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.
Environment and horizon •
•
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
Environment and horizon •
•
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.
Environment and horizon •
•
•
•
•
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.
Private Equity Capital Briefing
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
Private Equity Capital Briefing
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
Automotive and transportation
New York
643
Schneider National Inc.
US
Automotive and transportation
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
Automotive and transportation
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
Banking and capital markets
1%
14%
1%
16%
Technology
5%
5%
3%
13%
Real estate
2%
7%
2%
11%
Consumer products and retail
3%
6%
2%
10%
Life sciences
1%
5%
4%
10%
Automotive and transportation
1%
6%
2%
9%
Diversified industrial products
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
Environment and horizon •
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*
Number of issues (RHS)
*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)
Source: Thomson ONE.
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
Private Equity Capital Briefing
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
•
Source: Thomson ONE.
•
•
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$21b, contributing 21% to the total in the US. In Europe, there was €3.2b of high-yield issuance, a 10% contribution.
•
Clearing yields for single-B rated bonds widened in the US to 6.57% in the three months to the end of April from 6.49% at the end of March, and yields tightened to 5.20% from 5.64% in Europe, the lowest yield since the first quarter of 2010.
Environment and horizon •
With refinancing deals contributing the maximum in volume, refinancing of bonds with bonds is also rising, which was not the case in other months this year.
•
In Asian markets, supply and demand are nicely balanced, with investors looking out for assets, and issuers wanting to lock in long-term funding and sell riskier products while appetite is high and rates are low. Most market participants expect a fairly benign 2017, which will drive Asian new issues to new heights.
250
200
200
150
150 100 100 50
50 0
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 16 16 16 16 16 16 16 16 16 16 16 16 17 17 17 17 Proceeds (US$b) (LHS)
Number of issues (RHS)
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$b) (LHS)
Number of issues (RHS)
Top 10 corporate bond issuers, YTD April 2017 (US$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$b)
100
Private Equity Capital Briefing
Appendices
Appendix A
Global PE fundraising activity Global PE fundraising (in US$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%
$0
0% 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
YTD 2017
Source: Preqin
13
Private Equity Capital Briefing
Appendix A
Global PE acquisition activity PE acquisitions by year (in US$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
$0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
14
Private Equity Capital Briefing
Appendix A
Global PE acquisition activity by region — Americas Americas PE acquisitions (in US$b) Value
Number of deals
$80
350
$70
300
$60
250
$50 200 $40 150 $30 100
$20
50
$10 $0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
Americas PE acquisitions — the top deals with disclosed financial terms in 2017 Announcement date
Completion date
Company
Sector
Value (US$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
$1.7
Blackstone Group LP
14-Mar-17
21-Apr-17
17-Mar-17
12-Jan-17
1-Mar-17
17-Apr-17 14-Apr-17
14-Apr-17
17-Jan-17 20-Feb-17
20-Feb-17
Source: Dealogic
15
Private Equity Capital Briefing
Appendix A
Global PE acquisition activity by region — EMEA EMEA PE acquisitions (in US$b)
Value
Number of deals
$50
300
$45 250
$40 $35
200
$30 $25
150
$20 100
$15 $10
50
$5 $0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
EMEA PE acquisitions — the top deals with disclosed financial terms in 2017 Announcement date
Completion date
Company
Sector
Value (US$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
$0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
Asia-Pac PE acquisitions — the top deals with disclosed financial terms in 2017 Announcement date
Completion date
Company
Sector
Value (US$)
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.
$5.8
Source: Dealogic
17
Private Equity Capital Briefing
Appendix A
Global PE exit activity Global PE-backed exits by M&A — value and volume — quarterly trend (in US$b)
Value
Number of deals
$140
350
$120
300
$100
250
$80
200
$60
150
$40
100
$20
50
$0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
Global PE-backed IPOs — value and volume — quarterly trend (in US$b)
Value
Number of deals
$45
90
$40
80
$35
70
$30
60
$25
50
$20
40
$15
30
$10
20
$5
10
$0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
18
Private Equity Capital Briefing
Appendix A
Global PE exit activity — Americas Americas PE exits (in US$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 $0
0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Source: Dealogic
Americas PE exits — top exits 2017 Announcement Completion or filing date or priced date 6-Jan-17
31-Jan-17
Company
Sector
Value (US$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
$2.3
IPO M&A
IPO
Source: Dealogic
19
Private Equity Capital Briefing
Appendix A
Global PE exit activity — EMEA EMEA PE exits (in US$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
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
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
Private Equity Capital Briefing
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
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
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%
Automotive and transportation
830
-4%
58,833
-46%
2,436
-6%
209,027
-30%
712
-15%
77,124
-10%
2,168
-13%
281,523
-33%
Consumer products and retail
1,678
-11%
158,770
44%
5,159
-8%
444,957
-27%
Diversified industrial products
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%
Media and entertainment
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%
Banking and capital markets
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
Private Equity Capital Briefing
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
Automotive and transportation
9.5x
9.2x
Consumer products and retail
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
Diversified industrial products
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
Government and public sector
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
Media and entertainment
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%
-
Automotive and transportation
19%
16%
27%
25%
18%
11%
8%
9%
Consumer products and retail
17%
23%
27%
32%
14%
17%
15%
26%
Diversified industrial products
23%
19%
30%
29%
23%
17%
19%
24%
Financial services
19%
26%
24%
30%
15%
10%
15%
13%
Government and public sector
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%
Media and entertainment
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
Private Equity Capital Briefing
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%
0% Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
US
100%
100%
75%
75%
75%
74% 75%
68% 61%
52% 43%
50% 35%
48% 42%
33% 25%
0%
16%
0% Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
63% 57%
50%
31%
25%
24
61%
59%
58%
51% 50%
46%
0% Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
57%
47%
25%
0% Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
44%
30%
25%
0%
48%
25%
0% Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17
Private Equity Capital Briefing
Notes
25
Private Equity Capital Briefing
Notes
26
Private Equity Capital Briefing
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.
If you would like to discuss any of the topics covered in this publication, please contact your EY advisor or any of the contacts below. Transaction Advisory Services Steve Krouskos EY Global Vice Chair Transaction Advisory Services
Bill Casey EY Americas Leader Transaction Advisory Services
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst and Young Global Limited, each of which is a separate legal entity. Ernst and Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. About EY’s Transaction Advisory Services How you manage your capital agenda today will define your competitive position tomorrow. We work with clients to create social and economic value by helping them make better, more informed decisions about strategically managing capital and transactions in fast-changing markets. Whether you're preserving, optimizing, raising or investing capital, EY’s Transaction Advisory Services combine a unique set of skills, insight and experience to deliver focused advice. We can help you drive competitive advantage and increased returns through improved decisions across all aspects of your capital agenda. The views of the third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.
Andrea Guerzoni EY EMEIA Leader Transaction Advisory Services
Harsha Basnayake EY Asia-Pacific Leader Transaction Advisory Services
Peter Wesp EY Japan Leader Transaction Advisory Services
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.
ey.com
[email protected] +1 305 415 1645
[email protected] +39 02 8066 9707
[email protected] +65 6309 6741
[email protected] +81 3 4582 6465
[email protected]
Private Equity Herb Engert
+1 212 773 6202
EY Global Private Equity Leader
[email protected]
Bill Stoffel
+1 212 773 3141
EY Americas Private Equity Leader
[email protected]
Jeff Hecht
+1 212 773 2339
EY Global PE Tax Leader
[email protected]
Research and Insights Mark Temple
© 2017 EYGM Limited. All Rights Reserved.
+1 404 817 5090
EY Knowledge Transaction Advisory Services
Pete Witte EY Knowledge Private Equity
+44 20 7951 6985
[email protected] +1 312 879 4404
[email protected]