H1 2010

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2010 EVCA Buyout Review
An in-depth outlook of the buyout segment in Europe
October 2010
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Impact of the Economic Environment on Deal
Making
2
Improvement in economic environment helps
boost buyout investments
%
EU GDP growth and index of buyout investment activity
(index by amount)
1.5
120
1
105
0.5
90
0
75
-0.5
60
-1
45
-1.5
30
-2
15
-2.5
0
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
GDP growth EU 27 (% q/q)
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Buyout investments by amount (Index Q1 2007=100)
Source: EVCA calculation based on Eurostat and PEREP_Analytics
3
Debt market shows signs of revival
Senior loan volume - LBO transactions
400
350
300
140
€ billion
250
116
200
104
150
100
50
44
15
79
187
19
65
30
26
28
37
35
2001
2002
92
215
49
117
5
55
38
0
1999
2000
US market
2003
2004
8
2005
2006
2007
2008
17
2009
37
H1
2010
European market
Source: Standard & Poor's LCD
The data includes all private equity-related transactions, including refinancings and recapitalisations.
4
Institutional funding is still insignificant
European pro-rata vs. institutional LBO activity
70
60
€ billion
50
40
30
20
10
Pro-rata
10
10
2Q
1Q
09
4Q
09
09
3Q
2Q
09
1Q
08
4Q
08
3Q
08
08
2Q
1Q
07
4Q
07
07
3Q
2Q
07
1Q
06
4Q
06
3Q
06
06
2Q
1Q
05
4Q
05
3Q
05
2Q
1Q
05
0
Institutional
Source: Standard & Poor’s LCD
Pro rata loans are loans made up of revolving credit facility and an amortising term loan. Pro rata loans are syndicated to banks as opposed
to institutional loans, which are term-loan facilities with a portion carved out for non-bank (institutional) investors.
5
Leveraged loan prices have not fallen
Rolling 3-month weighted average spreads of all European new-issue LBOs
E + 600
498
E + 500
E + 400
433
E + 300
E + 200
E + 100
E+ 0
Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun98
99
99
00
00
01
01
02
02
03
03
04
04
05
05
06
06
07
07
08
08
09
09
10
Pro rata spread
Institutional spread
Source: Standard & Poor’s LCD
Wtd. avg. pro rata spread (WAPR) is the average RC/TLA spread weighted by sizes of the RC and TLA tranches.
Wtd. avg. institutional spread (WAIS) is the average TLB/TLC spread weighted by the sizes of the TLB and TLC tranches.
6
80% of outstanding European leveraged loans
mature 2013-2015
Maturity schedule by par outstanding as of 30 June 2010
2017
2%
2016
15%
2010 2011
0% 1%
2012
3%
2013
13%
2014
30%
2015
36%
Source: Standard & Poor’s LCD
Based on all facilities in the European leveraged loan index (ELLI) universe, priced and unpriced.
7
Leverage multiples converge across deal size
ranges
Debt-to-EBIT ratios for buyout transactions
14
12
10
8
6
4
2
0
2004
2005
2006
2007
2008
2009
H1 2010
Source: CMBOR/Barclays Private Equity/Ernst & Young
€10m-€100m
More than €100m
This sample includes all buyouts, not only private equity-backed buyouts. However, as non-private equity-backed buyouts are
typically smaller in size (mainly sub-€10m deals), the data is still representative for private equity-backed buyouts.
8
Large deals get higher equity share than smaller
deals in H1 2010
Average deal structures for European private-equity-backed buyouts
Deals less than €100m
100%
1%
2%
3%
4%
3%
4%
2%
3%
4%
90%
4%
5%
2%
47%
48%
45%
46%
1%
2%
30%
1%
1%
1%
1%
1%
1%
0%
2% 0%
3%
3%
4%
5%
70%
57%
56%
57%
58%
41%
44%
29%
0%
8%
40%
44%
0%
1%
2%
50%
66%
45%
1%
36%
80%
3%
30%
0%
2%
60%
40%
20%
2%
2%
46%
37%
60%
50%
100%
90%
29%
80%
70%
Deals more than €100m
67%
10%
10%
9%
7%
70%
61%
30%
51%
43%
20%
30%
10%
10%
0%
0%
2004 2005 2006 2007 2008 2009
Equity
H1
2010
Mezzanine
31%
32%
34%
2004 2005 2006 2007 2008 2009
Debt
Loan note
H1
2010
Other finance
Source: CMBOR/Barclays Private Equity/Ernst & Young
9
Purchase multiples increase at the upper end of
the market
Average P/E* ratios for European private-equity-backed buyouts
Deal size
range
2004
2005
2006
2007
2008
2009
H1 2010
€0m-€10m
6.6
8.0
7.0
9.3
6.2
7.0
3.9
€10m-€25m
9.1
10.3
9.7
9.6
9.6
8.1
7.4
€25m-€50m
11.9
10.5
11.2
11.4
12.0
8.9
12.2
€50m-€100m
12.8
15.3
9.8
12.4
14.8
16.2
17.6
€100m-€250m
14.3
14.5
14.9
16.4
15.7
12.0
16.5
Over €250m
13.4
18.4
18.6
18.5
16.8
8.9
17.6
Source: CMBOR/Barclays Private Equity/Ernst & Young
* P/E ratios are defined as deal price divided by EBIT.
10
Evolution of Buyout Activity 2007 – H1 2010
11
Fundraising improves but remains challenging
Fundraising by fund stage focus
(intermediate closings in the year)
€ billion
Growth capital
Buyout
Mezzanine
80
70
€69bn
€71bn
60
Amounts in
€m
2007
2008
2009
H1 2010
Growth capital
1,716
2,912
916
1,485
62,543
66,661
9,107
5,890
4,895
979
571
999
69,154
70,552
10,594
8,375
Buyout
50
Mezzanine
40
Total
fundraising*
30
20
€11bn
10
€8bn
0
2007
2008
2009
H1 2010
Source: EVCA/PEREP_Analytics
* Throughout the presentation, “total fundraising” refers to funds raised by buyout, growth and mezzanine funds
12
The majority of fundraising activity is concentrated
in UK & Ireland
Regional fundraising
(% of European total)
100%
90%
4%
3%
1%
7%
8%
5%
8%
1%
8%
1%
70%
1%
11%
7%
80%
8%
14%
12%
8%
3%
5%
13%
11%
5%
4%
60%
DACH region
France
Nordic Region
23%
50%
40%
67%
30%
59%
Benelux
CEE region
58%
Southern Europe
UK & Ireland
43%
20%
10%
0%
2007
2008
2009
H1 2010
Source: EVCA/PEREP_Analytics
13
Banks continue to be the leading source of capital
Funds raised by type of investor
(% of amount)
100%
Banks
8%
90%
15%
19%
20%
6%
80%
12%
5%
70%
3%
18%
60%
16%
6%
Capital markets
Corporate investors
3%
5%
19%
18%
Endowments and foundations
Family offices
11%
8%
50%
7%
40%
30%
Fund of funds
7%
5%
18%
10%
5%
37%
6%
6%
20%
Other asset managers (including PE
houses other than fund of funds)
12%
Pension funds
21%
10%
Insurance companies
10%
24%
0%
Public sector, including SWFs
15%
5%
5%
2%
3%
2007
2008
2009
H1 2010
Private individuals
Source: EVCA/PEREP_Analytics
Percentages are calculated on the funds raised for which the source is known.
14
US LPs decrease in importance, with UK LPs
maintaining their lead
Ranking of top limited partners by location
(per European fundraising year)
Ranking
2007
2008
2009
H1 2010
1
The US
The US
The UK
The UK
2
The UK
The UK
The US
France
3
Greece
Australasia
France
Australasia
4
Australasia
Canada
Italy
The US
5
Germany
France
Germany
Belgium
Source: EVCA/PEREP_Analytics
15
Average fund sizes are on the rise
Final closings by fund stage focus
(cumulative amount raised at final closing)
Amounts in
€m
Fund stage
2007
Amoun
t
Nr of
funds
2008
Avg
fund
size
Amoun
t
Nr of
funds
2009
Avg
fund
size
Amoun
t
Nr of
funds
H1 2010
Avg
fund
size
Amoun
t
Nr of
funds
Avg
fund
size
Growth
1,296
9
144
2,452
10
245
648
7
93
1,248
2
624
Buyout
57,191
80
715
59,551
66
902
9,001
15
600
8,917
15
594
4,702
12
392
508
3
169
540
4
135
1,546
4
387
63,188
101
626
62,511
79
791
10,190
26
392
11,711
21
558
Mezzanine
Independent
funds raised
Source: EVCA/PEREP_Analytics
16
UK & Ireland and Benelux see more final closings
than in full-year 2009
Final closings by fund region
(by number of funds closed)
100
6
3
90
15
80
70
4
4
14
Benelux
CEE region
14
DACH region
France
Nordic Region
19
60
50
17
40
9
Southern Europe
UK & Ireland
13
30
9
1
25
1
5
3
4
20
28
10
2
1
3
2
1
2
1
10
11
2009
H1 2010
0
2007
2008
Source: EVCA/PEREP_Analytics
17
€500-999m is the most popular fund size range in
H1 2010
Final closings by fund size range
By number of funds
By cumulative amount raised
€bn
120
70
size range in €m
100
60
12
80
>=1000
12
15
500-999
40
25
60
15
50
10
250-499
14
150-249
42
47
30
40
50-149
15
20
20
17
8
0
2007
8
2
2
6
2
2008
<50m
4
3
6
4
1
5
2
2009
H1 2010
10
17
20
10
7
8
4
0
3
2
3
2007
2008
1
6
6
1
2
1
4
1
2009
H1 2010
Source: EVCA/PEREP_Analytics
18
Most buyout funds are not sector specific
Final closings by fund sector focus
Amounts in €m
Fund sector focus
Agriculture, chemicals and
materials
2007
Amount
2008
Nr of
funds
Amount
2009
Nr of
funds
Amount
H1 2010
Nr of
funds
Amount
Nr of
funds
104
2
0
0
0
0
0
0
Business and industrial
products and services
1,737
5
116
2
0
0
0
0
Consumer products, services
and retail
2,528
4
50
1
98
1
101
1
200
1
546
1
0
0
315
1
0
0
116
1
575
1
0
0
648
2
114
2
100
1
56
1
0
0
1,000
1
0
0
0
0
Generalist
57,972
87
60,570
71
9,416
23
11,239
18
Independent funds raised
63,188
101
62,511
79
10,190
26
11,711
21
Energy and environment
Financial services
ICT
Life sciences
Source: EVCA/PEREP_Analytics
19
Investment levels start to recover, expected to
reach 2005 levels by year-end
Investments by European private equity firms- evolution
70
65
60
54
€ billion
50
46
40
34
30
27
21
20
18
14
19
15
15
12
8
10
4
6
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
H1
2010
Source: EVCA/PEREP_Analytics for 2007-H1 2010 data. For prior years’ data: EVCA/Thomson Reuters/PriceWaterhouseCoopers
20
H1 2010 investment into European companies has
already reached 80% of the full-year 2009 amount
Investments into European portfolio companies - evolution
70
2,000
65
1,769
1,889
1,800
60
1,603
46
1,400
1,200
40
1,000
30
807
19
20
800
600
15
Number of companies
€ billion
50
1,600
400
10
200
0
0
2007
2008
Amount
2009
H1 2010
Number of companies
Source: EVCA/PEREP_Analytics
21
GP proximity to investee companies increases in
importance during the crisis
Investments by geographic origin
Amounts in €m
2007
2008
2009
H1 2010
Amount
Number
of cos
Amount
Number
of cos
Amount
Number
of cos
Amount
Numbe
r of
cos
Domestic
42,885
1,509
33,840
1,598
13,148
1,380
11,647
719
Intra-European
19,112
281
10,965
310
5,286
238
2,940
85
Outside Europe
3,403
42
1,385
33
434
18
476
11
65,400
1,769
46,191
1,889
18,869
1,603
15,062
807
Geographic
origin of
investments
Total investment
Source: EVCA/PEREP_Analytics
22
Average investment size in UK & Ireland more than
doubles on 2009
Average deal size by region
50
45.0
45
43.4
42.4
40
37.0
35
32.832.2
€million
30.4
30.1
30.0
30
26.8
25
20
19.6
18.6
18.5
15
10
26.4
23.2
23.3
13.2
10.2
8.9
17.1
16.5
2007
2008
2009
H1 2010
16.5
14.2
12.1
7.1
11.9
10.5
7.7
5
0
Benelux
CEE region
DACH region
France
Nordic region
Southern Europe
UK & Ireland
Source: EVCA/PEREP_Analytics
23
The UK & Ireland’s domination as investment
markets further increases in H1 2010
Investments by region
% of amount
% of number of companies
Geographic
destination of
investments
2007
2008
2009
H1 2010
2007
2008
2009
H1 2010
Benelux
12%
7%
10%
4%
10%
8%
12%
7%
3%
5%
13%
3%
5%
5%
6%
4%
DACH region
18%
20%
13%
15%
16%
18%
22%
23%
France
17%
17%
12%
11%
20%
30%
19%
17%
Nordic region
10%
9%
13%
11%
12%
12%
14%
15%
Southern Europe
11%
17%
15%
8%
13%
12%
11%
9%
UK & Ireland
29%
26%
23%
49%
24%
15%
16%
25%
100%
100%
100%
100%
100%
100%
100%
100%
CEE region
Europe
Source: EVCA/PEREP_Analytics
24
Most capital is sourced domestically. The Nordic region
has the most active intra-regional cross-border flows
Regional cross-border flows for H1 2010
% of amount
100%
2%
3%
4%
4%
90%
80%
35%
33%
% of number of companies
5%
1%
6%
3%
9%
90%
20%
23%
34%
4%
70%
2%
7%
9%
4%
8%
3%
3%
2%
4%
11%
9%
80%
40%
3%
70%
1%
1%
60%
17%
7%
50%
97%
89%
40%
30%
100%
64%
64%
59%
57%
56%
Outside Europe
60%
Other Europe
Intra-region 50%
Domestic
40%
77%
80%
88%
Benelux
CEE
region
93%
80%
30%
20%
20%
10%
10%
0%
96%
87%
0%
Benelux
CEE
region
DACH
region
France
Nordic
region
Southern The UK &
Europe
Ireland
DACH
region
France
Nordic
region
Southern The UK &
Ireland
Europe
Source: EVCA/PEREP_Analytics
25
Most companies attract growth capital in 2009-H1
2010 versus buyout in 2007-2008
Investments by financing stage
Amounts in €m
Stage distribution
of investments
Growth
2007
Amount
2008
Number
of cos
Amount
2009
Numbe
r of cos
Amount
H1 2010
Number
of cos
Amoun
t
Number
of cos
5,082
352
7,397
578
4,494
751
2,483
413
452
54
329
71
683
146
293
52
1,739
139
1,521
175
1,775
167
1,406
62
Buyout
58,128
1,260
36,944
1,118
11,917
589
10,881
289
Total investment
65,400
1,769
46,191
1,889
18,869
1,603
15,062
807
Rescue/
turnaround
Replacement capital
Source: EVCA/PEREP_Analytics
26
Growth deals dominate across most regions. France and Nordic
regions are the exception with buyouts as the single largest
subset
Investments by region and stage in H1 2010
(% of number of companies)
100%
90%
18%
23%
25%
33%
80%
48%
70%
6%
12%
29%
8%
60%
50%
42%
44%
10%
11%
3%
5%
4%
2%
4%
2%
6%
12%
40%
30%
56%
59%
48%
54%
52%
Southern
Europe
UK and Ireland
46%
20%
38%
10%
0%
Benelux
CEE region
Growth
DACH region
Rescue/turnaround
France
Nordic region
Replacement capital
Buyout
Source: EVCA/PEREP_Analytics
27
Buyouts recover most of the lost value since 2007
in average investment size
Investments by stage of financing
(average amount of equity invested per company)
50
46
45
40
38
2007
35
€million
37
33
2008
2009
30
H1 2010
24
25
23
20
19
20
15
14
13
13
9
10
6
6
5
12
11
8
5
5
6
0
Growth
Rescue/Turnaround Replacement capital
Buyout
Total investment
Source: EVCA/PEREP_Analytics
28
In H1 2010, mid-market deals account for 45% of the transaction
value (vs. large and mega deals being 70% of TV in 2007), nearly
90% of the companies are small buyouts (vs. 60% in 2007)
Equity vs. transaction value* by deal size
2007
160
H1 2010
900
80
450
800
70
400
145.6
140
700
350
120
400
55.4
60
250
40
200
30
300
150
37.7
40
200
12.8
5.6
100
11.0
0
Equity value
100
9.3
10
2.0
0
Small
20
21.8
19.7
20
number of companies
€billion
500
80
300
50
€billion
600
100
number of companies
60
Mid-market
Large
Transaction value
Mega
Number of companies
3.4
50
5.2
2.1
4.3
3.8
1.5
0
0
Small
Equity value
Mid-market
Large
Transaction value
Mega
Number of companies
Source: EVCA/PEREP_Analytics
* Transaction value includes the contributions of all co-investors in a deal and the leverage. Therefore, the difference between private
equity funds’ contribution (“equity value”) and transaction value consists of two parts: the contributions of syndication partners other
than private equity firms (such as LP co-investors, corporate co-investors, financial institutions) and leverage.
29
The largest source of buyout deals in H1 2010 is private
equity firms (secondary buyouts) by amount, and family &
private owners by number of companies financed
Sources of buyouts
% of amount invested
companies
% of number of
100%
100%
90%
21%
90%
1%
5%
80%
28%
80%
70%
49%
3%
Private equity firm
Receivership
15%
1%
1%
6%
50%
1% 2%
7%
Privatisation & state
owned
Institutional
29%
60%
36%
36%
50%
40%
40%
29%
Family & private
39%
19%
30%
20%
10%
1%
5%
19%
70%
7%
16%
60%
15%
22%
Corporate
30%
Capital market
20%
11%
21%
35%
25%
21%
10%
17%
14%
13%
13%
14%
2008
2009
H1 2010
0%
0%
2008
2009
H1 2010
Source: EVCA/PEREP_Analytics
Percentages are presented for the buyout deals where the source is known.
30
Most sectors register an uplift in average
investment size on 2009
Average size of investment per company - sector overview
Agriculture
Business & industrial products
Business & industrial services
Chemicals & materials
Communications
H1 2010
2009
2008
2007
Computer & consumer electronics
Construction
Consumer goods & retail
Consumer services: other
Energy & environment
Financial services
Life sciences
Real estate
Transportation
€million
0
10
20
30
40
50
60
70
Source: EVCA/PEREP_Analytics
31
Consumer goods & retail is the most appealing
sector in H1 2010
Amount invested by sector
Business & industrial products
Business & industrial services
Chemicals & materials
Communications
Computer & consumer electronics
H1 2010
2009
2008
Construction
Consumer goods & retail
2007
Consumer services: other
Energy & environment
Financial services
Life sciences
Transportation
0
1
2
3
4
5
6
7
8
9
10
11
€million
Source: EVCA/PEREP_Analytics
32
More new investments for PE firms in H1 2010
prove the recovery of the investment market
Initial versus follow-on investments
(% of number of companies)
100%
100%
90%
90%
80%
39%
80%
44%
53%
57%
70%
70%
67%
62%
60%
57%
50%
Follow-on investment for the company
50%
49%
40%
30%
60%
Initial for the company
Initial for the private equity firm
40%
61%
30%
56%
43%
20%
47%
20%
10%
10%
0%
0%
2007
2008
2009
H1 2010
Source: EVCA/PEREP_Analytics
33
Follow-on deals are bigger than initial investments
in France and the DACH region
Initial versus follow-on investments by region – H1 2010
(average amount invested per company)
70
60
59
€million
50
43
Initial for the company
40
Follow-on investment for the company
34
32
Initial for the private equity firm
30
19
20
20
10
16
1317
14
15
11
13
22
19
13
21
14
9
6
5
0
Benelux
CEE
DACH
Region
France
Nordic
region
Southern
Europe
UK &
Ireland
Source: EVCA/PEREP_Analytics
34
Syndication in buyouts further decreases in H1
2010
Syndication by stage
(% of amount)
Buyout deals
Growth deals
100%
100%
90%
90%
28%
80%
42%
23%
24%
26%
77%
76%
74%
2008
2009
H1
2010
32%
36%
80%
47%
70%
70%
60%
60%
Syndication
50%
No syndication
50%
40%
40%
72%
30%
58%
64%
68%
30%
53%
20%
20%
10%
10%
0%
0%
2007
2008
2009
H1
2010
2007
Source: EVCA/PEREP_Analytics
35
The average amount invested in clubbed deals is
lower than in non-syndicated deals in France and
Benelux
Syndicated versus non-syndicated deals by region – H1 2010
(average amount invested per company)
60
49
50
€million
40
34
31
30
30
24
19
20
15
14
11
11
11
10
8
8
3
0
Benelux
CEE region
DACH region
France
No syndication
Nordic region
Southern
Europe
UK & Ireland
Syndication
Source: EVCA/PEREP_Analytics
36
In 2007- H1 2010, 57% of European companies
financed by buyout firms are SMEs
Investments by number of employees
% of number of companies
% of amount
100%
100%
13%
90%
19%
19%
90%
26%
80%
80%
24%
51%
20%
21%
70%
24%
60%
50%
57%
70%
Number of
employees:
Up to 250 (SMEs)
60%
250-1,000
Over 1,000
50%
57%
64%
40%
40%
28%
30%
63%
61%
61%
30%
21%
27%
50%
20%
20%
10%
10%
0%
0%
2007
2008
2009
H1 2010
21%
2007
19%
16%
17%
2008
2009
22%
H1 2010
Source: EVCA/PEREP_Analytics
37
The divestment market shows signs of revival with
€7bn divested at cost in H1 2010
€billion
Divestments at cost from European portfolio companies - evolution
25
20
1200
24
1079
1000
834
800
15
689
600
11
10
9
418
400
7
5
200
0
0
2007
2008
Amount at cost
2009
H1 2010
Number of companies
Source: EVCA/PEREP_Analytics
38
40% of the European companies divested by
private equity firms are located in the DACH region
Divestments by location of the portfolio company – H1 2010
100%
7%
7%
1%
90%
3%
18%
80%
70%
40%
Benelux
CEE region
DACH region
16%
60%
4%
50%
12%
France
Nordic Region
10%
Southern Europe
UK & Ireland
10%
40%
30%
6%
44%
20%
23%
10%
0%
% of amount at cost
% of number of companies
Source: EVCA/PEREP_Analytics
39
Trade sales have not picked up as expected in H1
2010
Divestments by exit method
(% of number of companies)
100%
90%
80%
70%
3%
3%
12%
10%
6%
2%
13%
1%
3%
16%
3%
21%
60%
6%
50%
9%
18%
11%
24%
11%
3%
4%
15%
12%
4%
11%
1%
40%
26%
10%
3%
3%
11%
0%
2007
3%
Sale to financial institution
Sale to management (MBO)
Trade sale
Divestment by other means
Write-offs
2%
16%
Unknown
17%
4%
29%
20%
Repayment of silent partnerships
Sale of quoted equity
Secondary sale
15%
22%
30%
IPO
Repayment of principal loans
7%
12%
4%
5%
2008
2009
H1 2010
Source: EVCA/PEREP_Analytics
40
Life sciences is the most divested sector in H1
2010
Divestments by sector (excluding write-offs)
(% of amount at cost divested)
100%
90%
80%
70%
60%
1%
15%
14%
21%
6%
12%
10%
4%
50%
12%
6%
5%
2%
9%
7%
16%
30%
15%
16%
35%
6%
2%
4%
13%
7%
20%
10%
0%
6%
2%
4%
2%
6%
3%
2007
9%
2%
6%
40%
6%
6%
12%
4%
16%
6%
2%
8%
7%
2008
7%
4%
2%
6%
2%
2%
18%
2009
H1 2010
Agriculture
Business & industrial products
Business & industrial services
Chemicals & materials
Communications
Computer & consumer electronics
Construction
Consumer goods & retail
Consumer services
Energy & environment
Financial services
Life sciences
Real estate
Transportation
Unknown
7%
Source: EVCA/PEREP_Analytics
41
Close to half of the H1 2010 write-offs are in
consumer services
Write-offs by sector
(% of amount at cost divested)
100%
3%
6%
9%
18%
90%
12%
26%
80%
5%
70%
6%
44%
15%
20%
60%
23%
50%
4%
21%
22%
30%
11%
48%
5%
20%
11%
19%
22%
10%
6%
12%
0%
5%
2007
1%
2008
2009
Business and industrial services
Chemicals and materials
Communications
Computer and consumer electronics
Construction
Consumer goods and retail
Consumer services
9%
40%
Agriculture
Business and industrial products
Energy and environment
Financial services
Life sciences
Real estate
Transportation
Unknown
6%
H1 2010
Source: EVCA/PEREP_Analytics
42
Buyout Performance as of December 2009
43
The long-term performance of the buyout industry
remains robust
Annualised net pooled IRR from inception to 31-12-2009
Funds formed
1980-2009
Fund size
Multiples
Sample size
Net pooled
IRR
DPI
RVPI
Multiples (as % of TVPI)
TVPI
DPI
RVPI
Small
289
12.5
1.14
0.40
1.54
74%
26%
Mid-market
66
15.4
1.06
0.48
1.54
69%
31%
Large
51
18.7
1.16
0.38
1.54
75%
25%
Mega
52
8.4
0.69
0.52
1.21
57%
43%
All buyout
458
11.9
0.83
0.49
1.32
63%
37%
Source: EVCA/Thomson Reuters
44
Top-quarter and top-half returns remain strong at
30.6% and 19.7% respectively
Top-quarter and upper-half net pooled IRR as of 31-12-2009
Funds formed
1980-2009
Fund size
Top-quarter net pooled IRR
(Top-quarter funds formed 1980-2009)
Sample size
Top-quarter
pooled IRR
Top-half net pooled IRR
(Top-half funds formed 1980-2009)
Overall
upper
quartile IRR*
Sample size
Top-half
pooled IRR
Overall
median
IRR**
Small
72
28.7
16.1
144
20.8
6.2
Mid-market
15
35.3
22.1
33
25.2
7.3
Large
13
48.0
18.4
25
24.0
4.6
Mega
12
23.6
16.9
26
16.4
8.7
All buyout
113
30.6
17.0
228
19.7
6.2
Source: EVCA/Thomson Reuters
* Entry point that funds have to meet or exceed as return in order to become part of top-quarter funds.
** Entry point that funds have to meet or exceed as return in order to become part of upper-half funds.
45
The spread of returns across the four performance
quarters has narrowed in 2009
Buyout performance per quarter as of 31-12-2009
Funds formed 1980-2009
Fund size
Net pooled
IRR
Upper
quartile
Net pooled
top quarter
IRR
Small
12.5
16.1
28.7
Mid-market
15.4
22.1
35.3
Large
18.7
18.4
48.0
Mega
8.4
16.9
23.6
Percentile
Net pooled
for the
quarter
100
30.6%
17.0%
75
11.3%
6.2%
50
1.6%
-2.7%
25
All buyout
11.9
17.0
30.6
Net IRR
-18.9%
Source: EVCA/Thomson Reuters
46
Buyout investments during downturns generate
superior performance
Annualised net pooled IRR by vintage years as 31-12-2009
Funds formed :
Fund size
Small
1980-1984
IRR
9.2
DPI
1.88
Mid-market
1985-1989
IRR
DPI
1990-1994
IRR
DPI
1.88
DPI
IRR
DPI
2005-2009
IRR
DPI
1.60
18.4
1.95
8.1
1.09
13.5
1.05
1.6
0.17
17.8
1.69
8.8
1.27
31.7
1.62
17.5
1.16
-3.7
0.16
25.9
2.68
16.9
1.56
12.4
0.96
-3.9
0.16
10.8
1.34
20.6
1.28
-10.4
0.11
12.3
1.35
18.1
1.20
-9.0
0.11
Mega
9.2
IRR
2000-2004
10.5
Large
All buyout
1995-1999
13.6
1.65
18.6
2.04
Source: EVCA/Thomson Reuters
47
Three-year IRRs reflect the impact of the crisis
Short-, medium-, and long-term returns reflected by net horizon IRRs to 31-12-2009
Funds formed
1980-2008
Fund size
1-year IRR
3-year IRR
5-year IRR
10-year IRR
Small
17.0
4.1
10.1
8.0
Mid-market
-1.9
-2.7
5.5
6.5
Large
-9.1
-0.2
7.8
8.8
Mega
8.6
-5.7
8.5
8.1
All buyout
7.2
-3.9
8.3
8.0
Source: EVCA/Thomson Reuters
48
Buyout performance stands at 8.3% on the 5-year
horizon and 8.0% on the 10-year horizon
10-year rolling net IRRs
50
45
45
40
40
35
35
30
30
Small
Mid-market
Large
Mega
All buyout
Small
Mid-market
Large
Mega
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
1999
0
1998
5
1997
5
1996
10
1995
10
1994
15
1993
15
1992
20
1991
20
1992
25
1991
25
1990
%
50
1990
%
Five-year rolling net IRRs
All buyout
Source: EVCA/Thomson Reuters
49
Industrial/energy funds once more achieve the highest returns. Life
sciences is the only sector that registers a modest improvement in
performance on 2008
Performance by sector focus
Funds formed 1980-2009
Fund size
Sample size
Net IRR to
Dec 2009
Net IRR to
Dec 2008
Net IRR to
Dec 2007
Net IRR to
Dec 2006
Net IRR to
Dec 2005
Consumer related
37
15.0
16.7
22.1
22.7
22.7
ICT
31
10.2
10.7
11.5
12.2
12.6
Industrial/energy
25
22.3
22.9
23.5
23.4
23.7
Life sciences
21
8.3
7.9
11.0
11.0
7.3
Other
59
14.1
15.0
18.3
18.4
13.7
Source: EVCA/Thomson Reuters
50
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