustain their globalized operations. “For many companies, crossborder deals are a necessity — successful companies will find ways to navigate challenges such as rising nationalism. Executives are evaluating M&A across a wide range of geographies to secure market access and grow customer base,” said Mr. Krouskos.

Target

Sector

Country

Acquiror

C.R. Bard Inc.

Life sciences

US

Becton Dickinson & Co.

24,433

Christian Dior SE (26.0032%) Panera Bread Co.

Consumer products France and retail Real estate US

Groupe Arnault SAS

13,146

JAB Holding Co SARL

7,490

Christian Dior Couture SA Patient Monitoring & Recovery Division of Medtronic plc Belle International Holdings Ltd (87.938%)

Consumer products France and retail Life sciences US

LVMH Moet Hennessy Louis Vuitton SE Cardinal Health Inc.

7,079

Consumer products China and retail

5,823

Akorn Inc.

Life sciences

Hillhouse Capital Management Ltd, Wisdom Man Ventures Ltd and CDH Investments Ltd Fresenius SE & Co. KGaA

AdvancePierre Foods Holdings Inc. Swift Transportation Co.

Consumer products US and retail Automotive and US transportation

Tyson Foods Inc.

4,277

Knight Transportation Inc.

4,010

Chewy Inc.

Technology

PetSmart Inc.

3,350

US

US

Value (US$m)

6,059

4,887

Deal environment: by area (US$b) Last 12 months (LTM) to April 2017 versus LTM to April 2016 Source: Dealogic and EY analysis 3,000

2,000

1,000

Americas

Asia-Pacific

EMEA

LTM value

PTM value

Deal environment: by target sector and target area (% share of global value) LTM to April 2017 Source: Dealogic and EY analysis; excludes real estate asset sales. Note: because of rounding, percentages may not add up to total. Americas

Asia-Pacific

EMEA

Total

Technology

8%

3%

4%

16%

Oil and gas

10%

1%

2%

14%

Diversified industrial products

5%

2%

4%

11%

Consumer products and retail

6%

2%

3%

10%

Life sciences

4%

1%

2%

8%

Power and utilities

3%

2%

2%

7%

Media and entertainment

4%

1%

1%

5%

2%

2%

2%

5%

2%

1%

2%

5%

9%

6%

5%

19%

52%

21%

27%

100%

Real estate, hospitality and construction Banking and capital markets Others All sectors M&A analysis as at 1 May 2017.

Note: data is continually updated and therefore subject to change. Figures have been rounded off to nearest decimal place.


1.i. M&A: cross-border deal flow Key cross-border M&A deal flow (LTM to April 2017) (Total = US$1.31t)

UK&I to: N America – $104b W Europe – $6b Africa – $3b Middle East – $3b

N America to: W Europe – $194b UK&I – $59b Middle East – $20b

Greater China and Mongolia to: N America – $43b W Europe – $36b Oceania – $19b

W Europe to: N America – $152b L America - $15b Russia, CIS and CSE - $9b

Japan to: N America – $48b UK&I - $35b W Europe – $10b

L America to: N America – $9b Russia, CIS and CSE - $1b Key >$100b >$50b >$10b Note: all figures are in US$.

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

Acquiror# Africa

SE Asia Greater Russia, (including China and CIS and Korea) Mongolia$ CSE

W Europe India (excluding UK&I)

Japan

Latin America

Middle East

North America

Oceania

UK&I

Inbound total

% versus PTM

896

81

6,734

1,577

3,515

22

1,568

-

112

7,398

882

3,196

25,982

111%

SE Asia (including Korea)

5

6,016

8,540

13

2,663

7

2,821

24

8,170

5,440

145

1,237

35,082

-6%

Greater China and Mongolia $

-

3,287

27,879

450

3,878

-

688

40

-

8,454

521

195

45,393

3%

Russia, CIS and CSE

1,131

347

2,581

2,493

8,852

3,107

8,845

1,048

11,916

1,776

1,759

1,285

45,139

34%

W Europe (excluding UK&I)

1

4,589

35,627

2,216

95,273

1,267

9,953

566

3,096

193,575

957

5,966

353,085

22%

334

7,760

3,409

12,922

1,326

-

1,515

-

575

5,222

58

26

33,146

88%

-

295

345

-

320

151

-

-

-

2,993

29

-

4,133

-87%

Latin America

40

109

16,971

200

14,846

9

204

7,227

1,194

18,709

689

321

60,519

27%

Middle East

42

80

17,427

411

6,465

12

26

-

3,615

20,211

101

2,905

51,295

383%

6,937

14,625

43,100

110

152,344

1,685

47,501

8,511

13,221

103,118

5,310

104,013

500,474

15%

Africa

India Japan

North America Oceania UK&I Outbound total %  versus previous 12 months (PTM)

683

1,899

19,405

1

1,259

67

1,553

-

484

4,162

1,901

1,566

32,981

-21%

3,794

881

12,604

213

7,433

1,025

34,772

-

1,935

59,449

3,605

1,479

127,189

-51%

13,864

39,968

194,622

20,606

298,173

7,352

109,446

17,417

44,317

430,507

15,957

122,190 1,314,417

4%

16%

49%

-5%

78%

-19%

12%

72%

-11%

-26%

20%

36%

Key

>US$100b

# 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 May 2017. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

8

6%

>US$50b

4%

>US$10b

Intra-area cross-border deals


2. IPOs Executive summary •

This month recorded the strongest year-to-date (YTD) IPO activity in terms of proceeds, witnessing a significant year on year (YOY) increase in terms of both number of IPOs and proceeds.

•

EMEA accounted for 5 of the top 10 deals this month.

•

The Asia-Pacific region continued to dominate global IPO activity, in terms of both number of deals and proceeds.

•

Several big IPOs, such as Quadrant Energy (with expected proceeds of US$4.0b) and Officeworks (US$1.1b), are expected to hit the Australian IPO market in the coming quarters, making it a key IPO destination.

Current state

Top 10 IPOs by proceeds, April 2017

•

April 2017 recorded the strongest IPO activity YTD in terms of proceeds, on the back of three of the top five deals so far this year. The month saw 123 deals raising US$16.8b, registering a YOY increase of 54% and 86% in terms of number of IPOs and proceeds respectively.

Source: Dealogic.

•

Asia-Pacific accounted for 63% and 42% of global number of IPOs and proceeds respectively (US$7.1b raised via 78 deals). Greater China continues to dominate the IPO activity in the region, accounting for 62% and 79% of IPOs and proceeds respectively. This region recorded the largest deal of the month.

•

•

•

•

Hong Kong SIX Swiss Exchange Bolsa de Madrid

2,220

Switzerland

Life sciences

Spain

Automotive and transportation

Azul S.A.

Brazil


New York

643

Schneider National Inc.

US


New York

550

US exchanges witnessed the highest monthly activity this YTD in terms of number of IPOs, with 21 deals raising US$4.4b. In fact, this month saw the highest level of IPO activity in April since 2014.

TPI Polene Power pcl

Thailand

Power and utilities

Thailand

505

The top two deals (by proceeds) for this month were as follows:

Eddie Stobart Logistics plc

UK


London (AIM)

497

X-FAB Silicon Foundries Germany S.E.

Technology

Euronext (Paris)

455

Dino Polska S.A.

Consumer products and Warsaw retail

417

Oil and gas

391

EMEA saw an increase in IPO activity for the third consecutive month, raising US$5.2b via 23 deals. The region recorded two of the top three deals this month, accounting for more than 50% of the regional proceeds.

Guotai Junan Securities Co. Ltd raised US$2.2b in the largest Hong Kong listing this year. The company intends to use the IPO proceeds for the development of institutional finance, personal finance, investment management and international business, as well as for additional working capital and other general corporate purposes. Galenica Sante AG raised US$1.9b in the biggest Swiss IPO since 2015. The proceeds from the listing are expected to be used for refinancing Vifor Pharma's US$1.5b acquisition of Relypsa in 2016.

Environment and horizon

•

Banking and capital markets

Proceeds (US$m)

Gestamp Automocion S.A.

•

•

Guotai Junan Securities China Co. Ltd.

Exchange

Galenica Sante AG

•

•

Issuer location Sector

The global IPO outlook remains robust, as we see a growing pipeline of candidates planning to list on major exchanges around the world from a broad range of sectors. It should also be aided by equity markets trading at all-time highs, amid improving economic fundamentals and lower volatility in many regions around the world.

Hess Midstream Partners US LP

IPO activity is gaining momentum in Australia as IPO listings are outperforming the ASX 200 index. There is also greater investor appetite for the mining sector, given higher commodity prices and greater overall confidence in the equity market. Several big IPOs, such as Quadrant Energy (with expected IPO proceeds of US$4.0b) and Officeworks (US$1.1b), are expected to hit the Australian IPO market in the coming quarters, making it a key IPO destination. Despite continued political uncertainty in the region due to the commencement of Brexit negotiations and the upcoming French and German elections, market volatility has remained relatively low in Europe. This, combined with the low interest rate environment and investors remaining keen to back IPOs with compelling equity stories, indicates that a healthy pipeline of IPO candidates should continue to emerge across the region.

928

New York

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

30%

The US IPO market is expected to be steady going forward. This quarter is likely to see listings from the technology sector by IPO candidates that delayed their listings until after the high-profile listing of Snap Inc.. The US IPO pipeline is likely to remain robust as equities continue to trade at alltime highs with low market volatility. The outlook of the mainland China IPO market is positive for the coming quarters. In addition to efforts to speed up IPOs coming to the public markets, the regulator is stepping up scrutiny of backdoor1 listing, refinancing and speculative activities among listed companies, and pushing forward with reforms to build a multi-tier capital market, all of which would see the A-share2 market become healthier in the long run. The Stock Exchange of Hong Kong’s IPO pipeline is seeing diversification in terms of geography and sectors as companies from other Asian countries are eyeing opportunities in China and are increasingly interested in listing in Hong Kong. IPO candidates are coming from the education, technology, health care and life sciences sectors.

Poland

1,893

Global

Asia-Pacific US

10%

Americas (including US)

Value -40%

-20%

0%

20%

-10% EMEA

-30%

Volume

•

Issuer name

IPO activity by sector and area (% share of global proceeds) LTM to April 2017 Source: 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


1%

14%

1%

16%

Technology

5%

5%

3%

13%

Real estate

2%

7%

2%

11%


3%

6%

2%

10%

Life sciences

1%

5%

4%

10%


1%

6%

2%

9%


1%

5%

2%

7%

Oil and gas

3%

1%

2%

6%

Power and utilities

0%

2%

3%

5%

Others

2%

7%

3%

12%

20%

57%

23%

100%

Total

9

Private Equity Capital Briefing Note: 1A strategy of going public by acquiring an already listed company as the company desiring to go public fails to meet the criteria for listing on a stock exchange. 2A-shares are shares that trade on the two mainland China stock exchanges.

4. Loans Executive summary •

Loan volume in April fell in both Europe and the US due to political and exogenous risks along with demand supply imbalance.

•

The impact of low oil prices in the Middle Eastern loan market is expected to continue to hamper economic growth across the region.

•

Nonexistent M&A in 1Q17 showed signs of recovery in April as many US companies lined up loans.

•

The leveraged loan repricing wave that hit record heights in January is beginning to show signs of waning.

•

Capacity remains for issuers last in the market six months or so ago, to shave more than 1% from the cost of their financing.

•

Lenders are expected to remain optimistic on volume picking up in the coming quarters.

Current state

Global investment-grade loans (US$b)

•

Source: Thomson ONE.

•

•

•

•

In April, US$57b of loans were issued in the US and €6b in Europe, taking the YTD global issuance to US$311b, up 121% from the same period in 2016. The European volume of loan recaps and refinancings fell in April compared with March, but the flow of repricings continued as issuers returned to cut yields. Repricing activity in Europe in April (€6.9b) was more than double the 2016 monthly average of €2.4b, making it the sixthbusiest month for repricings since 2013. Historically April is low on loan activity in the US, explaining the 50% decline month on month from March. Political and exogenous risks also drove the market downward to US$63b compared with US$127b last month. With demand continuing to exceed supply, the imbalance is leading to thinning of spreads and an increase in leverage. The Middle Eastern loan market has been slow due to a lack of refinancing opportunities and low oil prices, which is still hampering economic growth across the region and curbing corporate and financial institutions' demand for new money loans. Nonexistent loans financing M&A in 1Q17 showed signs of recovery in April as many US companies lined up loans in order to fund mergers in sectors such as health care, food and retail. As large-scale M&A has been on hold since the US presidential election, deals such as Becton Dickinson and Bard can trigger another wave of deals and bridge financings.

•

In the YTD, 40% of loan issuance in the US and 30% in Europe was M&A driven, up by 35% in the US and down by 8% in Europe compared with the same period last year.

•

The leveraged loan repricing wave that hit record heights in January is beginning to show signs of waning; the average clearing yield for single-B rated term loans widened in the US to 5.21% from 5.09% in March, and was unchanged at 4.07% in Europe.

•

600

600 400 400 200 200

0

0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17

Proceeds (LHS) *Data until 30 April 2017.

QTD Apr*

Number of issues (RHS)

Global high-yield loans (US$b) Source: Thomson ONE. 1,200

3,000

900 2,000 600 1,000


800

300

Repricing volumes have begun to fall in both the US and the Europe. This can be attributed to the massive volume over recent months leaving fewer issuers to reprice, leading to investor fatigue setting in. A long-standing dearth of supply in the loan market has led to a dramatic fall in pricing since the start of the year but, in recent weeks, investors have begun to resist those weakened terms. However, investors who are weary of successive rounds of repricings are welcoming large liquid deals.

0

0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Proceeds (LHS)

QTD Apr*


*Data until 30 April 2017.

Opportunities •

•

Although some of the heat has come off the market there is still capacity for issuers, that were last in the market six months or so ago, to shave more than 1% from the cost of their financing. Lenders are expected to remain optimistic that volume will pick up in the coming quarters. But, following a slower than expected start to the year, expectations have been rolled back until US President Donald Trump is able to push through his pro-business measures.

Global loan issuance by industry, March 2017

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

Proceeds

Issues

Bank of America Merrill Lynch

85.0

439

JP Morgan

74.2

385

Citi

58.3

267

Mitsubishi UFJ Financial Group

51.8

523

Barclays

51.0

224

Source: Thomson ONE. Government and agencies

All loans by region, YTD April 2017 (US$b)

Proceeds (US$b)


Real estate

Market share

Proceeds

Issues

Americas

60.9%

690.0

1,193

EMEA

22.2%

251.3

313

Asia-Pacific

16.9%

190.7

1,111

Consumer products and services Health care High technology Consumer staples Financials

10

0

50

100

150

200


5. Bonds Executive summary •

Global high-yield activity fell on a monthly basis in April, with both the US and Europe experiencing volume decline.

•

The first round of the French presidential election and constructive market conditions led to a strong supply of European loans in April.

•

Refinancing wave implied overpowering seasoned credits when compared to debut issuers, reducing the new issuance volume.

•

The trend of refinancing of bonds with bonds is also rising, which was not the case in other months this year.

•

Bankers expect issuance levels to remain strong into mid-May, until the blackout period.

Current state

Euro bond issuances

•


•

•

Global high-yield activity fell on a monthly basis after an overwhelming 1Q17. High-yield issuance was US$15.1b in the US and €7.9b in Europe, taking the YTD total global issuance to US$133b, up 62% compared with the same period last year. The European high-yield bond market was dominated with refinancings and recaps, with only €330 million used for M&A. Overall, the YTD volume went up to €32.1 billion, up 167% from the first four months of 2016. April’s European bond collections were at their third highest in many years, down only on last month and September 2016. The first round of the French presidential election and constructive market conditions led to a strong supply of European loans in April, as bankers were pushing to get deals completed before the election. Although usually a busy period, Easter was even more special this year, with 10 issuers and 13 bonds in the market in a two-week period, making it second only to 2010.

•

In the US, the monthly high-yield issuance volume was the lowest April volume since 2009. Refinancing continued to be the primary reason for issuance, but the contribution decreased from 80% in March to 66% in April.

•

The refinancing wave also means overpowering seasoned credits when compared with debut issuers. Although the number of debut issuers increased on a monthly basis due to the low number in February and March, the YTD volume is still behind the number of deals completed in the same period last year.

•

Cash-strapped sovereigns such as Qatar and Oman have also turned to the bond market after tapping the loan market for billions of dollars last year, reducing the demand for loans in the region.

•

High-yield issuance for M&A activity to April was US$21b, contributing 21% to the total in the US. In Europe, there was €3.2b of high-yield issuance, a 10% contribution.

•

Clearing yields for single-B rated bonds widened in the US to 6.57% in the three months to the end of April from 6.49% at the end of March, and yields tightened to 5.20% from 5.64% in Europe, the lowest yield since the first quarter of 2010.


With refinancing deals contributing the maximum in volume, refinancing of bonds with bonds is also rising, which was not the case in other months this year.

•

In Asian markets, supply and demand are nicely balanced, with investors looking out for assets, and issuers wanting to lock in long-term funding and sell riskier products while appetite is high and rates are low. Most market participants expect a fairly benign 2017, which will drive Asian new issues to new heights.

250

200

200

150

150 100 100 50

50 0

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 16 16 16 16 16 16 16 16 16 16 16 16 17 17 17 17 Proceeds (US$b) (LHS)


US bond issuances Source: Thomson ONE. 400

500 400

300

300 200 200 100

100

0

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 16 16 16 16 16 16 16 16 16 16 16 16 17 17 17 17 Proceeds (US$b) (LHS)


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

Issuer

Opportunities

Nation

Industry

Proceeds

•

Bankers expect issuance levels to remain strong into mid-May, when the blackout period occurs.

Microsoft Corp

US

High technology

17.0

•

Refinancings are likely to continue to dominate, as conditions are strong enough to keep supporting tighter margins.

Broadcom Corp

US

High technology

13.6

Verizon Communications Inc

US

Telecommunications

11.0

Apple Inc

US

High technology

11.0

AT&T Inc

US

Telecommunications

10.5

Global bond issuance by industry, YTD 2017 Source: Thomson ONE. Media and entertainment Retail Health care Materials Consumer products and services Consumer staples Real estate Telecommunications High technology Industrials Energy and power 0

11

China

Industrials

8.7

Deutsche Telekom International

Netherlands

Telecommunications

7.6

Siemens NV

Netherlands

High technology

7.5

Telefonica Emisiones S.A.U

Spain

Telecommunications

6.2

State Power Investment Corp

China

Energy and power

5.7

China Railway Corp

50 Proceeds (US$b)

100


Appendices

Appendix A

Global PE fundraising activity Global PE fundraising (in US$b) Commitments (US$b)

Number of funds

$700

1,200

$600

1,000

$500 800 $400 600 $300 400 $200 200

$100

$0

0 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD 2017

Source: Preqin

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

North America

Europe

Asia-Pacific and rest of world

Asia-Pacific and rest of world as percentage of total

$600

16% 14%

$500

12% $400

10%

$300

8% 6%

$200

4% $100

2%

$0

0% 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD 2017

Source: Preqin

13


Appendix A

Global PE acquisition activity PE acquisitions by year (in US$b) Value

Number of deals

$800

4,000

$700

3,500

$600

3,000

$500

2,500

$400

2,000

$300

1,500

$200

1,000

$100

500

$0

0 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD 2017

Source: Dealogic

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

Number of deals

$140

700

$120

600

$100

500

$80

400

$60

300

$40

200

$20

100

$0

0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Source: Dealogic

14


Appendix A

Global PE acquisition activity by region — Americas Americas PE acquisitions (in US$b) Value

Number of deals

$80

350

$70

300

$60

250

$50 200 $40 150 $30 100

$20

50

$10 $0


Source: Dealogic

Americas PE acquisitions — the top deals with disclosed financial terms in 2017 Announcement date

Completion date

Company

Sector

Value (US$b)

Acquiror

10-Feb-17

Aon Hewitt LLC (HR BPO Platform) Technology

$4.8

Blackstone Group LP

13-Mar-17

DH Corp.

Technology

$3.4

Vista Equity Partners LLC

27-Mar-17

Diversey Inc.

Consumer products

$3.2

Bain Capital LLC

Air Methods Corp.

Transportation

$2.5

American Securities LLC

USI Insurance Services LLC

Insurance

$2.5

KKR & Co. LP

Eagleford shale assets

Oil and gas

$2.1

Blackstone Group LP

EagleClaw Midstream Services LLC Utilities

$2.0

Blackstone Group LP

Ascend Learning LLC

Technology

$2.0

Blackstone Group LP

Leslie's Poolmart Inc.

Consumer products

$1.8

Catterton Management Co. LLC

US property portfolio

Real estate

$1.7

Blackstone Group LP

14-Mar-17

21-Apr-17

17-Mar-17

12-Jan-17

1-Mar-17

17-Apr-17 14-Apr-17

14-Apr-17

17-Jan-17 20-Feb-17

20-Feb-17

Source: Dealogic

15


Appendix A

Global PE acquisition activity by region — EMEA EMEA PE acquisitions (in US$b)

Value

Number of deals

$50

300

$45 250

$40 $35

200

$30 $25

150

$20 100

$15 $10

50

$5 $0


Source: Dealogic

EMEA PE acquisitions — the top deals with disclosed financial terms in 2017 Announcement date

Completion date

Company

Sector

Value (US$b)

Acquiror

23-Feb-17

Stada Arzneimittel AG

Health care

$5.0

Cinven Ltd.; Advent International Corp.

12-Apr-17

Refresco Group NV

Food and beverage

$2.2

PAI Partners SAS

22-Jan-17

Cerba HealthCare SASU

Health care

$1.9

Partners Group Holding AG

7-Mar-17

Allfunds Bank SA

Finance

$1.9

Hellman & Friedman LLC

20-Apr-17

Mubadala Development Co. (Private equity portfolio worth US$2.5b) Finance

$1.8

Ardian SA

Property Portfolio (German and Dutch property portfolio) Real estate

$1.4

Blackstone Group LP

20-Apr-17

20-Mar-17

31-Mar-17

31-Mar-17

Bradford & Bingley plc (Mortgage loans portfolio)

Finance

$1.2

Blackstone Group LP

30-Mar-17

30-Mar-17

Corialis International SA/NV

Metal and steel

$1.1

CVC Capital Partners Ltd.

31-Mar-17

Novo Banco SA

Finance

$1.1

Lone Star Global Acquisitions Ltd.

31-Mar-17

Compania Logistica de Hidrocarburos SA CLH

Oil and gas

$1.1

CVC Capital Partners Ltd.

Source: Dealogic

Private Equity Capital Briefing 16

Appendix A

Global PE acquisition activity by region — Asia-Pacific Asia-Pacific PE acquisitions (in US$b) Value

Number of deals

$30

140 120

$25

100 $20 80 $15 60 $10

40

$5

20

$0


Source: Dealogic

Asia-Pac PE acquisitions — the top deals with disclosed financial terms in 2017 Announcement date

Completion date

Company

Sector

Value (US$)

Acquiror

24-Feb-17

24-Mar-17

Belle International Holdings Ltd. Consumer products McDonald's China Management Ltd. Dining & lodging Daesung Industrial Gases Co. Ltd. Chemicals

26-Apr-17 13-Jan-17

22-Mar-17

Hitachi Kokusai Electric Inc. Telecommunications Hitachi Koki Co. Ltd. Consumer products

$1.5 $1.2

KKR & Co. LP KKR & Co. LP

Nord Anglia Education Inc. Professional services

$1.2

Canada Pension Plan Investment Board-CPPIB

Bharti Infratel Ltd.

Telecommunications

$0.9

1-Feb-17

Hyundai Card Co Ltd.

Finance

$0.6

Canada Pension Plan Investment Board-CPPIB Affinity Equity Partners (HK) Ltd. Carlyle Group LP

6-Apr-17

Zhaopin Ltd.

Technology

$0.4

FountainVest Partners

24-Mar-17

TASAKI & Co. Ltd.

Retail

$0.4

MBK Partners Ltd.

28-Apr-17 8-Jan-17

25-Apr-17 28-Mar-17

28-Mar-17

$2.1

CDH China Holdings Management Co. Ltd. Carlyle Group LP; CITIC Capital Partners Ltd.

$1.6

MBK Partners Ltd.

$5.8

Source: Dealogic

17


Appendix A

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

Value

Number of deals

$140

350

$120

300

$100

250

$80

200

$60

150

$40

100

$20

50

$0


Source: Dealogic

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

Value

Number of deals

$45

90

$40

80

$35

70

$30

60

$25

50

$20

40

$15

30

$10

20

$5

10

$0


Source: Dealogic

18


Appendix A

Global PE exit activity — Americas Americas PE exits (in US$b)

M&A value

IPO value

M&A volume

IPO volume

$90

160

$80

140

$70

120

$60

100

$50

80

$40

60

$30

40

$20

20

$10 $0


Source: Dealogic

Americas PE exits — top exits 2017 Announcement Completion or filing date or priced date 6-Jan-17

31-Jan-17

Company

Sector

Value (US$b)

Sponsor

Type

9-Jan-17

24-Mar-17

Invitation Homes Inc. AdvancePierre Foods Holdings Inc. Surgical Care Affiliates Inc.

Health care

$3.5

TPG Capital LP

M&A

19-Dec-16

26-Jan-17

Jagged Peak Energy Inc. Oil and gas

$3.2

Quantum Energy Partners

IPO

13-Feb-17

28-Apr-17

ZELTIQ Aesthetics Inc. USI Insurance Services LLC

Health care

$2.5

Frazier Healthcare Partners

M&A

Insurance

$2.5

Onex Corp.

M&A

Onex Corp. Sterling Partners Inc.; Citigroup Private Equity; KKR & Co. LP; Snow Phipps Group LLC Carlyle Group LP; Madison Dearborn Partners LLC Weston Presidio Capital; Peterson Partners LP; TPG Capital LP

IPO

25-Apr-17

17-Mar-17

Real estate

$6.3

Blackstone Group LP

IPO

Food and beverage

$4.3

Oaktree Capital Group LLC

M&A

1-Jun-16

26-Jan-17

JELD-WEN Holding Inc.

Construction/building

$2.4

2-Oct-15

31-Jan-17

Laureate Education Inc. Professional services Multi Packaging Solutions International Ltd. Forestry and paper

$2.4

Azul SA

$2.2

24-Jan-17

6-Feb-17

10-Apr-17

Transportation

$2.3

IPO M&A

IPO

Source: Dealogic

19


Appendix A

Global PE exit activity — EMEA EMEA PE exits (in US$b) M&A value

IPO value

M&A volume

IPO volume

$70

160

$60

140 120

$50

100 $40 80 $30 60 $20

40

$10

20

$0


Source: Dealogic

EMEA PE exits — top exits 2017

Announcement Completion or or filing date priced date

Company

Sector

7-Feb-17

3-Apr-17

Mauser Group NV

Chemicals

$2.3

Clayton Dubilier & Rice LLC

M&A

22-Jan-17

20-Apr-17

Cerba HealthCare SASU

Health care

$1.9

PAI Partners SAS

M&A

7-Mar-17

Allfunds Bank SA

Finance

$1.9

Warburg Pincus LLC; General Atlantic LLC

M&A

18-Apr-17

Weetabix Ltd.

Food and beverage

$1.8

Baring Private Equity Asia Ltd.

M&A

14-Mar-17

Kemble Water Holdings Ltd. Utilities

$1.6

Macquarie Infrastructure & Real Assets Pty Ltd

M&A

$1.4

Lone Star Global Acquisitions Ltd.

IPO

Vanderlande Industries BV Machinery

$1.3

NPM Capital NV

M&A

$1.1

Advent International Corp.

M&A

$1.1

Ardian SA

M&A

$1.1

Pamplona Capital Management LLP

M&A

6-Mar-17

28-Mar-17

23-Mar-17

Neinor Homes SAU

Real estate

30-Mar-17

30-Mar-17

Corialis International SA/NV

31-Mar-17

3-Apr-17

Compania Logistica de Hidrocarburos SA CLH Oil and gas

9-Apr-17

Beacon Rail Leasing Ltd.

9-Apr-17

Metal and steel

Finance

Value (US$b) Sponsor

Type

Source: Dealogic

20


Appendix A

Global PE exit activity — Asia-Pacific Asia-Pacific PE exits (in US$b) M&A value

IPO value

M&A volume

IPO volume

$45

45

$40

40

$35

35

$30

30

$25

25

$20

20

$15

15

$10

10

$5

5

$0


Source: Dealogic

Asia-Pacific PE exits — top exits 2017 Announcement Completion or or filing date priced date

Company

Sector

Utilities

$3.1

TPG Capital LP

M&A

24-Apr-17

Alinta Holdings ING Life Insurance Korea Ltd.

Insurance

$2.4

IPO

Leisure and recreation

$2.3

24-Feb-17

24-Mar-17

USJ Co. Ltd. Daesung Industrial Gases Co. Ltd.

Chemicals

$1.6

5-Jan-17

22-Mar-17

Agribusiness

$1.5

MBK Partners Ltd. Goldman Sachs Capital Partners; MBK Partners Ltd. Goldman Sachs Capital Partners CDH China Holdings Management Co. Ltd.; KKR & Co. LP

22-Feb-17

21-Mar-17

$0.9

Permira Ltd.

IPO

8-Feb-17

13-Mar-17

$0.7

Bain Capital LLC

IPO

6-Apr-17

6-Apr-17

$0.5

Bain Capital LLC

M&A

16-Mar-17 23-Mar-17

28-Feb-17

27-Feb-17

6-Feb-17

6-Feb-17

China Modern Dairy Holdings Ltd. Sushiro Global Holdings Ltd.

Dining and lodging Professional Macromill Inc. services Zhejiang Uniview Computers and Technologies Co. Ltd. electronics

Value (US$b) Sponsor

Type

M&A M&A

M&A

Crystal Orange Hotel Holdings Ltd.

Dining and lodging

$0.5

Carlyle Group LP

M&A

Yongle Tape Co., Ltd

Chemicals

$0.2

Shaw Kwei & Partners Ltd.

M&A

Source: Dealogic

21

Private Equity Capital Briefing Capital Briefing

Appendix A M&A activity monthly flash Volume

Value

Calendar YTD

YTD % ∆

2016 J

F

Volume

Calendar YTD

YTD % ∆

LTM

A

M

J

2017 (to April 17)

J

A

S

O

N

D

J

vs. 2016 (to April 16)

F

LTM % ∆

2015

2017 M

Value

M

A

M

J

J

2017 (to April 17)

A

S

O

N

D

vs. 2016 (to April 16)

J

F

LTM

LTM % ∆

2016 M

A

M

J

LTM (to April 17)

J

A

S

O

N

D

J

vs. PTM (to April 16)

2017 F

M

A

M

J

J

A

LTM (to April 17)

S

O

N

D

J

F

M

A

vs. PTM (to April 16)

M&A activity by areas and regions Global

11,763

-7%

953,873

9%

35,603

-5%

3,593,074

-8% -5%

4,460

-6%

545,166

16%

13,218

-9%

2,162,617

Canada

613

-27%

68,135

-22%

2,440

-3%

216,802

-1%

MeCAR

69

-22%

6,139

-27%

215

-18%

18,490

-36%

Americas

256

-22%

21,561

-23%

807

-26%

78,893

4%

US

3,627

-4%

476,117

19%

10,457

-13%

1,978,215

-5%

EMEA

SA region

4,372

-8%

383,001

47%

12,807

-3%

1,300,046

8%

Africa

198

-20%

10,308

-5%

570

-13%

47,365

41%

BeNe

266

-8%

44,882

249%

823

-13%

124,794

-44%

CIS

224

-25%

6,576

-44%

823

-13%

59,082

5%

CSE

202

-44%

9,152

-41%

887

-18%

46,665

0%

FraLux

766

-6%

90,145

165%

2,266

-3%

193,769

24%

GSA

773

-1%

80,336

0%

2,257

-4%

311,362

47%

94

3%

19,091

320%

244

-8%

38,361

-28%

469

8%

64,248

82%

1,391

-7%

150,315

-7%

85

-33%

26,344

913%

277

-23%

87,621

266%

Israel Mediterranean MENA

515

17%

9,054

-54%

1,394

7%

65,755

25%

UK&I

1,193

-3%

72,827

25%

3,597

4%

322,137

-26%

Asia-Pacific

4,291

-5%

267,231

-24%

13,665

-3%

1,049,156

-11%

570

2%

21,394

-23%

1,830

5%

80,028

11%

1,954

19%

157,654

-34%

5,618

-3%

599,864

-23%

India

319

-23%

28,091

73%

1,081

-21%

82,216

65%

Japan

979

-2%

40,106

-15%

3,062

-2%

177,446

3%

Korea

188

-60%

15,143

-23%

1,120

-16%

60,122

-20%

Oceania

510

-5%

21,105

-10%

1,637

-5%

102,765

13%

Nordics

ASEAN Greater China

M&A activity by sectors Aerospace and defense

102

-15%

16,343

153%

344

-7%

40,615

22%


830

-4%

58,833

-46%

2,436

-6%

209,027

-30%

712

-15%

77,124

-10%

2,168

-13%

281,523

-33%


1,678

-11%

158,770

44%

5,159

-8%

444,957

-27%


1,566

-4%

130,956

-5%

4,835

-3%

534,180

18%

Government and public sector

211

-5%

3,954

-37%

598

-11%

22,478

-10%

Insurance

340

-4%

26,909

-11%

1,019

-12%

136,069

-46%

Life sciences

772

-9%

130,245

14%

2,356

-7%

396,189

-8%


752

-12%

20,887

-56%

2,279

-12%

216,680

-27%

Mining and metals

659

-5%

26,699

-11%

2,116

3%

115,888

-18%

Oil and gas

435

-6%

153,149

129%

1,421

-1%

520,808

89%

1,421

-3%

26,416

-51%

3,961

-10%

105,888

-29%

Power and utilities

452

-4%

53,871

-24%

1,414

-3%

257,033

19%

Provider care

401

2%

20,918

46%

1,142

-4%

70,023

38%

Real estate

1,126

-6%

72,556

19%

3,388

-1%

255,535

22%

Technology

3,334

0%

129,028

-20%

9,604

-3%

610,126

-16%


Other sectors

Telecommunications

225

-1%

38,975

34%

709

-8%

280,598

94%

Wealth and asset management

283

-18%

19,886

81%

962

-6%

60,535

56%

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 May 2017. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

22


Appendix B M&A multiples and bid premium Median deal multiple — EV / EBITDA Global

Americas

LTM (to Apr 17)

PTM (to Apr 16)

LTM (to Apr 17)

Aerospace and defense

13.6x

11.3x


9.5x

9.2x


10.5x

Asia-Pacific

EMEA

PTM (to Apr 16)

LTM (to Apr 17)

PTM (to Apr 16)

LTM (to Apr 17)

PTM (to Apr 16)

10.3x

9.1x

11.2x

14.1x

15.5x

11.6x

8.5x

11.5x

9.8x

9.9x

10.4x

8.4x

11.0x

11.1x

10.7x

11.9x

11.9x

9.6x

10.4x 9.3x


9.7x

9.9x

10.8x

10.8x

10.7x

10.5x

8.1x

Financial services

10.5x

10.3x

13.0x

12.3x

8.8x

7.9x

8.7x

9.6x


8.2x

11.1x

8.2x

6.6x

10.5x

11.2x

7.2x

11.4x

Healthcare

10.0x

11.8xx

11.6x

10.3x

15.7x

17.5x

8.3x

11.0x

Life sciences

11.9x

11.2x

8.2x

9.5x

12.2x

8.3x

12.2x

12.3x


13.5x

11.8x

11.4x

12.7x

19.6x

11.0x

12.0x

10.8x

Mining and metals

9.9x

12.3x

9.9x

9.7x

10.4x

15.6x

9.0x

11.5x

Oil and gas

8.5x

8.5x

9.8x

7.7x

8.0x

10.9x

8.7x

9.0x

Other sectors

8.9x

8.2x

10.7x

7.8x

14.2x

9.0x

5.6x

11.2x

Power and utilities

9.3x

9.5x

11.9x

10.5x

9.0x

10.7x

8.7x

7.9x

Real estate

11.0x

10.1x

12.4x

10.4x

12.8x

10.3x

10.0x

10.0x

Technology

10.9x

11.3x

11.8x

13.2x

11.7x

11.6x

10.0x

10.2x

Telecommunications

8.2x

7.4x

10.1x

6.9x

7.9x

9.9x

7.9x

7.4x

10.2x

10.4x

11.2x

10.5x

10.7x

11.0x

9.1x

9.8x

LTM (to Apr 17)

PTM (to Apr 16)

LTM (to Apr 17)

PTM (to Apr 16)

LTM (to Apr 17)

PTM (to Apr 16)

LTM (to Apr 17)

Aerospace and defense

35%

22%

50%

14%

30%

31%

29%

-


19%

16%

27%

25%

18%

11%

8%

9%


17%

23%

27%

32%

14%

17%

15%

26%


23%

19%

30%

29%

23%

17%

19%

24%

Financial services

19%

26%

24%

30%

15%

10%

15%

13%


27%

22%

31%

44%

16%

18%

23%

16%

Healthcare

16%

18%

18%

28%

5%

10%

19%

17%

Life sciences

25%

22%

25%

34%

29%

16%

16%

2%


27%

25%

42%

38%

14%

19%

12%

14%

Mining and metals

22%

16%

27%

24%

17%

12%

25%

14%

Oil and gas

23%

25%

31%

28%

21%

19%

12%

30%

Other sectors

17%

25%

16%

27%

21%

24%

19%

20%

Power and utilities

21%

21%

30%

30%

13%

21%

36%

14%

Real estate

25%

14%

27%

13%

24%

15%

19%

8%

Technology

24%

23%

34%

31%

18%

16%

18%

22%

Telecommunications

12%

22%

43%

26%

10%

27%

10%

15%

Total

22%

21%

29%

30%

18%

17%

17%

17%

Total

Median bid premium to four-week stock price Global

Americas

Asia-Pacific

EMEA PTM (to Apr 16)

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

23


Appendix C Capital Confidence Barometer (April 2017): by area Respondents who expect their company to pursue acquisitions in the next 12 months

Global

Americas

100%

EMEA

100%

100% 81%

75%

75% 56%

59%

57%

57%

56%

62% 54%

50% 50%

75%

67%

50%

50%

40%

50% 34%

25%

Asia-Pacific

China

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

Germany

100%

100%

100%

75%

75%

75% 56%

45%

50%

47%

44%

46%

38%

51%

49% 43%

50%

40%

43%

38%

61%

56% 50%

50% 28%

25%

25%

0%

Japan

0% Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17

UK

100%

28%

25%



US

100%

100%

75%

75%

75%

74% 75%

68% 61%

52% 43%

50% 35%

48% 42%

33% 25%

0%

16%


63% 57%

50%

31%

25%

24

61%

59%

58%

51% 50%

46%


57%

47%

25%


44%

30%

25%

0%

48%

25%




Notes

25


Notes

26


EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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Andrea Guerzoni EY EMEIA Leader Transaction Advisory Services

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EYG no. 03160-174GBL ED None In line with EY’s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

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