PE Capital Briefing February 2017 FINAL

Private Equity Capital Briefing

February 2017

Monthly insights and intelligence on PE trends

PE off to a strong start in 2017

January marks the most active start to a year for PE since the financial crisis

The better the question. The better the answer.The better the world works.

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 and distills this intelligence into a succinct and user-friendly publication.

Private Equity Capital Briefingprovides 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

AppendicesAppendix 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

• After a robust year for PE fundraising in 2016, firms are off to a strong start in the New Year. PE firms closed funds valued atUS$45b in January, up 78% from the US$25b raised last year.

• Infrastructure funds were particularly well represented amongst funds that closed in January, accounting for half of the total.

• The average fund size exceeded US$1b in January, compared with US$650m for the full year 2016.

Current state

Fundraising

• After a robust year for PE fundraising in 2016, firms are off to a strong start in the New Year. PE firms closed funds valued at US$45b in January, up 78% from the US$25b raised last year.

• Infrastructure funds were particularly well represented among funds that closed in January, accounting for half of the total by value. The sector has seen significant interest from investors in recent years from investors looking for stable returns over time and the ability to deploy large amounts of capital. The election of Donald Trump in the US has accelerated interest, after the administration signaled that spending on infrastructure investments will be a priority. Indeed, several of the world’s largest alternative asset managers have recently announced plans to add funds in the space, suggesting that 2017 could be a record year for fundraising.

• The handful of closing s by a number of large infrastructure funds pushed average fund sizes past the US$1b mark in January, compared with US$650m in the full year 2016. Funds have been trending larger as LPs seek to put greater amounts of assets to work in PE and other alternative investments.

Environment and horizon

• PE firms are raising capital faster than they have in the past. According to Preqin, the average PE fund in 2016 spent 16 months between launch and final close, down from 17 months in 2015, and 18 months in 2013. Buyout and infrastructure funds have seen the strongest demand, closing in 12 months and 15 months, respectively.

• Currently there are more than 2,800 funds in the market, seeking an aggregate US$1t. Buyout accounts for the largest share, with roughly 300 funds seeking US$225b, followed by real estate and secondariesfunds.

• “Core” PE funds, or funds which are designed to invest and hold companies over a much longer period are seeing interest from certain segments of investors. While some large traditional LPs are wary of sacrificing liquidity and the ability to be nimble/opportunistic without sufficient return, for the right LPs—family offices that want fewer taxable events, SWFs with ultra-low cost of capital and long time frames—they solve a significant issue and can be a good fit.

• Consolidation in the PE industry has been ongoing for some time, with LPs seeking to invest greater amounts with smaller number of managers. CalPERS’ private equity consultant recently disclosed that the pension had completed the sale of 26 partnership interests with a value of more than US$420b, following up a similar sale in the first half of last year. At that time, CalPERS’ ambition was to reduce the number of managers to less than 120, from a high several years ago of roughly 400.

Global PE fundraising by month, LTM (in US$b)

4 Private Equity Capital Briefing

Source: Preqin

Source: Preqin

$0

$20

$40

$60

$80

$100

$120

$140

Jan Feb Mar Apr May Jun Jul Aug Seep Oct Nov Dec Jan

0

20

40

60

80

100

Commitments No. of funds

Source: Preqin

$0

$10

$20

$30

$40

$50

$60

$70

Global PE infrastructure fundraising by year (in US$b)

Source: Preqin

$0

$200

$400

$600

$800

$1,000

$1,200

0

50

100

150

200

250


PE funds in the market by type and target (in US$b)

Source: Preqin

Source: Preqin

Time to close by fund type (in months)

12

17 1715

19

Buyout Growth Real estate Infra Distressed

Source: PreqinSource: Preqin

Average fund sizes over time (in US$m)

$0

$200

$400

$600

$800

$1,000

$1,200

1.ii. Private equity: acquisitions

Executive summary

• While January typically represents a quiet month for PE acquisitions, it was the most active start to a year since the financial crisis.

• PE firms announced 84 deals valued at US$16.1b during the month.

• Active sectors continued 2016’s trend, with large deals announced in Health care, Consumer Products and Technology.

Current state

• January typically represents a quiet month for PE acquisitions. Firms announced 84 deals valued at US$16.1b during the month, a decline of 58% by value from December. However, it nonetheless represented the most active start to a year since the financial crisis. Activity was spread across a range of geographies and sectors; there were six deals valued at more than US$1b, while active sectors continued 2016’s trend, with large deals announced in Health care, Consumer Products and Technology.

• Deal activity increased across all regions in January versus the same period a year ago:

• The Americas saw 38 deals valued at US$7.8b, up 77% from a year ago.

• EMEA saw 39 deals valued at US$4.5b, up more than 150% from a year ago.

• Asia-Pacific saw 7 deals valued at US$3.8b, up 48% from a year ago.


• With valuations still at elevated levels, PE firms remain challenged to deploy assets in ways that leave headroom for growth. According to S&P Leveraged Commentary and Data, average purchase multiples closed 2016 at 10.0x in both Europe and the US, which is above the levels seen during the 2006-2007 period. As a result, many firms are underwriting limited multiple expansion into current acquisitions (or even multiple compression in certain industries), and instead are relying on operational improvements and value creation techniques to drive returns. Industry participants say that maintaining discipline, sticking to core competencies, and being able to clearly articulate a firm’s particular competitive advantage relative to a deal is now more important than ever.

• PE investment in the real estate sector could see continued interest in 2017, despite concerns of high prices and political uncertainty over the direction of trade agreements. The appetite for the asset class shows little sign of abating, according to EY’s 2017 Global market outlook: trends in real estate private equity. The report reviews various regions and where they are in the business cycle, stating that while investors have an appetite for US real estate, they are cautious because of expected interest rate rises. The Southeast Asian real estate market looks set for increased activity over the latter half of 2017. The report also notes that in many ways, investors are viewing Germany as Europe’s safe haven. Germany’s economic growth remains solid and the demand for housing as a result of strong migration to the country is boosting the residential market.

• According to a study of 805 educational institutions recently released by Commonfund and the National Association of College and University Business Officers (NACUBO), the average net investment return for US and Canadian college and university endowments was 4.5% last year, the worst since 2009. However, endowments that performed better tended to have the highest allocations to alternative investments. The top decile allocated 62% to alternatives, versus an average of 53% across all endowments.

• As the PE industry continues to grow and mature, digital technologies are playing a more critical role than ever. Firms are rapidly seeking to scale their capabilities across a range of competencies including analytics, reporting, cyber and regulatory compliance. While the industry currently remains overly reliant on manual processes for front-office, middle-office and back-office functions, it is beginning to recognize the need for change. EY and Private Equity International recently released a survey of more than 100 PE CFOs, which found that while sourcing and dealmaking remain center stage, developing cost-effective operations through talent management, automation and the ability to harness fund-level and portfolio company data is increasingly essential.

PE acquisitions by month (in US$b)


Source: Dealogic

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

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

0

5

10

15

20

25

30

35

40

45


Global PE acquisitions see most active January since GFC (in US$b)

Source: Dealogic

Top deals in Jan 2017

Source: Dealogic

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

Target Region Industry Sponsor Value (US$b)

McDonald's China Management Ltd. Asia Pacific Dining & Lodging

Carlyle Group LPCITIC Capital Partners Ltd. $2.1

Hitachi Koki Co. Ltd. Asia Pacific Consumer Products KKR & Co LP $1.3

Leslie's Poolmart Inc. Americas Consumer ProductsCatterton Management Co. LLC-L Catterton $1.8

Eagleford Shale Assets Americas Oil & Gas Blackstone Group LP $2.3

Cerba Healthcare SASU EMEA Health care Partners Group Holding AG $1.9

LANDesk Software Inc. Americas Technology ClearLake Capital Group LP $1.2

33%

44%40%

33% 34%

42% 41%

33%

27% 25%

Managementreporting

Portfolio analytics Investor portal Fund accounting Regulatoryreporting

Past two year Next two years

Insights from EY/PEI PE CFO survey: What has been your technology focus

during the past two years, and what will it be over the next two years?

Source: EY/PEI 2017 Global Private Equity Survey

1.iii. Private equity: exits

Executive summary

• The pace of exits has been slowing as PE firms shift their focus to deployment. January 2017 saw a continuation of the trend, with PE firms announcing 70 exits valued at US$26.0b, a decline of 11% from December.

• However, the month saw significantly improved sentiment in the IPO markets, with a number of PE-backed deals going public. In total, six PE-backed deals raised US$3.9b. All were listings on US exchanges.

Current state

• The pace of exits has been slowing as PE firms shift their focus to deployment. While 2014 was a record year for exits, and 2015 was similarly robust, exit activity has decelerated in recent quarters. PE firms exited 999 companies with an aggregate value of US$331b in 2016, down 22% by value versus the year prior.

• January 2017 saw a continuation of the trend, with PE firms announcing 70 exits valued at US$26.0b, a decline of 11% from December. Activity slowed most significant in sales to strategics and secondary buyers. Overall, M&A exits were down 20% versus December; this was largely the result of declines in EMEA, which saw a particularly active month in December. However, this represented an increase of 81% versus January 2016.

• Macro concerns and geopolitical uncertainty have weighed heavily on the global IPO markets in recent months—between the macro slowdown in China, Britain’s vote to leave the EU in June and the surprise results of the US presidential election in November, markets have been largely unable to find their footing. In 2016, global IPO activity declined 13% by volume and 31% by value, with 1,084 companies going public, raising US$134.2b, making it the quietest year for IPOs since 2012.

• January saw significantly improved sentiment in the IPO markets, with a number of PE-backed deals going public. In total, six PE-backed deals raised US$3.9b. All were listings on US exchanges.


• 2017 is positioned to be a strong year for IPOs. With many of the more obvious geopolitical impediments now in the rearview, and many global equities markets flirting with all-time highs, investor confidence is high. Q4 saw several high-profile deals price, and there remains evidence that this momentum is poised to carry over into the New Year. The year could even see the return of some PE manager listings to the market. In early February, alternative investment manager and PE advisory Hamilton Lane Advisors filed for a listing on the Nasdaq exchange in an IPO that could raise up to US$200m.

• There are currently more than 60 PE-backed companies in IPO registration; in the aggregate, they could raise nearly US$10b in total proceeds. Key things to watch in 2017:

• Low volatility and a lack of macro impediments should set the stage for an active first half.

• Investor confidence is returning to the emerging markets, and could enable a marked uptick in issuance.

• Mounting pressure on unicorns could drive deals in the tech space.

PE M&A exits by year (US$b)

PE IPOs by month (in US$b)

6


Source: Dealogic

Source: Dealogic

Source: Dealogic

Top PE exits, January 2016

Announcement or

filing date

Company Sector Value (US$b)

Sponsor Type

6-Jan-17Invitation Homes Inc.

Real Estate/Property $6.3 Blackstone Group LP IPO

9-Jan-17Surgical Care Affiliates Inc. Health care $3.4 TPG Capital LP M&A

2-Oct-15Laureate Education Inc.

Professional Services $2.9

Sterling Partners Inc.;Citigroup Private Equity;KKR & Co. LP;Snow Phipps Group LLC IPO

1-Jun-16JELD-WEN Holding Inc.

Construction/ Building $2.4 Onex Corp. IPO

24-Jan-17

Multi Packaging Solutions International Ltd.

Forestry & Paper $2.3

Carlyle Group LP;Madison Dearborn Partners LLC M&A

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0


Strategic PE

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0


PE exits by region—comparison of LTM (last 12 months) and PTM (prior 12 months)

Source: Dealogic -20%

-15%

-10%

-5%

0%

5%

-30% -25% -20% -15% -10% -5% 0%

Americas

Global

EMEA

Asia-Pacific

Value

Number of deals

-20%

-15%

-10%

-5%

0%

5%

-20% 0%

Current state• Megadeals led the charge in 2017, as the year started strongly for big-

ticket deals, with a number of billion-dollar plus deals (44) capturing the limelight and boosting M&A deal value. January saw deals worth US$262b, the highest value recorded in the first month since 2008. Total value was up 44% and 14% compared with similar periods in 2016 and 2015 respectively. Companies are using dealmaking as their primary response to elevated pressure for growth and the threat of disruption, even though heightened geopolitical and economic uncertainty further complicates the outlook for many industries.

• US-based deals kicked off 2017 in a big way. Total value for US-targeted deals was US$110b, a four-year high, indicating the increasing optimism for US M&A activity. This trend may accelerate further due to anticipated favorable policies under the Trump Administration, strong credit markets and elevated confidence in the C-suite.

• Oil and gas was one of the most active sectors in January, with 68 deals worth US$43.5b. With the stabilization of oil prices, there is a growing demand for upstream assets, particularly in the Permian Basin, signaling a recovering appetite for production expansion. The Permian Basin has become the hot spot for M&A in the shale oil industry, due to its impressive production profile and low-cost resources. There were several examples of this trend: a US$6.6b asset acquisition by Exxon Mobil; the friendly takeover of Clayton Williams by Noble Energy, worth US$3b; and Targa Resources’ purchase of Outrigger Energy's assets.

• The largest deal of the month saw US health care giant Johnson & Johnson (J&J) agree to buy Swiss biotech company Actelion, including spinning off Actelion's research and development pipeline. The acquisition gives J&J access to the Swiss group's lineup of high-price, high-margin medicines for rare diseases, helping it diversify its portfolio as its biggest product Remicade, which treats arthritis, faces cheaper competition.

• Another important deal was the merger between Italy's Luxottica and France’s Essilor, to create a global powerhouse in the eyewear industry with annual revenue of more than €15b. The deal, one of Europe's largest cross-border tie-ups, brings together Luxottica, the world's top frame maker, with brands such as Ray-Ban and Essilor, a leading manufacturer of ophthalmic lenses. By merging, the companies will be better positioned to take advantage of strong demand in a market expected to achieve continued growth due to an aging global population and increasing awareness about eye care in Asia and Latin America.

Environment and horizon• Global M&A is expected to remain strong in 2017. Increasing investor

demands for higher returns means strategic growth remains at the heart of companies’ corporate strategy as they look to focus on expansion to tap into new areas of growth – and M&A is often the quickest route to achieve this. Market conditions remain supportive of M&A, with an abundance of capital available at historically low borrowing rates.

• Cross-border deals are likely to be in ready supply in 2017. In the next year, we are expected to see heightened cross-border deals, to buy into pockets of growth and secure supply chains. With companies increasingly operating in a global environment with globalized supply chains, those need to be secured, and M&A is increasingly becoming an effective instrument to achieve that. In 2017, we should see increasing cross-border dealmaking, particularly between Asia and North America, as well as a continuing flow of outbound purchases from China into Europe and Asia.

• Regulatory policies may ease in 2017 compared with 2016, which saw a record amount of deals being pulled due to regulatory and antitrust concerns. In 2017, the regulation of dealmaking will be in the spotlight, particularly in the US, where the new Trump Administration may lead to a more favorable regulatory regime.

• Sector convergence is set to be a hot topic for the boardroom in the foreseeable future. Digital disruption has led to the blurring of sector lines and changing consumer behavior, thereby making it imperative for companies to look at new business models. Companies will look to future-proof their businesses through acquisitions outside their core sector to survive and thrive in this increasingly disruptive environment.

• Consequently, portfolio reorganization will be a key deal driver, making companies active both on the buy side and sell side. We can expect to see companies having another look at their portfolio to capitalize better on the disruptive trends impacting their business. Conducting strategic reviews will be the new norm to ensure resilient capital allocation, with a view to selling non-core assets and releasing capital to support their strategic priorities.

Deal environment: by area (YOY % change)

Last 12 months (LTM) to January 2017 versus LTM to January 2016Source: Dealogic and EY analysis.

Deal environment: by target sector and target area (% share of global value)

LTM to January 2017Source: Dealogic and EY analysis; excludes real estate asset transactions.

Note: because of rounding, percentages may not add up to total.

Top 10 announced deals by value, January 2017Source: Dealogic.

M&A analysis as at 1 February 2017.

Note: data is continually updated and therefore subject to change.

Figures have been rounded off to nearest decimal place.7

Executive summary• There was a strong start to global M&A in 2017 by value, though volume declined marginally.

• The value for US-targeted deals during the month was US$110b − up 26% year-on-year (Y0Y).

• Big-ticket deals in consumer products and retail, oil and gas, and life sciences grabbed headlines.

• The M&A outlook for 2017 remains positive as companies look to optimize portfolios.

• Future-proofing will be a key driver of M&A as companies look for disruptive trends within their core and innovation outside their sectors.

2. M&A

Target Sector Country Acquiror Value (US$m)

Actelion Ltd. Life sciences Switzerland Johnson & Johnson 31,373

Luxottica Group SpA Consumer products and retail

Italy Essilor International SA 25,546

Williams Partners LP (31.6527%)

Oil and gas US Williams Companies Inc 11,400

Zodiac Aerospace SA Aerospace and defense

France Safran SA 10,333

VCA Inc. Provider care US Mars Inc. 9,082

Permian Basin – oil and gas assets

Oil and gas US Exxon Mobil Corp. 6,600

WGL Holdings Inc. Power and utilities US AltaGas Ltd. 6,295

Ariad Pharmaceuticals Inc.

Life sciences US Takeda Pharmaceutical Co Ltd.

5,664

Bioverativ Inc. Life sciences US Existing Shareholders 5,167

Booker Group plc. Consumer products and retail

UK Tesco plc. 4,687

Value

Vo

lum

e

Americas

EMEA

Global

Asia-Pacific

Americas Asia-Pacific EMEA Total

Technology 8% 3% 4% 16%

Oil and gas 9% 1% 2% 13%

Diversified industrial products 5% 2% 5% 12%

Consumer products and retail 5% 2% 3% 10%

Life sciences 5% 1% 2% 8%

Power and utilities 3% 1% 2% 7%

Media and entertainment 4% 1% 1% 6%

Banking and capital markets 1% 1% 2% 5%

Automotive and transportation 1% 3% 1% 5%

Others 9% 6% 5% 19%

All sectors 51% 22% 27% 100%

Capital Briefing

2.i. M&A: cross-border deal flow

Key cross-border M&A deal flow(LTM to January 2017)(Total = US$1.35t)

N America to:W Europe – $173b

UK&I – $72bLatin America – $21b

Japan to:N America – $40b

UK&I - $35bW Europe – $12b

UK&I to:N America – $90bW Europe – $12bMiddle East – $3b

Africa – $3b

L America to:W Europe – $8bN America – $3b

Greater China andMongolia to:

W Europe – $84bN America – $59bL America – $17bW Europe to:

N America – $131bUK&I – $23b

L America - $13b

Cross-border M&A deal flow (LTM to January 2017)

(US$m)

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

1. Acquiror refers to acquiror’s ultimate holding company.

2. Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan.

M&A analysis as at 1 February 2017.

Source: Dealogic. All Rights Reserved.

Note: data is continually updated and therefore subject to change.

Key >US$100b >US$50b >US$10b

Intra-area cross-border deals

Target Acquiror1 Africa SE Asia (including Korea)

Greater China and Mongolia$

Russia, CIS and CSE

W Europe (excluding UK&I)

India Japan Latin America

Middle East

North America

Oceania UK&I Inboundtotal

% versus PTM

Africa 962 81 4,702 1,621 2,695 32 1,563 - 447 5,912 867 2,879 21,763 127%

SE Asia (including Korea)

1 7,188 7,692 13 2,662 36 3,018 24 1,174 5,118 261 1,192 28,381 -20%

Greater China andMongolia 2

2 5,115 24,858 - 3,643 - 553 - - 11,106 212 101 45,590 -11%

Russia, CIS and CSE 1,038 1,406 3,146 2,955 3,704 4,148 8,630 1,048 11,856 1,281 1,914 1,269 42,397 19%

W Europe (excluding UK&I)

47 2,717 84,497 6,460 90,640 1,331 11,916 7,962 1,981 172,834 1,084 12,495 393,964 43%

India 632 7,651 1,589 12,922 1,515 - 2,105 - 500 4,385 83 86 31,469 82%

Japan - 217 8,759 - 236 444 - - - 475 15 - 10,146 -58%

Latin America 40 28 16,914 700 13,360 20 69 5,724 1,194 20,667 1,683 319 60,717 28%

Middle East 43 44 14,381 436 7,509 6 4 - 3,843 2,463 125 2,887 31,741 195%

North America 6,937 15,062 59,441 177 131,378 1,930 40,478 3,269 6,221 128,285 5,522 89,684 488,383 11%

Oceania 675 1,976 14,436 1 2,702 50 1,559 - - 14,556 1,827 1,465 39,249 -13%

UK&I 3,486 767 12,708 70 22,711 1,030 35,040 - 2,646 72,053 474 1,241 152,227 -55%

Outbound total 13,865 42,252 253,125 25,356 282,755 9,028 104,934 18,027 29,864 439,134 14,067 113,620 1,346,027 1%

% versus previous 12 months (PTM)

-8% 91% 91% 253% -42% 85% 35% 22% -58% 20% 11% -6% 1%

8 Capital Briefing

3. IPOs

Executive summary

• Global IPO activity surged in January 2017, witnessing a significant YOY increase in terms of both deal volume and value.

• The Asia-Pacific region continued to dominate global IPO activity in terms of both deal volume and value.

• US exchanges accounted for 6 of the top 10 deals this month.

• IPO activity in Europe is expected to increase in the next few months, as the IPO pipeline looks healthy and investors are seeking investment opportunities. However, implications from Brexit, new US policies and elections in France, Germany and the Netherlands later in 2017 may affect the IPO markets across the region.

9

Current state• Global IPO activity got off to a lively start, with 103 deals raising

US$10.1b in January 2017 on the back of strong activity in Asia-Pacific and the US. This level of activity was significantly up on the slow start to last year (up 243% by volume and 1118% by value YOY) and compared positively with the average for January over the past five years (74% and 44% higher). This month witnessed the highest level of IPO activity in January since 2014.

• Asia-Pacific continued to dominate the global IPO activity, raising US$5.4b via 88 deals in January 2017, accounting for 85% and 54% of the global volume and value respectively. Compared with January 2016, the region registered a 300% and 679% increase in terms of deal volume and value respectively. The activity largely made up of listings from Greater China, which contributed 66% and 49% to the global deal volume and value respectively.

• EMEIA saw sluggish IPO activity, as investors continue to be selective as a result of the current economic and political outlook. While January is traditionally a slow month, the region saw only four deals raising US$128.8m in January 2017, which was down 43% in terms of deal volume and up 297% in terms of deal value as compared with January 2016.

• US exchanges made a bright start to 2017 with nine deals raising US$4.3b against no activity in January 2016, accounting for 43% of total global value. Financial-sponsored IPOs also made a comeback, accounting for eight of the nine deals this month. US exchanges accounted for five of the top six deals globally by proceeds this month, along with the only US$1b-plus deal –the listing of real estate investment trust Invitation Homes Inc., which raised US$1.5b. This was the largest US IPO since October 2015.

Environment and horizon• The prospects for global IPO activity look more positive in 2017 compared

with 2016 as many threats to the stability of the global economy ease and investors regain confidence. However, uncertainty is likely to persist in certain regions over the coming months, so we do not expect a significant improvement until at least the second half of the year.

• Asia-Pacific is expected to drive global IPO activity in 2017, much like 2016. IPO activity in mainland China is expected to accelerate in 2017 due to the faster pace of IPO approvals by the China Securities Regulatory Commission since November 2016. This should enable more companies that are currently in the long queue of the pipeline to gain access to the capital markets, as long as the market environment is supportive. Despite a solid pipeline, Hong Kong's IPO fund-raising capability, especially for mega IPOs, may come under pressure due to the relatively lower post-IPO performance of some high-profile listings in 2016. This may result in a slower start to Hong Kong's IPO market in the first half of the year.

• US IPO activity is expected to improve as we progress through 2017 on the back of a pipeline of more than 130 companies ready to list, as well as those that have filed their IPO registrations confidentially. However, US President Donald Trump’s Executive Order on minimizing the economic burden of the Patient Protection and Affordable Care Act (Obamacare) may affect a number of health care and life science companies considering an IPO, as investors may face greater uncertainty in valuing such companies in a rapidly changing regulatory environment.

• The European IPO outlook is optimistic, as the IPO pipeline looks healthy and investors are seeking investment opportunities with compelling and well-supported equity stories. The pipeline of cross-border IPO activity is also beginning to build, with a number of international companies looking at listing in London. However, as we move into 2017, implications from Brexit, new US policies and elections in France, Germany and the Netherlands may potentially affect equity stories and investor sentiment, and hence the IPO markets across Europe.

• IPO activity in the ASEAN (Association of Southeast Asian Nations) region should rise in 2017, as receding uncertainty, commodity price gains and faster economic growth is expected to attract investors in Singapore and Malaysia. However, elsewhere in Southeast Asia, significant fluctuation in the rupiah over the past year is expected to dampen the appetite for listings in Indonesia, while the political situation and a drop in the peso may affect investor sentiment for the Philippines. Higher benchmark interest rates under a new Government in the US could also tempt international investors to pull money out of riskier emerging markets.

Top 10 IPOs by proceeds, January 2017Source: Dealogic.

Issuer name Issuerlocation

Sector Exchange Proceeds(US$m)

Invitation Homes Inc. US Real estate New York 1,540

JELD-WEN Holding Inc. USDiversified industrial products

New York 661

China Galaxy Securities Co. Ltd.

ChinaBanking and capital markets

Shanghai 591

Keane Group Inc. US Oil and gas New York 585

Laureate Education Inc. USGovernment andpublic Sector

NASDAQ 490

Jagged Peak Energy Inc. US Oil and gas New York 474

Jilin Jiutai Rural Commercial Bank Corp. Ltd.


Hong Kong 446

Central China Securities Co. Ltd.


Shanghai 406

REV Group Inc. USAutomotive and transportation

New York 275

SMU SA ChileConsumer products and retail

Santiago 198

IPO activity by sector and area (% share of global proceeds)

LTM to January 2017Source: 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% 17% 2% 20%

Real estate 3% 8% 2% 13%

Technology 1% 5% 3% 10%

Life sciences 2% 5% 2% 9%

Consumer products and retail 2% 5% 2% 9%

Automotive and transportation 1% 7% 1% 8%

Diversified industrial products 1% 5% 2% 8%

Oil and gas 3% 1% 3% 6%

Power and utilities 0% 1% 4% 5%

Others 2% 6% 4% 12%

Total 16% 59% 25% 100%

IPO activity by area (YOY % change)

(LTM to January 2017 versus LTM to January 2016)Source: Dealogic; regional classification on the basis of issuer nationality.

-40%

-20%

0%

20%

-60% -50% -40% -30% -20% -10% 0%

Value

Vo

lum

eAmericas

EMEA

Global

Asia-Pacific

Capital Briefing

Current state• In January, US$95b of loans were issued in the US and €9.4b in Europe,

taking the YTD global issuance to US$105b, up 133% from same period in 2016. Europe recorded the second-highest monthly tally in nearly two years, and the biggest for an opening month in any year since 2007.

• The recent pickup in this activity is an extension of a bustling fourth quarter, bolstered by the sustained issuer-friendly market. M&A contributed about a quarter of January’s deals by both volume and count, but were overshadowed by the avalanche of repricings.

• Repricing activity continued the surge in January although it did not reach as high a level as seen during September and October. There has almost been three times as much repricing activity from September to January as M&A-driven activity.

• The Middle East’s loan market has had the quietest January in 21 yearswith little sign of picking up. Due to the execution of all the imminent refinancings in the recent past, only a few new money deals are expected as low oil prices do not trigger appetite for money.

• Globally, China’s property developers are tapping the offshore loan markets to help refinance billions of dollars of maturing debt this year. These financings are in contrast with the start of 2016, when property developers were rushing into the domestic Chinese market to lock in lower funding costs.

• Issuer-friendly conditions in the US loan market have prompted a rush of opportunistic transactions to start the new year. Even as borrowers crowded the market in anticipation of better terms, the results in January were often better than they might have expected.

• The tightening of yield continued in January from last year, helping borrowers to shave off considerably more from their cost of financing in January; the average clearing yield for single-B rated term loans dipped in the US to 5.18% from 5.34% in December, and tightened to 4.28% from 4.50% in Europe, explaining the repricing wave of the past five months.

Environment and horizon• Since May of 2016, a repricing wave in the European market has led to

documentation terms growing steadily weaker. Lack of information is making investors concerned, as it makes investment decisions more challenging and could exacerbate any downward turn in a business with no covenants to protect them.

• However, 2017 has got off to a busy start; refinancing and repricing deals are driving issuance, supported by a “bond to loan” trend as private equity firms take advantage of favourable covenant lite loan structures. Add-on acquisitions, secondary buyouts and bond to loan deals are also supporting supply as sponsors refinance high-yield bonds and junior loans with lower coupon, covenant lite senior loans.

Opportunities• Issuance of second lien debt and, potentially, subordinated mezzanine

debt is expected to increase in 2017 in Europe as borrowers look to refinance and recapitalize existing deal structures. Players are expecting the loan space, with its ample liquidity, to continue to be the market of choice for borrowers in early 2017.

• The trend of US borrowers looking to the European market for loan financing is not expected to end soon, especially with the anticipated rise in US rates.

4. Loans

Executive summary

Global investment-grade loans (US$b)Source: Thomson ONE.

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

Global loan issuance by industry, YTD 2017Source: Thomson ONE.

Proceeds Issues

Bank of America Merrill Lynch 96.4 32

Sumitomo Mitsui Finl Grp Inc 46.0 14

Mizuho Financial Group 43.1 12

Deutsche Bank 34.4 11

Barclays 30.8 9

All loans by region, YTD 2017 (US$b)Source: Thomson ONE

Market share Proceeds Issues

Americas 47.5% 392.5 72

EMEA 44.1% 365.1 17

Asia-Pacific 8.4% 69.5 46

10

• Europe recorded the second-highest monthly tally in nearly two years, and the biggest for an opening month in any year since 2007.

• Repricing activity continued the surge in January; there has almost been three times as much repricing activity from September to January as M&A-driven activity.

• China’s property developers are tapping the offshore loan markets to help refinance billions of dollars of maturing debt this year.

• The tightening of yield continued in January from last year, helping borrowers to shave off considerably more from their cost of financing.

• Issuance of second lien debt and potentially subordinated mezzanine debt is expected to increase in 2017.

0 100 200 300 400

Consumer staplesFinancials

TelecommunicationsEnergy and power

Real estateConsumer products and services

High technologyMedia and entertainment

Health careRetail

MaterialsIndustrials

Government and agencies

Proceeds (US$b)

0

200

400

600

0

200

400

600

800

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

Proceeds (LHS) Number of issues (RHS)

0

1,000

2,000

3,000

0

300

600

900

1,200

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

Proceeds (LHS) Number of issues (RHS)

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

*

*

*QTD data till 31 January 2017

*QTD data till 31 January 2017

Capital Briefing

Current state• Global high-yield activity rose sharply in January on a monthly basis.

High-yield issuance in the US was US$17.5b and €5.9b in Europe, taking the YTD total global issuance to US$23.4b, up 261% from the same period last year.

• The European high-yield market had a strong start this year, measured by volume, diversity and deals flying through syndication. January 2017 was far ahead of this time last year and, at one stage, even looked like it might have been the strongest start to a year in the market’s history. Compared with the typical slow-start opening, this year has proven to be far more varied, however, and this is most evident in the amount of sterling issuance, which almost touched the full-year total in 2016.

• US high-grade issuance shattered both records and expectations in January; refinancing-driven borrowers swarmed the market to lock in rates, banks built capital and borrowers maintained strong pricing leverage through cascading supply.

• The high-yield new issue market was dominated by sterling debut issuers such as Talk Talk, Amigo Loans, NewDay and B&M Retail, as well as dual currency double-B rated such as Telecom Italia, Jaguar Land Rover and Smurfit Kappa. NewDay was the only Leveraged Buyout related deal.

• This year’s early hurdles have been more political than economic and, other than the foreign exchange space, markets have largely taken Theresa May’s “hard Brexit” speech and Donald Trump’s inauguration in their stride compared with concerns over Chinese growth last year.

• High-yield issuance for M&A activity in January was US$5.3b, contributing 43% to the total in the US. In Europe, there was €494m of high-yield issuance, or a 9% contribution. Although these numbers are marginally higher than the same period last year, M&A contributions have decreased overall from the last few months due to the surge in repricings.

• Clearing yields for single-B rated bonds widened in the US to 5.34% in the three months to the end of January, from 5.18% at the end of December, and yields tightened to 3.62% from 4.11% in Europe.

Environment and horizon• Market sentiment felt as if there was a lot of pent-up demand in high

yield. People weren’t fully invested, there wasn’t the volatility they had expected, and then they had large inflows and coupon build-up that led to a strong start to the year.

• Technical factors are pushing issuers back to the loan market, which is why the use of all-senior financing has increased, thereby resulting in lower overall leverage multiples, while leverage through senior debt rose to 2007 levels.

Opportunities• Sterling issuances increased in January as the Brexit debate intensified,

as borrowers typically avoid times of potential volatility. However, the market is sensing uncertainty ahead and playing high on issuing sterling.

• Issuers are going to take advantage of Brexit new-issue premium;sterling deals tend to offer more yield than euros anyway and, in a year when borrowers are confident that low yielding double-Bs will be beneficial, the chance to buy paper with some yield is always going to be attractive.

• The European Central Bank might start to signal the gradual tapering of its bond purchase program in few months, a policy move that is keenly anticipated by investors.

0 10 20 30 40

High technology

Industrials

Energy and power

Telecommunications

Materials

Consumer staples

Real estate

Media and entertainment

Consumer products and services

Retail

Health care

Proceeds (US$b)

Executive summary

Euro bond issuancesSource: Thomson ONE.

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

Global bond issuance by industry, YTD 2017Source: Thomson ONE.

Issuer Nation Industry Proceeds

Microsoft Corp US High technology 17.0

Broadcom Corp US High technology 13.6

AT&T Inc US Telecommunications 10.0

Deutsche Telekom International

Netherlands Telecommunications 7.3

Petrobras Global Finance BV

Netherlands Energy and power 4.0

Park Aerospace Holdings Ltd

Republic of Ireland

Industrials 3.0

IBM Corp US High technology 2.8

Comcast Corp USMedia and entertainment

2.5

Telefonica Emisiones S.A.U Spain Telecommunications 2.0

Nissan Motor Co Ltd Japan Industrials 2.0

0

50

100

150

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0

50

100

150

200

250

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Aug16

Sep16

Oct16

Nov16

Dec16

Jan17

Proceeds (US$b) (LHS) Number of issues (RHS)

11

0

100

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500

0

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400

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Aug16

Sep16

Oct16

Nov16

Dec16

Jan17

Proceeds (US$b) (LHS) Number of issues (RHS)

5. Bonds

• Global high-yield activity rose sharply in January; both the US and Europe experienced tremendous volume increments.

• The start of this year has proven to be far more varied, most evident in the amount of sterling issuance.

• Technical factors are pushing issuers back to the loan market, which is why the use of all-senior financing has increased.

• Sterling issuances increased in January as the Brexit debate intensified, as borrowers typically avoid times of potential volatility.

Capital Briefing

US bond issuancesSource: Thomson ONE.

Appendices

Dry powder — buyout funds — by region

Global PE fundraising

Appendix AGlobal PE fundraising activity

Source: Preqin

0

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$0

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$700

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ytd

Commitments (US$b) Number of funds

0%

2%

4%

6%

8%

10%

12%

14%

16%

$0

$100

$200

$300

$400

$500

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan2017

North America Europe Asia and rest of world Asia-Pacific and ROW as percentage of total

Private Equity Capital Briefing13

Source: Preqin

Source: Dealogic

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

PE acquisitions by year (in US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic

0

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700

$0

$20

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$140

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

Value Number of deals

Private Equity Capital Briefing14

0

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017ytd


15

Americas PE acquisitions — the top deals with disclosed financial terms in 2016

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

0

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Source: Dealogic

Announcementdate

Completiondate

Company Sector Value (US$) Acquiror

12-Jan-17Oil & Gas Assets (Eagleford Shale Assets) Oil & Gas 2.3b Blackstone Group LP

17-Jan-17 Leslie's Poolmart Inc. Consumer Products 1.8b Catterton Management Co. LLC

3-Jan-17 23-Jan-17 LANDesk Software Inc.Computers & Electronics 1.2b ClearLake Capital Group LP

19-Jan-17Power Station (four natural gas and one hydro plant) Utility & Energy 925m LS Power Equity Advisors LLC

27-Jan-17 Harris Corp (IT services business)Computers & Electronics 690m Veritas Capital Management LLC

24-Jan-17Bob Evans Farms Inc. (Bob Evans Restaurants) Dining & Lodging 605m Golden Gate Capital Corp

9-Jan-17 9-Jan-17 Anvil International Consumer Products 315m One Equity Partners LLC

Source: Dealogic

Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Source: Dealogic

16


Announcement date Completion date Company Sector Value (US$) Acquiror

22-Jan-17 Cerba Healthcare SASU Health care 1.9b Partners Group Holding AG

30-Jan-17 Zenith Vehicle Contracts Ltd. Finance 940m Bridgepoint Advisers Ltd.

13-Jan-17 ConCardis GmbHComputers & Electronics 744m

Advent International Corp.;Bain Capital LLC

6-Jan-17

Power Station (365 MW operational solar PV power portfolio) Utility & Energy 581m EFG Hermes Private Equity

3-Feb-17 Resilux NV Chemicals 455m Bain Capital LLC

2-Feb-17 Golden Goose Srl Textile 432m Carlyle Group LP

3-Feb-17 Audiotonix Ltd.Consumer Products 254m Astorg Partners SA

30-Jan-17 30-Jan-17 Davies Group Ltd. (Majority %) Insurance 113m HGGC LLC

0

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300

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50



Source: Dealogic

EMEA PE acquisitions — the top deals with disclosed financial terms in 2016

Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

0

20

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140

$0

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$30


Value No. of deals


Announcement date

Completion date

Company SectorValue

(US$b)Acquiror

8-Jan-17McDonald's China Management Ltd. Dining & Lodging 2.1b

Carlyle Group LP;CITIC Capital Partners Ltd.

13-Jan-17 Hitachi Koki Co Ltd. Consumer Products 1.3b KKR & Co LP

1-Feb-17 Hyundai Card Co Ltd. (43%) Finance 584m

Affinity Equity Partners (HK) Ltd.;Carlyle Group LP

31-Jan-17 31-Jan-17 Allied Mills Pty Ltd. Food & Beverage 344mPacific Equity Partners Pty Ltd.

4-Jan-17 4-Jan-17MEDALL Healthcare PvtLtd. (80%) Health care 235m Abraaj Capital Ltd.

3-Feb-17 3-Feb-17Shanghai Siyanli Industry Co. Ltd. (Majority %) Health care 224m

Standard Chartered Private Equity Ltd.

18-Jan-17 18-Jan-17 PVR Ltd. (14%) Leisure & Recreation 121m Warburg Pincus LLC

Source: Dealogic

Asia-Pac PE acquisitions — the top deals with disclosed financial terms in 2016

Source: Dealogic

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

Appendix AGlobal PE exit activity

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

0

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Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top exits 2016

Americas PE exits (in US$b)

Announcementor filing date

Completion or priced

date

Company Sector Value (US$b) Sponsor Type

6-Jan-17 31-Jan-17 Invitation Homes Inc. Real Estate/Property $6.3 Blackstone Group LP IPO

9-Jan-17Surgical Care Affiliates Inc. Health care $3.4 TPG Capital LP M&A

2-Oct-15 31-Jan-17 Laureate Education Inc. Professional Services $2.9

Sterling Partners Inc.;Citigroup Private Equity;KKR & Co. LP;Snow Phipps Group LLC IPO

1-Jun-16 26-Jan-17 JELD-WEN Holding Inc. Construction/Building $2.4 Onex Corp. IPO

24-Jan-17Multi Packaging Solutions International Ltd. Forestry & Paper $2.3

Carlyle Group LP;Madison Dearborn Partners LLC M&A

14-Dec-16 19-Jan-17 Keane Group Inc. Oil & Gas $2.0 Cerberus Capital Management LP IPO

17-Jan-17 Leslie's Poolmart Inc. Consumer Products $1.8Leonard Green & Partners LP;CVC Capital Partners Ltd. M&A

26-Jan-17MoneyGram International Inc. Finance $1.5

Thomas H Lee Partners LP;Goldman Sachs Capital Partners M&A

24-Oct-16 26-Jan-17 REV Group Inc. Auto/Truck $1.4 AIP LLC IPO

25-Jan-17 CoverMyMeds LLCComputers & Electronics $1.4 Francisco Partners Management LP M&A

0

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M&A value IPO value M&A volume IPO volume

19

Source: Dealogic


Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top exits 2016

EMEA PE exits (in US$b)

Announcementor filing date

Completion orpriced date

Company Sector Value (US$) Sponsor Type

7-Feb-17 Mauser Group NV Chemicals $2.3b Clayton Dubilier & Rice LLC M&A

22-Jan-17Cerba Healthcare SASU Health care $1.9b PAI Partners SAS M&A

30-Jan-17Zenith Vehicle Contracts Ltd. Finance $940m HgCapital LLP M&A

23-Jan-17Nordic Cinema Group AB

Leisure & Recreation $931m Bridgepoint Advisers Ltd M&A

7-Feb-17 Momondo Group Ltd.Computers & Electronics $550m Great Hill Partners LP M&A

2-Feb-17 Golden Goose Srl Textile $431m Ergon Capital Partners SA M&A

5-Jan-17 5-Jan-17 Micheldever Group Ltd. Auto/Truck $265mGraphite Capital Management LLP M&A

3-Feb-17 Audiotonix Ltd. Consumer Products $253m Epiris Managers LLP M&A

1-Feb-17Shopping Centres (4 shopping centres)

Real Estate/Property $179m Blackstone Group LP M&A

7-Jan-17Generis FarmacêuticaSA Health care $142m

Magnum Capital Industrial Partners M&A

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20

Source: Dealogic


Capital Briefing21

Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Announcement or filing date

Completion orpriced date

Company Sector Value (US$) Sponsor Type

5-Jan-17China Modern Dairy Holdings Ltd. (74.9%) Agribusiness $1.9b

CDH China Holdings Management Co. Ltd.;KKR & Co. LP M&A

6-Feb-17 6-Feb-17 YongLe Tape Co. Ltd. Chemicals $245m Shaw Kwei & Partners Ltd. M&A

4-Jan-17 4-Jan-17MEDALL Healthcare PvtLtd. (80%) Health care $235m Peepul Capital LLC M&A

8-Feb-17

Abacus Property Group (World Trade Centre complex in Melbourne);KKR & Co. LP

Real Estate/Property $204m KKR & Co LP M&A

18-Jan-17 18-Jan-17 PVR Ltd. (14%)Leisure & Recreation $121m

Multiples Alternate AssetManagement Pvt Ltd. M&A

Asia-Pacific PE exits — top exits 2016

Asia-Pacific PE exits (in US$b)

0

5

10

15

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45

$0.0

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$10.0

$15.0

$20.0

$25.0

$30.0

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$40.0

$45.0



Source: Dealogic


Appendix BM&A activity monthly flash

Volume Value Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2017(to January

17)

vs. 2016(to January

16)

2017(to January

17)

vs. 2016(to January

16)

LTM (to January

17)

vs. PTM(to January

16)

LTM (to January

17)

vs. PTM(to January

16)

M&A activity by areas and regions

Global 2,410 -25% 262,303 44% 35,113 -8% 3,570,462 -14%

Americas 942 -24% 156,190 45% 12,930 -12% 2,113,137 -14%

Canada 124 -38% 9,762 -53% 2,515 2% 223,272 9%

MeCAR 13 0% 753 83% 218 -17% 21,700 -6%

SA region 67 -13% 6,813 22% 826 -25% 85,002 30%

US 804 -21% 146,919 54% 10,332 -14% 1,933,996 -15%

EMEA 918 -27% 103,211 235% 12,745 -5% 1,256,119 -2%

Africa 35 -41% 1,875 -12% 570 -12% 46,903 55%

BeNe 60 -29% 1,882 407% 836 -11% 95,547 -69%

CIS 38 -45% 590 -59% 878 -10% 66,128 47%

CSE 34 -69% 1,929 -38% 896 -19% 51,837 21%

FraLux 177 -38% 42,444 1607% 2,312 -1% 172,651 -5%

GSA 203 3% 34,399 476% 2,193 -7% 351,410 121%

Israel 24 -14% 344 -74% 235 -10% 22,807 -59%

Mediterranean 113 6% 29,155 696% 1,352 -12% 144,855 -19%

MENA 19 -39% 2,749 480% 291 -16% 62,950 67%

Nordics 132 -3% 3,350 1% 1,378 3% 71,739 12%

UK&I 234 -29% 14,333 66% 3,604 4% 332,457 -36%

Asia-Pacific 862 -20% 63,335 -13% 13,460 -5% 1,113,718 -4%

ASEAN 135 -1% 3,551 -9% 1,842 6% 85,740 47%

Greater China 378 -19% 43,623 -14% 5,488 -4% 667,631 -8%

India 115 6% 2,091 26% 1,139 -16% 69,644 32%

Japan 201 -9% 9,264 -3% 3,032 -4% 180,426 4%

Korea 17 -85% 881 -89% 1,137 -14% 56,307 -45%

Oceania 60 -38% 4,680 148% 1,644 -4% 110,355 15%

M&A activity by sectors

Aerospace and defense 22 -24% 11,417 2184% 346 -13% 41,644 23%

Automotive and transportation 174 -19% 7,865 -82% 2,399 -8% 220,372 -29%

Banking and capital markets 142 -32% 11,171 -51% 2,212 -15% 279,718 -33%

Consumer products and retail 368 -26% 60,039 184% 5,198 -10% 440,233 -34%

Diversified industrial products 304 -23% 42,090 108% 4,723 -7% 562,810 34%

Government and public sector 43 -25% 603 -80% 592 -19% 17,597 -49%

Insurance 68 -24% 4,597 -7% 999 -13% 138,628 -55%

Life sciences 187 -21% 54,284 256% 2,346 -8% 420,491 -5%

Media and entertainment 146 -35% 4,668 -67% 2,301 -12% 239,310 -22%

Mining and metals 107 -24% 7,527 24% 2,099 1% 119,315 -14%

Oil and gas 96 -14% 44,963 421% 1,402 -1% 459,794 48%

Other sectors 322 -16% 9,103 -64% 3,895 -13% 119,212 -16%

Power and utilities 116 -9% 16,938 84% 1,408 -5% 260,753 42%

Provider care 85 -13% 15,151 324% 1,095 -8% 74,915 23%

Real estate 214 -26% 10,400 -12% 3,305 -5% 245,930 12%

Technology 665 -26% 28,882 -25% 9,228 -7% 624,950 -19%

Telecommunications 45 -22% 1,484 -65% 697 -18% 270,150 51%

Wealth and asset management 48 -45% 2,824 24% 967 -6% 52,173 -23%

22

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

Capital Briefing

2016 2017

J F M A M J J A S O N D J F M A M J J A S O N D

2015 2016 2017

J F M A M J J A S O N D J F M A M J J A S O N D J

Appendix CM&A multiples and bid premium

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

23

Median deal multiple — EV / EBITDA

Global Americas Asia-Pacific EMEA

LTM(to Jan 17)

PTM(to Jan 16)

LTM(to Jan 17)

PTM(to Jan 16)

LTM(to Jan 17)

PTM(to Jan 16)

LTM(to Jan 17)

PTM(to Jan 16)

Aerospace and defense 11.7x 12.5x 10.1x 9.1x 13.9x 11.5x 15.5x 13.7x

Automotive and transportation 9.7x 10.0x 8.7x 10.3x 11.8x 10.0x 9.1x 9.2x

Consumer products and retail 10.8x 11.0x 11.1x 11.0x 11.7x 12.0x 10.1x 10.2x

Diversified industrial products 9.8x 10.1x 9.9x 11.0x 11.1x 10.7x 8.8x 9.1x

Financial services 10.4x 10.4x 12.2x 11.8x 8.9x 8.0x 8.7x 10.5x

Government and public sector 8.6x 15.6x 7.8x 15.6x 8.2x 11.2x 9.5x 15.9x

Health care 10.9x 11.8x 11.9x 10.3x 15.7x 16.3x 8.9x 11.1x

Life sciences 13.3x 10.9x 8.7x 9.8x 23.7x 8.6x 13.3x 11.9x

Media and entertainment 12.2x 12.4x 11.3x 12.7x 18.4x 12.7x 10.2x 11.8x

Mining and metals 10.2x 11.7x 8.8x 10.7x 12.8x 14.2x 9.2x 10.7x

Oil and gas 9.2x 8.4x 8.3x 8.3x 8.7x 8.8x 9.7x 8.1x

Other sectors 8.5x 7.9x 10.1x 6.2x 10.5x 15.4x 5.6x 8.7x

Power and utilities 9.2x 9.5x 11.3x 10.4x 10.5x 10.8x 8.3x 7.9x

Real estate 9.7x 9.3x 11.1x 9.1x 9.6x 9.3x 9.6x 10.0x

Technology 11.3x 11.2x 12.2x 13.2x 11.8x 10.5x 10.1x 10.4x

Telecommunications 8.3x 7.4x 9.9x 6.4x 8.0x 10.3x 7.2x 7.0x

Total 10.3x 10.5x 10.7x 10.7x 11.2x 10.9x 9.3x 10.0x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEA

LTM(to Jan 17)

PTM(to Jan 16)

LTM(to Jan 17)

PTM(to Jan 16)

LTM(to Jan 17)

PTM(to Jan 16)

LTM(to Jan 17)

PTM(to Jan 16)

Aerospace and defense 31% 29% 48% 14% 22% 32% 29% -

Automotive and transportation

22% 12% 37% 18% 19% 11% 8% 11%

Consumer products and retail 18% 21% 27% 32% 15% 17% 17% 16%

Diversified industrial products 23% 18% 33% 24% 20% 17% 22% 26%

Financial services 22% 20% 30% 27% 15% 11% 15% 14%

Government and public sector 35% 22% 44% 23% 10% 21% 40% 16%

Health care 13% 18% 13% 30% 10% 10% 12% 24%

Life sciences 27% 18% 25% 32% 35% 16% - 2%

Media and entertainment 32% 23% 42% 37% 26% 19% 11% 16%

Mining and metals 22% 19% 26% 29% 21% 12% 23% 17%

Oil and gas 25% 23% 29% 28% 22% 18% 18% 32%

Other sectors 19% 24% 23% 27% 20% 20% 18% 22%

Power and utilities 27% 21% 31% 26% 22% 22% 28% 21%

Real estate 25% 13% 27% 15% 25% 14% 18%% 3%

Technology 24% 24% 38% 29% 18% 18% 15% 25%

Telecommunications 21% 15% 43% 26% 7% 15% 15% 12%

Total 23% 20% 31% 27% 18% 17% 17% 17%

Capital Briefing

Appendix DCapital Confidence Barometer (October 2016): by area

Respondents who expect their company to pursue acquisitions in the next 12 months.

40%

56%59%

50%

57%

0%

25%

50%

75%

100%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

34%

57%

67%

54%

62%

0%

25%

50%

75%

100%


30%

50% 48%44%

47%

0%

25%

50%

75%

100%


Global Americas EMEA

57%

45% 44%

38%

47%

0%

25%

50%

75%

100%


Asia-Pacific China Germany

28%

51%56%

50%

61%

0%

25%

50%

75%

100%


Japan UK US

16%

58%

52%

59%

48%

0%

25%

50%

75%

100%


33%

61%

74%

57%

75%

0%

25%

50%

75%

100%


24

56%

43%40%

43%

49%

0%

25%

50%

75%

100%


68%

51%

43%

35%

61%

0%

25%

50%

75%

100%



Notes


Notes


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.

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Private Equity

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EY Knowledge


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EY Knowledge

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Documents

PE Capital Briefing February 2017 FINAL