Private Equity Apax Partners 2008 Annual Report

www.apax.com

ApaxPartners

AnnualR

eport2008

Designed and produced by RadleyYeldarPhotography by Matt Mawson (Mosaic: Benedict Johnson – Emmaus: HenryThomas)Printed by CTD (FSC and ISO 14001 certified)

Printed on Challenger Laser Matt comprising of fibres sourced from well-managedsustainable forest reserves and bleached without the use of chlorine.The production mill for this paper operates to EMAS, ISO 14001 environmentaland ISO 9001 quality standards.

Apax Partners Annual Report 2008

What’s in thisAnnual Report?Table of contents

2 Performance highlights

4 Apax Fundslive portfolio summary

110 Chief Executive’s letter

fromMartin Halusa

14 Investment strategy

19 Our global reach

20 China – opportunities and challenges

226 Operational structure

28 Governance and compliance

32 Our values

34 The wider community

342 Sector review

Tech &Telecom

52 Sector reviewRetail & Consumer

62 Sector reviewMedia

70 Sector reviewHealthcare

80 Sector reviewFinancial & Business Services

490 Investors

98 Current portfolio

100 Apax Partners international offices

Front cover:ShanghaiWorldTrade Centre, ApaxPartners’ new China headquarters

Section 1:Overview

Section 2:Governance

Section 3:Our sector expertise

Section 4:Our investors

12739_R&A08_Cover:Layout 1 24/6/09 11:38 Page 1

www.apax.com

ApaxPartners

AnnualR

eport2008








fromMartin Halusa





32 Our values


342 Sector review

Tech &Telecom





490 Investors




Section 1:Overview





The development ofApax Partners

The history of Apax Partners is interwoven with the development of the privateequity asset class on both sides of the Atlantic.Throughout its 30 year history,the firm has successfully raised and advised Funds which invested across allinvestment stages, and through several complete economic cycles.

The firm’s focus on buyouts is rooted in a culture that has always beenoutward looking, pioneering and committed to growing businesses.The deepunderstanding of the five sectors in which its Funds invest has been at the coreof Apax Partners’ strategy, giving it early access to investment opportunities andan ability to add value quickly to portfolio companies.

At 31.12.2008

At 31.12.2008

At 31.12.2008

€26.6bn£25.7bn

US$36.9bn

Total funds raised

1999:The firm raises its first pan-European fund, having integratedthe management companiesof its European and Israeli offices.

€1.8bn

2002: European and US operatingcompanies merge to becomeApax Partners LLP

2001:Apax EuropeV raisedThe largest European privateequity fund at the time.

€4.4bn

2007:Apax EuropeVII raisedThe largest European privateequity fund.

€11.2bn

2004: SuccessionMartin Halusa elected CEO tosucceed founder Sir Ronald Cohen

2006 IndiaMumbai officeopens

2008 ChinaShanghaiofficeopens

1994 IsraelTel Aviv officeopens

2005 ChinaHong Kong officeopens

2004 SwedenStockholmoffice opens

2000 ItalyMilan office opens

1976 Sir Ronald Cohen’sMultinational ManagementGroup and Alan PatricofAssociates join forces.

19801976

Private equity firm

built around indust

ry sectors

1980: Excelsior Fund The US firmraises its first fund

US$25.53m

1981:ApaxVenture Capital FundThe UK firm raises its first fund

£10.15m1990 GermanyMunich officeopens

1989 SpainMadrid officeopens


1Apax Partners Annual Report 2008

About us Apax Partners is an independent global partnershipfocused solely on private equity. Funds advised by ApaxPartners typically invest in large companies with a valuebetween €1bn and €5bn.The Funds invest in five sectors:Tech &Telecom, Retail & Consumer, Media, Healthcare,Financial & Business Services.Apax Funds provide the capital and expertise that help

excellent management teams release the full potential oftheir businesses. Companies backed by Apax Funds havea strong track record of growing by investing in researchand development, exports and sales and by growingemployment.

Our missionOur mission is to release the untapped potentialof companies, management teams and portfolio companyemployees in order to generate superior returns forthe millions of individuals whose pension funds andinvestment plans commit to our Funds.

Find out how we got hereApax Partners timeline under the flap

12739_R&A08_Sec1_p1-21.qxd:Layout 1 24/6/09 16:00 Page 1


Acquisitions MonthlyWinner Exit of the yearMölnlycke

Dow Jones/Private EquityNewsAwardsWinner Europeanfundraising of the yearWinner Europeanlarge buyout of the yearWinner European exitof the year Intelsat

FinancialTimes-MergermarketEuropean M&AAwards 2008Winner Private Equity Firmof theYear

EuropeanVenture CapitalJournalAwards 2008Winner Fundraising of theYear

Financial News/Private EquityNewsAwards for Excellence inPrivate EquityWinner European Private EquityPersonality of theYear –Martin Halusa


New investments in 2008

Deal name Location

D+S europe Germany

Emap UK

TriZetto US

Weather Italy

Key realisations in 2008

Deal name Location

Audible US

Bezeq Israel

Intelsat US

Princeton Softech US

Total amount invested in 2008 (€)

1.84bnAverage portfolio profit growth 2008

11%Average portfolio profit growth, last ten years

16%Total amount realised in 2008 (€)

1.07bn

Award winning private equity

Net debt/EBITDA multiple

5.1x

Total portfolio enterprise value (€)

68bnEquity : Debt ratio in theApax Funds live portfolio

31:69

Total portfolio staff 2008

>270,000

Investor breakdown by type In

Public pension funds 31.77%

Private pension funds 14.16%

Funds of funds 11.14%

High net worth individuals 10.28%

Insurance 9.76%

Banks 7.05%

Endowments 6.14%

Sovereign funds 5.18%

Gatekeepers 4.52%

Investor breakdownby type

40%

30%

20%

10%

0% 15 year 10 year

28.1

%

23.4

%

Net

IRR

–A

pax

Euro

peFu

nds1

Net

IRR

top

deci

lebe

nchm

ark

2

5.7%

MSC

IEur

ope

Net

IRR

–A

pax

Euro

peFu

nds1

Net

IRR

top

deci

lebe

nchm

ark

2

MSC

IEur

ope

30.1

%

18.3

%

0.1%

Apax Partners funds returns to Investors

1 At 31 December 2008. 2 Benchmark is the top decile buyout cumulative vintage year annual IRR as of March 2009 (latest available for 2009) for AEVI and all privateequity IRR for other funds.10 year and 15 year benchmarks are the cumulative composite vintage year IRRs over each period.Source:Thomson Financial. MSCI data as of 31 December 2008.

46%of which is top line growth;

54%of which is operational improvement.


*

*

*

*

*

*

Apax Funds live portfolio summary

†

*

*

Sale agreed July 2008, completed March 2009

Tech &Telecom Retail & Consumer Media

*Walker: UK compliant †BVK: Germany compliant

Healthcare Financial & Business Services


Apax Funds live portfolio value by sectorat 31 December 2008

Retail & Consumer

Tech & Telecom

Healthcare

Media

Financial & Business Services

29.73%

27.25%

17.17%

13.54%

12.31%

Portfolio equity value


Section 1Overview

10 Chief Executive’s letterfrom Martin Halusa


19 Our global reach

20 China – opportunities and challenges176


Our investment strategy is clearly focused on identifyingopportunities where our in-house resources and expertise canadd value.Our sole focus is, and always has been, excellence inprivate equity investing.We do not do anything else.Within private equity, we focus on five industry sectors, which

together account for around 50% of the economy. Our Funds haveinvested in the same five sectors for over 25 years and our teamis made up of industry experts who are dedicated to generatingunique investment opportunities within these sectors.We believe this strategy was right at the top of the market and

is the right one to employ in this unusual and difficult market.

Strategy




On the other hand, this industry will face considerable challenges over thenext few years.The market for raising new capital will be more difficult becausethe pension funds and other institutional investors that are the main backers ofthe asset class will themselves have less liquidity and may well cut back on thenumber of firms in which they choose to invest. Ultimately, this could lead to aconsiderable amount of consolidation.The availability of debt financing is expectedto continue to be limited, which puts more emphasis on private equity firmsbeing able to deliver operational value-add.This, in return, presents a personnelchallenge as the skill sets needed in private equity shift from financing tooperational expertise.

What are we doing? The number one priority for Apax Partners at themoment is ensuring that our Funds’ existing portfolio companies are in a robustposition to weather the stormy economic climate.While our Funds’ portfoliooverall is in good shape, the severity and speed of the current downturn isunprecedented and is impacting certain sectors and companies more severelythan others.We are mobilising internal and external resources to help and supportportfolio companies that are feeling the effects of the current downturn.

However, while we cannot account for all future scenarios, we believe thatwe will be able to contain the impact on our Funds’ portfolio overall. At present,the average debt level across our Funds’ portfolio is relatively modest at 5x annualprofits, and the first significant re-financing is not due until 2012. Despite theeconomic slowdown last year, the 36 major companies in our Funds’ portfolioachieved increased profits (EBITDA) of 11% and, of these companies, 30 wereon or above our original investment plan for 2008.The ability to grow thecompanies in which our Funds invest and to release their full potential is moreimportant at this time than it has ever been.

Over the past 18 months, in anticipation of this downturn, we haverecruited several senior industrialists to our Portfolio Support Group, which nownumbers ten professionals.This team supports the investment staff, providing awealth of operational and finance expertise. Additionally, the senior Partner grouphas an average of 13 years’ private equity experience and has been throughchallenging recessions before. Around 80% of the investment team has abackground in industry and consultancy, rather than investment banking andtransaction management.

It is this team strength and experience that will help our portfolio, as wellas Apax Partners, emerge out of the current difficulties in a robust position.

The governance structure with private equity firms in general and withApax Partners in particular has never been more crucial, for example, our Fundsremain unleveraged, we remain focused on one core business and are rewardedonly on a long-term basis.We have a governance model that has, to a large degree,insulated us from many of the problems that financial services companies arefacing today, which have been caused by inadequate checks and balances, by ashort-termist culture of uncontrolled and excessive risk taking, by misalignmentsof interest, and by expansion into new business areas where risks were improperlyunderstood and governance structures poorly defined.

10

Chief Executive’s letter

Why are we reporting?Welcome to the second Apax Partners AnnualReport.The aim of the Report is to provide greater transparency on Apax Partnersand the portfolio companies in which its Funds invest.We recognise that, asthe industry expands and matures, it has an obligation to increase the qualityof its transparency and disclosure. Apax Partners has been at the forefront ofdiscussions about how to achieve this on an industry-wide basis and is fullycommitted to conforming to theWalker Guidelines in the UK and the transparencyguidelines of the BVK in Germany, as well as the Private Equity Council guidelineson responsible investment.

How does the current economic turmoil impactApax Partners? Given thedramatic events in the financial services industry and the global economy during2008, I would like to start by stating clearly that we believe the private equityownership model is robust and relevant in these turbulent and worrying times.

In the last decade, private equity has become an established and viablealternative to public market and family ownership, and we believe that this shift ishere to stay. It is our view that companies will continue to alternate betweenpublic and private ownership in accordance with their funding needs and theability of the public markets to value them correctly, fund their growth and dealwith significant changes in strategy, which may impact short-term performance.

The private equity model is characterised by a strong alignment of interestsbetween the shareholders, management and employees and by a long-terminvestment horizon, which in our case stretches to an average of five years.

This governance model will always be an attractive solution for those publiccompanies which have multitudes of short-term shareholders with conflictingmotivations.The quarterly reporting schedule and the distraction of a fluctuatingshare price, which is so often unrelated to company fundamentals, represents aconstant distraction for management. It is an equally applicable model for thosefamily owned companies which are struggling with succession issues and alack of clear management incentive and for whom a public listing is not aviable alternative.

In our view the private equity model is well suited to help companiesthrough this difficult period.The ability to act quickly and decisively with an eye tothe long-term health of company fundamentals, rather than short-term concernsabout the share price, is critical. This is a view shared by theWorld EconomicForum, whose findings in a recent report show that private equity is best suitedto make the difficult decisions to manage companies effectively in a downturn.

So far, private equity is proving to be one of the most stable elements ofthe financial services industry.

In terms of results, when we look back at this crisis, we believe thatthe leading firms will have outperformed the top players in other asset classes.There is now significant evidence that the best firms in the industry are able tosustain their performance by continuing to help management teams, and we thinkthat the current downturn will further emphasise this trend.

16%average annual growth rate over the past 10 years.Source: Apax Partners

11%average growth rate 2008

>270,000employees in portfolio companiesSource: Apax Partners

Martin Halusa, CEOApax Partners


Growth in the Global Private Equity market

Buyout value (US$bn)

700

700

600

500

400

300

200

100

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

3,000

2,500

2,000

1,500

1,000

500

0

Number of buyouts

Source: Dealogic

G


Chief Executive’s lettercontinued

In contrast to the compensation schemes that have been widely criticisedat banks and other financial services companies, we are only rewarded if ourFunds’ investments are successful. Our reward scheme is aligned with theinvestors in our Funds; we do not participate in the capital gains of the Funds untilthe pension funds, endowments and insurance companies that are our mainbackers have been paid back in full and have received the agreed return on theircapital. Our horizons are also long-term, the Funds that we advise typically havea life-span of ten years or more.

We have a relatively simple model.We are a ‘pure play’ private equity firm,whose Funds make investments in large companies operating in five industrysectors.We provide the backing for companies that operate in the ‘real’ economyacross the world: companies that provide mobile phone infrastructure in Greeceand Pakistan, milk and dairy products in Israel and Romania and operate hospitalsin India.

We stuck to this strategy when there was ample opportunity to expandour business, and fully intend to stick to it in this more challenging environment.We remain a focused investment manager rather than an ‘asset gatherer’ and webelieve that the governance structures that we have put in place to manage ourbusiness globally are amongst the best in class (see pages 28–31 for more detail).

What next?We have been expecting a downturn in the credit market and aslowdown in the economy for the last three years and have invested accordingly.Clearly it has been deeper than we predicted and, at the time of writing, weexpect it to get worse before it gets better.

We clearly saw valuations become over-inflated in the years leading upto August 2007, and we invested accordingly; now we think that confidence isdropping to the extent where we will see a period of significant over-compensation.Looking at valuations with an historic perspective, we are seeing good companieswith strong fundamentals being mis-priced by the public markets.

In this environment, where banks have scaled back their lending, thepercentage of our own equity that our Funds use to back companies will increase.Indeed, many investments will be equity only.We will see more situations whereour Funds invest alongside established corporate players, such as our partnershipwith the Guardian Media Group in Emap andTrader Media or investments likeWeather, where our Funds took a minority stake in a larger growth companyto enable it to fully benefit from the recovery.What hasn’t changed is ourcommitment to helping companies release their full potential in terms of growth,profitability and long-term sustainability.

In its 30 year history, Apax Partners has never been focused on distressedsituations and ‘turnarounds’ or trying to take advantage of cyclical fluctuations inthe market. From our earliest days, when our Funds invested in small high growthbusinesses, we have always sought to back excellent management teams incompanies with growth potential. Our Funds continue to back the same excellentcompanies and provide the industrial expertise that will enable them to prosper inthese difficult times.

Key events forApax As part of a long-term plan to expand our presencein Asia, last year we opened an office in Shanghai, our first in mainland China.We were also pleased to welcome Richard Zhang to the Firm to lead our pushinto Greater China. Coinciding with Richard’s arrival, several of our senior Europeanand US based partners have relocated to the China office. Richard’s account ofthe challenges and opportunities that present themselves as we continue ourexpansion follows on page 21 of this Report. It remains our long-term ambitionto have equivalent sized teams in Europe, the US and Asia.

In terms of investments, 2008 was very much a year of two halves. In thefirst half of the year, our funds were active investors, backing four companies:Emap, D+S europe,TriZetto andWeather Investments. In the second half we didnot make any new investments due to the extraordinary economic turbulence.

In terms of divestments, the highlights were the sale of satellite operatorIntelsat at the very start of the year and the agreed sale of grocery chainSomerfield to the Co-Operative Group in July. Both illustrate how we are able tohelp companies release their full potential. The case of Somerfield is a goodexample of how a period of private equity ownership can breathe new life into apublic business that is lacking strategic direction. Intelsat was a very successfulconsolidation play in an industry sector where our team had a very deep priorunderstanding.

The skill sets, governance model and alignment of interests in privateequity will continue to create out-performance relative to the public markets.However, in the short term, the industry will have to deal with a challengingfundraising environment and portfolio companies which are suffering in thecurrent recession. Fortunately, Apax Partners is well positioned on both counts.The companies in which our Funds invest continue to perform well in a toughmarket.We also have a large team of industry specialists and the capitalnecessary to support the few companies in our portfolio which are strugglingas a result of the recession.

Although there will inevitably be consolidation in the industry, in thelong term those firms that can create value through these difficult times will enjoya very attractive future.

Martin Halusa Chief Executive


As well as ensuring that the financial structure is appropriate, Apax Partnershas recently embedded non-financial principles for responsible investment intoits investment process (see page 32–33).

In the case of virtually every investment, at least one Apax Partnersexecutive will join the board of a portfolio company in a non-executive capacityto bring broad experience to bear and to give the company access to theinternational resources that Apax Partners can provide.This can assist ApaxFunds portfolio companies with matters as diverse as acquisition opportunities,IPO planning, key management hires, understanding competitive threats andopportunities, international expansion and benchmarking Key PerformanceIndicators against best practice. Apax Partners believes that having its ownexecutives perform this role is key to driving value creation.The Apax Partnersrepresentative will also monitor non-financial aspects of portfolio companies suchas corporate governance, corporate social responsibility and compliance withthe Apax Partners values.

1514 Apax Partners Annual Report 2008

Investment strategyOverview

Apax Funds have a proven strategy ofsector focused investing, looking foropportunities where capital, experienceand insight can release the potentialof businesses and lead to significantgrowth.The firm has successfullypursued this strategy since 1990.Our sector focus, combined with anestablished network of local officesand a global platform, represents thefoundation ofApax Partners’ strategy.

Sector focus Apax Funds invest across five global growth sectors:Tech &Telecom, Retail & Consumer, Media, Healthcare, Financial & Business Services.Funds advised by Apax Partners have invested successfully in these sectors over thelast 25 years, giving us genuine insight into the businesses in which our Funds invest.The team at Apax Partners is geared toward this strategy of sector-focused investing,with 80% of investment professionals having prior relevant sector expertise.

Local presenceOur offices have been established for an average of 13 years eachand are primarily staffed by local nationals. Close relationships with decision makers inthe countries in which we operate helps us to unearth new investment opportunitiesand understand the market in which portfolio companies operate.

Global reach Apax Partners has an established global presence, with tenoffices in nine countries across three continents. Our global platform enables us togrow businesses by spotting emerging trends early, supporting the growth of globalcompanies and using the world’s stock markets most effectively. As the privateequity market matures, we believe that some of the best-performing firms will bethose with genuine global reach and financial scale.

Investment focus The five sectors in which Apax Funds invest follow differentbusiness cycles, which can also vary by country. Apax Funds do not pre-allocatecapital to sectors or countries but invest according to the prospects for each sector andeconomy as well as the detailed strategies developed by each Apax Partners sectorteam. Investments are structured around the growth needs of the specific business.

Apax Partners believes that investments in companies which are typicallyvalued between €1bn and €5bn are best suited to its experience and expertise.In our view, these larger businesses offer more established and resilient businessmodels, more opportunities to create value, greater attraction for excellentmanagement teams, and more diverse exit options than smaller businesses and yetstill maintain the growth characteristics that are more difficult to realise in the verylargest businesses.These are also businesses that often benefit from Apax Partners’extensive global platform and presence in multiple markets and its ability to deploy alarge amount of experienced resources in complex international transactions.

Responsible Investment Apax Partners is focused on advising the Apax Fundson managing the portfolio risks as well as the risks of the individual companies inwhich the Funds invest. Apax Funds take a responsible attitude toward the capitalstructures in the portfolio companies in which they invest to avoid over-leveraging abusiness.The average debt level in Apax Funds’ live portfolio is 5.1x EBITDA.

Value creationThroughout its 30+ year history, Apax Partners has beencommitted to helping businesses through all stages of their development.Apax Funds continue to look for opportunities where they can use their insight intothe growth drivers of the underlying business.We believe that this is a more robustsource of returns, over the business cycle, than a sole reliance on financial leverageor multiple arbitrage. Over the last ten years, the cumulative annual growth rate ofprofits across the Apax Funds portfolio was 16% per annum.

10Apax Partners has ten offices in ninecountries across three continents.

5Apax Partners focuses on five industrysectors bringing deep expertise andexperience to management.

How do we grow businesses?Typically, Apax Partners attempts to growbusinesses by acting as a catalyst for change.

Howwe help businesses grow

Step 1

Define the full potential

Step 2

Develop the business plan

Step 3

Accelerate performance

Step 4

Harness the talent

Step 5

Focus on company results

Step 6

Optimise returns on equity



Investment strategyGlobal reach

Apax Partners’ offices have been establishedfor an average of 13 years each andare primarily staffed by local nationals.Close relationships with decision makersin the countries in which we operate givesus an advantage in terms of finding newinvestment opportunities and understandingthe market in which Apax Funds’ portfoliocompanies operate.

Apax Partners has an established globalplatform with ten offices in nine countriesacross three continents.This breadthenables it to spot emerging trends early,support the growth of companies anduse the financial markets most effectively.As the private equity market matures, webelieve that some of the best-performingfirms will be those with genuine global

reach and financial scale. Apax Partnersis one of a small group of private equityfirms to have embraced the challengeof globalisation.

UKEstablished: 1981

ItalyEstablished: 2000

SpainEstablished: 1989

IsraelEstablished: 1994

USEstablished: 1969

GermanyEstablished: 1990

China: Hong KongEstablished: 2005

China: ShanghaiEstablished: 2008

SwedenEstablished: 2004

IndiaEstablished: 2006

45partners worldwide

10offices

13years average partnerexperience in privateequity

Apax Partners deal selection criteria

Question 1

Is the company in one of our five sectors of industry expertise?

Question 2

Dowe have any particular insight into the risks and opportunities for growth?

Question 3

Is it amarket leaderwith significant growth potential within our targeted size range?

Question 4

Does the company have untapped potential to grow?

Question 5

Is it a global company or does it have the potential to be?

Question 6

Is the companywell managed? Can we add value to the management andgovernance of the business?

We generate a huge amount of investmentideas across our global platform. Each ofthese initial ideas is subject to rigorousassessment by the investment team, whowill often call on external analysis to supporttheir deal hypothesis.When the investmentis sufficiently well developed, it is broughtbefore our internal investment committeeswho assess the opportunity based on thecriteria highlighted above.

Of a total of 1,531 investment ideas loggedin our system since the start of 2005, 11%made it to the point where they were underserious consideration and only 3% made itto the next stage. Of all of the investmentopportunities that we looked at around theworld, we completed just 30.

We invest a significant amount ofinternal and external resources in thoseinvestments that do reach completion.The research involves all areas of thecompany’s performance, management

and market, as well as non-financial aspectssuch as environmental impact, CSR policiesand governance structures. On average,we spend over eight months looking at anopportunity before it reaches completion,and in virtually every one of these investmentswe will have a prior relationship with themanagement before the deal even makesit on to the system.

Investment strategyHow do we select our investments?



Investment strategyHow we support our portfolio

One of Apax Partners’ core strengths is that ourFunds only invest in companies in five industrysectors. As a result, the expertise we have builtup over the years gives us the understanding

necessary to help our management teamsdevelop and grow their firms in good timesas well as bad.

Sector Expertise

The Portfolio Support Group harnessesthe varied array of talents within the firmto deliver the best mix of services to thecompanies in which our funds invest.

As well as helping portfolio companiesdeal with today’s challenging marketconditions, the Group identifies longer-termopportunities that may have been lost bymanagement as they deal with pressingshort-term operational issues.

The Group delivers focused support in anumber of different ways as explained in thediagram and descriptions on this page.

SectorExpertise

100-DayPlanningCentre ofexcellence

ManagementSupport

Secondments

PortfolioRecruitment

Centre

FinancingTeam

PortfolioSupportGroup

A key part of the strategy to invest along sectorlines is Apax Partners’ panel of operating partners– seasoned industrialists who offer a wealth ofmanagerial experience and specialist expertise.The members of this panel can be used to help

tackle particular situations and projects or, inexceptional circumstances, can take the helmat businesses that might be facing specificissues for which the existing management isnot adequately equipped.

Management Support

Actions taken by an investor during the first fewmonths with a new portfolio company are criticalin determining the success of the business.Apax Partners has refined its approach to thisprocess. An enormous amount of time is investedin gathering information and assessing the

experience within the business and codifying this toaccelerate the pace of change.We make sure that the right people and incentivestructures are in place in our Funds’ portfoliocompanies. And we perfect the detailed plan thatwill guide the business well into the future.

100-Day Planning

In such turbulent times it is inevitable that someof the companies in which our Funds invest willface significant financing challenges and in manycases the existing management teams will nothave faced such tough trading conditions before.Apax Partners’ FinancingTeam can be madeavailable to help navigate a path through the

difficult conditions, working both in-house anddirectly with investee managers.The team canalso exploit the silver linings that come with thisterritory, working with the companies to makeuse of the ultra-low interest rate environmentand the value-creation opportunities it offers.

FinancingTeam

With over 100 companies in the current portfolioemploying hundreds of senior managers, ApaxPartners’ Portfolio Recruitment Centre provides akey support function.The team, which manages a30,000-strong database of contacts, undertakes

the search and selection function for strategicallyimportant managerial and advisory positionswithin the portfolio, sourcing and liaising withspecialist outsourcing firms where necessary.

Portfolio Recruitment Centre

Apax Partners also seeks to provide support viathe seconding of investment team membersinto portfolio firms. Given the current economicconditions, this makes for a win-win situation:our portfolio companies benefit from additional

high-level support, while the investment teammembers gain invaluable hands-on experiencein a tough operating environment.

Secondments



China and beyond The opening of ApaxPartners’ first office in mainland China wasone of the key highlights for the Firm in 2008.It followed nearly three years of methodicalpreparation after the opening of a beachheadin Hong Kong in 2005, and represents thecontinuation of a deliberate and consistentglobalisation strategy. By transferring seniorprofessionals from across our network andmaking highly selective new hires in China,we now have seven investment professionalsincluding three Partners based in GreaterChina.The team is headed by me, RichardZhang, a native Chinese and a formerDirector of McKinsey who, over 15 years ofconsulting experience with the firm, playeda key role in building its China practice.

Apax Funds’ initial investment focus ismainland China, Hong Kong andTaiwanwhile being opportunistic in South East Asia(primarily Singapore and Korea).The Fundswill follow the same proven investmentstrategy and apply the same investmentprinciples and criteria as they do across ourglobal platform.We want our Funds to beseen as not just a financial sponsor, but a‘strategic partner’.

Greater China In terms of the market, theGreater China economies are all profoundlyshaped by mainland China. For instance,roughly 60% of the Hong Kong stockexchange market capitalisation comes frompure mainland Chinese companies and alisting in Hong Kong has become a gatewayto the world for Chinese champions withglobal aspirations. Many ofTaiwan’s

technology and consumer goods giants arealso the market leaders in the mainland, andrecent political change inTaiwan hasaccelerated the speed of this integration.

Investments can be completed inHong Kong orTaiwan, which have moreinvestor friendly regulatory regimes, whilestill being able to tap into the mainlandgrowth. Regardless of where the transactionsactually take place, developing truly deepChina-specific insights, relationships, andnetworks to spot attractive assets and makethem actionable is a critical factor of successacross Greater China markets.

The impact of the global slowdownWhilethe current economic events have had nobearing whatsoever on the timing of ourentry into mainland China, this is certainly acritical moment for China’s potential rise asan economic superpower. After 30 yearsof reform, liberalisation and astonishingeconomic growth, China is undergoing oneof its most challenging periods as a resultof the global financial crisis; proving thereis no such thing as decoupling.

The dramatic slowdown in exports hasalmost halved China’s GDP growth from apeak of 13% in 2007 to only 6.8% in thefinal quarter of 2008.The first half of 2009is likely to continue this downward trend.Yet it is difficult to think of anywhere in theworld today where you can sense morehope and positive energy, not least in thevast upsurge of entrepreneurial activity thathas been unleashed.

The Chinese government’s response tothe crisis has been swift, massive andcontinuous. It is primarily aimed at boostingdomestic investment and consumptionto counterbalance export losses.We arealready starting to see limited signs ofprogress. Retail sales grew about 15% inthe first two months of 2009 compared tothe same period a year ago, and automobilesales in particular hit a record high of over1 million units in March 2009. Credit hassteadily become more widely available sinceNovember 2008; new loans quadrupled toreach RMB1.89 trillion in March 2009 fromonly RMB470 billion back in November.Chinese banks remain highly liquid andprofitable, having suffered minor bruisesfrom the subprime loss. More importantly,China’s longer term fundamentals remainstrong, as continued urbanisation will createanother 200 million new consumers andpossibly over a dozen mega cities (each witha population in excess of 10 million) in thenext 2–3 decades.

Danger or opportunity Despite the enormouspromise, China is never an easy market, andwe are fully aware of the need for patienceand prudence. However, growth was, isand will remain a fundamental theme ofChina, notwithstanding the current crisis.Incidentally the Chinese word for ‘crisis’literally consists of two characters --‘wei’ meaning danger, and ‘ji’ meaningopportunity – the marriage of dangerand opportunity.

China: opportunitiesand challenges

Richard Zhang Apax Partners Greater China





32 Our values

34 The wider community222 23

12739_R&A08_Sec2_22-39.qxd:Layout 1 24/6/09 16:03 Page 22

The private equity model is characterised by an alignment ofinterests between the private equity firm, the investors in itsfunds and the portfolio company management. In contrast tomany other financial services models, our investment horizonsare long-term and we are only rewarded for success after ourinvestors have been repaid.

Apax Partners has consistently sought the highest possiblestandards in corporate governance and transparency. Our rigorousinternal processes are supported by external advisory boards toensure that interests remain aligned and any conflicts are dealtwith quickly and efficiently.

Stability




How we are runOperational structure

Martin HalusaWorldwide CEO (London)Martin joined Apax Partners in 1990.He is Chairman of the global ExecutiveCommittee and Investment Committeeand a member of the Approval, Exit andPortfolio Review Committees.

John Megrue (NewYork)John initially joined Apax Partners in 1988,then left to co-found his own privateequity firm and returned with his teamin 2005. He is a member of the Approval,Investment, and Portfolio ReviewCommittees.

Michael Phillips (Munich)Michael joined Apax Partners in 1992.He leads the Financial & BusinessServices team globally and is a memberof the Approval, Investment, PortfolioReview and Exit Committees.

Stephen Grabiner (London)Stephen joined Apax Partners in 1999.He leads the Media team globally andis a member of the Investment,Portfolio Review and Exit Committees.

Approval CommitteeChaired by Peter Englander, the ApprovalCommittee acts as a sounding board tothe deal teams and ensures that thebest opportunities are pursued acrossour sectors and geographies.

Investment CommitteeChaired by Martin Halusa, the InvestmentCommittee makes the investmentrecommendations to the investmentmanager.

Portfolio Review CommitteeChaired by Peter Englander, the PortfolioReview Committee periodically monitorsindividual portfolio companies to assessways in which Apax Partners can addfurther value or to iron out potentialproblems.

Exit CommitteeChaired by Paul Fitzsimons, the ExitCommittee reviews exit options forspecific portfolio companies.

Communications

Manages the dialogue between the firmand its stakeholders.

Tax

Manages reporting of information toinvestors to allow them to comply withtheir own tax filing obligations.

IT

Provides and manages the technologyinfrastructure.

Compliance

Ensures the business complies withgovernance regulations.

Ensures the business complies withexternal regulations and the Apax Partnersinternal code of conduct.

FundsAdministration/Finance

Provides administrative operations toensure the smooth financial running ofthe business and timely and accurateinvestor reporting.

Investor Relations

Manages the relationships with ourinvestors.

Human Resources

Manages all aspects of the firm’srelationship with its employees.

Investment Committees

Executive Committee

Apax Partners

1 2 3 4

Five specialist sectors

Below the Executive Committee are a further four sub-committeesthat oversee the investment process from initial idea through duediligence and throughout the life of the investment to its eventual exit.At every stage in the process, the investment is subject to a rigorousprocess of scrutiny by these committees.

The Executive Committee is responsible for the day-to-daymanagement of Apax Partners worldwide.The group meets on amonthly basis to discuss matters of strategic importance for theglobal organisation.

Sector teams work across our global network of offices, usingextensive in-house knowledge and access to business networks.We are able to quickly identify global trends within a sector andmaximise the business opportunities.

Portfolio Support Group The Portfolio Support Group harnesses a varied array of talentswithin the firm to deliver the best mix of services to thecompanies in which our funds invest.

Support operations

Sector expertiseWe only invest in the five sectorsin which we have specialistexperience and expertise.

Management supportOur panel of seasonedindustrialists are experts atworking with the managementof our portfolio companies tomaximise growth potential.

100 Day PlanningOur process of early-dayplanning is critical to thesuccess of our investments.

Financing teamOur finance team offer portfoliocompanies unrivalled experience,which is proving crucial duringthe current economic downturn.

Portfolio Recruitment CentreOur 30,000-strong databaseof experienced managementpersonnel offers our portfoliocompanies unrivalledrecruitment resources.

Tech & TelecomPioneers inTechnology andTelecommunications investingwith companies on both sidesof the Atlantic.

Retail & ConsumerOne of the leading globalinvestors in the Retail andConsumer sector over severaldecades. Over €2.4bn of equityinvested in retail businesses.

MediaOne of the largest andlongest-established teams in theindustry.The team has a widevariety of industry, consulting,private equity and bankingexperience, with focus on nichesub-sectors.

HealthcareStrong scientific background,with many members havingachieved academic successin their specialist field beforemoving into industry, consultingor private equity directly.

Financial & Business ServicesWorldwide, the FABS team ismade up of 18 investmentprofessionals located acrossApax Partners’ office network.The team has a broad range ofexpertise spanning industry,consulting and investmentbanking.



How we are runGovernance and compliance

Sub-committees Below the Executive Committee are a further four sub-committees that oversee the investment process from initial idea through duediligence and throughout the life of the investment to its eventual exit. At everystage in the process, the investment is subject to a rigorous process of scrutinyby these committees.

The Company’s approach to corporate governance Apax Partners LLP(‘Apax Partners’) is the holding company for the worldwide Apax partnership andis the lead investment adviser to the most recent Apax Funds. In the UK, it isregulated by the Financial Services Authority (FSA) and advises Apax PartnersEurope Managers Limited (APEM) which is also regulated by the FSA. APEM isowned by the firm’s UK-based senior partners and manages the assets of themost recent Apax Funds.

Apax Partners is committed to maintaining the highest business standardsconsistently across all of its offices. Although the firm is only subject to formalregistration and regulation in some of the markets in which it operates, it isnonetheless governed on a global basis and applies the same business principlesand compliance procedures to all of its operations.

As such, Apax Partners has consistently sought to lead good practice incorporate governance and transparency within the private equity sector.

The business of Apax Partners is operated and managed through a smallnumber of committees whose respective terms of reference clearly defineresponsibilities and accountability.

Executive CommitteeThe Executive Committee is responsible for theday-to-day management of Apax Partners worldwide.The group meets ona monthly basis to discuss matters of strategic importance for the globalorganisation. It is also responsible for setting standards on remuneration andrecruitment and oversees the governance of the firm in each of the countriesin which it operates.

FundAdvisory Boards As well as the internal corporate governance bodies,Apax Partners has a well-established structure of external advisory boards.Each of the Funds managed or advised by Apax Partners has a Board of Advisers.Representatives of up to 15 of Apax Funds’ Investors are invited to becomemembers of the Board.The independence of the Board is maintained becauseit is always chaired by one of our investors, who are appointed every two years.The Board is currently chaired byWim Borgdorff, managing partner at AlpInvestPartners, Europe’s largest investor in private equity.The responsibility of theChairman is to set the agenda and ensure that the Board of Advisers complieswith its terms of reference.

The Board of Advisers meets twice a year and is consulted by the GeneralPartner on certain of the affairs and operations of the Funds, in particular, issuesrelating to conflicts of interest and review of the valuations at which investmentsare carried in the notes to the accounts.

Debt Apax Funds are managed with zero leverage. At the portfolio companylevel, average leverage is 5.1x.

Compliance Compliance reports periodically to the Executive Committeeon results of monitoring and other issues and on an ad hoc basis as necessary.The Partner with the responsibility for the oversight of Apax Partners’ complianceis Martin Halusa.

Executive Committee

1. Martin Halusa Chairman

2. Stephen Grabiner

3. Michael Phillips

4. John Megrue

Investment process

1

23 4

1 2 3 4Investment Committee

ChairMartin Halusa

Terms of referenceProvide investmentrecommendations tothe investment manager.

Portfolio Review Committee

Chair Peter Englander

Terms of referenceReview of progress of portfoliocompany compared to 100 DayPlan. Forum for discussion of likelyongoing funding requirementsand for exit opportunities.Recommendation of managementchanges to the deal team.

Exit Committee

Chair Paul Fitzsimons

Terms of referenceReviews exit options for specificportfolio companies.

Approval Committee

Chair Peter Englander

Terms of reference Source of guidanceto deal teams. Approval of deal expensebudgets. Provision of advice to EuropeanInvestment Committee.



How we are runGovernance and compliancecontinued

Global business standards The Compliance department has developeda series of principles and procedures to guide and support the global firm.

The key principles are communicated through regular training and visitsto all offices and are regularly monitored to ensure that the standards are beingadhered to.The main areas of focus are as follows:

Conflicts of interest Apax Partners maintains policies concerning potentialconflicts of interest not only to comply with its FSA regulatory obligations butin particular to identify and manage those conflicts.Typically, conflicts aremanaged by obtaining consent, refraining from taking action and by disclosure.Detailed procedures are in place to manage conflicts, for example co-investment,remuneration, carried interest, allocation and responsibility of Directors.There arealso policies designed to manage personal conflicts such as personal share andsecurities dealing, the receipt of gifts and entertainment, and external non-Apaxactivities. Each Fund has a Board of Advisers, made up of the major investors inthat fund to which potential conflicts can be referred for guidance.The scopeof this Board is set out in its terms of reference and in the Fund’s partnershipagreement.

Senior management arrangements Certain positions and functions withinApax Partners require key individuals to receive approval from regulatory bodiesbefore they can be appointed: these include all Partners and Directors, and certainkey support functions such as Compliance and Finance. As an Approved Person,those individuals are required to conduct themselves in a manner consistent witha specified set of principles and are personally accountable to the Regulator fortheir actions.

ConfidentialityMembers of the Apax Partners team recognise the trustthat is placed in them, both by investors and by the companies that the Fundsare looking to invest in. Confidential information received by any Apax Partnersrepresentative is treated as such and all reasonable practical steps are takento restrict access by unauthorised persons. Everyone is required to sign anundertaking reminding them of their obligations on joining the firm andannually thereafter.

Personal responsibilities Apax Partners prides itself on the honesty andintegrity of the people it employs, and recognises its duty to make all employeesaware of their responsibilities.The Compliance department provides guidanceto all members of the team on how they should conduct themselves and theconsequences of their behaviour, and encourages all members of the team tovoice any concerns that they might have.

All employees are required to sign an undertaking confirming that they willadhere to the standards which are available to everyone via the Apax Partners’Intranet site and also brought to their attention as appropriate.

Apax Partners recognises that an individual may act in a way which placesthem in direct conflict with the interests of the business and it has adopted astrict personal account dealing procedure and requires all members of the globalteam to obtain prior approval from Compliance before carrying out any personaltransaction. Compliance maintains a restricted list and permission to deal will notusually be granted where the transaction relates to a company on that list.

Anti-money laundering Apax Partners considers it unlikely that partieswill seek to use their relationship with Apax Partners in connection with moneylaundering or terrorist financing. Nevertheless it views its responsibilities in thearea of anti-money laundering seriously and has worked with the BVCA and theFSA to contribute to the standards currently in place within the private equityindustry in the UK.

Custody APEM is appointed by the General Partner of the Apax Funds toact as custodian of the assets of the Apax Funds.This is a regulated activity in theUK. Its activities as Custodian are specifically reported on by external auditors tothe FSA. Since its appointment, APEM has only received unqualified audit reportsin respect of this activity.

Risk management The responsibility for risk management within ApaxPartners rests with the Executive Committee.The overriding culture within theorganisation is always to adopt the highest standards in all areas of the businessand demand the same from all third parties who perform activities on our behalf.

Where specific risks within the business have been identified, appropriatecontrols are in place to mitigate those risks from occurring wherever possible.


Our values

Our five core values

1. IntegrityWe apply the highest standardsof integrity across our worldwide businessin our dealings with all of our stakeholders.

2. Safeguarding our environmentWe runenvironmentally sound operations whichaspire to create minimal damage to theenvironment.We seek to drive down theenvironmental impact of operations byreducing waste, emissions and dischargesand by using energy efficiently. Following an

4. Building long-term relationshipsWeconduct business on a long-term, sustainableand transparent basis, looking to createrelationships founded on mutual advantagewhich are capable of enduring beyond a singletransaction.

5. Putting people firstWe treat people withdignity and respect, as we would wish to betreated ourselves.We only recruit, select and

advance employees on merit, irrespective ofage, gender, nationality, disability, religiousbelief or sexual orientation.We do not tolerateabusive, harassing or offensive conduct in theworkplace.The welfare of our employees andthose of Apax Funds’ portfolio companies is atop priority.We aspire to have no accidents, noharm to people and not to subject anyone tounnecessary risks at work.

independent assessment by the CarbonNeutral Company, Apax Partners has offset itscarbon emissions to become carbon neutralacross all its offices.We continue to work toreduce our carbon footprint wherever possible.

3. Supporting communitiesWe act withrespect and consideration for the quality of lifeand economic and social progress of thecommunities within which we operate.

What is important to us?

Our values are built into every aspect ofour business. Because private equity issuch a long-term business, and dependson the trust it receives from investors,business owners and management teams,the values of integrity and sustainabilityare crucial in everything we do.We applythese values equally across our business inall of the countries in which we operate.They inform our interactions withemployees, portfolio companies, suppliers,investors and the local communities inwhich we operate. Apax Funds are long-termstewards of over US$35bn of our investors’capital, which has been entrusted to us on thebasis of our values and uncompromisingintegrity. Apax Funds predominantly invest ingrowth companies within our five sectors ofexpertise.The Apax Funds do not invest incompanies involved in firearms, pornographyor that derive significant revenues from theproduction or sale of tobacco.

We are long-term investors with the aim ofbuilding robust and sustainable businesses.We employ a rigorous screening processbefore we make any investment, whichincludes an assessment of the environmental,ethical and social impact of that business.These aspects of the business are thenassessed on an ongoing basis as part of theportfolio review process and are analysedby the whole team on a twice-yearly basis.Portfolio companies are encouraged to takean active lead in terms of corporate socialresponsibility partly because we believe thatthis will enhance the reputation and long-termprospects of the business and help to reducepotential liabilities.

We are proud of what we do: backingmanagement to release the full potential oftheir businesses through insight and patientlong-term investment.We are very awareof our responsibilities and at all times areguided by our values.

Shaping our industry’s valuesWe are committed to working with the industry oncorporate responsibility issues including environmental, social and governance bestpractice, as well as raising the standard of transparency and disclosure to all ourstakeholders. As such, we were engaged from the earliest stages in the developmentof theWalker Guidelines onTransparency and Disclosure in the UK, and are involvedwith industry associations in other countries in their creation of similar codes.

In addition, this year we signed the Private Equity Council’s Guidelines forResponsible Investment, and again were involved from the start of the project.Working with our investors and the Private Equity Council in the US, we helpeddevise nine principles for the private equity industry, guided by the UN GlobalCompact’s Principles and the UN Principles for Responsible Investment.We are formally embedding these Guidelines into our investment process.See the PEC website for the full list atwww.privateequitycouncil.org



How we are runThe wider community


TheApax Foundation is a UK-registered charity and is the channel for ApaxPartners’ corporate giving globally. In 2008/09,The Foundation made grants of £1.2m.

Given the wide range of good causes that exist and the difficulty of choosingbetween them, we have continued to focus our major grant-giving on the veryspecific area of social entrepreneurship.

Social entrepreneurship is a natural fit with what Apax Partners doescommercially and is also an area where several of our team, including some of theApax Foundation’sTrustees, have significant experience.This provides us with asteady flow of introductions to leading charities in the field, both fromwithin the firmand from our wider network.

The Foundation has also continued its commitment to our staff ‘matching’scheme and the private equity community’s collective charity, the Private EquityFoundation.

The Apax Foundation is chaired by Sir Ronald Cohen and itsTrustees are drawnfrom the senior ranks of the firm: Peter Englander (CEO of the Foundation), MartinHalusa, Khawar Mann, David Marks, JohnMegrue, Michael Phillips and RichardWilson.

Social entrepreneurship is a wide field covering all enterprises that have asocial purpose rather than being purely profit-driven.The Apax Foundationconcentrates on organisations that are working to promote employment indisadvantaged communities.

We have extended the range of charities we support this year and addedthree significant new sponsorships to our existing portfolio: Emmaus, Ashoka andthe Bridges Social Entrepreneurs Fund.

Social entrepreneurship:Ashoka is a global organisation which identifies leading socialentrepreneurs around the world and provides financial backing to enable them todevelop their enterprises.

The Apax Foundation wanted to support an Ashoka Fellowwhose businessmatched our specific focus on enterprises which stimulate employment in deprivedcommunities and selected Norbert Kunz.

Norbert’s project aims to establish self-employment as a viable option fordisadvantaged, unemployed young people in deprived regions of Germany. Hecreated a support system for young, small-business entrepreneurs offering advice,training, infrastructure, financing and mentoring in what he calls a ‘one-stop shop’.

The project has so far enabled 1,000 formerly unemployed young entrepreneursto set up their own small businesses and created 1,300 jobs.The Apax Foundation’sthree year funding commitment to Norbert via Ashoka will enable him to continue hiswork and build on the existing success of the project.

www.ashoka.org

Social entrepreneurship: Bridges Social Entrepreneurs Fund As one of the foundersof BridgesVentures in 2002, Apax Partners maintains a close relationship with theorganisation and is keen to be involved in its development. Bridges is a venture capitalfirm with a social mission – it invests in businesses which will generate a social returnas well as a financial return.

Many social enterprises need capital to develop but find it difficult to raiseinvestment. Bridges’ latest initiative is the Bridges Social Entrepreneurs Fund, whichaims to fill this need by providing funding specifically to enable successful socialenterprises to grow.

In 2008 the Apax Foundation became one of the Founder Partners of theSocial Entrepreneurs Fund with a three-year funding commitment to the BridgesCharitableTrust, which is establishing the new fund.

www.bridgesventures.com

Social entrepreneurship: Emmaus is an international movement which createscommunities for the homeless, offering a home, work and the chance to rebuild theirlives in a supportive family environment.

The communities aim to be self-sustaining – the Emmaus model is that,alongside the living quarters and pastoral care, each community runs a businessoperation providing work for the residents, all of whom are required to sign offprimary state benefits.The revenue from this business goes to maintain thecommunity.The ethos combines self-help with awareness of the needs of others.Emmaus has created a virtuous circle where existing, successful communities givefrom their profits to help communities at the early stage of development to get upand running.

Wewere introduced to Emmaus by its President,TerryWaite, whoseexperience as a captive in Beirut made him particularly sensitive to the isolation ofpeople living outside mainstream society.

“It was then I experienced what many people go through. I endured the misery,the sense of isolation, fear, boredom, the despair and that sense of helplessnessand exclusion from ordinary, everyday life, which is so much part of both captivityand homelessness”. TerryWaite President, Emmaus UK

In 2008 the Apax Foundation agreed a three year grant to Emmaus which will gotowards the development of communities in the UK, US and India.

www.emmaus.org.uk www.emmaus-international.org


Andy’s story Andy worked as a carerfor children and adults. In 1996 he wentto work in Bosnia and was deeplytraumatised by what he saw there.Shortly after he returned to the UK, hiswife and children were killed in a roadaccident. Until a year agoAndy livedat Emmaus Greenwich (UK).

“After I heard about my family, I lockedmyself in my flat. I don’t know how I gotthrough it. My doctor then told me Icouldn’t do care work anymore because ofan old back injury that had flared up again.That was the final straw. I lost track of timefor a while. I slept on the streets in Victoriafor four months.

When I arrived at Emmaus Greenwichit was as if I had been looking for a placelike that all my life. It felt safe and I couldrelax at last. My room was an expressionof me. I had flowers in my room. Living atEmmaus Greenwich gave me the chanceto think about what had happened to meand to work out what to do next.

When I felt strong enough to leave,the Community helped me move out intoa shared house. I delivered leaflets, workedas a cleaner – at one point I had threepart-time jobs!

One of these was for a companyproviding pet medication, and they offeredme full-time employment. Recently I waspromoted to store manager, which I’mreally enjoying. The skills I picked up atEmmaus have helped me.

I don’t want to lose my links withEmmaus Greenwich and I want to continueto help them because they helped me. I gointo the Community from time to time andhelp out in the kitchen. I make cakes andpastries. I am taking each day as it comes,but on the whole I feel optimistic aboutthe future.

Emmaus gave me the breather Ineeded. They gave me support, even whenI thought I didn’t need it. I feel so muchstronger now.The loneliness inside mehas gone. There should be more EmmausCommunities. It’s a system that works”.

Emmaus




How we are runThe wider communitycontinued

The ‘matching’ schemeMany of our team give their time and skills tocharitable causes close to their hearts. Apax Partners supports and encouragesthis spirit of giving through a ‘matching’ scheme. Under this scheme, the ApaxFoundation makes a grant of at least £5,000 to every charity that benefits fromthe significant, active involvement of a member of the Apax Partners team.

The Private Equity Foundation (PEF) is the collective charity for theEuropean private equity community. It focuses on the issue of NEETs (youngpeople not in education, employment or training) and invests both money andexpertise from the private equity community to help charities working in thisarea achieve a step-change in their impact.

As well as backing the Private Equity Foundation financially, Apax Partnersstaff play an active role in the work of the charity.

Isabelle Probstel fromApax Partners’ Munich office has been instrumentalin establishing the Private Equity Foundation’s operations in continental Europe,overseeing all of the charity’s activities in Germany. Under her leadership,the PEFmade its first grant in mainland Europe this year, to the HamburgerHauptschulmodell (HHM), an organisation working to optimise the careeropportunities of young people who leave school having completed only themost basic level of education.

In the UK, ten members of the Apax Partners London team swappedtheir suits for overalls to add the finishing touches to a new community centrein Newham, East London.They worked alongside teams from other privateequity firms to complete the project, which was funded by the Private EquityFoundation in partnership with Community Links.

In addition, Apax Partners’ London office hosted a summer reception forthe PEF to bring together their supporters and portfolio charities.

Opportunities for young people: Business in the Community Apax Partnersis a member of Business in the Community and wewelcomed 30 students fromJohn Kelly Boys and Girls Schools to Apax Partners’ London headquarters throughBusiness in the Community’s mentoring programme, Mosaic.The students spenta day learning about the work of the different departments in the firm to open theirminds to career opportunities they might not have been aware of, and some studentsthen returned for more focused work experience later in the year.

“I spent my work experience with Iain Katimbo [Fund Accountant] – he showedmeeverything he does and was really helpful. I’m still in touch with Iain and he gives megreat advice”. UsmanMirza Student, John Kelly Boys’Technology College, Neasden

Opportunities for young people: Social Mobility Foundation Separately,we are supporters of the Social Mobility Foundation’s placement programme.The programme aims to inspire able students from less privileged backgroundsby broadening their outlook on potential career opportunities.

In 2008, a group of students from the Social Mobility Foundation joined ourexisting work experience programme.They were based in theMedia team and, inaddition to their project work there, had ‘lunch and learn’ sessions to give them aview of a variety of office functions.The students were encouraged to explore andto draw on help across the firm: the Apax team enjoyed the experience of beingunexpectedly waylaid by enthusiastic teenagers bursting with questions; an exerciseparticularly enjoyed by the students was the challenge to find potential bolt-onacquisitions for the firm’s portfolio companies.

“This work experience has given me bigger ambitions and dreams for the future.I didn’t have any links into the financial industry before and this experience hasmademe even more determined to work hard to achieve my goals”.Anish Shah Student, Claremont High School, Kenton

Apax Foundation matching scheme

Irene Liebler, HRManager, Apax Partners Munich office,and KhawarMann, Partner, Apax Partners London office,supporting Room to Read Room to Read is aninternational organisation which builds schools in thedeveloping world in partnership with local communities.

Irene Liebler and her husband, Hans, helped toestablish Room to Read in Germany in 2006. As they hadalready been sponsoring the education of two girls in Nepalfor some years, they chose that country for the new schoolwhich their Room to Read division would support. As wellas continuing to organise fundraising activities for theschool in Nepal and now a second school inVietnam, Irenehas activated her network to inspire others to becomeinvolved and, as a result, a new Room to Read division isbeing established in Frankfurt.

Separately, Khawar Mann and some friends frombusiness school got together to fund a school inVietnam inthe Room to Read programme.They have raised funds forthe construction of the school, teacher training andmaterials, and ongoing maintenance of the school, and theirinvolvement also extends to providing guidance about whatthey would like the school to achieve. www.roomtoread.org


Stephen Grabiner, Partner, and Steven Dyson,Principal, Apax Partners London office, supportingBuilding Bridges Dr Mark Berelowitz, ConsultantPsychiatrist at the Royal Free Hospital, London, had anidea to foster understanding in areas of conflict bybringing young doctors from both sides of a troubledregion to London to train together at the Royal Free, aleading London teaching hospital. He talked about it toStephen Grabiner and Steven Dyson at Apax Partners,and they decided to work with him to translate the ideainto reality. A few months later the Building Bridges

project is under way, with four young orthopaedicsurgeons, two Israeli and two Palestinian, workingside by side at the Royal Free with the support ofMr Nicholas Goddard, Consultant Orthopaedic Surgeon.An important component of the model is that, as wellas working together, the doctors should also livetogether for the duration of their stay in London todeepen their understanding of each other’s culture andperspective. The project is not limited to Israel/Palestineand it is hoped that in time it could be developed toother regions damaged by conflict.


MitchTruwit, Partner, andMike Gallagher,Associate, Apax Partners NewYork office, supportingStreetSquash Mitch serves as a board member ofStreetSquash, a charity in Harlem, NewYork providingsupport to underprivileged children. At risk children areselected by their schools to join the programme, whichteaches the children squash and also, more importantly,improves their academic and social prospects throughone-to-one mentoring and involvement in communityservice projects. To date, every one of the high school

students to have gone through the programme hasgraduated or is on course to graduate in the standardfour years and all have gained acceptance to college.

Mitch’s enthusiasm for the programme was clearlyinfectious and Mike Gallagher, a colleague in the NewYork office, volunteered as a mentor this year, workingwith a 12-year old boy both on a one-to-one basis andat group events with other children taking part in theprogramme. www.streetsquash.org


Mia Saunders, Personal Assistant, Apax PartnersLondon office, supporting The Samaritans

Mia has regularly manned a helpline for TheSamaritans, covering either an evening shift after workfrom 6-10pm or the 10pm-3am night time slot. Sheunderwent training in order to qualify for this workcounselling people in vulnerable emotional states, forwhomThe Samaritans acts quite literally in some casesas a lifeline. www.samaritans.org



42 Sector reviewTech &Telecom




80 Sector reviewFinancial & Business Services3

40 41


Apax Funds are pioneers in technology and telecomsinvesting.They have backed companies on both sides of theAtlantic from the very first days of the venture capital industryand were among the first to apply the skills forged in theseventure capital deals to the buyout arena.

4342

TopTech &Telecom investments

Weather Investment year Enterprise value atInvestments time of investment

2008 €21.3bnNXP Investment year Enterprise value at

time of investment

2006 $11.0bnTDC Investment year Enterprise value

time of investment

2005 €11.3bn

Bezeq Investment year Enterprise value attime of investment

2005 €4.3bnTim Hellas Investment year Enterprise value at

time of investment

2005 €1.9bnIntelsat/ Investment year Enterprise value atPanAmSat time of investment

2005 $11.6bn

Tech &TelecomOur sector expertise



4544

1 2

4

3 6

5

7

8

109

1. Borja Martinez

OfficeMadrid

Board seats Panrico,Wisdom-LaNetroZed, DMR Consulting,Fractus, Electro-Stocks (observer).

Background Joined Apax Partners in2000. Prior experience at BCG andGoldman Sachs. BSc in BusinessAdministration from ESADE. MBA fromHarvard Business School.

2. Roy Mackenzie

Office London

Board seats Frontier Silicon, King.com,Tideway Systems, NXP (observer).

Background Joined Apax Partners in2003. Prior experience at McKinsey &Company, Psion Computers andMicrosoft Corporation. M.Eng in ElectricalEngineering from Imperial College,London. MBA from Stanford GraduateSchool of Business (Arjay Miller Scholar).

3. GiancarloAliberti

OfficeMilan

Board seats Farmafactoring, Azimut,Tim Hellas, Sisal.

Background Joined Apax Partners in2000. Prior experience at MonitorCompany and Montedison. EconomicsDegree from University of Rome, Italy.MBA from Harvard Business School.

4. Salim Nathoo

Office London

Board seatsWeather Investments,SMARTTechnologies,Tim Hellas,PrometheanTechnologies, Mobifon,Inmarsat.

Background Joined Apax Partners in1999 from McKinsey & Company. MA inMathematics from St. John’s College,Cambridge University. MBA fromINSEAD.

5. RichardWilson

Office London

Board seatsWeather Investments,TDC,NXP, Inmarsat, Mobifon, Jazztel, Autonomy.

Background Joined Apax Partners in1995. Prior experience at ScientificGenerics and Marconi Space Systems.BA (Hons) in Engineering from Gonville &Caius College, Cambridge University.MBA from INSEAD. Chartered Engineer(MIMechE).

6. Nico Hansen

Office NewYork

Board seats TriZetto, Xerium, KabelDeutschland, Versatel.

Background Joined Apax Partners in2000 from McKinsey, where hespecialised in telecoms. PhD inEconomics from the University of Bonn,MA in Economics from the University ofGöttingen.

7. JasonWright

Office NewYork

Board seats Realpage, Plex Systems,Planview

Background Joined Apax Partners in2000. Prior experience at GE Capital andAccenture. BA in Economics fromTuftsUniversity. MBA from theWharton Schoolof the University of Pennsylvania.

8.Andrew Sillitoe

Office London

Board seats Intelsat,TDC.

Background Joined Apax Partners in1998. Prior experience at LEK. MA inPhilosophy, Politics and Economics fromSt. John’s College, Oxford. MBA fromINSEAD.

9. Neeraj Bharadwaj

OfficeMumbai

Board seats Apollo Hospitals, JAMDATMobile,WiderThan, NXP

Background Joined Apax Partners in1999. Previously with McKinsey &Company, Goldman Sachs, and MorganStanley. BSc in Economics from theWharton School of the University ofPennsylvania. MBA from the HarvardBusiness School.

10.Torsten Krumm

OfficeMunich

Board seats Suse,Tropolys, Versatel,Q-Cells, Acol, Onespin Solutions

Background Joined Apax Partners in2002 from Intel as a Director of IntelCapital Europe. Graduate diploma (MA) inelectrical communication engineering andcomputer science, and corporate MBAprogramme from INSEAD.

Our sector expertiseTech &Telecom partners




Our sector expertiseTech &Telecom review

Overview Apax Funds are pioneers inTechnology andTelecommunicationsinvesting.They have backed companies on both sides of the Atlantic from the veryfirst days of the venture capital industry and were among the first to apply theskills forged in these venture capital deals to the buyout arena.

Nowadays Apax Partners focuses purely on buyouts and larger growthinvestments, but still offers a unique sector-focused capability, with the growthDNA and industry expertise remaining a core feature of one of the largest sectorteams in the business.This capability has led to a number of buyout investmentshaving been made ‘ahead of the curve’, or in non-obvious areas.

The 25-strong team comes from a variety of backgrounds in industry,consultancy and banking and each person specialises in different niche sub-sectors.

This pool of industry knowledge can be rapidly deployed across ApaxPartners’ global platform according to the needs of the specific investment.The team has advised Apax Funds on more than €3.8bn of investment in thelast 15 years.

Marketplace/trends and drivers Telecom:We segment the telecomsector into incumbents, altnets, cable and mobile.This segmentation reflectsthe differing challenges and opportunities faced by each type of operator asthe trend towards convergence marches forward.Though not immune torecessionary conditions, the changes that are happening as a result ofconvergence mean that competitive market structures and regulatory regimesare the most important determinants of the medium-term health of any nationalor regional telecom market.

Marketplace/trends and drivers Technology:We segment the technologysector into components, systems, software and services, each with their owndynamics. In contrast to the telecom sector, the macroeconomic environment islikely to dominate the effect of any structural changes occurring in the technologysector over the coming quarters.That said, difficult macroeconomic times willaccelerate some of these changes (for example, the delivery of software as aservice and industry consolidation) and it is the companies that are best placed tobenefit from these changes that will emerge stronger from the current downturn.

StrategyTelecom: As discussed above, the dynamics in the telecom marketdiffer quite considerably from country to country. As a result, our investmentstrategy is predicated on a detailed analysis of i) the competitive and regulatorydynamics in any given country and ii) the identification of those operators andmanagement teams who are best placed to benefit from the secular shiftstowards data, mobility and applications such as video or have exceptionalmarketing and segmentation skills.

StrategyTechnology: In technology, we are focused on those companieswhose fundamentals ensure that they will emerge from the current difficult timesin a position of strength.These companies typically possess strong franchise value– derived, for example, from distribution, intellectual property and brand – as wellas being active in sub-sectors in which the secular growth trends offsetmacroeconomic downforces – for example the increasing recognition of thebenefits of technology in the classroom.

Outlook The telecom space is characterised by a relatively high degree ofshort-term predictability, but with important medium-term effects that are largelyindependent of the current macroeconomic difficulties, yet will have a lastingeffect on the various market participants.

In technology, the short-term predictability is significantly less. It isnevertheless highly likely that the process of consolidation that is underway willensure that the leaders emerge from the downturn with a strengthened position.

Andrew Sillitoe



Our sector expertiseTech &Telecom continued

Case study:Tech &Telecom

IntelsatMaking communications closer, by far Intelsat is the world’s leading provider

of fixed satellite services (FSS). Based in Bermuda, the firm became the first tolaunch a commercial communications satellite in 1965 and, four years later,transmitted images around the world of man’s first steps on the moon. Over 40years on, it runs a global network of satellites and terrestrial infrastructure whichserves over 200 countries and territories and is setting the standard for theadvanced transmission of video, data and voice services.

Why this deal? Intelsat initially came onto Apax Partners’ radar screen at theend of 2003, after Apax Funds had completed the first leveraged acquisition ofa satellite business (Inmarsat). Back then, according to Apax Partners’ AndrewSillitoe, head of theTech &Telecom sector, Intelsat faced some challenges: “Intelsathad been hit particularly hard by overcapacity in the FSS market following the techboom – and its revenues had been declining as a result.” But despite this, thebusiness still posted strong and predictable cash flows and Apax Partners was ableto see the potential for growth thanks, in part, to the expertise and relationships ithad built during the Inmarsat process.

In January 2005, Apax Funds acquired Intelsat for $5.2bn together with aconsortium of investors including Apollo, Madison Dearborn and Permira.

What has happened since the deal completed? This transaction represented aturning point for the company and under the stewardship of a new CEO – DaveMcGlade, who joined the business in March 2005 from UK mobile operator O2 – itsfortunes began to improve rapidly. Most significantly, Intelsat agreed in August 2005to acquire rival operator PanAmSat in a $6.4bn transaction.The deal, which broughtIntelsat added video market expertise, an advanced satellite fleet and a blue-chipmedia customer base, created the industry’s largest satellite operator with thebroadest customer base. It also resulted in a new COO for the combined businessin the form of PanAmSat’s Jim Frownfelter.

Commenting on the PanAmSat transaction McGlade says: “The plan wasto use the acquisition of PanAmSat as a vehicle to accelerate change and improveperformance. Literally, the day after we announced the deal we began a rigorousintegration process aimed at creating a more balanced business. One of the keyearly priorities was to make use of the significant synergies that existed in termsof both operating and capital expenditures.”

What about the future? The next task for Intelsat’s management team, aidedby a Principal from Apax Partners who had been seconded to the company on afull-time basis, was to develop a clear growth strategy.This strategy was to be basedon three core principles: firstly to maximise revenues on a satellite by satellite basis;secondly to identify and make selective investments in key growth areas; and finallyto generate a strong pipeline of incremental business development opportunities.

The initiatives undertaken by the management team with the support of itsbackers showed clear and early signs of success, with strong growth in revenuesand profits and a real improvement in its competitive position. In light of this, thedecision was taken by the backers to launch a sale process and in June 2007 theinvestors signed an agreement to sell Intelsat to BC Partners.

”We carried out a highly detailed due diligence exercise – taking Intelsat’s globalcapacity and building up a supply and demand model, region by region, band byband and application by application. Our analysis showed that supply and demandwere coming into balance and we saw real scope to reverse revenue declines andto improve operational efficiency.” Andrew Sillitoe Apax Partners’ head ofTech &Telecom



Our sector expertiseTech &Telecom continued

Case study:Tech &Telecom

WeatherInvestments

A strategic partnership for global growthWeather Investments is a globaltelecommunications company offering mobile, fixed-line, internet and internationalcommunication services to over 100 million subscribers in Southern Europe,North Africa and Asia.The company operates through its subsidiariesWindTelecomunicazioni,Wind Hellas and OrascomTelecom Holding.

WindTelecomunicazioni is the third largest mobile and second largest fixedoperator in Italy.

Wind Hellas (formerlyTIM Hellas) is the number three mobile and fixed operator inGreece and a former Apax Europe VI portfolio company.

OrascomTelecom Holding is a Cairo listed holding company of leading mobileoperators in North Africa and Asia.

Why this deal? Apax Partners had long been attracted to the companybecause of the balance between the high growth characteristics of the emergingmarket portfolio and the cash flow stability of the more mature,Western Europeanbusinesses. In June 2008, Funds advised by Apax Partners together with twoother firms, won a limited auction to buy a minority stake inWeather for €1.1bn,and a further investment later in the year increased the consortium’s stake.

WhyApax Partners? Apax Partners’ strong prior relationship with founderand CEO Naguib Sawiris was instrumental in ensuring that it secured theopportunity to invest, as Sawiris explains: “The reasons why we went with Apaxwere trust, chemistry and integrity. I initially came across them when I was tryingto buyWindTelecom in 2005 and, although the opportunity to work together onthat did not materialise, we kept in touch and at the end of 2007 we were incontact again whenWeather Investments acquiredTIM Hellas from Apax.We didthat deal from start to finish in three weeks and subsequently became very closeto them through that deal”.

What about the future? Sawiris, who founded the company from scratch tobecome the world’s 11th largest telecom provider in terms of customer numbers,has clear ambitions forWeather. “Today, we are 11th largest, but my ambition is tobe among the five or six biggest telecom providers globally. I believe that having acritical mass of subscriber numbers is crucial because in the future more productsand services will be run through the phone. Banking for us is a big potentialrevenue stream and we already have 100 million potential customers. In terms ofpayment, we own these relationships whereas a VISA or Mastercard do not”.

The growth achieved by Orascom andWind in recent years is due in largepart to the skills of the company’s management team in acquiring and integratingassets well and driving value.The current economic downturn provides boththreats and opportunities for the group. Apax Partners has supportedWeather ona number of initiatives on the strategic, operational and financial side to optimisethe capital structure. Commenting on the relationship to date, Sawiris concludes:“The relationship is strong, but they are tough and know the space well. They putour people under pressure and have ensured that the reporting discipline is inplace across the group”.

“We have very strong management which will not let the market dictate to us.We are currently concentrated on EBITDA and free cash flow across the group andon reducing debt. On the more offensive side, I think there will be lots of potentialacquisition targets out there in the next couple of years”.Naguib Sawris, CEO,Weather Investments



We have been one of the leading global investors in theRetail and Consumer sector over several decades. During thistime we have invested €2.4bn in retail businesses, backing adiverse range of retail, consumer and leisure businesses acrossour global platform.

Top Retail & Consumer investments

Tnuva Investment year Enterprise value attime of investment

2008 $1.4bnD+S europe Investment year Enterprise value at

time of investment

2008 €0.6bnSisal Investment year Enterprise value

time of investment

2006 €1.2bnTommy Hilfiger Investment year Enterprise value

time of investment

2006 €1.2bn

Somerfield Investment year Enterprise value attime of investment

2005 £1.8bnPanrico Investment year Enterprise value atDonuts time of investment

2005 €0.9bnNew Look Investment year Enterprise value at

time of investment

2004 £0.8bn

Retail &Consumer

Our sector expertise


Our sector expertiseRetail & Consumer partners

8

5554

1

2

3

4

5

6

7

1. Zehavit Cohen

Office Tel Aviv

Board seatsTnuva, Bezeq.

Background Joined Apax Partners in2006. Prior experience as Executive VPand CFO of the IDB Group (Israel’s largestinvestment company) and VP of ChaseManhattan. MA from theWharton School,University of Pennsylvania; MBA from theUniversity of Pittsburgh. Lecturer inFinance and Accounting at theWhartonSchool, University of Pennsylvania. Fellowof the University of Pennsylvania.

2. Oriol Pinya

OfficeMadrid

Board seats Panrico, Electro-Stocks,Vueling, Itevelesa.

Background Joined Apax Partners in1999. Prior experience at BCG and MerrillLynch. BBA from ESADE. Master CEMSfrom HEC. MBA from Harvard BusinessSchool.

3.Alex Pellegrini

Office NewYork

Board seats Advanced Homecare,MagnaCare Holdings, Spectrum LaboratoryNetwork,Voyager HospiceCare, Rue21.

Background Joined Apax Partners in2000. Prior experience at Merrill Lynch.BA in Finance with Honors from thePennsylvania State University.

4. John F. Megrue, Jr.

Office NewYork

Board seats Bob’s Discount Furniture,TommyHilfiger Corp., MagnaCare, Rue21.

Background Originally joined ApaxPartners in 1988, then left to co-found hisown private equity firm and returned withhis team in 2005. BS in MechanicalEngineering from Cornell University. MBAfrom theWharton School of the Universityof Pennsylvania.

5. Christian Näther

OfficeMunich

Board seatsTank & Rast, Phillips vanHeusen/Calvin Klein, LR Health & BeautySystems,Tommy Hilfiger, CBR, D+Seurope AG.

Background Joined Apax Partners in2001 after 8 years as a Partner inConsumer & Retail at McKinsey. Degreein business administration and PhD inStrategic Management from the LudwigMaximilian University in Munich.

6.Amedeo Carassai

OfficeMilan

Board seatsWeather Investments,Farmafactoring, Sisal.

Background Joined Apax Partners in2003. Prior experience at McKinsey,Procter & Gamble, Syntek Capital. Laureain Ingegneria Elettronica (ElectricalEngineering, Operations Research) fromUniversita’ La Sapienza, Rome, Italy. MBAfrom Sloan School of Management, MIT,Boston.

7.Alex Fortescue

Office London

Board seats Plantasjen, Somerfield,New Look.

Background Joined Apax Partners in1999 from OC&C Strategy Consultants.BEng in Electrical and ElectronicEngineering from Imperial College,London. MBA from INSEAD.

8. Matthew Brockman

Office London

Board seats Hit Entertainment,New Look, Healthcare at Home,Merlin Entertainments.

Background Joined Apax Partners in2000. Prior experience at LEK Consulting.BEng in Mechanical Engineering fromImperial College, London. MBA fromHarvard Business School.

9. David Kim

Office NewYork

Board seatsTommy Bahama, SpyderActive Sports, Contech ConstructionProducts, Norcraft Cabinets.

Background Joined Apax Partners in2000. Prior experience at Butler CapitalCorporation. BS in East Asian StudiesfromWest Point. MBA from HarvardBusiness School. Graduate of the U.S.Army Airborne and Ranger schools.

9




Our sector expertiseRetail & Consumer review

Overview Apax Funds have been one of the leading global investors in theRetail and Consumer sector over several decades, during which time they haveinvested €2.4bn of equity in retail businesses. Apax Funds have backed a diverserange of retail, consumer and leisure businesses across their global platform:companies such as Somerfield and New Look in the UK; Plantasjen inScandinavia; CBR in Germany; Sisal and Panrico in Southern Europe andTommyBahama, Spyder and LifeTime Fitness in the USA as well as global brands such asTommy Hilfiger and PVH/Calvin Klein.

The Retail & Consumer team is made up of 23 investment professionalsglobally, including nine partners, spread throughout North America, Europe andAsia.The team has a range of professional backgrounds and wide experienceacross many segments within retail, consumer and leisure.

Marketplace trends and drivers During the course of 2008 the globalmacroeconomic environment deteriorated sharply, pushing many developedeconomies into recession. Retail and consumer facing businesses have beenamongst the first and worst affected by this. An all time low in consumerconfidence, increasing (fear of) unemployment, significantly reduced creditavailability and tumbling asset prices, especially housing, have contributed to fallsin consumption. Emerging markets, which many had thought would prove moreresilient, are now also showing major signs of weakness.

An unprecedented level of policy response, with low interest rates,spending programmes and quantitative easing take us into uncharted waters interms of how consumption and GDP will respond.The hope is clearly that thesepolicies begin to boost demand during 2009, the danger is that they lead toinflation, inefficiency and ultimately stagnation.

However, the current economic slowdown is not hitting all areas of retailand consumer equally and evidence from previous recessions suggests thatwhilst certain sub-sectors are hit hard others are relatively insulated. Even withinindividual cyclical sub-sectors, there remain winners and losers and particularly in atough environment, performance levels polarise.

Consumer companies need to remain responsive to over-riding markettrends whilst also reacting to changes caused by the current environment.Thesetrends include:

Polarisation Individuals are increasingly discerning in their choices as theyweigh up every purchasing decision. Value for money is now the key purchasecriterion and in their increasing search for this, consumers are showing willingnessto alter their purchasing habits – trading down to value offers to make savingson some items, whilst also investing in premium quality for others.Winning propositions are those that offer distinctive value to consumers eitherthrough price, product or service and are able to deliver and communicate thisconsistently.

Interruption of some long-term consumer trendsWhilst the downturn ismostly accelerating certain long-term channel or consumer trends, there is alsoevidence that it is temporarily disrupting others. In recent years, there has beensignificant growth in higher priced products offering maximum convenience orstrong health and sustainability credentials.The downturn is forcing consumersto go ‘back to basics’, trading chilled ready meals for home cooked recipes,expensive trips abroad for ‘staycations’, lattes from coffee shops for instant coffee,and organic smoothies for cheap soft drinks.

Acceleration of channel shifts with value at the forefront of manyconsumers’ minds, the relative pricing transparency and convenience of homeshopping provided by the internet is transferring share online at an increasing rate.

Increasing reach and scale of multiple grocers: in every majorWesterncountry there is a very large and typically concentrated grocery sector which hasconsiderable influence on a number of food and non-food consumer and retailcategories.Whilst genuine category killers are able to compete effectively with thegrocers, variety retailers are increasingly struggling to keep up.

Although sector valuations dropped dramatically throughout the year, theswift deterioration in trading and lack of visibility in outlook meant Apax Funds tooka very cautious view on investing, with completed investments limited to contextswhere clear secular trends underpinned growth. A good example of this approachis the acquisition of D+S europe, an e-tail fulfilment business.

The opportunity was also taken to realise the investment in food retailerSomerfield, which operates in one of the most defensive categories in theconsumer space, via a trade sale.

Retail & Consumer strategy Apax Funds’ investment strategy in the sectoris to focus on growth driven by exposure to underlying positive trends (some ofwhich are outlined above). Apax Partners’ local market presence, combined witha global reach, enables it to understand the themes from around the world andadapt them to local market circumstances. It also allows Apax Partners to buildrelationships with, and Apax Funds to invest behind, the very best internationalretail, consumer and leisure sector management.

OutlookThe Apax Partners sector strategy will remain focused on globalsub-sectors which will exhibit growth, backing strong management teamsexecuting within the context of the secular trends identified above.The uncertainconsumer environment and lack of bank debt will inevitably be reflected in thenature of deals undertaken. Liquidity issues, over-levered balance sheets andunder-valued cyclical businesses are likely to generate continued investmentopportunities.

Alex Fortescue



Our sector expertiseRetail & Consumer continued

Case study: Retail & Consumer

TnuvaAdding value to Israel’s food industry Tnuva is the largest food manufacturer

and distributor in Israel and one of its most well-known companies. It owns sevenout of the ten most known food brands in Israel and accounts for over 14% ofshelf space in supermarkets.

Tnuva was formed over 80 years ago as an agricultural cooperative of 620farming communities across the country, who were also the company’s suppliersof raw milk and produce. Over the years it had been seen by many investors as anattractive proposition but due to the complex ownership structure it was out ofreach to potential buyers.

The deal Aware of a potential economic downturn, Apax Partners wasattracted toTnuva because of its stable business model: the majority of thecompany’s food products are basic staples (65% dairy-related plus meat, poultry,eggs, fish, frozen vegetables) and so the company was felt to be well placed toweather a recession.

WhyApax Partners? In 2006,Tnuva opened itself up to a limited auction.Although the Apax Fund’s bid was not the highest in financial terms, it was

nonetheless perceived as the most attractive.The management and board of thecompany explained their decision to accept the third highest bid by saying that theexpertise and professionalism displayed by the Apax Partners team during thefour month due diligence process prior to the Fund’s bid had convinced them thatApax Partners would be the best partner for the future growth of the company.

Apax Partners’ ability through its local presence to understand the differentstakeholders’ needs and address them appropriately was also critical to thesuccess of the Fund’s bid.

Post completion Following the auction there was a lengthy and complexprocess of negotiation with the agricultural owners of the business, which tookalmost two years, and necessitated a change in the law and the introduction ofnew tax codes.The transaction closed in January 2008, with the Apax Europe VIIFund and its co-investor Mivtach Shamir gaining a 77% stake inTnuva for anenterprise value of $1.4bn.

What about the future? Apax Partners believes that the first year after anacquisition is critical to the success of a business and the deal team put a greatdeal of time into learning more aboutTnuva’s business and working out whereApax Funds could add value.

By the end of the first year following acquisition, many of the plannedchanges atTnuva had been completed.These included sales of some of unusedreal estate; turning around the fresh meat business, which became profitable inthe second half of 2008; hiring new talent and creating a new organisationalstructure which is expected to enhance synergies across the group.

Led by Zehavit Cohen, who became Chair ofTnuva, the Apax Fund dealteam is continuing to work through the numerous projects which were identifiedas areas where our Funds can add value, as well as exploring strategic alternativesfor non-core subsidiaries and potential add-on opportunities.

“Since the acquisition byApax Funds, we have introduced a culture of valuecreation and efficiency to the company which, as a cooperative, had notpreviously been part of its thinking”. Zehavit Cohen Apax Partners



Our sector expertiseRetail & Consumer continued

Fashioning a successful investment in a growth sub-sector D+S europe AGis a leading international e-commerce and customer service provider listed on theDeutsche Börse.The company’s e-commerce division provides the tools thatenable some of the world’s biggest fashion names to maintain their competitiveedge in the online sphere.The business looks after all of the elements involved inensuring that customers get the best online treatment, including the design andoperation of online shops, warehousing, delivery of goods, and paymentprocessing.The customer service division provides essential call centre supportto some of Germany’s largest companies and is now the country’s third-largestprovider of value-added telephony services.

As an early mover in the supply of e-commerce solutions to the fashionindustry, D+S europe has seen very rapid growth in this part of the business,and now dominates the European market in this very high-growth field. In 2007,fashion was the fastest-growing segment of the online retail market and D+S’smanagement expects the segment’s growth to continue at a double-digit pace,despite the general economic climate.This sector trend opened up enormousopportunities for D+S europe; so in late 2007, the company began looking for apartner who could offer the know-how and requisite financial strength to takeadvantage of this potential.

WhyApax? Apax Funds stood out because of their experience in thefashion industry through investments such asTommy Hilfiger, CBR Group andCalvin Klein, as well as their experience in the IT and business services sectorsand focus on growth buyouts.

As a result, D+S’s management team engaged with Apax Funds on anexclusive basis and in April 2008, the current Apax EuropeVII fund acquiredthe shares of several legacy shareholders and at the same time submitted avoluntary acquisition tender to all other shareholders.The offer was unanimouslyrecommended by the D+S Board and in early 2009 Apax Funds became themajority shareholder in D+S europe, holding over 90% of the company’s shares.

What about the future? Since the investment,CEO Achim Plate and histeam have driven D+S europe’s growth in both lines of business: In 2008 totalrevenues rose by 29 per cent to €299 million. In addition to growing the existinge-commerce customers, the business has launched online sites for newcustomers including Hugo Boss and C&A. Around 40 new websites for fashionplayers are scheduled to launch in 2009, including the online shop for anotherApax Funds portfolio company,Tommy Hilfiger.

In the field of call centre services, the company entered into a strategicpartnership with DeutscheTelekom in 2008, under which Germany’s largesttelecommunications company is transferring considerable customer service andback office operations to D+S.The call centres also serve as the foundation forcorporate social responsibility activities at D+S. For years, the company has beenone of the major sponsors of the Students Helping Life (SHL) non-profit initiative,which conducts its Social Day annually in Germany. On this day, students workfor companies or private individuals for a good cause – in 2008, some 200,000students from over 1,000 schools participated in this campaign, which wasorganised with the aid of a D+S call centre.

Case study: Retail & Consumer

D+S europe

“The partnership has already borne fruit. In collaboration withApax, we arebenefiting from its financial strength and its broad international network.This network is serving to pave the way for partnerships and businessrelations. In addition, D+S is gaining access to potential customers at thehighest level”. Achim Plate CEO, D+S europe


The 20-strongMedia team is one of the largest and longest-established in the industry. The team has a wide variety ofindustry, consulting, private equity and banking experience, withmembers focusing on niche sub-sectors of the market. In the lastten years, the team has advised Apax Funds on the investment of€3.4bn of equity.

6362

Top Media investments

Emap Investment year Enterprise value attime of investment

2008 £1.2bnCengage Investment year Enterprise value atLearning time of investment

2007 $7.3bn

Trader Media Investment year Enterprise value atGroup time of investment

2007 £1.4bnCME Investment year Enterprise value at

time of investment

2006 $2.8bn

MediaOur sector expertise



1. Jacqueline Reses

Office NewYork

Board seats Cengage Learning,Nelson Education, Hit Entertainment,The Learning Annex, NEP Broadcasting.

Background Joined Apax Partners in2001. Previously at Goldman Sachs. BSEfrom theWharton School, University ofPennsylvania.

2. Stephen Grabiner

Office London

Board seats Emap,Travelex, IncisiveMedia, Bezeq, PCM,Yell.

Background Joined Apax Partners in1999. Previously at On Digital andTheDailyTelegraph. BA in Economics fromUniversity of Sheffield. MBA fromManchester Business School.

3. Christian Stahl

Office NewYork

Board seats Cengage Learning, CentralEuropean Media Enterprises (CME),Tommy Hilfiger,World Directories, 20Minutes,Telcast Media Group,ThomsonDirectories,The Stationery Office.

Background Joined Apax Partners in1999. Previously at Bain & Company.Diplom Kaufmann and BA in BusinessAdministration from EuropaeischesStudienprogramm fuerBetriebswirtschaftslehre (ESB),Reutlingen/London. MBA from INSEAD.

4.Tom Hall

Office London

Board seatsTrader Media Group,Truvo,The Stationery Office, Zeneus Pharma,20 Minutes,Thomson Directories.

Background Joined Apax Partners in1998. Previously at S.G.Warburg andDeutsche Bank. MA from CambridgeUniversity.

5. Irina Hemmers

Office London

Board seats Emap,Trader Media Group,Incisive Media,World Directories, PCM,Sulo/Cleanaway.

Background Joined Apax Partners in2001. Previously at McKinsey. MA inInternational Economics from Universityof Innsbruck/Tulane University. MPA inPublic Administration from Harvard.

6. Paul Fitzsimons

Office London

Board seats Cengage Learning,Hit Entertainment, Hub International,Kabel Deutschland Group, FuturePublishing, StageThree Music.

Background Joined Apax Partners in1992. Previously at Arthur Andersen.Chartered Accountant (ACA).

1

2

3

4

5

6

64 65

Our sector expertiseMedia partners




Our sector expertiseMedia review

OverviewThe 20-strong Media team is one of the largest and longest-established in the industry.The team has a wide variety of industry, consulting,private equity and banking experience, with members focusing on niche sub-sectors of the market. In the last ten years, the team has advised Apax Funds onthe investment of €3.4bn of equity. In the last five of those years, Apax Fundshave led eight investments in the sector, of which four have been in non-competitive situations.

Marketplace/trends and drivers The two main forces driving change in themedia sector are the economic climate and rapid technological change.

The severity of the current recession has hit nearly all parts of the mediasector as businesses across the economy slash marketing budgets. Advertisingrevenues are being most severely affected. In traditional media channels we areseeing year-on-year declines of up to 30%. In online businesses, where searchadvertising has until now been a significant growth driver, advertising spend hasfallen from high double digit to single digit growth.There are certain businessmodels however, such as those based on subscriptions or with more stable endusers such as the public sector, which are proving more resilient to the downturn.

In parallel, the internet has led to a revolution in the way media content isdistributed.This technology shift has led to falling costs of distribution and storageand consequently to lower costs of entry; in other instances the impact of digitalcontent has changed the game for incumbent suppliers.The pace of technologicalchange is having a profound impact across the media space and has beenaccelerating in the current economic climate, as customers focus on cheaperchannels with the clearest return on investment.

Widespread penetration of digital media across multiple channels includingcable television, broadband internet and mobile internet has led to changes inconsumer behaviour with regard to media consumption. In the UK, for instance,the number of households connected to broadband internet shot up to 58% in2008 from just 1% in 2001.This has corresponded with a rapid increase in usage.In the three years to 2006, internet usage across Europe rose by 28% against abackdrop of falling circulations in more traditional media formats like newspapersand magazines.

Digitisation has led to its own changes in the radio,TV and musiclandscapes. Across Europe, the old incumbentTV and radio channels are seeingtheir viewing figures fall as new digital competitors take market share. In themusic space, the major record labels are struggling to find business models thatfit the new world of digital publishing.

Media strategy On a positive note, the fast-paced technological changeaffecting the industry has led to a sustained increase in media consumption.While the current economic downturn means that it is difficult to translate agrowth in consumption into a growth in revenues, this trend provides commercialopportunities and a favourable long-term outlook for those companies that are ableto understand and exploit sub-sector dynamics.Working in conjunction with ApaxPartners’Tech &Telecom team, the Media team is well positioned to react andcontinue to advise on investments that are ‘ahead of the curve’.

Our funds are looking to invest in situations where businesses are seekingto build out an online platform or in situations where brand strength and marketleadership can enable companies to operate across various media platformssuccessfully.

OutlookThe impact of the current economic climate and technologicalchange is having a variable impact across the sector.This will continue to bethe case, and the prospects for the various sub-sectors will consequently differwidely according to how they are affected. In segments such as consumer bookpublishing and outdoor advertising, the impact of technological change is relativelylow; in others, like business-to-business publishing, recorded music andnewspapers it will continue to have a massive impact. Finally, for some, such asprofessional or academic publishers and information service providers, changesin media consumption and technological innovation represent a significantopportunity for growth. Understanding the uptake of new technology acrossdifferent geographies and how this will impact the various sub-sectors within themedia space will continue to be the key to successful investing.

Stephen Grabiner



Our sector expertiseMedia continued

Backing best of breed in a challenging environment Emap is one of the UK’sleading business information providers serving the retail/fashion, public services,construction, media and automotive industries.The Company provides informationto its customers through four key formats: print and online magazines (35% of2007 revenues); exhibitions and festivals (32%); digital information services (27%);and conferences (6%).

As well as publishing, the business also organises three of the top four UKtrade exhibitions, has the leading publication in most of its core market segments,runs the pre-eminent international advertising festival (Cannes Lions) and, withWGSN (a provider of digital information to the fashion industry), has a high-growthand market-leading information services business. Approximately 75% of revenueis generated in the UK and 25% from international sources including the high-growth Middle Eastern market.

The company’s business model has evolved from being largely reliant onprint advertising to being far more diverse and resilient and thus able to tapdifferent corporate budgets other than advertising.

Close to 75% of Emap's brands are number one or number two in theirmarket. Because of this leadership, the brands are highly valued by customers andenjoy high renewal rates.They also benefit from a flight to quality in a morechallenging trading environment when customers will cut budgets on second tierbrands rather than reducing spend on the market leader.

The Investment Apax Funds, alongside corporate partner Guardian MediaGroup, acquired the business as a result of the three-way break-up of Emap plc atthe end of 2007.The break-up led to the sale of the consumer publishing and radiodivisions to Bauer Media, a large German media conglomerate, while Apax Fundsand GMG took private the remaining B2B division and umbrella “plc” organisation.

The strong existing partnership between Apax Funds and GMG through theirjoint ownership ofTrader Media Group in the UK proved to be a decisive competitiveadvantage in securing the coveted B2B titles. Apax Partners also had a strong‘angle’ because of its existing investment in the B2B sector with Incisive Media.

Progress In the nine months to December 2008, Emap's revenue grew 3%year on year.This growth was achieved against the back-drop of a difficult tradingenvironment in Emap's core UK market where the key end markets it serves, retailand construction, experienced a significant downturn.This was partly compensatedfor by a strong performance in its public sector end market. In comparison toother media companies, Emap has shown a good degree of resilience, largely asa result of having a streamlined portfolio of market leading products that benefitfrom customers concentrating budget spend on the market leader.

Since the initial investment, which completed at the beginning of the year,Apax Funds and GMG have worked with the company to complete the seniormanagement team, including hiring David Gilbertson as buy-in CEO from Informa.The Group has also been fundamentally restructured along product lines, with newreporting lines put in place and a new set of performance indicators introduced.

Case study:Media

Emap


The Healthcare team atApax Partners comprises 17dedicated investment professionals based in Europe,the US and India. The team is characterised by its very strongscientific background, with many of the members havingachieved academic success in their specialist field beforemoving into industry, consulting or private equity directly.

Top Health investments

TriZetto Investment year Enterprise value attime of investment

2008 $1.5bnGeneral Investment year Enterprise value atHealthcare time of investmentGroup

2006 £2.5bn

Capio Investment year Enterprise value attime of investment

2006 €2.9bnMölnlycke Investment year Enterprise value atHealth Care time of investment

2005 €1.3bn

HealthcareOur sector expertise

Apax Partners Annual Report 200870 71


Our sector expertiseHealthcare partners

2

1

5

3

7372

1. Bill Sullivan

Office NewYork

Board seats TriZetto, SpectrumLaboratory Network, MagnaCareHoldings.

Background Joined Apax Partners in2007. Prior experience at MagnaCareHoldings, Inc., Oxford Health Plans andLincoln HN Life. Bachelors of Financeand Banking from Suffolk Universityin Boston.

2. Buddy Gumina

Office NewYork

Board seatsTriZetto, QualitestPharmaceuticals, Spectrum LaboratoryNetwork, Encompass Home Health,Voyager HospiceCare, MagnacareHoldings.

Background Joined Apax Partners in1998. Prior experience at Donaldson,Lufkin & Jenrette Merchant BankingPartners. BA in Political Science fromYaleUniversity. MBA from Harvard GraduateSchool of Business Administration.

3. Ian Jones

Office London

Board seats General Healthcare Group,Mölnlycke Health Care Group, RegentMedical, Medlock Medical, HansenTransmissions, PureWafer.

Background Joined Apax Partners in1997 from Coopers & Lybrand. Degree inMathematics and Computer Science fromCambridge University. MBA fromWarwickBusiness School. Chartered Accountant(ACA).

4. Khawar Mann

Office London

Board seats General Healthcare Group,Capio, Unilabs, Celldex.

Background Joined Apax Partners in2003. Prior experience atWeston MedicalGroup PLC and Linklaters. MA in MedicalSciences and Law and LL.M from GirtonCollege, Cambridge University. MBA fromtheWharton School, University ofPennsylvania.

5. Cathrin Petty

Office NewYork

Board seats Qualitest Pharmaceuticals,Affymax Inc., Intercell AG, ZymogeneticsInc, Xanodyne Inc., Zeneus Pharma Ltd.

Background Joined Apax Partners in2000 from Schroder Ventures, andpreviously worked at SchrodersInvestment Management. MSc in NaturalSciences (immunology) from New Hall,Cambridge University with a postgraduate in Management Studies fromthe Judge Institute, Cambridge.

5

4




Our sector expertiseHealthcare review

OverviewThe Healthcare team at Apax Partners comprises 17 dedicatedinvestment professionals based in London, NewYork, Madrid, Milan, Munich andMumbai.The team is characterised by its very strong scientific background, withmany of the members having achieved academic success in their specialist fieldbefore moving into industry, consulting or private equity directly. Led from Londonby Ian Jones, it is a stable team, with the core members having advised the lastthree Apax Funds.

The Healthcare group focuses exclusively on buyouts and has advised ApaxFunds on equity investments of over €2.2bn in companies such as ApolloHospitals, General Healthcare Group, Capio, Unilabs, Mölnlycke Health CareGroup,TriZetto and Qualitest Pharmaceuticals.

Marketplace trends and driversThe Healthcare team focuses specifically onthree core areas globally: medical products, devices and supplies; speciality andgeneric pharmaceuticals and healthcare service providers and in addition, in theUS, on the healthcare IT space. Dynamics are different in each sub-sector.

The key drivers in the medical products space are innovation, consolidationand globalisation.There are pressures on many large medical product companiesto divest non-core assets. In our opinion the medical products sub-sector hasattractive LBO characteristics, displaying long-term growth prospects with goodmargins and cash flow characteristics.

The pharmaceuticals space is characterised by increased commercialpressures driving a re-examination of the business model. Ongoing consolidationamongst the major pharmaceutical companies will drive portfolio rationalisationand create opportunities for more nimble competitors. In the generics space, weare witnessing continued strong growth in demand, balanced by consolidation andaggressive competition; the sector remains an attractive area for the team tofocus on.

Across the broad sweep of companies that are covered by the healthcareproviders tag, the key dynamics are ageing populations, consumer awareness andpatient choice. Healthcare costs are forcing payers to re-assess the level of futureprovision and the financing of care. New reimbursement models are emergingincluding ‘pay by performance’ rather than ‘pay by procedure’.The sector is alsobecoming increasingly regulated and specialised management teams areemerging on a global basis, which are well equipped to deal with a rapidlychanging part of the healthcare sector.

Healthcare IT is becoming increasingly important for providers,professionals and patients. New models of healthcare delivery are increasinglyIT intensive. Further, there is broad recognition, especially in the US, that dataanalytics and customer-facing technologies will be critical to future success.Theteam is interested in segments of the market benefiting from exposure fromthese drivers and led the US$1.5bn public-to-private ofTriZetto in the US duringthe summer of 2008.

Healthcare strategyThe Healthcare team has specialists in each of the threekey areas of focus outlined above. It is focused on making investments in growthareas where it has a proprietary angle, derived from its sector knowledge andexpertise.The primary focus of the team is on European and US opportunities butthere are significant opportunities for transatlantic and global transactions,reflecting the global nature of the healthcare industry.

OutlookWe believe that the healthcare sector remains dynamic and willsee increasing changes in how healthcare is provided and sourced. As a result ofthese changes, we anticipate that there will be far-reaching consequences in thehealthcare sub-sectors that we focus on.We continue to concentrate on areaswhere rapid change and dislocations in the market are producing interestingopportunities.

Ian Jones



Our sector expertiseHealthcare continued

Towards Integrated Healthcare Management Based in Newport Beach,California, theTriZetto Group Inc. develops, licences and manages softwaresolutions that link together constituents in the healthcare supply chain to improvethe coordination of benefits and care for healthcare consumers.The company,which was founded in 1997 and achieved an IPO on NASDAQ two years later, hasapproximately 2,000 staff and sells its software systems to over 350 separatecustomers in the US health insurance and benefits administrator markets; all in all,TriZetto technology touches approximately half the insured population of the US.

The deal In August 2008, Apax Europe VII and Apax USVII joined forceswith two ofTriZetto’s core customers – Blue Cross Shield ofTennessee andRegence Group – to take the company private in an investment worthapproximately US$1.5bn. On the decision to de-listTriZetto, founder and CEOJeff Margolis says: “Although the management team felt thatTriZetto had a verystrong profile as a listed business, we also saw a major opportunity to secure theinvestment that would get us closer to achieving our ultimate goal of IntegratedHealthcare Management. Clearly, the state of the public markets was also afactor: we had predicted an extended period of volatility on the markets andwanted to avoid the potentially destructive situation where managementresources are diverted away from the objectives of a business to deal withPR issues.The option of a take-private by a strong backer offered us the chanceto secure real value for our shareholders and customers”.

WhyApax Partners? As far as the choice of partner was concerned Margolisexplains that the options had been varied: “There was significant interest inTriZetto in late 2007 and into 2008, with something like 20 unsolicited approachesfrom trade and financial bidders.We had already crossed paths with Apax before,whilst analysing a potential acquisition, and on this occasion we were immediatelyimpressed by the team’s grasp of the long-term vision for the business and theirwillingness to buy into this vision and trust the strengths of the company. In theend, this, plus their relationship with two of our key clients, gave them the edgeand the three parties combined to win the bid.”

Since the deal completed In the few short months since the completion ofthe deal the transition from public to private has been a seamless one.What ismore, as Margolis points out, the change has not affected the company’sperformance.

What about the future?TheTriZetto and Apax Partners teams stronglybelieve that healthcare systems in the US and elsewhere continue to suffer frompoor coordination and the company’s ultimate goal is to optimise benefits and carevia the principle of Integrated Healthcare Management.To achieve this, theprimary objective must be to continue to make investments that fuel growth, bothin terms of the development ofTriZetto’s existing technology and services, and viaacquisitions that bolster the company’s footprint, increase its range of offeringsand, perhaps, expand its geographical coverage.

Case study: Healthcare

TriZetto

“I feel that we are already seeing an improvement in our strategic planning –specifically in our ability to look further into the future and make decisionswhich will help us achieve the greatest impact – and this is largely thanks tothe support we receive fromApax on the strategic and financial planning side”.Jeff Margolis, CEO,TriZetto



Our sector expertiseHealthcare continued

Bringing focused expertise to an Indian leaderTreating over three millionpatients every year, Apollo Hospitals is the largest private healthcare provider inAsia. Apollo was established as a public company in 1979 by Dr P C Reddy, andhas been a pioneering force in Indian healthcare ever since.Today it operates anetwork of 44 hospitals with around 7,000 beds. In addition to its hospitalsbusiness, Apollo owns and operates one of the largest pharmacy chains in India aswell as primary care clinics, nursing homes, a health insurance business and oneof India’s largest medical outsourcing businesses.

The deal In mid 2007, Apollo was looking to raise equity capital in order toexpand. Suneeta Reddy, Apollo’s Finance Director, explains the rationale: “We hada very clear sense that Apollo was poised for growth. Demand in the Indianhealthcare sector was, and still is, far greater than supply, the stock markets weredoing well and we wanted to capitalise on the opportunity.”

WhyApax Partners? As part of this sales process, the Apollo Managementteam met with five or six other investors and ultimately chose Funds advised byApax Partners. Apax was always well placed due to its knowledge of thehealthcare sector in general and specific experience with hospital investmentssuch as Capio and General Healthcare Group in Europe. It also benefited from astrong prior relationship with the company and with the Reddy family stretchingback to an initial meeting in the US in 2004.

Reddy continues: “We were looking for a strategic partner that could reallyhelp the business maximise the opportunities that we saw. Most of the otherscould provide the financing, but we felt that Apax understood the hospitalbusiness much better and would also have the strategic know-how that we werelooking for. In terms of process, they were extremely thorough; they hadcommissioned an external study and had a deep understanding of the market.They were also able to complete the diligence very quickly and with a very highlevel of understanding.”

Since the deal completed in October 2007, Apax Funds’ deal team hasadvised management on a number of initiatives such as budgeting andperformance monitoring in the group, operational improvements and assessmentof potential acquisition targets. “We haven’t seen eye-to-eye on everything”, saysReddy, “but they have been a surprisingly useful sounding board for the businessand their questioning approach has helped to get the best out of our team and,at the end of the day, our interests are very closely aligned.

“They have also been effective at benchmarking our business againstperformance in their European investments and have challenged us to drivethrough operational improvements without compromising on clinical excellence.The team have risen to this challenge and, as a consequence, the business hasbecome more profitable.”

What about the future? As more people demand a higher standard ofmedical care, the growth potential for Apollo remains strong.The private hospitalsmarket is diverse and there is scope for further consolidation as well as organicgrowth.The group also has ambitious plans to grow the number of pharmacies itoperates from 700 to 1,200 by 2010.

Case study: Healthcare

Apollo

“Given the current market conditions, there are certainly opportunities out there.They genuinely understand the business and although India is a different culture, thefundamental business model of operating a hospital doesn’t change that much andthe experience they have as owners of hospitals elsewhere will be beneficial as wecontinue to grow.The results of the partnership so far have been good and they havegiven the company the freedom to take decisive action”.Suneeta Reddy, Finance Director, Apollo Hospitals


Worldwide, the FABS team is made up of 18 investmentprofessionals located acrossApax Partners’ office network.The team has a broad range of expertise spanning industry,consulting and investment banking that enables Apax Partnersboth to identify opportunities and to work deeply with portfoliocompanies across the sector.

Top Financial & Business Services investments

Hub Investment year Enterprise value atInternational time of investment

2007 $2.0bnFarmactoring Investment year Enterprise value at

time of investment

2006 €224m

Travelex Investment year Enterprise value attime of investment

2005 £1.1bn

Financial &Business Services

Our sector expertise



Our sector expertiseFinancial & Business Services partners

1

23

5

8382

4

1. MitchTruwit

Office NewYork

Board seats Hub International

Background Joined Apax Partners in2006. Previously President and ChiefExecutive Officer of OrbitzWorldwide,Chief Operating Officer of priceline.comand Head of Corporate Development forOxford Health Plans. BA in PoliticalScience fromVassar College. MBA fromHarvard Graduate School of BusinessAdministration.

2. Michael Phillips

OfficeMunich

Board seats Xerium, Sulo, IFCO, PVH,Tommy Hilfiger.

Background Joined Apax Partners in1992. Prior experience at Ciba-Geigy Ltd.and OttoWaste Management Ltd. BScHonours in Engineering Chemistry fromQueen’s University, Kingston, Canada.MBA from INSEAD.

3. Frank Ehmer

Office London

Board seats CME, Emap,Tommy Hilfiger,Authentos, Bundesdruckerei,Wind Hellas.

Background Joined Apax Partners in2000. Prior experience at the hedge fundHighbridge in NewYork. Diploma fromUniversität Mannheim. MBA fromHarvard Business School.

4. Massimiliano Belingheri

Office London

Board seats Farmafactoring, Azimut,SmartTechnologies,Yell, PCM.

Background Joined Apax Partners in2001. Prior experience at McKinsey andMorgan Stanley. Laurea in Economia inGovernment, Business & Economics fromUniversita’ Commerciale Bocconi, Milan,Italy. MBA from Harvard Business School(Baker Scholar).

5. Ralf Gruss

Office Hong Kong

Board seats IFCO, Kabel Deutschland,LR Health & Beauty Systems.

Background Joined Apax Partners in2000 from Arthur D. Little. Degree inFinancial Economics and IndustrialEngineering from the University ofKarlsruhe. Studied Financial Economicsand Business Administration at theLondon School of Economics and theUniversity of Massachusetts (Boston).




In business services, the main drivers continue to be the implications ofoutsourcing and globalisation. In a recession, companies are looking to outsourcemore of their non-core functions, and are increasingly seeking partners that areable to fulfil these functions across their entire network.This will lead tocontinuous growth within the sector to counterbalance the impact of the globalrecession. Governments’ commitments to free trade should support theglobalisation of the sector and its consolidation as business services firms striveto meet their clients’ needs around the world.

StrategyThe team pursues different strategies for financial services andbusiness services, reflecting the unique dynamics of each sector.

In financial services, we target businesses that own strong customer-facingfranchises and have the potential to strongly benefit from a rebound in theeconomy. We aim to support solid institutions to take advantage of the scarcity ofavailable capital to pursue growth through acquisition in their vertical segments ofoperation.

In business services, we believe that as the market tends to becharacterised by relative fragmentation there exists a substantial opportunity tobuild and develop businesses of scale through organic growth and acquisition.Our goal is therefore to acquire strong platforms that can be used to drive growthboth within their own markets and overseas and be positively exposed to arebound in the global economy.

OutlookThe trends underlying both the financial services and businessservices industries mean that they are likely to continue to be highly geared toan economic rebound, and present attractive investment opportunities for theApax Funds.Within financial services, scarcity of capital will present a unique flowof investment opportunities as large groups seek to exit non-core businesses andgeographies and business models get redefined. Continued turbulence in thecapital markets will create opportunities as firms seek strategic partners to helpthem through the downturn. In business services, globalisation and consolidationwill continue to present opportunities for investment in the sector.

Michael Phillips

84

Our sector expertiseFinancial & Business Services review

OverviewThe Financial & Business Services (‘FABS’) sector represents asubstantial portion of the global economy, with approximately 18% of the marketcapitalisation of the MSCI Global Index in the sector.The sector itselfencompasses a diverse range of businesses, from diversified global financialinstitutions to international business services companies, and countless regional,national and local players.

Worldwide, the FABS team is made up of 18 investment professionalslocated across Apax Partners’ office network.The team has a broad range ofexpertise spanning industry, consulting and investment banking that enablesApax Partners both to identify opportunities and to work deeply with portfoliocompanies across the sector.

Apax Funds have invested €1.4bn in the sector over the past 15 years.

Marketplace/trends and drivers The financial services sector has beenone of the main beneficiaries of the long term globalisation and deregulationprocess that has transformed the global economy over the past 30 years.Thislong term trend will continue, despite the current credit crisis. After the globalcorrection in asset values and a re-basing of GDP levels, normal growth will return,as will the need for financial services in both developed and developing regions.We remain confident that the financial services sector will out-perform GDPgrowth in the future.

However, whenever the speed of new product innovation and productcomplexity outstrip the limits of the available regulatory framework and riskcontrol systems, an imbalance is created. In this instance, the imbalance alloweda surplus of cheap liquidity to misprice risk in ‘repackaged’ sub-prime real estateassets and other financial debt products.The crisis was further fuelled by theissuance of derivatives and insurance products in the form of credit default swapsand credit wraps, without adequate requirements for regulatory capital.Whatappeared to be free money now burdens the financial markets with losses thatcannot be financed.The only solution to stabilise the financial markets has beenstrong government intervention and the elimination of loopholes in the regulatoryframework of the banking sector.This process will continue through 2009 and theeffects will be felt for years to come.

We expect the financial services sector to be reshaped in the years tocome as financial services conglomerates (some of them government owned)sell high quality non-core businesses to raise capital to restore their balancesheets, repay government support and retrench to their core markets.

While asset management, asset gathering, insurance and support serviceswill go through a cyclical downturn, the viability of wholesale funded business willbe severely tested.We expect the new wave of legislation and regulation torestrict entry into the sector, increase core capital requirements and protect theprofitability of the existing institutions.



Our sector expertiseFinancial & Business Services continued

Farmafactoring S.p.A. is the leading provider of credit management servicesto suppliers to the Italian public healthcare system, the Servizio Sanitario Nazionale(‘SSN’).The company was founded in 1985 by a group of Italian and multinationalpharmaceutical and biomedical companies to alleviate the cash-flow difficulties ofthe SSN’s suppliers, who were affected by the traditionally long payment cycles ofits constituent health authorities.

Farmafactoring purchases and manages the collection of its clients’receivables, allowing them to completely outsource their accounts receivablesmanagement function. In addition to providing non-recourse factoring,Farmafactoring also provides receivables management services for clients whochoose to retain them on their own balance sheets.

Farmafactoring’s strong relationships with the SSN’s local health authoritiesacross Italy and deep knowledge of their payment patterns allows the company toprice its products very competitively, while its scale gives it a strong bargainingposition when negotiating payments from the health authorities.

The deal The company was attractive to Apax Funds as it is the clear marketleader with a defensible competitive position in a growing sector. Historically,growth in public healthcare expenditure has not been impacted by the economiccycle and, in addition, the company has identified several growth opportunities,including providing its services to a wider range of suppliers to the SSN and toother parts of the Italian public sector, launching new products to its existingclients, and expanding internationally.

WhyApax Partners? In December 2006, the Apax Europe VI fund won anauction to acquire a 91.7% stake in Farmafactoring.The Apax deal team had beendeveloping an understanding of Farmafactoring’s business and prospects for sometime prior to the decision by the company’s shareholders to begin the saleprocess, and their extensive knowledge of the business provided a keycompetitive advantage during the auction process.

What about the future? Since the acquisition, the business has continuedto perform strongly and the Apax deal team has advised the company’smanagement to put in place preemptive measures to counter any shocksresulting from the volatility of the credit markets.

In addition, a series of initiatives has been launched to optimise the keyvalue drivers of the business, including targets to encourage the collection of asmuch default interest as possible from the existing book of business, buyingportfolios of receivables outside the existing client base, and improvements to thefunding structure of the business.

Finally, the company has completed the necessary groundwork to expandits operations to Spain to leverage its expertise with public healthcare payers in amarket with similar dynamics to Italy.

Case study: Financial & Business Services

Farmafactoring



90 Investors review

98 Current portfolio listing

100 Apax Partners international offices488 89


Our investors are our clients and the relationship with our investors is at theheart of our business and indeed drives our business. Advising the Apax Funds towhich our investors have committed, understanding what they are looking forfrom their investment, and working with them to provide enhanced returns drivesthe Apax Partners strategy and that of the Investor Relations (IR) team.The IRteam places significant emphasis on three key areas: (i) investor communication;(ii) relationship development and (iii) content improvement.The primary principleapplied across the three areas is to be transparent, by providing detailed andfrequent information through formal and informal communication channels.

Investor communicationsThe IR team advise our Guernsey office oncommunications with our investors.This includes quarterly reports and activityupdates (or press releases) upon the occurrence of significant events such as themaking or disposal of an investment. Formal reporting is sent directly to investorsand there is also a secure Extranet providing online access to financial, legal andreporting information for investors, as well as copies of presentations given toinvestors at the Annual Meeting, Boards of Advisers Meetings, as well as Minutesof the Boards of Advisers Meetings.

In addition to the above, the Funds Administration team provides quarterlyCapital Statements to Investors and audited Financial Statements for the ApaxFund Partnerships and can assist in answering more technical and accountingqueries from investors. A specialist tax team is also available to assist in theprovision of tax reporting information.

Relationship development The IR team manages a thorough relationshipdevelopment programme ensuring investors receive relevant updates as well asaccess to senior investment professionals across the firm.The opportunity for one-on-one meetings is regularly offered to current and potential investors in the fundsand meetings are taken by both the IR team and the investment professionals.

The IR team is keen to develop long-serving relationships with investorsand seeks to understand through these relationships what investors are lookingfor, how best to deliver this, and make ongoing proposals to investors asappropriate.

Content improvement Apax Partners recognises that investors’ demandsand requirements for information are constantly evolving.Therefore Apax Partnershas built an appropriate infrastructure to collect information to support investorneeds, as well as to be able to communicate to investors on topical issues as theyemerge. Investors have the opportunity to pose ad-hoc questions via the IR teamand we ensure they receive a timely response.

90

Our Investors

Apax Partners Annual Report 2008 91

How the Funds have evolved The history of Apax Partners is interwovenwith the development of the private equity asset class on both sides of the Atlantic.

Throughout its 30-year history, Apax Funds have successfully investedacross all investment stages, and through several complete economic cycles.

The firm’s current focus on large buyouts is rooted in a culture that hasalways been outward looking, pioneering and committed to growing businesses.The deep understanding of the five sectors in which its Funds invest has been atthe core of Apax Partners’ strategy, giving it early access to investmentopportunities and an ability to add value quickly to portfolio companies.

The development ofApax Partners

Year of first Total amountFund investment raised (m)

UKApax Venture Capital Fund 1982 £10.15Apax Ventures II 1984 £30.12Apax Ventures III 1987 £75.00Apax Ventures IV 1990 £109.60Apax UK V 1995 £164.00Apax UK VI 1997 £313.20

Pan-EuropeanApax Europe IV 1999 €1,803.15Apax Europe V 2001 €4,404.30Apax Europe VI 2005 €4,310.33Apax Europe VII 2007 €11,204.27

GermanyAPA German European Ventures 1992 €49.39Apax Germany II 1997 €133.20

IsraelIsrael Growth Fund 1994 US$40.05Apax Israel II 1999 US$102.50

United StatesExcelsior Fund 1981 US$25.53Excelsior II 1985 US$109.13Excelsior Jersey 1985 US$29.82The P/A Fund 1987 US$40.40Excelsior III 1989 US$175.00P/A Fund II 1993 US$60.61Excelsior IV 1995 US$265.15P/A Fund III 1997 US$100.00Excelsior V 1998 US$406.00Excelsior VI 2000 US$1,100.00Apax US VII 2006 US$856.34SKM Equity Fund I 1993 US$300.00SKM Equity Fund II 1996 US$516.00SKM Equity Fund III 2000 US$720.00

JapanApax Globis Japan Fund 1999 ¥20,000.00

OtherApax European Buy-In Fund 1989 €300.00

Investor breakdown by type In

Public pension funds 31.77%

Private pension funds 14.16%

Funds of funds 11.14%

High net worth individuals 10.28%

Insurance 9.76%

Banks 7.05%

Endowments 6.14%

Sovereign funds 5.18%

Gatekeepers 4.52%

Investor breakdown by type

I

US 40.21%

Continental Europe 24.54%

UK 13.98%

Canada 11.59%

Asia 8.13%

Oceania 1.56%

Investor breakdown by geography

P

Investor breakdown by geography

At 31.12.2008

At 31.12.2008

At 31.12.2008

€26.6bn£25.7bn

US$36.9bn

Total funds raised

EmilioVoli Partner, Investor Relations

DavidWhitehouse Partner, Investor Relations

Nadia Preston Head of IR Client Services



Our Investors

Case study: Investor

AlpInvestAlpInvest Partners independently manages the private equity investments

for two of the world’s largest pension funds: Dutch ABP and PFZW.The pensionfunds’ beneficiaries are civil servants, teachers and healthcare workers, allparticipating in sector based defined benefit schemes.

While ABP and PFZW had successful histories as private equity investors,the funds concluded that their long-term commitment to the market would bestbe served by an independent, dedicated and full-scale private equity organisation.AlpInvest Partners became the exclusive private equity manager for these fundsin 1999 and bears full discretionary power over all investment decisions.

AlpInvest Partners is one of the few private equity investors with thefinancial scale and global reach to partner with the world's largest private equityfirms as well as the specialised high-performers. With €40bn of assets undermanagement, AlpInvest Partners has the ability to provide substantialcommitments to partners’ funds and also to support them with meaningful equityand mezzanine co-investment in their portfolio companies.

In portfolio construction AlpInvest Partners takes a long-term investmentperspective by analysing the global economic trends effecting private equity. AlpInvestPartners follows a deliberate allocation process: top-down segment analysis andbottom-up partner selection.

The top-down approach includes analysis of the general characteristics, sizeand growth of all private equity market segments.

In investment selection the fund investments team performs extensive duediligence in order to be able to identify the best-in-class general partners based onthe desired geography, industry focus and stage of life focus. In conducting thisdue diligence, the team leverages AlpInvest Partners’ firm-wide resources andintelligence. With first-hand knowledge collected from the co-investments teamalong with the market visibility of the secondary investments team, AlpInvestPartners is able to quickly and efficiently identify trends, integrate knowledge andcapture opportunity.

AlpInvest Partners’ success is driven by partnering with experienced privateequity investors, operating within well structured teams with solid investmenthistories.This requires our partners to be responsible owners of their portfoliocompanies. AlpInvest Partners is engaged in the discussions on implementation ofthe UN Principles for Responsible Investment in the private equity space andpromotes portfolio companies to subscribe to the UN Global Compact principles.

The firm believes that private equity has the ability to deliver excellent returns toinvestors by bringing better governance to companies, by improving operationalperformance and by ensuring full alignment of interest between investors andcompany management.



Our Investors


CommonfundCommonfund Capital LP Founded in 1971, Commonfund is a non-profit

investment management company devoted to enhancing the financial resourcesof non-profit institutions and social enterprises including educational endowments,foundations, hospitals and healthcare systems, cultural, social service and faith-based organisations and other charities located in the US, Canada, the UnitedKingdom and elsewhere. Commonfund Capital is the private capital arm ofCommonfund. Since the founding of Commonfund Capital in 1988, the missionhas remained the same: to provide organisations with a total solution for privatecapital investing – venture capital, private equity and natural resources. Withoffices in Wilton, Connecticut and London, UK, Commonfund Capital is staffed bymore than 40 investment professionals and serves over 700 institutional investorsfrom the non-profit community. Since the formation of Commonfund Capital, thegroup has managed 37 fund-of-fund programmes totalling over US$11bn in privatecapital commitments. Within these programmes, Commonfund has forgedpartnerships with 188 direct private capital management groups around the globe.

There are several fundamental factors that continue to testify to thestrength and success of the private capital industry that distinguish the privatecapital model in any environment, weak or strong.These advantages includestrong competitive urgency, long-term horizon, strong governance, alignedincentives, focus on strong management talent, stable shareholder base andefficient capital structures. From a portfolio allocation standpoint, the key topotential success in this asset class is to partner with top tier private capitalmanagers in a diversified programme in order to access the vast and largelydistinct opportunity set private companies represent.

The manager selection process for a private capital programme considerssuch fundamental issues as the quality and experience of the manager's team,investment philosophy and past performance. Assessment includes the strategicfit of the manager’s investment approach with investment objectives of theorganisation and conduct of a number of qualitative and quantitative analyses.More specifically, this could be a review of factors such as quality of team,investment strategy, investment and exit experience, alignment of interest, abilityto add value to portfolio companies, commitment/motivation, firm culture, duediligence expertise, deal sourcing, firm governance, prior track record anddistribution policies.This work, accompanied by structured risk management, legalnegotiation and documentation in the commitment phase, is key to building aprivate capital programme. After the commitment period, the focus becomesongoing monitoring and dialogue with the manager during the investment life ofmanager commitments.

Commonfund Capital works on advisory boards for private capitalmanagers around the world.

Some relationships, such as the Commonfund-Apax relationship, date back twodecades to the very first commitments made outside of the US by CommonfundCapital. Commonfund Capital places a high value on these relationships, seeking tobe a trusted partner and adviser to select, high quality general partners.



Our Investors


GICGICThe Government of Singapore Investment Corporation (GIC) has been

the manager of Singapore’s foreign reserves since 1981.The GIC Group strives toachieve good long-term returns on assets under its management, to preserve andenhance Singapore's reserves. Owned wholly by Singapore’s Ministry of Financebut reporting to its own Board of Directors, GIC operates as a private fundmanagement company with the sole objective of generating financial returnsthrough its main subsidiaries: Public Markets, Real Estate and Special Investments(SI). GIC is today one of the largest investment management organisations in theworld, investing well over US$100 billion in multiple asset classes in more than 40countries.

GIC SI’s team of 70 investment professionals operates from offices inSingapore, London, NewYork, Silicon Valley and Beijing, and adopts a globallyintegrated approach in its selection of fund manager and direct investments.The GIC SI portfolio includes limited partner interests in leading global and regionalfunds focused on investments in buyouts, venture capital, infrastructure andmezzanine. Minority equity and mezzanine investments are also made directly inwell-run companies. GIC SI further invests directly in infrastructure assetsworldwide. GIC SI’s investment team adds value to fund managers and investeecompanies by providing advice and access to a global network of business linkswhich GIC SI has developed over the years.

The GIC perspective is that of a long-term investor over various economiccycles. For over 25 years, the firm has identified and invested with outstandingprivate equity fund managers and grown with them over time. Our partnershipwith Apax Partners is now in its third decade, and is an impressive example of thehigh-quality relationships which GIC SI seeks to establish globally.

Our partnership withApax Partners is now in its third decade, and is an impressiveexample of the high-quality relationships which GIC SI seeks to establish globally.



Current portfolioFollowing is a complete list of all liveApax Funds portfolio companies.

Year of initialTech &Telecom investment

Bezeq The Israel Telecommunication Corp 2005

BitBand Inc 2003

BlueArc Corporation 2000

Centerbeam 2000

Composite Software 2002

Corvil Networks Limited 2003

Crescendo Networks Limited 2003

CSG Solar AG 2005

Dialog Semiconductor Plc 1998

Digital Fuel Technologies Inc 2005

Elliptec Resonant Actuator AG 2004

Frontier Silicon Holdings Limited 2003

Handmark 2001

InnovaLight 2004

Iris Financial Engineering Holdings Ltd 2003

mFoundry 2003

Midasplayer/King.com 2005

Mobixell Networks 2000

Nanomix 2002

NXP 2006

OnePath Networks Limited 1997

Onespin Solutions GmbH 2005

Peregrine Semiconductor 1997

Pictage 2006

Power Paper Limited 2005

PowerID Limited 2007

Printar Limited 2004

Promethean Ltd 2004

RaySat, Inc. 2005

Red-M Group 2001

SMART Technologies 2007

Starhome BV 2004

Streamserve Inc 1999

Synetrix Holdings Limited 2004

TDC A/S 2005

Tideway Systems Limited 2004

Transera Communications 2004

Versatel AG 2005

Weather Investments SpA 2008

Wisair Inc 2002

Year of initialRetail & Consumer investment

Ale House Holdings 2004

Bob’s Discount Furniture 2005

Café Rio 2004

Comark 2005

D+S europe AG 2008

Home Organizers 2000

LR Health & Beauty Systems GmbH 2004

New Look Group* 2004

Norcraft Companies 2003

Ollie’s Bargain Outlet 2003

Panrico, S.A. 2005

Plantasjen 2007

rue21 1998

S.B. Restaurant 2000

Savaria Corporation 1998

Sisal S.p.A. 2006

Somerfield Ltd* 2005

Spyder Active Sports 2004

Teavana Holdings 2004

Tnuva 2008

Tommy Hilfiger Corp 2006

Xerium Technologies 1999

Year of initialMedia investment

Cengage – Nelson Education 2007

Cengage Learning 2007

Central European Media Enterprises Ltd 2006

Emap* 2007

HIT Entertainment* 2005

Incisive Media Limited* 2006

Quartermaster 2005

SportsMyx Holdings 2005

Stage Three Music Limited 2004

Telcast Media Group GmbH 2001

The Learning Annex 2006

The NewsMarket 2000

Trader Media Group* 2007

Truvo/World Directories 2004

VoodooVox 2001

Year of initialHealthcare investment

Aerovance 2004

Affymax Pharmaceuticals 2001

AngioDynamics 1999

Apollo Hospitals Enterprise Ltd 2007

Ascent Healthcare 2000

Astex Technology Ltd/Metagen GmbH 2001

Cadent 2000

Capio AB 2006

Celldex Therapeutics 2003

Dune Medical Devices Limited 2004

General Healthcare Group Limited* 2006

Magnacare Holdings 2002

Novacea 2004

Orexo AB (Biolipox AB) 2002

Procognia Limited 2002

Prometheus Laboratories 1999

Qualitest Pharmaceuticals 2007

Senex Financial 2004

Sense Proteomic Ltd/Procognia 1998

SkinMedica 2003

Spectrum Holding Company 2005

The TriZetto Group 2008

Voyager HospiceCare 2004

Wilex AG 1998

Xanodyne Pharmaceuticals 2005

ZymoGenetics 2000

Year of initialFinancial & Business Services investment

Bolero.net 2000

Builders TradeSource 2003

Contech Construction 2006

CorMine 2005

Electro – Stocks Grup S.L. 2007

Farmafactoring S.P.A. 2006

Hub International 2007

IFCO Systems N.V. 2003

L3 2000

PlanView 2004

Plexus Systems 2006

RealPage 2003

Travelex Holdings Limited* 2005

Year of initialOther investment

Applied Tech 1997

Basic Energy Services 2005

Precision Partners 1998

*UKWalker-compliant portfolio companies

EmapEmap is the UK’s leading business information provider.The company provides information to its customersthrough four key formats: print and online magazines,exhibitions and festivals, digital information services,and conferences.The initial investment from Apax Fundswas made by Apax Europe VII in 2007.

General Healthcare Group LimitedGeneral Healthcare Group is the leading provider ofindependent health care services in the UK. Its primarybusinesses are BMI Healthcare and Netcare UK.BMI Healthcare is the acute care private hospital division andNetcare UK provides specialised clinical services to patientsunder contract to the National Health Service.The initialinvestment in this company was made by the Apax Europe VIfund in 2006.

HIT EntertainmentHit Entertainment is the world's largest independentowner and distributor of pre-school children's content.Hit owns brands such asThomas and Friends, Bob theBuilder, Barney the Dinosaur, Pingu, Fireman Sam andAngelina Ballerina.The initial investment in this companywas made by the Apax Europe VI fund in 2005.

Incisive Media LimitedIncisive Media is a business-to-business informationprovider.The business operates across the main areas offinancial services, with leading brands in the financial, legal,accountancy, real estate and IT sectors.The initialinvestment in this company was made by the ApaxEurope VI fund in 2006.

New Look GroupNew Look is a retailer of value fashion clothing and the thirdlargest womenswear retailer in the UK.The company hasnearly 600 stores in the UK and over 270 stores tradingunder the MIM format in France.The initial investmentin this company was made by the Apax Europe IV andApax Europe V funds in 2004.

SomerfieldSomerfield is the fifth largest grocery retailer in the UK, operatingout of small, local stores to serve the ‘convenience shoppers’market. In July 2008, funds advised by Apax Partners agreed thesale of Somerfield to the Co-operative Group for £1.565bn.

The initial investment in this company was made by the ApaxEurope VI fund in 2005.

Trader Media GroupTrader Media Group is one of Europe’s largest specialist multi-media publishers, with market-leading automotive classifiedwebsites, over 70 leading classified titles and a high-volumeprinting business.

Autotrader is the leading player in the UK automotive printclassified market and autotrader.co.uk is the leader in the onlinesegment.

The initial investment in this company was made by the ApaxEurope VII fund in 2007.

Travelex Holdings LimitedTravelex is the world's largest non-bank provider of commercialforeign exchange services, providing integrated paymentsolutions for business customers globally.Travelex operatesover 700 retail foreign exchange branches around the world.The initial investment in this company was made by the ApaxEurope V and Apax Europe VI funds in 2005.

Turnover (53 weeks to 29 March 2008)

Number of employees

£1,169.1m20,405Turnover (year to 31 March 2008)

Number of employees

£283.3m1,588

Turnover (year to 31 July 2008)

Number of employees

US$273.8m384

Turnover (year to 31 Dec. 2008 – unaudited)

Number of employees

£224.7m1,899

Turnover (year to 31 March 2008)

Number of employees

£309.1m3,527

Turnover (year to 30 April 2008)

Number of employees

£4,221.4m40,855Turnover (year to 30 Sept. 2008)

Number of employees

£772.6m8,473

Turnover (year to 31 Dec. 2008)

Number of employees

£583.7m5,554


100

Apax Partners international offices

For any questions on this Report pleasecontact Ben Harding in the UK office.

China

Apax Partners Hong Kong Ltd16th FloorNexxus Building41 Connaught RoadCentral Hong KongPeople’s Republic of ChinaT: +852 2297 2313

China

Apax Investment (Shanghai)Company Ltd65th floorShanghai World Financial Center100 Century AvenuePudong New District200120, ShanghaiPeople’s Republic of ChinaT: +86 21 5198 5656

Germany

Apax PartnersBeteiligungsberatung GmbHPossartstrasse 11Kopernikustrasse81679 MunichGermanyT: +49 89 998 9090

Guernsey

Third FloorRoyal Bank Place1 Glategny EsplanadeSt Peter PortGuernsey GY1 2HJT: +44 (0)1481 810 000

Israel

Apax Partners (Israel) LtdMuseumTower4 Berkowitz StreetTel Aviv 64238IsraelT: +972 3 777 4400

For any questions on this report pleasecontact Ben Harding in the UK office.

Italy

Apax Partners S.r.l.Palazzo Gallarati ScottiVia A. Manzoni, 30Milan 20121ItalyT: +39 02 762 1191

India

Apax Partners IndiaAdvisers Private Limited2nd FloorDevchand HouseShivsager EstateDr Annie Besant RoadWorliMumbai – 400018IndiaT: +91 22 4050 8400

Spain

Apax Partners España, S.A.Velázquez 10-5°28001 MadridSpainT: +34 91 423 1000

UK

Apax Partners UK Ltd33 Jermyn StreetLondon SW1Y 6DNUnited KingdomT: +44 (0)20 7872 6300

USA

Apax Partners, L.P.53rd Floor153 East 53rd StreetNewYork, NY 10022USAT: +1 212 753 6300


www.apax.com

ApaxPartners

AnnualR

eport2008








fromMartin Halusa


19 Our global reach




32 Our values


342 Sector review

Tech &Telecom





490 Investors




Section 1:Overview





Documents

Private Equity Apax Partners 2008 Annual Report