AIFM Directive 2010 Conference

Tuesday 30 November 2010

Central London
www.aifmdirective.co.uk

Dear Spotlight Subscriber,

Preqin is delighted to have arranged a special invitation and 20% discount for Preqin Spotlight readers who would like to
attend Private Equity Forum’s AIFM Directive 2010 Conference in London, on Tuesday 30 November 2010. Please quote ref.
‘PreqinAIFM’ – book your place for just £364.40 Member of trade body (RRP £455.50) / £396.00 Non-member (RRP £495.00).

The AIFMD is still not a done deal and a number of issues remain subject to negotiation and are critical to the alternative assets
industry, including but not limited to; the disproportionate burden the disclosure regime would place on SMEs, the third country
issue and the implication article 27a would have on management buy-outs. Everyone engaged in the sector will need to
become familiar with the details and likely impact of the new legislation.

Through company case studies, in-depth presentations and panel discussions, Private Equity Forum's AIFM Directive 2010
Conference will provide you with clarification on the next series of changes to ensure you are aware of the necessary key
actions and deadlines.

Confirmed speakers include:

Godfrey Bloom MEP - Coordinator for the Europe of Freedom and Democracy Group on the Economic and Monetary Affairs
Committee in the European Parliament – UK Independence Party (UKIP)
Jarrod Cowley-Grimmond, Director, Finance Sector Development, Commerce & Employment Department – States of
Guernsey
James Greig, Partner – PricewaterhouseCoopers Legal (PwC Legal)
Sam Kay, Partner – Head of Investment Funds – Travers Smith
Justin Partington, Commercial Director – Ipes (UK) Limited
Joanna Perkins, Director, Financial Markets Law Committee (FMLC) – established by the Bank of England
Ian Sayers, Director General – Association of Investment Companies (AIC)
Jarkko Syyrila, Director International Relations – Investment Management Association (IMA)

Conference chairs:

Martin Arnold, Private Equity Correspondent – Financial Times (FT)

Paul Hodkinson, Editor – Private Equity News (PEN)

To register For sponsorship opportunities:

Tel: +44 (0)845 463 7621 Tel: +44 (0)845 269 7842

Email: register@privateequityforum.co.uk Email: sponsorship@privateequityforum.co.uk

I will also be participating in a panel discussion at the conference, and hope to have an opportunity to connect with you there.

Best Regards,

Tim Friedman
Head of Communications
Preqin
 Private Equity Spotlight
Welcome to the latest edition
of Private Equity Spotlight, the
monthly newsletter from Preqin
providing insights into private
equity performance, investors and October 2010
fundraising. Private Equity Spotlight
combines information from our online
products Performance Analyst,
Feature
Investor Intelligence, Fund Manager
Profiles, Funds in Market, Secondary
Market Monitor and Deals Analyst. Overview of Alternatives Investment Consultants

A growing number of institutions active in private equity and other alternatives are
utilizing investment consultants to help them make decisions about allocations and
specific investments. We conducted a survey to see how satisfied these investors are
October 2010
Volume 6 - Issue 10 with their consultants. Page 3.

You can download all the data in this month’s Spotlight in Excel.
FEATURED PUBLICATION: Wherever you see this symbol, the data is available for free
download on Excel. Just click on the symbol and your download
The 2011 Preqin Alternatives will begin automatically. You are welcome to use the data in any
Investment Consultant Review presentations you are preparing, please cite Preqin as the source.

More information available at:

www.preqin.com/aic
Q3 2010 Special
The 2011 Preqin Alternatives
Investment Consultant Review
Fundraising Spotlight:
In Q3 2010 private equity fundraising Deals Spotlight:
increased from the previous quarter, Q3 2010 was the strongest quarter
but by how much? And what is the for deals since the collapse of
outlook in terms of funds on the road, Lehman Brothers. We examine the
going into the final quarter of the year? characteristics of deals made in the
Page 7. quarter and in particular the shift
towards European-based deals.
Performance Spotlight: Page 10.
London: Preqin has analyzed the returns
Equitable House, generated by private equity partnerships
47 King William Street, as at 31 March 2010. The NAV of all
London, EC4R 9AF private equity funds has changed, but to
what?
+44 (0)20 7065 5100 Page 9.

New York:
230 Park Avenue,
10th Floor, New York, Regulars
NY 10169
+1 212 808 3008 Secondaries Spotlight: Preqin has moved!
Fund type preferences of buyers and
Singapore: sellers in the secondary market. Please note, that as of 18th October,
Samsung Hub Page 11. 2010 Preqin’s London address has
3 Church Street changed:
Level 8 Conferences Spotlight:
Singapore 049483 The month’s private equity events.
Preqin Ltd,
+65 6408 0122 Page 12.
Equitable House,
Investor News: 47 King William Street,
w: www.preqin.com London,
All the latest news on private equity
e: info@preqin.com investors. EC4R 9AF
Page 14.
Tel: +44 (0)20 7645 8888
Twitter: www.twitter.com/preqin
LinkedIn: Search for Preqin

alternative assets. intelligent data.

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 Feature Overview of Alternatives Investment Consultants Download Data

Overview of Alternatives Investment

Consultants
Investment consultants are being utilized by a growing number of institutions active in alternatives, Dami
Sogunro looks at how satisfied these investors are and what this means for the investment consultant
space.

Investment consultants are an integral part of the investment process

in the alternatives space. They can be a necessary and useful
intermediary or advisor on an investor’s dealings across an array
of asset types, providing services such as manager search and
selection, asset allocation and investment policy development, and
performance monitoring. They are ever present in all regions of the
world and advise a diverse range of institutional investors, with client
types ranging from those with relatively small investment portfolios,
such as high-net-worth individuals and single family offices, to
those with more complex and larger portfolios, such as insurance
companies and pension funds.

Investment consultants perform an important role within the

alternative assets industry. Investors benefit from the advice and
guidance their consultants provide, as well as the access they can
gain through their consultants to specific managers or funds. Fund
managers can also benefit from establishing relationships with
consultants as this can be an important step towards garnering
commitments from their clients.

This article examines some of the vital attributes of the investment on a discretionary-only basis and a further 39% offer their services
consulting industry using data from the soon-to-be-released 2011 on a non-discretionary-only basis. Just under half of firms (48%) offer
Preqin Alternatives Investment Consultant Review. both types of service.

Overview of the Industry The majority (65%) of investment consultants are headquartered in
The Preqin Investment Consultant database has information on North America. A further 29% are based in Europe and the remaining
more than 300 investment consultants which are active in the 6% in Asia and Rest of World. Though few investment consultants
alternatives space. As Fig. 1 shows, 13% offer consulting services active in the alternatives space are headquartered in Asia and Rest

Fig. 1: Breakdown of Alternatives Investment Consultants by Fig. 2: Proportion of Alternatives Investment Consultants Offering
Nature of Services Provided Services by Asset Class

90%

80% 77%
72%
70%
Proportion of Firms

59%
60%

50%
42%
40%

30%

20%

10%

0%
Private Equity Hedge Funds Real Estate Infrastructure

Source: Preqin Source: Preqin

4 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

►4
Feature Overview of Alternatives Investment Consultants Download Data

Fig. 3: Attributes Clients Consider When Reviewing Alternatives of World, larger firms which are headquartered in North America or
Investment Consultants Europe often have satellite offices in other regions of the world, in
places such as Australia, Singapore and China.
Average Rating of Importance

5 4.7
4.5 4.5
4.5 4.2 4.3 4.2 4.3 4.3
4.1
3.9
4.1
3.9 Of all the consultants active in alternatives, 64% advise investors
4
3.5 3.2
3.5 3.4 on their activity in private equity, 59% on hedge funds, 49% on real
3 2008 estate and 34% on infrastructure, as shown in Fig. 2. While some
2.5
2009
firms specialize in investments in one asset class only, others advise
2 investors across the whole spectrum of alternative asset classes.
1.5 2010
1
0.5 Review and Performance of Investment Consultants
0 Preqin undertook a survey of 120 leading institutional investors that
Communication/

Relationships

International
Competitive Price

make use of the services of an investment consultant for some or all

Track Record in

Good Customer
Fund Selection
Proven Strong

Presence
Managers
with Top
Good
Service

of their investments in the alternatives space, the full results of which

Client

can be seen in the 2011 Preqin Alternatives Investment Consultant

Review. The split of respondents is representative of the global make-
Source: Preqin up of institutional investors in alternatives by type, size, and location.
Investors were asked questions on performance-related issues and
their investment consultant review procedure.
Fig. 4: Alternatives Investment Consultants’ Success in Providing
Good Value for Money Survey respondents were asked to rank the level of importance they
place on several of the key attributes they consider when assessing
100% 1% 3% 2% 3% and reviewing investment consultants. Each attribute was ranked on
5% 8%
Proportion of Asset Class

6%
90% a scale of one to five, with one denoting a low level of importance
80% 30% 20%
33% 40% Poor and five denoting a high level of importance. Fig. 3 shows how LP
Respondents

70%
60%
Below Average opinions in this area have changed over the past couple of years. On
69% Average
50%
37% average, attributes of the most importance to clients when reviewing
34% 46% 30% Above Average
40% investment consultants have continued to be both the consultant’s
30% Excellent
ability to demonstrate a good track record in fund selection and its
20% 8% 35%
10%
27% 21% 27% ability to provide a good level of customer service. In 2010, survey
15%
0% respondents gave these attributes an average importance rating of
4.7 and 4.5 respectively.
Consultants
Hedge Fund

Infrastructure

Private Equity
Overall

Consultants

Real Estate
Consultants

Consultants

Surprisingly, the lowest average importance rating was given to the

need for consultants to have an international presence; this was given
Source: Preqin an average rating of 3.9 in 2008, 3.5 in 2009, and 3.4 in 2010. It is
possible that investors are more cautious about making investments
outside of their domestic region. Alternatively, those looking to invest
internationally may be seeking local advisors.
Fig. 5: Likelihood of Investors Seeking New or Additional Advice
on Alternative Investments in the Next 12 Months
Value for Money of Investment Consultants
Many investors have placed the costs incurred by their investment
50%
46% portfolios under increasing scrutiny and consequently the ability
45%
of investment consultants to provide top quality services at a
Proportion of Investors

40% competitive price is also of increasing importance to investors. Survey

35% respondents gave the need for consultants to charge a competitive
30% level of fees an average rating of 4.1, rising significantly from the 3.2
24%
25% average importance rating this attribute was given in our 2008 survey.
19%
20%

15% In order to assess how well consultants were measuring up to this

11%
10% requirement, investors were asked whether or not they felt their
5%
consultants provided good value for money. Fig. 4 shows that overall,
0%
27% of respondents felt their consultants provide excellent value
Very Likely Possibly Unlikely Definitely Not for money and a further two-thirds rated them as above average or
Likelihood of Investor Seeking New or Additional Advice in the average. Only a small percentage of survey respondents (1%) feel
Next 12 Months the services their consultants supply represent poor value for money.
Source: Preqin
When the asset classes are considered separately, the proportion
of respondents that felt their advisor offered good value for money
varied greatly. 72% felt that their private equity consultants provide
excellent or above average value for money, while a much smaller

5 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

►5
Feature Overview of Alternatives Investment Consultants Download Data

23% believed that their infrastructure advisor’s service was of this and evidence of their ability to identify and select the top performing
standard. 27% and 30% of real estate advisors were felt to offer managers for their clients while remaining competitive in the fees
excellent or above average value for money respectively, while they charge for their services.
hedge fund consultants were rated as providing either excellent or
above average value for money by 67% of respondents.

Seeking New Advice?

Investors were also asked about the likelihood that they would seek Data Source:
new or additional advice on alternative investments in the next 12
months. As shown in Fig. 5, just under a third of respondents may The 2011 Alternatives Investment Consultant Review
seek new or additional advice at some point over the next 12 months.
Investors could be motivated to seek a new consultant by a number The 2011 Preqin Alternatives Investment Consultant
of factors, such as an increase in the rate of investments, a change Review is a necessary guide for all fund marketers and
in strategy, dissatisfaction with their current consultant, or as a result fund managers looking for information on the alternative
investment consultant industry. The Review contains
of a statutory requirement to issue RFPs for consultants at certain
profiles for over 300 consulting firms, with information
points in time. Fig. 5 also shows that 46% stated that it was unlikely
on the asset classes they cover, services on offer, key
that they would be seeking new investment consultants in the coming financial information, and direct contact information for
year and 24% stated that they would definitely not be seeking a new the relevant contacts, alongside details showing which
consultant or additional advice. consultants are being retained by over 1,700 investors.

Future Outlook For more information or to purchase the publication with a

Overall, our survey found that the majority of investors rated their pre-publication discount, please visit:
consultant(s) as having above average performance in most key www.preqin.com/aic
areas, such as value for money and customer service, showing
that alternatives investment consultants are generally meeting the
needs of their clients. Little movement in terms of the relationships
investors maintain with consultants is also to be expected: 70% of
investors are unlikely to seek new or additional advice and just 11%
indicated that that it was very likely for them to do so. In terms of
client satisfaction, only 6% of respondents expressed dissatisfaction
with their consultant(s) by rating the value for money they provide as
below average or poor.

Considering these statistics, investors currently appear to be largely

content with their investment consultants. It is also clear that the key
attributes that investors look for in their investment consultants are
the provision of a good level of customer service and communication,

The Alternative Investments Europe Summit 2010 gathers the 29 November – 1 December 2010
region's forefront institutional investors to explore next Majestic Barrière, Cannes, France
generation alternative investment strategies in private equity,
infrastructure, hedge funds and emerging asset classes. summits@marcusevanscy.com
www.aie-summit.com/Preqin

IIR's 12th Annual Pr

eq
Q D u
KMuot is in

Mezzanine Finance c
22 e V o 2
68 IP un 0%
PQ o t
C
NA de
& the Subordinated Debt Market D :

I really need a The largest gathering of mezzanine and leveraged finance players in Europe!
Hear from the following outstanding speakers: 24th & 25th November 2010, May Fair Hotel, London
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one-to-one meeting Dr. Matthias Unser

Managing Director
DB PRIVATE
EQUITY
Marc Boughton
Managing Partner
CVC
Jason Block
Head of Investor
Management
ICG
Erik Bosman
Partner
ALPINVEST
PARTNERS UK LTD
Janusz Heath
Managing Director,
Head of Asset
Management
CAPITAL
DYNAMICS
Michelle de
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Senior Director
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James Chesterman
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WATKINS
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Partner
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Managing Director
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Lemy Gresh
CEO
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Over 250
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What’s New for 2010?
to discuss business
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New Speakers! Keynote Presentations! New Panels!
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 Networking drinks reception Detailed analyses of:
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is there still a place for mezz?
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6 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

2011 Preqin Alternatives
alternative assets. intelligent data.

Investment Consultant Review

The 2011 Preqin Alternatives Investment Consultant Review is a necessary guide for all fund marketers and fund managers
looking for information on the alternative investment consultant industry.
Key content includes:

• Vital analysis on all aspects of the alternatives investment consultant universe.

Includes key trends plus information on the market’s make-up.
• Specific intelligence on activity in private equity, real estate, hedge funds and The 2011 Preqin Alternatives
infrastructure included in all analysis and profiles. Investment Consultant Review

• Comprehensive profiles for over 300 investment consultants.

• Profiles include key individual contact information, areas of speciality, plans for
2011 and beyond, financial information, service coverage etc.
• Details for over 1,500 sample clients. See who is advising whom for each area of
alternatives.
• See which firms operate a buy-list, which firms consider first-time managers, and
what they look for when considering new opportunities.
• Results of our in-depth survey showing investor satisfaction with their consultants
and other key information. www.preqin.com/aic
• League tables.

Order before Friday 5th Nov for your 25% pre-publication discount!

I would like to purchase the Preqin Alternatives Investment Consultant Review:

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Fundraising Q3 2010 Fundraising Overview Download Data

Fundraising Spotlight: Q3 2010 Overview

Private equity fundraising in Q3 2010 was up from Q2 but by how much? Claire Wilson investigates.

In Q3 2010, 83 private equity funds worldwide reached REGISTER BEFORE

a final close, raising an aggregate $59bn (Fig. 1). This 29th October 2010
represents a 20% increase on the amount raised in the and save up to US$500
previous quarter, during which quarterly fundraising fell to a
Value creation for private equity and
six-year low. Although improved from the previous quarter,
The Private Equity World investors
Q3 private equity fundraising fell short of the $66bn raised Awards and gala dinner is
designed to identify and reward Turn opportunities into a win-win scenario for your partners and investors
in Q1 of this year. The figures suggest that the fundraising those companies who have
Hear from over 50 leading private equity firms on how to manage asset value and drive
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market remains challenging for managers currently on the demonstrated an unparalleled
ability to succeed and Recognize growth potential of influential MENA markets
road. continually set standards
Transform emerging opportunities into ROI

of excellence. Build portfolios with infrastructure investment

An unbeatable insight into project outlook, anticipated returns, raising capital and
managing risk in MENA infrastructure investment
The length of time that funds which closed in Q3 2010 The categories:
spent on the road is indicative of the difficult market s Deal of the year
6th annual

conditions faced by fund managers. Over a quarter of the s Best new private equity fund

funds that reached a final close in Q3 2010 were in market s Best private equity house
s Best venture capital fund
for 19-24 months, as shown in Fig. 2. A further 36% had s Special merit award

been on the road for between 25 and 36 months, while 3% s Best sharia-compliant firm or fund
s Best investor in MENA PE funds 21 – 24 November 2010, Shangri-La Hotel, Dubai, UAE
had been fundraising for over three years, as illustrated in s Best MENA investment adviser
Fig. 2. Fundraising generally took longer for funds closed Sponsors: Official government partner:

in Q3 2010 than in the previous quarter: the proportion of Be recognized as setting the
funds that reached a final close in 12 months or less fell standard for the industry by
Strategic partner: Produced by:
nominating your company for
from 24% to 15%. its outstanding achievements EUREKA PRIVATE EQUITY

Buyout funds raised the most capital in Q3 2010, with 13 www.terrapinn.com/2010/pemena

such funds raising an aggregate $21bn (Fig. 3). Although www.terrapinn.com/2010/awardspeme
one fewer buyout fund closed than in the previous quarter,
the aggregate capital raised by buyout funds increased was accounted for by real estate funds, with 18 such funds raising
significantly from Q2, when 14 such funds raised an aggregate a combined $8.7bn. Venture funds were the most abundant and
$13.9bn. The second-largest amount of capital raised in Q3 2010 $3.7 bn was raised by the 20 funds of this type that closed during
the quarter. Infrastructure fund closes were the least numerous, but

Fig. 1: All Private Equity Fundraising by Quarter,

Q1 2003 - Q3 2010 Fig. 2: Time Spent on the Road for Funds Closed in Q3 2010

30%
250 27%
Proportion of Funds Closed

207 25%
196 198
Aggregate Capital Raised ($bn)

200 21%
170 20% 19%
162
149
150 139 126 15%
123 15%
121 124 123
108
95 94
100 10% 9%
81 76
63 66 6%
56 52 59 56 59
48 51 49 5%
50 38 3%
22 21 19
0%
0 1-6 Months 7-12 13-18 19-24 25-30 31-36 37
Months Months Months Months Months Months +
Q1 2003
Q2 2003
Q3 2003
Q4 2003
Q1 2004
Q2 2004
Q3 2004
Q4 2004
Q1 2005
Q2 2005
Q3 2005
Q4 2005
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010

Time Spent on the Road

8 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Fundraising Q3 2010 Fundraising Overview Download Data

the three funds that did close during the quarter raised the third-largest Fig. 3: Private Equity Fundraising by Type, Q3 2010
amount of aggregate capital, $8.4bn.
25
21.1
20
20 18
No. Funds
Raised
15 13
11
Data Source: 10 8.9 8.7 8.4
Aggregate
Capital
Preqin’s Funds in Market database contains details of over 5 4 3.7
5
3.7
5
4 Raised
3 2.9
1,500 private equity funds on the road seeking capital, plus 1.0
($bn)
0.6
information on every vehicle that has closed since 2003. For 0
more information about this product and how it can assist you,

Buyout

Mezzanine
Infrastructure

Secondaries
Venture

Fund of

Other
Distressed

Real Estate

Funds
Debt
please visit:

www.preqin.com/fim
Fund Type

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CEE 2010
Date: 2nd & 3rd November 2010, London

Fundraising & Deal Structures

in the New Fund Cycle

Hear from over 30 leading industry experts including: Post-Conference Workshop:

Structuring
Finance
in CEE Leveraged
Martin Prohazka Indrek Kaldoja Hannes Ambacher Alessandra Pasian Radim Stach Piotr Nocen Jacek Korpala Peter Piho
Buy Outs
GAIN CAPITAL SWEDFUND BANK GUTTMAN AG EBRD RIVERSIDE EUROPE RESOURCE PARTNERS ARX EQUITY PARTNERS SWEDFUND 4th November 2010, London

Organised by

Scott R. Penwell Bill Watson Martin Paev Mark O’Hare Barbara Nowakowska Tolga Ismen Tod Kersten Sean Glodek
PARISH CAPITAL AMUNDI SORTIS PREQIN POLISH PRIVATE ISMEN DC ADVISORY DARBY OVERSEAS
EQUITY ASSOSCIATION INVESTMENTS

New updates for 2010-11, • General Partner Outlook for CEE Fundraising Plus
including: • Limited Partner View of • Raising a CEE Fund • Exit Strategies
Opportunities in CEE • LPs Commitments to Funds • Distressed Opportunities
Regional Outlook • Restructurings
• Economic Outlook for the CEE Financing Deals Country Focuses • Regulation
Region • How are deals being financed? • Russia • Poland • The Mid-Market
• CEE Private Equity: A Research • The role of Mezzanine • SEE/Turkey • Baltics • Legal Update
Based Overview

Register Today: Call: +44 (0) 20 7017 7790 Fax: +44 (0) 20 7017 7824 Email: kmregistration@informa.com
For the latest programme and to register, please visit: www.informaglobalevents.com/KM2550PES1

9 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Fundraising Funds on the Road in Q4 2010 Download Data

Fundraising Spotlight: Funds on the Road

Helen Wilson examines the number and type of funds on the road at the start of Q4 2010.

Q4 2010 sees the first quarter-on-quarter increase in the Fig. 1: Funds in Market by Quarter, Q4 2008 - Q4 2010
aggregate capital targeted by funds on the road for over a year
and a half. Throughout 2010 the number and aggregate target of 1,800 1,673
1,624 1,622
1,574 1,582 1,562
private equity vehicles on the road had been in decline, but going 1,600 1,522 1,547
into the final quarter of the year there are 1,547 funds targeting 1,400 1,304
an aggregate $571bn, marking a 2% increase from the previous 1,200 No. Funds
quarter in the capital targeted. on Road
1,000 889 887
807
800 754
705 691
Despite this increase there are still fewer vehicles on the road 636
560 571
and less capital being targeted than at the beginning of the year, 600 Aggregate
Target
as can be seen in Fig. 1. At the start of the year 1,582 funds 400 ($bn)
were seeking to raise an aggregate $691bn, 17% more capital 200
than is being targeted by funds on the road as of Q4 2010. The 0
average target size of funds in market has also decreased over Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009 2009 2009 2009 2010 2010 2010 2010
this period. In Q1 2010 the average target of a fund in market
stood at $440mn; as of Q4 2010 it stands at $370mn. These
figures show that the difficult fundraising conditions in the wake
of the financial crisis are yet to ease and a significant number of Fig. 2: Composition of Funds in Market by Primary
fund managers with vehicles on the road are having to reduce Geographic Focus
their fundraising targets as a result.
800
A large proportion of the funds in market are primarily focused 696
on North America, with 696 such vehicles targeting an aggregate 700

$275bn, as shown in Fig. 2. Primarily North America-focused 600

funds account for 45% of the number of funds in market and 500
485 No. Funds
on Road
nearly half of the aggregate target capital. Such funds also have
400 366
the largest average target size out of all funds in market, with the
average fund target of a North America-focused fund standing 300 275
Aggregate
at $400mn, compared to $360mn for Europe-focused funds and 200 165 Target
131 ($bn)
$340mn for Asia and Rest of World-focused funds.
100

Asia and Rest of World-focused funds are targeting the second- 0

North America Europe Asia and Rest of
largest amount of capital. 485 such vehicles are seeking $165bn World
in aggregate commitments, accounting for 31% of the number of Primary Geographic Focus
funds and 29% of the aggregate targeted capital of all funds in
market.

There are currently 366 primarily Europe-focused funds on the

road targeting an aggregate $131bn in investor capital. Europe- Data Source:
focused funds account for 23% of the global targeted capital and
Preqin’s Funds in Market database contains details of over
24% of the number of funds on the road.
1,500 private equity funds on the road seeking capital, plus
information on every vehicle that has closed since 2003. For
more information about this product and how it can assist you,
The largest fund currently in market is BC European Cap IX, a
please visit:
European-focused buyout fund targeting capital commitments
of €6bn. The fund, which is managed by London-based firm
www.preqin.com/fim
BC Partners, plans to invest in a diverse range of industries
throughout Europe.

10 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Performance Performance of Private Equity Funds Download Data

Performance Spotlight
Sam Meakin looks at the performance of private equity firms as at 31 March, 2010.

Using data from Performance Analyst, Preqin has analyzed the Fig. 1: All Private Equity Change in NAV by Quarter
returns generated by private equity partnerships as at 31 March 2010
in order to provide an independent and unbiased assessment of the

Average Change in NAV from Previous Quarter

7.0% 6.7%
industry’s performance. Preqin currently holds transparent net-to-LP
performance data for over 5,200 private equity funds of all types and 6.0%
5.4%
geographic focus. In terms of aggregate value, this represents around 5.0%
5.0%
70% of all capital ever raised by the industry. Non-
4.1%
Weighted
4.0%
3.4%
Fig. 1 shows the change in net asset value (NAV) between successive 3.0% 2.7%
quarters from Q2 2009 to Q1 2010. The industry’s fund valuations 2.2% Weighted
have consistently increased quarter on quarter throughout the period. 2.0% 1.7%

The largest change occurred over Q3 2009, when the non-weighted 1.0%
average change in net asset value for all private equity funds was
4.1%, and the weighted change was 6.7%. This weighted change 0.0%
takes into account fund sizes, suggesting that larger funds have Q2 2009 Q3 2009 Q4 2009 Q1 2010

outperformed smaller funds in each of the four quarters shown. Q1

2010 data shows an increase of 2.2% in the weighted metric and 1.7%
in the non-weighted. However, it is important to note that larger funds
had previously been more adversely affected by the financial crisis Fig. 2: Private Equity Horizon IRR vs. Public Indices,
than smaller funds. as of 31 March 2009

Fig. 2 shows the horizon IRR of all private equity funds over the one-, 90%
three- and five-year periods compared to the returns achieved by 80%
All Private
three public indices benchmarks. The overall private equity horizon 70% Equity
Annualized Returns

IRR for the one-year period to 31 March 2010 stands at 21.8%, an 60%
S&P 500
improvement on the 13.8% posted as of 31 December 2009 and 50%
40%
significantly better than the -9.2% as of Q3 2009 and the -27.6% as of MSCI Europe
30%
Q4 2008.
20%
10% MSCI
The one-year returns to Q1 2010 for the Standard & Poor’s 500, Emerging
0% Markets
MSCI Europe and MSCI Emerging Markets were 49.8%, 56.1% -10% 1 year to Mar 2010 3 years to Mar 5 years to Mar
2010 2010
and 81.1% respectively, higher than the one-year private equity -20%
returns to Q1 2010. As with private equity, the public indices were all
posting negative returns as of the first quarter of 2009 but have been
improving since.

Over the three-year period, the returns achieved by all four indices
are more closely bunched, and the private equity horizon IRR to 31 Data Source:
March 2010 is -0.3%, while the figure for the five-year period stands at
16.8%.The three- and five-year returns for the Standard & Poor’s 500 Preqin’s Performance Analyst database contains full metrics
were -4.2% and 1.9% respectively. for over 5,200 named vehicles. For more information about this
product and how it can assist you, please visit:

www.preqin.com/pa

11 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Deals Q3 2010 PE-Backed Deals Download Data

Deals Spotlight: Q3 2010 PE-Backed Deals

Manuel Carvalho looks at the strongest quarter for buyout deals in the post-credit crunch landscape.

Fig. 1: Quarterly Number and Value of Deals,

A total of 515 private equity-backed buyout deals were Q1 2007 - Q3 2010
announced in Q3 2010 with an aggregate value of $66.7bn.
This represents a 29% increase in the aggregate value from Q2 800 250.0
2010, when 498 deals were announced with an aggregate value

Aggregate Deal Value ($bn)

700
of $51.9bn, and a notable 147% increase on the value reported 200.0

Number of Deals
600
in Q1 2010, which saw 396 deals valued at $27bn. Deal flow
500 150.0
globally in Q3 2010 represents the strongest quarter for buyout
400
deals in the post-credit crunch landscape, with the aggregate
300 100.0
value of deals announced in Q3 2010 more than treble the value
of deals seen during the same period in 2009. 200
50.0
100
Q3 2010 has seen aggregate deal value remain strong globally 0 0.0
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
in comparison to the previous year, with deal values in North
America and Europe significantly higher than during 2009. In
Q3 2010, North American aggregate deal value increased 6.5%
Number of Deals Aggregate Deal Value ($bn)
from the previous quarter, with 249 deals valued at $34.2 bn
announced in Q3 2010, up from the 233 buyouts valued at $32bn
in Q2 2010. Furthermore, Q3 2010 deal flow in North America
Fig. 2: Quarterly Aggregate Deal Value by Regional Focus,
represents a significant 165% increase on the aggregate deal
Q1 2008 - Q3 2010
value seen in the region in Q1 2010, and remains notably
higher than deal flow witnessed in the region during 2009.
40.0
However, North American deal flow remains significantly lower
35.0
in comparison to the buyout boom era of 2007, which saw
Aggregate Deal Value ($bn)

North
$124.3bn and $173.1bn in aggregate deal value during its first 30.0 America

and second quarter, respectively. 25.0

Europe
20.0
European aggregate deal value in Q3 2010 increased
15.0
significantly from the previous quarter, with 186 buyouts valued Asia and
at $26.3bn announced during the quarter, a notable 120% 10.0 Rest of
World
increase from the $12bn in deal value witnessed during Q2 2010, 5.0
and close to treble the European aggregate deal value seen in 0.0
Q1 2010. Deal flow in Asia and Rest of World has continued to
Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

hover above the levels seen in 2009, with 80 deals valued at

$6.2bn announced in the region, a 62% increase from the $3.8bn
in value reported a year earlier in Q3 2009. However, the value
of deals in Asia and Rest of World has dipped slightly from the
$7.8bn in value witnessed during Q2 2010.

Preqin’s Deals Analyst database contains in-depth data

for over 15,000 buyout deals across the globe. For more
information about this product and how it can assist you,
please visit: www.preqin.com/deals

12 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Secondaries Secondaries Spotlight Download Data

Secondaries Spotlight
Fig. 1: Breakdown of Secondary Fund of Funds Managers by Fig. 2: Breakdown of Secondaries Funds Currently Fundraising by
Primary Regional Location Target Size
Source: Preqin Source: Preqin

45%
39%
40%

Proportion of Funds
35%
30%
25% 22%
20%
15% 13% 13% 13%
10%
5%
0%
Fig.1 shows a breakdown of the regional location of Less Than $100-249mn $250-499mn $500-999mn $1bn or More
$100mn
secondary fund of funds managers and private equity fund of
funds managers raising dedicated secondaries funds. North
America-based managers dominate the market, comprising
51% of all secondary fund of funds managers. Managers The breakdown of secondaries funds currently fundraising
based in Europe account for 45% of the total, while by target size is shown in Fig. 2. 39% of secondaries funds
managers based elsewhere make up the remaining 4%. As currently in market are seeking $100-249 million from
the private equity market in Asia continues to expand and investors. 13% are targeting $1 billion or more in commitments.
mature, the number of firms managing secondaries vehicles Another 13% are at the smaller end of the spectrum, seeking
located in Asia is expected to increase. less than $100 million in capital commitments.

According to Preqin’s unique pricing model, a $10,000,000 commitment to the median 2008 venture fund - which would have called
$2,690,000 and has a reported net asset value (NAV) of $2,359,130 - would today fetch $1,941,304 on the secondary market, or
approximately 82% of its NAV.

Secondaries News

CDP Capital – Private Equity Group is bringing a private equity
portfolio to the secondary market.
The asset manager, which is responsible for the private equity
portfolio of the Caisse de dépôt et placement du Québec, is looking
to sell a $800 million portfolio of private equity fund stakes on
the secondary market. Although it is unknown exactly which fund
stakes the asset manager is looking to sell, the portfolio reportedly
consists of buyout and venture funds. CDP Capital – Private Equity
Group has previously looked into selling a private equity portfolio
that comprised C$1-2 billion of commitments, with approximately
half of them drawn down, but cancelled the sale at the beginning of
the year.
Indiana Public Employees’ Retirement Fund has made a
commitment to Lexington Capital Partners VII.
The $14.2 billion pension fund committed $100 million to the
secondaries fund, which is targeting $5 billion from investors. The
vehicle seeks to purchase LP stakes in established global buyout,
venture capital and mezzanine funds. As well as gaining exposure
to the secondary market through secondaries vehicles, the
retirement fund also actively purchases fund stakes directly on the
secondary market. It makes secondary investments for a number
of reasons, including favourable pricing, gaining access to funds it
has previously not had exposure to, and increasing its exposure to
funds it has already committed to.
Data Source:
Secondary Market Monitor (SMM) is a service available
free of charge to accredited LPs. The service enables LPs
to obtain indicative pricing indications on all or part of their
private equity and private equity real estate portfolios.
www.preqin.com/smm

13 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Conferences

Conferences Spotlight: Forthcoming Events

Conference Dates Location Organizer

SuperReturn Middle East 17 - 20 October 2010 Abu Dhabi ICBI

Asset Allocation Forum in Alternatives 2010 18 October 2010 New York Catalyst Forum

Private Equity World Africa 2010 18 - 21 October 2010 Johannesburg Terrapinn

Alternative Investment Forum: Russia & CIS 18 - 20 October 2010 London Adam Smith Conferences

UK Pensions & Investments 18 - 20 October 2010 London Marcus Evans

Fund Forum Latin America 2010 19 - 21 October 2010 Sao Paulo ICBI

Southeast Asia Private Equity Investing Conference 19 - 22 October 2010 Ho Chi Minh City Thunderbird

NASBIC Annual Meeting & Private Equity Conference 24 - 26 October 2010 Palm Beach NASBIC

European Alternative & Institutional Investing Summit 25 - 27 October 2010 Monte Carlo Opal Financial Group

II Russian Private Equity Congress 28 October 2010 Moscow Cbonds-Congress

Endowment & Foundation Forum 1 - 3 November 2010 Boston Opal Financial Group

CEE Private Equity 2 - 3 November 2010 London IIR

AIS 2010 Abu Dhabi Showcase of Alternative
3 - 4 November 2010 Abu Dhabi Leoron Events
Investment Funds

14 Private Equity Spotlight, October 2010 © 2010 Preqin Ltd. www.preqin.com

Conferences
Private Equity World MENA 2010
Date: 21-24 November, 2010
Location: Shangri-La Hotel, Dubai, UAE
Organiser: Terrapinn
The 6th annual Private Equity World MENA conference
is the region’s leading event designed to bring together
investors, SWFs, private equity and venture capital
funds for 4 days of high level networking and discussion.
Learn first-hand from leading regional and international
private equity firms on their strategies for creating value,
managing portfolios, delivering returns and building
investment partnerships to tap into new industries and
new markets.
Information: www.terrapinn.com/2010/pemena/
Alternative Investments Europe Summit 2010
Date: 29 November – 1 December, 2010
Location: Majestic Barrière, Cannes, France
Organiser: Marcus Evans
The Alternative Investments Europe Summit 2010
gathers the region’s forefront institutional investors to
explore next generation alternative investment strategies
in private equity, infrastructure, hedge funds and
emerging asset classes.
Information: www.aie-summit.com/Preqinel
II Russian Private Equity Congress
Date: 28 October, 2010
Location: Moscow, MICEX Stock Exchange
Organiser: Cbonds Congress
The conference targets representatives of asset
management companies running private equity
investment funds, law and consulting firms, and
companies interested in raising financing by means of
Private Equity, and people interested in the current state
in the Russian stock market, its tendencies and outlook.
Information: www.cbonds-congress.com/events/66/
15 Private Equity Spotlight, October 2010
Mezzanine Finance Conference 2010
Date: 24-25 November, 2010
Location: May Fair Hotel, London
Organiser: IIR
IIR’s Mezzanine Finance Conference is the leading
event in the industry’s calendar. Each year, key industry
players gather in London for this annual forum, to
address the business critical issues impacting the
mezzanine market.
Information: www.informaglobalevents.com/mezz
AIFM Directive 2010 Conference
Date: 30 November, 2010
Location: Central London
Organiser: Private Equity Forum
Through company case studies, in-depth presentations
and panel discussions, Private Equity Forum’s AIFM
Directive 2010 Conference will provide you with
clarification on the next series of changes to ensure you
are aware of the necessary key actions and deadlines.
Information: www.aifmdirective.co.uk
CEE Private Equity
Date: 2-3 November, 2010
Location: London
Organiser: IIR Events
IIR’s 4th Annual Private Equity CEE Conference
brings together an exceptional panel of Private Equity
Professionals, with contributions from some of the
leading Limited Partners investing in the region.
Information: www.informaglobalevents.com/KM2550PES
© 2010 Preqin Ltd. www.preqin.com
News
Investor News
Emma Dineen takes a look at the latest private equity investor news.
LIG Insurance plans to resume its
private equity activity.
The Korean insurance provider expects to
resume investing in private equity funds
in 2011, having held off investing in the
asset class for over a year. It expects to
commit to one or two new funds over the
next 12 months, committing around USD
10 million to each fund. LIG has a USD
129 million allocation to private equity
and, while it has historically preferred
South Korean funds, going forward it is
considering a wider range of geographies.
It does not have a target allocation to
the asset class, preferring instead the
flexibility to respond to changing market
conditions.
Proparco continues to invest in African
private equity funds.
The EUR 2 billion government agency has
been an active private equity investor in
emerging markets for a number of years,
with a particular interest in African private
equity opportunities. It has 6% of its
total assets currently allocated to private
equity investments in Africa, equating to
approximately 60% of its overall private
equity portfolio. The government agency
feels the African private equity market is
offering good investment opportunities
due to the increase in the number of
sector- and country-focused funds, and
the overall more vibrant private equity
fundraising in the region. Proparco plans
to invest between EUR 20 million and
EUR 150 million in 10 to 15 private equity
funds globally over the next 12 months
and has recently made a commitment to
Swicorp Intaj Capital II, an expansion fund
targeting investments in the MENA region.
Proparco expects to maintain its level of
exposure to private equity over the long
term.
Unigestion Environmental
Sustainability Fund of Funds is
planning to hold a first close at the end
of November.
Unigestion’s energy-focused vehicle is
16 Private Equity Spotlight, October 2010
targeting overall commitments of USD 200 interim. The foundation manages total
million, reduced from its original target assets of USD 223 million and has a small
of USD 250 million. The fund of funds private equity allocation. As of September
expects to raise USD 60 million for a first 2010, it is not looking to make any new
close at the end of November. It has a private equity investments for at least six
primary focus on the US, allocating 50% months, due to its portfolio liquidity being
of capital to US funds, with an allocation relatively low. Once it resolves this issue,
to Europe of 40%, and the remaining 10% it will reconsider investments in the asset
of capital allotted to investments in Asia. class. The foundation mainly invests in US
The vehicle plans to allocate 40-50% of venture and buyout funds.
raised capital to growth and expansion
funds, 20-30% to late stage venture and Lothian Pension Fund anticipates
20-30% to alternative energy projects, and committing GBP 100 million to six new
there will be a 10% allowance for other private equity funds over the next 12
investment types. It also has the capacity months.
to co-invest alongside fund managers. The GBP 3 billion public pension fund
Unigestion Environmental Sustainability has GBP 160 million currently allocated to
Fund of Funds will typically commit EUR private equity and has a target allocation
10-15 million to each underlying fund. to the asset class of 6.5%. It considers
a range of private equity funds on an
Stapi Lifeyrissjodur expects to resume opportunistic basis and commits to funds
private equity investments in 2011. in a global basis, including emerging
The EUR 800 million Icelandic pension markets. Lothian Pension Fund is looking
fund has a target allocation to private to work with existing managers in its
equity of 10% of total assets. Having portfolio as well as forming some new
made no new commitments to private relationships with managers it has not
equity since 2009, when it reached its previously worked with, to invest GBP 100
target allocation to the asset class, Stapi million across six private equity vehicles
Lifeyrissjodur expects to resume making over the next 12 months.
new commitments to private equity funds
in 2011. Stapi Lifeyrissjodur’s private
equity portfolio is heavily weighted
towards buyout funds, in particular small-
and mid-market funds, and it expects to
maintain its level of exposure to buyout
strategies. The pension fund also expects
to increase its exposure to Asia, with a
preference for pan-Asian and Pacific
funds. Over the next 12 months, Stapi
Lifeyrissjodur expects to commit around
EUR 30 million in total to two or three new
vehicles and will most likely re-up with
existing managers in its portfolio.
Wilder Foundation’s Treasurer is
retiring.
The Wilder Foundation’s current treasurer,
Steve Loosbrock, plans to retire at the
end of the year. Assistant Treasurer Chris
Sergeant will be taking up the role in the
© 2010 Preqin Ltd. www.preqin.com