Private Equity Capital Briefing - Building a better ...File/ey-pe-capital-briefing-january-2018.pdf · Private Equity Capital Briefing ... small-cap funds than in large and mid-cap

Private Equity Capital Briefing

January 2018

Monthly insights and intelligence on PE trends

PE finishes strong in 2017

Firms see record fundraising in 2017, the most active year for dealmaking since 2007

The Private Equity Capital Briefing has been designed to help you remain current on capital market trends. It captures key insights from subject-matter professionals across EY and distills this intelligence into a succinct and user-friendly publication.

Private Equity Capital Briefingprovides perspectives on both recent developments and the longer-term outlook for private equity (PE) fundraising, acquisitions and exits, as well as trends in global M&A, cross-border deal flows, IPOs and the debt and bond markets.

Please feel free to reach out to any of the subject-matter contacts listed on the back page of this document if you wish to discuss any of the topics covered.

ContentsSection 1 Private equity: fundraising 4

Private equity: acquisitions 5

Private equity: exits 6

Section 2 Infrastructure 7

Section 3 Private credit 8

Section 4 M&A 9

Section 5 IPOs 10

Section 6 Loans 11

Section 7 Bonds 12

AppendicesAppendix A PE activity by geography 14

Appendix B M&A activity monthly flash 23

Appendix C M&A multiples and bid premium 24

Appendix D Capital Confidence Barometer 25

1.i. Private equity: fundraising

Executive summary

• PE fundraising reached a record in 2017, with firms closing funds valued at US$637.3b during the year. As more firms report on funds closed Dec. 31, the figure is expected to climb even higher.

• The increase in fundraising in 2017 is attributable to megafunds, which are up 27% from last year.

• Dry powder continues to wade deeper into record territory, ending the year at US$633.8b, up 13% from the end of 2016.

Current state

Fundraising

• PE fundraising reached a record in 2017, with 934 separate vehicles closing on an aggregate US$637.3b in commitments, up 5% from last year, and exceeding the 2007-2008 prior market record. As additional funds report on closings held Dec. 31, the figure is expected to increase. The increase in fundraising in 2017 is attributable to megafunds - those with more than US$4.5b in total commitments from investors.

Dry powder

• Dry powder continues to wade deeper into record territory, ending the year at US$633.8b, up 13% from the end of last year.

• Over the past 3 years, dry powder grew faster in megafunds and small-cap funds than in large and mid-cap funds.

Growth of buyout dry powder - 3-year CAGR by fund sizeSource: Pregin

Environment and horizon

• The outlook for fundraising remains strong. According to Coller Capital's semiannual survey of PE investors, respondents plan to allocate more money to more managers. Over the next three years, 50% of investors plan to increase the average size of PE commitments and 40% plan to increase their PE manager count, while 21% expect to reduce it. The vast majority (89%), however, expressed concern that such increases are resulting in too many weak GPs receiving commitments.

• While increasing levels of dry powder have been a source of anxiety for some industry watchers, when viewed across time, the picture looks less worrisome. Indeed, dry powder levels are growing more slowly than at the last peak in 2007, dry powder was growing at a three-year CAGR of 35% per year; in 2017, PE added dry powder at a rate of just 12% per year.

• Investors believe PE offers diversifying returns. According to Natixis, 61% of institutional investors believe PE provides better diversification than traditional asset classes and 58% believe private credit provides better diversification than fixed-income vehicles.

4


Global PE fundraising by year (in US$b)

Source: Preqin

Fund TypeTarget

size (US$b)

Finalsize

(US$b)Industry focus

Location focus

Apollo Investment Fund IX Buyout 23 24.7 Diversified

Developed countries

CVC Capital Partners Fund VII Buyout 14 18 Diversified Global

Global Infrastructure Partners III Infrastructure 12.5 15.8 Infrastructure Global

Silver Lake Partners V Buyout 12.5 15 TechnologyNorth America

KKR Americas Fund XII Buyout 10 13.9 Diversified Americas

Vista Equity Partners Fund VI Buyout 8 11

Technology, Software

North America

Clayton Dubilier & Rice X Buyout 8.5 9.4 Diversified

Europe, North America

KKR Asian Fund III Buyout 7 9.3 Diversified Asia

Blackstone Real Estate Partners Europe V Real Estate 8 8.7 Property Europe

BC European Cap X Buyout 8 8.3 Diversified

Europe, North America

Top funds raised in 2017Source: Pregin

PE dry powder by year and region (US$b)Source: Pregin

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400

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800

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$0

$100

$200

$300

$400

$500

$600

$700

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Q1 value (LHS) Q2 value (LHS) Q3 value (LHS)

Q4 value (LHS) Number of funds (RHS)

$0

$100

$200

$300

$400

$500

$600

$700

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

North America Europe Asia Rest of world

18.1%

3.2%

10.3%

16.1%

12.4%

Mega Large Mid Small Overall

Fund size 2016 (US$b) 2017 (US$b) % change

Mega 182 231 27%

Large 146 139 -5%

Mid 153 151 -1%

Small 128 116 -9%

Total 609 637 5%

1.ii. Private equity: acquisitions

Executive summary

• Acquisitions were up 10% in 2017 versus the prior year, with firms announcing deals valued at US$354.3b, the largest total since 2007.

• Activity was driven by strength in Asia-Pacific and EMEA, which were up 66% and 10% by value, respectively.

• Consumer products and retail (CPR), technology, real estate, and health care were the most active sectors.

• Barring exogenous shocks, elevated buyout multiples are expected to continue in 2018.

Current state

• PE acquisition activity closed 2017 up 10% versus the prior year, with firms announcing deals valued at US$354.3b. It was the largest total since 2007 on the smallest deal count since 2002. Activity was highest during Q3, when deal values approached US$130b; acquisitions fell 44% during Q4, to US$72.4b, the lowest Q4 total since 2013.

• Activity was driven by strength in Asia-Pacific and EMEA. Deal values were up 66% to US$83.1b in Asia-Pacific and up 10% to US$127.3b in EMEA. The Americas, however, saw a decline of 9% from last year to US$143.9b.

• Asia-Pacific hosted the largest deal of the year, when a Bain Capital-led consortium acquired Toshiba’s memory unit for US$18b, while EMEA hosted the largest deal of Q4 with KKR’s US$8b purchase of Unilever’s spreads business.

• Technology has been one of the most active sectors for PE in the last two years. While technology deal value declined 15% from 2016, the sector still represented 19% of PE activity in 2017. In 2017, consumer products and retail (CPR) was the most active sector overall, with 21% of total deal value - followed by technology with 19%, real estate with 13% and health care with 11%. CPR, tech, and health care in particular are expected to remain active in 2018, driven in part by compelling opportunities for transformational change amid disruptive industry dynamics.

• Since the financial crisis, PE as a percentage of global M&A has trended higher, particularly in EMEA and Asia-Pacific; however, overall it remains at roughly half the levels seen in 2006 and 2007.


• Barring exogenous shocks, elevated buyout multiples are expected to continue in 2018. The extent to which the industry maintains discipline in the face of increasing pressure to deploy assets will be a critical factor in its ability to ride out future challenges and take advantage of market dislocations.

• Lending to US PE-backed companies hit a record high in the past year, according to Thomson Reuters LPC data. Most of the volume came from refinancing and repricing activity. PE firms currently hold stakes in more than 13,000 companies across the globe.

• It was reported that CalPERS, the largest pension fund in the US, recently sent Requests for Information (RFIs) to a number of potential partners to help manage its US$40b PE portfolio. The partnership would reportedly work on managing co-investments, separate accounts, and other opportunities. Increasing interest by large LPs in co-investments and directs has been one of the defining trends in PE over the last decade. Such investors can sometimes alleviate many of the governance and alignment issues inherent in consortiums comprised of multiple PE firms, and can often bring something to the table purely financial buyers can’t. According to Coller Capital’s Global Private Equity Barometer, the share of LPs making direct investments almost doubled between 2006 and 2012, but has since leveled-off at about a third. On the other hand, the number of LPs co-investing has doubled over the last decade.

5


PE deals by sector as a percent of total dealsSource: Dealogic

Target Sector RegionValue

(US$b)Acquiror

Toshiba Memory Corp.

Computers andelectronics

Asia-Pacific 18

Bain Capital LLC; SK Hynix Inc.; Seagate Technology plc;.DellTechnologies Capital; Kingston Technology Corp.; Apple Inc.; Hoya Corp.

Calpine Corp.Utility andenergy Americas 17

Energy Capital Partners LLC; Access Industries Inc.; Canada Pension Plan Investment Board(CPPIB)

Global Logistic Properties Ltd. Real estate

Asia-Pacific 16

China Vanke Co. Ltd.; HopuInvestment Management Co.; SMG Eastern Ltd.; HillhouseCapital Management Ltd.; Bank of China Ltd.

Unilever plc (Spreads business)

Food and beverage EMEA 8 KKR & Co. LP

Staples Inc.Consumer products Americas 6.8 Sycamore Partners LP

Top PE deals in 2017Source: Dealogic

PE acquisitions by year and region (US$b)Source: Dealogic

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Americas value (LHS) Asia-Pacific value (LHS)

EMEA value (LHS) Global number of deals (RHS)

0% 5% 10% 15% 20% 25%

Oil and gas

Telecom

Materials

Industrials

Financials

Utilities

Health care

Real estate

Technology

CPR

2017 2016

PE as a percentage of global M&ASource: Dealogic

0%

10%

20%

30%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Americias Asia-Pacific EMEA

1.iii. Private equity: exits

Executive summary

• Despite the gradual winding down of the exit supercycle from deals acquired at the last market peak, exits were up 10% in 2017.

• IPOs rebounded from a soft 2016, increasing 18% by value to US$37.7b. Exits by M&A increased 9% to US$330.1b.

• Secondary exits grew to a 5-year high.

• Investors expect PE to continue to deliver attractive returns over the next several years. According to a recent Coller Capital survey, 80% of respondents expect net annual returns of more than 11% over the next 3 to 5 years.

Current state

• PE firms exited companies valued at US$367.8b in 2017. While that was an increase of 10% from 2016, the peak of the exit supercycle occurred between 2014 and 2015, when firms exited companies valued at US$482b and US$429b, respectively.

• IPOs increased 18% to US$37.7b while M&A exits increased 9% to US$330.1b, YoY. Americas was the only region to grow both M&A and IPO exits, whereas Asia-Pacific saw more IPOs and less M&A, and EMEA saw more M&A and less IPOs. During Q4, IPOs increased 129% to US$10.9b while M&A exits declined 19% to US$69.9b.

• Secondary exits grew to a 5-year high.

Exits by type as a percentage of totalSource: Dealogic


• Investors expect attractive PE returns over the next 3 to 5 years, according to the Coller Capital survey, with 80% of respondents expecting net annual returns of more than 11%. Return expectations over the long term are more pessimistic with 60% of investors expecting a decrease, 33% expecting no change and just 7% expecting an increase.

• New research from EY and the British Private Equity and Venture Capital Association (BVCA) concludes that under PE ownership, the population of companies exited in the UK over the last decade collectively increased employment, employee compensation, capital investment, productivity, revenue and profits. Compared to public companies and the UK private sector as a whole, portfolio company performance is broadly in line with or ahead of these benchmarks. Over the duration of PE ownership, underlying organic employment (removing the effect of bolt-on acquisitions and partial disposals) 1.4% per year, in line with the UK private sector. Employee compensation growth under PE ownership exceeded the UK private sector benchmark, at 3.5% versus 2.5% annual growth. Capital productivity growth in the PE portfolio exceeded public company benchmarks, at 6.4% annually, versus no growth in the benchmark, and labor productivity growth - at just under 2% per year - was on a par with benchmarks. The gross equity return from portfolio company exits was 3.2 times the public company benchmark, half of which was directly attributable to PE-led strategic and operational improvements.

6


Exits by region and type (in US$b)Source: Dealogic

Company Type RegionValue

(US$b)Sponsor

Logicor Europe Ltd. M&A EMEA 13.8 Blackstone Group LP

Patheon NV M&A Americas 7.2 JLL Partners LLC

LTS Group Holdings LLC M&A Americas 7.1

Berkshire Partners LLC; ABRY Partners Inc.; Pamlico Capital Management LP

Tribune Media Co. M&A Americas 6.6Angelo, Gordon & Co. LP;Oaktree Capital Group LLC

ista International GmbH M&A EMEA 6.5

Canada Pension Plan Investment Board (CPPIB);CVC Capital Partners Ltd.

Top PE exits in 2017Source: Dealogic

PE exits by year and type (US$b)Source: Dealogic

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200

400

600

800

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1,200

1,400

$0

$100

$200

$300

$400

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

M&A exit value (LHS) IPO exit value (LHS) Number of deals (RHS)

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Americas Asia-Pacific EMEA

2016 M&A 2017 M&A 2016 IPO 2017 IPO

22%

16%

20%

22%

24%

0% 20% 40% 60% 80% 100%

2013

2014

2015

2016

2017

IPO Secondary Strategic

2. Infrastructure

Executive summary

• 2017 saw a record year for infrastructure fundraising, with US$72.8b in commitments from investors.

• Deployment slowed, with deal value down 35% from 2016.

• The year also saw a shift toward secondary stage deals, which represented 70% of PE investment in the asset class in 2017.

• Firms currently have a record US$157b in capital available for new deals, and there are an additional 260 firms in the fundraising process seeking US$118b in commitments.

Current state

• Infrastructure fundraising saw a record year in 2017. Firms raised US$72.8b in total commitments from LPs across 80 separate vehicles, an increase of 5% from 2016. The first quarter was particularly active, driven by the US$15.8b in commitments closed by Global Infrastructure Partners II.

• Funds focused on the US represented nearly 50% of aggregate commitments (up from 47% in 2016), while the EMEA region accounted for 40% (up from 33% in 2016),

• Deployment has slowed. So far this year, PE firms have announced deals valued at US$218b, down 35% from last year. Declines were largest in Asia and Europe – down 43% and down 28%, respectively, from last year – while activity in North America remained steady, down just 3% from 2016.

• 2017 saw a marked shift in deals for existing assets – the proportion of secondary stage deals as a percentage of all infrastructure deals increased from 52% in 2015 and 53% in 2016 to 70% in 2017. Such deals provide investors assets with a lower risk profile as construction has already been completed, and there is greater certainty around cash flows.


• As a result of the strong market for fundraising, infrastructure funds currently have nearly US$160b in capital available for new deals. Moreover, there are currently more than 260 funds on the road seeking an additional US$118b in total commitments.

• After a year of taking a back seat to other priorities, the White House is poised to release its outline for new infrastructure spending in the coming weeks. The plan reportedly calls for US$200b in federal spending, which would be supplemented by an additional US$800b from states, localities and private investors - something that analysts are concerned might make it a challenge to pass, especially in light of US tax reform, which could effectively make raising those funds more expensive.

• Paris-based Ardian recently sold a portfolio of infrastructure assets to Dutch pension fund APG in a deal valued at a reported US$1.2b. Ardiancited the sale as an example of a transaction that allowed certain LPs to achieve liquidity while allowing others to hold attractive investments for longer periods of time. Such GP-led secondary deals are becoming increasingly common across PE as funds look to help reconcile the varying investment horizons of their investors.

Source: Preqin

Top infrastructure funds raised 2017

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2009 2010 2011 2012 2013 2014 2015 2016 2017

Value No. of funds

Infrastructure fundraising (US$b)

Source: Preqin

Fund Target (in US$b)

Raised (in US$b)

Strategy

Global Infrastructure Partners III 12.5 15.8 Primary

EQT Infrastructure III 3.3 4.2 Primary

Actis Energy Infrastructure Fund IV 2.0 2.8 Primary

AMP Capital Infrastructure Debt Fund III

2.0 2.5 Debt/mezzanine

Pan-European Infrastructure Fund II

2.2 2.0 Primary

QIC Global Infrastructure Fund 1.3 1.8 Fund of funds, primary

Infracapital Greenfield Infrastructure Fund

1.3 1.7 Primary

BlackRock Global Renewable Power Fund II

1.0 1.7 Primary

BlackRock Renewable Income UK Fund

N/A 1.4 Primary

European Infra Senior 1 1.7 1.4 Debt/mezzanine

Infrastructure deal activity by year (by value, in US$b)

Source: Preqin

Infrastructure deal activity by stage as a percent of total – 2015 to 2017

Source: Preqin

$0

$50

$100

$150

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$300

$350

$400

$450

$500

2009 2010 2011 2012 2013 2014 2015 2016 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

Brownfield Greenfield Secondary stage

2015 2016 2017

7


3. Private credit

Executive summary

• Fundraising for private credit investing hit an all-time high of US$103b in 2017, up 7% from last year.

• Continued demand for direct lending funds drove activity. Direct strategies accounted for more than half of fundraising in the space last year.

• Demand was particularly strong in Asia, which saw firms raise US$5b in private credit commitments, up from just U$$2b in 2016.

Current state

• Fundraising for private credit surpassed US$100b for the first time in 2017. Firms raised US$103.2b in commitments during the year, up 7% from 2017. In contrast to last year, which saw a spike at the end of the year account for more than half of the total, activity in 2017 was spread evenly across all four quarters.

• Activity was driven by continued strength in direct lending, which saw 63 separate funds close with an aggregate US$54b in capital, accounting for 53% of the year’s total. This was up from 2017, when direct strategies accumulated US$24b and accounted for 25% of the asset class’ total. Fundraising for funds focused on distressed opportunities remained strong in 2017, albeit below the levels of the prior tow year. Firms raised US$23b for distressed funds, down 31% from last year.

• On a regional basis, the Americas saw a modicum of softening, with fundraising for funds focused on the region down 5% from 2017, while funds focused on EMEA and Asia-Pacific were up 34% and 145% respectively (although Asia-Pac increased from a modest base in 2016).

• As a result of the strong fundraising environment, credit funds now have nearly US$235b in dry powder for new deals, approximately 66% of which is focused on the US market.


• Fundraising for the asset class is expected to remain robust. There are currently more than 300 funds on the road seeking an aggregate US$160b in fresh capital from investors. Underscoring the demand for the asset class and the entry of new players into the space, more than half, according to Preqin, represent a new manager’s first fund.

• Direct lending strategies in particular are expected to remain in high demand, driven by the continuing shift of lending from traditional banks to alternative lenders. Of the 300 funds currently on the road raising new assets, direct lending strategies represent 50%.

• According to an analysis published by PitchBook, distressed debt funds outperformed other private asset classes on a risk-adjusted basis between 2000 and 2012, with a median IRR of 10.1%, and a standard deviation of 11.0%. PitchBook cited the increasing sophistication of the asset class and its ability to identify high potential turnaround opportunities along with the ability to structure in ways that minimizes downside risk. On a returns-only basis, buyout performed best, with a median IRR of 12%.

Fundraising by region – 2016 vs 2017

Source: Preqin

Private credit fundraising by quarter (US$b)

Source: Preqin

Credit dry powder 2009-2017

Source: Preqin

Americas:

2016 – US68bb

2017– US$64b

Change – (5%)

Europe:

2016 – US$26b

2017 – US$34b

Change – 34%

Asia Pacific:

2016 – US$2b

2017 – US$5b

Change – 145%

Fund Raised (US$b) Type

Senior Debt Partners III 5.0 Direct lending

HPS Specialty Loan Fund 2016 4.5 Direct lending

Cerberus Institutional Partners VI 4.0 Distressed debt

Hayfin Direct Lending Fund II 3.8 Direct lending

Ares Private Credit Solutions 3.4 Direct lending

Senior Loan Fund 3.4 Direct lending

Centerbridge Special Credit Partners III-Flex 2.9 Distressed debt

Benefit Street Partners Debt Fund IV 2.6 Direct lending

Carlyle Strategic Partners IV 2.5 Distressed debt

Marlin Equity Partners V 2.5 Special situations

Top credit funds closed in 2017

Source: Preqin

2009 2010 2011 2012 2013 2014 2015 2016 2017

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100

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2009 2010 2011 2012 2013 2014 2015 2016 2017

Value No. of funds

Credit fundraising by fund type, as a percentage of total

Source: Preqin

Direct lending

25%

Distressed debt, 34%

Mezzanine33%

Other, 8%

Direct lending,

53%Distresseddebt, 22%

Mezzanine11%

Other, 14%

2016 2017


8

Current state

• Global M&A remained healthy during 2017, with 37,533 deals valued at US$3.2t — exceeding US$3t for the fourth consecutive year. While global deal value fell by 7% compared with the previous year, deal volume increased by 6% compared with the same time in 2016. The decline in value can be primarily attributed to the lack of megadeals (US$10b and above), of which there were only 29 in 2017, as compared to 36 in 2016. Deal activity was largely characterized by smaller-sized deals and the trend is expected to continue in 2018, as regulatory scrutiny on big mergers increases.

• Interestingly, 4Q17 M&A deal value stood at US$996b — the biggest quarter of 2017 and the seventh-largest quarterly deal value on record.

• While North America continued to drive deal activity on the buy side (11,215 deals valued at US$1.5t), 2017 turned out to be a strong year for European suitors as well, recording 9,680 deals worth US$741b – up 26% in terms of deal value and 5% in terms of volume. A more stable economic outlook and growing confidence in Europe helped boost dealmaking activity in the region.

• Technology continued to be the top-performing sector in 2017, registering 9,729 deals worth US$564b – the highest yearly volume on record. With digital transformation remaining a core driver of M&A, the shift toward a digital future will likely see more innovative start-ups and nimble tech-enabled businesses targeted, with global corporations seeking to complement their own organic strategies.

• The deal that captured headlines in December saw Walt Disney Co entering into a deal to buy film, television and international businesses from Rupert Murdoch’s 21st Century Fox Inc. for US$69b, as the world’s largest entertainment company seeks even greater scale to combat growing digital rivals Netflix Inc. and Amazon.com Inc. Under the deal, Disney will acquire significant assets from Fox, including the studios that produce the blockbuster Marvel superhero series and the Avatar franchise, as well as hit TV shows such as The Simpsons. The acquisition of these complementary assets enables Disney to create more appealing content and build direct relationships with consumers.


• The M&A outlook in 2018 looks robust, with corporations seeing deals as a critical opportunity for growth in the coming year. There will be a heightened appetite to do deals in the coming months, with digital transformation remaining a core driver of M&A. Other dynamics such as corporations holding huge amounts of cash and interest rates remaining historically low, availability of credit and record PE dry powder are likely to persist and propel deal activity.

• Small and mid-range strategic deals are likely to be more prominent in 2018, as companies reshape their portfolios to respond to disruptive forces. The slowdown in megadeals will likely continue as regulatory scrutiny on big mergers increases. “Smaller, tech-smart deals will help companies future-proof their operations to address continuously changing business models. We should also see a strong continuation of deals in the range of US$1b to US$5b as companies buy and sell to reshape their portfolios,” commented Steve Krouskos, Global Vice Chair, EY TAS.

• Sector convergence should continue to be the key trend for M&A in the foreseeable future. The convergence of all industries with technology is becoming one of the key narratives of the modern corporate economy. Cross-sector deals reflect the changing dynamics for running global businesses as they respond to changing customer behaviors.

• Divestitures are likely to remain in vogue in 2018. To keep pace and sustain growth in this disruptive environment, most companies are fast-tracking the frequency of their portfolio reviews to ensure that they have the right mix of assets to compete. This should lead to an uptick in divestitures, as companies seek to divest noncore assets and recycle capital to take advantage of new growth possibilities.

• Stakeholder demand for inclusive growth may determine dealmakingsuccess in the coming months. With a wide variety of stakeholders in today’s business environment, the demand for value creation beyond just the bottom line is rising. With increasing focus on social concerns across many countries, dealmakers are becoming acutely aware of the need to communicate the benefits of deals to a broader set of stakeholders.

9

Executive summary

• 2017 was a healthy year for global M&A, with 37,533 deals announced worth US$3.2t.

• Europe emerged as an active buyer during the year, recording 9,680 deals worth US$741b.

• Technology was the busiest sector for M&A in 2017, registering 9,729 deals valued at US$564b.

• The M&A outlook for 2018 remains positive as companies view deals as a critical opportunity for growth in the coming year.

• Stakeholder demand for inclusive growth may determine dealmaking success in the coming months.

4. M&A

-

1,000

2,000

3,000

Americas Asia-Pacific EMEA

LTM value PTM value

Deal environment: by area (US$b)

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

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

LTM to December 2017Source: Dealogic and EY analysis; excludes real estate asset sales.

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

M&A analysis as at 1 January 2018.

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

Figures have been rounded off to nearest decimal place.

Americas Asia-Pacific EMEA Total

Technology 9% 5% 3% 18%

Consumer products and retail 4% 3% 5% 12%

Oil and gas 7% 0% 2% 10%

Life sciences 5% 1% 2% 8%

Automotive and transportation 1% 2% 4% 7%

Power and utilities 4% 1% 2% 7%

Diversified industrial products 2% 2% 2% 6%

Media and entertainment 4% 1% 0% 5%

Real estate 2% 1% 1% 5%

Others 11% 6% 6% 23%

All sectors 50% 23% 27% 100%

Global deal value and volume (year to date (YTD) last five years)Source: Dealogic and EY analysis.

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2013 2014 2015 2016 2017

Value (US$b) (LHS) Volume* (RHS)

*Volume based on deals greater than US$100m.


5. IPOs

Executive summary

• Global IPO activity saw a year on year (YOY) increase of 55% and 42% in terms of number of deals and proceeds respectively in 2017.

• The Asia-Pacific region dominated global IPO activity, both in terms of deal volume and value.

• The prospects of IPO activity are bright in 2018 on the back of a healthy pipeline across sectors and markets.

• Cross-border deals are likely to remain a prominent feature of the global IPO market in 2018, with exchanges in the US, Greater China and London.

10

Current state

• IPO activity surged in 2017 compared with 2016 due to political stability in many markets, strong performance of IPOs and improvement in overall economic conditions. In total, there were 1,699 IPOs globally in 2017, which raised US$191.6b, compared with 1,093 IPOs raising US$134.5b in 2016 — a 55% increase by number of deals and 42% by proceeds.

• 2017 saw the comeback of technology IPOs, with this sector leading global IPO activity by both number of deals and proceeds. While the diversified industrial products and consumer products sectors had a strong showing in terms of number of deals, real estate, together with banking and capital markets, drove the activity in terms of proceeds.

• Cross-border IPOs were a prominent feature in 2017. With 122 listings and total proceeds of more than US$22b, they accounted for 7% of IPOs and 12% of all proceeds, with the latter being the highest proportion since 2014. The US was the most active destination, with 35% of all cross-border listings being conducted on the US exchanges. Other significant destinations for foreign listings were Hong Kong (with 19% of cross-border deals), the UK (17%) and Australia (12%).

• Asia-Pacific dominated global IPO activity by both number of deals and proceeds. With 1,158 IPOs worth US$91.7b, the region accounted for 68% of the global number of deals and 48% of proceeds. Activity in the region was dominated by Greater China, which accounted for 52% and 58% of the region’s deals and proceeds respectively. This activity was driven by strength of stock markets and positive post-IPO performance.

• The Americas’ regional share of global IPOs increased in 2017, both by number of deals and proceeds. The region recorded seven megadeals this year compared with three in 2016. US IPO activity also increased in 2017 (179 deals raising US$40.3b), registering a YOY increase of 60% and 88% in terms of number of deals and proceeds respectively.


• The global IPO outlook for 2018 is positive, with lower volatility across regions, equity indices hitting all-time highs, and steady investor confidence encouraging a healthy pipeline of market-ready companies to build up across sectors and markets. Also, cross-border deals look set to remain a feature of the global IPO market in 2018, with exchanges in the US, Greater China and London. However, geopolitical issues in many regions remain a downside risk.

• The pace of IPO activity in mainland China exchanges is expected to remain stable in 2018, with strong demand for new listings tempered by greater regulatory scrutiny of IPO applications. The Hong Kong Stock Exchange (HKEx) has made strong progress in attracting more small and medium-sized companies, a trend that is set to continue. In particular, it is showing success in turning itself into a listing hub for technology and other “new economy” firms. However, risks to the Chinese economy, such as the possible drag on economic growth exerted by financial deleveraging, could reduce the pace of listings if they become more pronounced.

• Additionally, an increasing number of foreign companies are likely to seek IPOs in Hong Kong, because of high valuations and enhanced opportunity for companies listed in Greater China to draw strength from the region’s strong economic growth. Many of these companies are likely to be from Asia-Pacific countries, including the ASEAN bloc, South Korea and Japan.

• After a stellar 2017, India’s IPO market looks good for 2018. The combination of primary market growth and overall economic growth is set to make India a highly attractive emerging market for investments in the coming months.

• The outlook for EMEA IPO activity in 2018 is positive, with increased activity anticipated across most of the region, barring any significant geopolitical shocks. However, investors remain selective, and appetite for new stocks will depend on market timing and valuations.

• IPO activity in the beginning of 2018 is expected to be relatively quiet in the UK, but we expect it to pick up considerably in 2Q18 as local and foreign businesses look to benefit from the currently stable environment, and the low value of the pound continues – making UK investments attractive to international investors.

• The prospects for 2018 look positive in the US due to an increasing volume of interest by local and foreign companies as the environment for issuers and investors remains strong. The underlying fundamentals of the US IPO market continue to be attractive.

Top 10 IPOs by proceeds, 2017Source: Dealogic.

Issuer name Issuerlocation

Sector Exchange Proceeds(US$m)

Snap Inc. US Technology New York 3,910

Allied Irish Banks plc IrelandBanking and capital markets

London 3,833

Pirelli & C SpA ItalyAutomotive and transportation

Borsa Italiana 2,822

Landis & Gyr Holding AG SwitzerlandDiversified industrial products

SIX Swiss Exchange

2,405

Netmarble Games Corp South Korea Technology Korea 2,336

Guotai Junan Securities Co. Ltd.

ChinaBanking and capital markets

Hong Kong 2,220

Altice USA Inc. USMedia and entertainment

New York 2,152

BAWAG Group AG AustriaBanking and capital markets

Wiener Börse(Vienna)

1,974

Galenica Sante AG Switzerland Life sciencesSIX Swiss Exchange

1,893

Invitation Homes Inc. US Real estate New York 1,771

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

2017Source: Dealogic; regional classification on the basis of issuer nationality.

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

Americas Asia-Pacific EMEA Total

Technology 5% 8% 3% 16%

Real estate 3% 4% 4% 11%

Banking and capital markets 1% 5% 5% 11%

Diversified industrial products 2% 5% 2% 10%

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

Automotive and transportation 1% 4% 3% 9%

Life sciences 2% 3% 3% 8%

Insurance 0% 5% 0% 6%

Oil and gas 4% 0% 1% 5%

Others 3% 8% 5% 17%

Total 24% 48% 28% 100%

IPO activity by area (YOY % change)

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

0%

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6. Loans

Executive summary

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

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

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

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

Proceeds Issues

Bank of America Merrill Lynch 343.4 1,597

JP Morgan Chase & Company 302.5 1,465

Citigroup Inc. 243.7 960

Wells Fargo & Company 197.1 1,239

Mitsubishi UFJ Financial Group 178.2 1,483

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

Market share (%) Proceeds Issues

Americas 62.7 2,851.3 4,923

EMEA 20.9 953.4 1,504

Asia-Pacific 16.3 743.6 3,458

11

• December was one of the quietest month in 2017 for the European and US leveraged loan market. December and August are typically the slowest months for the primary market each year.

• However, this was the highest total for December on record in Europe and second highest total in the US.

• In 2017, the leverage loan market remained strong in the US with loan volume reaching a record high of US$645.7b, up 34% on 2016.

• CLO issuance remained active, accounting for 64% of institutional loan allocations in 2017, up from 62% in 2016.

• A good start is expected in 2018, with large M&A and LBO financings already in the pipeline, some of which are for cross border deals.

Current state

• In December, US$32b of loans were issued in the US and €4.4b in Europe, taking the total 2017 global issuance volume to US$781.7b, up 40% compared to 2016. Monthly volume, as expected, decreased in December due to the holiday season, and was one of the quietest month in 2017 for the European and US leveraged loan market.

• However, this was the highest total for December on record in Europe and second highest total in the US.

• M&A-driven deals accounted for 45% of total 2017 volume in both the US and Europe, followed by refinancing activity, which accounted for 40%.

• The European leveraged loan market recorded strong activity in 2017, with total volume up by 73% compared with 2016. The European market was dominated by refinancing deals, which accounted for 44% of total volume in 2017, followed by M&A activity at 41% and Recapitalisation deals at 15%.

• In US, leveraged loan volume reached a record high at $645.7b in 2017, up 34% compared with 2016. Institutional issuance in 2017 was $503b, up 49% compared to 2016, and ahead of the previous record of $456b in 2013. M&A activity drove the leveraged loan market accounting for 45.3% of total issuance, followed by refinancing activity which accounted for 39.6%.

• CLO issuance remains strong, accounting for 64.0% of institutional loan allocations in 2017, up from 62% in 2016. In the US, the default rate of the S&P/LSTA Leveraged Loan Index reached a 17-month high of 2.05% in December due to six Chapter 11 filings in Q4’17.


• The European leveraged loan market set new records on volume, leverage, and pricing in 2017 and positive issuance conditions are expecting to continue into 2018. A strong start is also expected in 2018 as large M&A and LBO financings are already in pipeline, some of which are for cross border deals.

• The European CLO market saw a record issuance in 2017 (€20.9b from 51 deals) and is expected to do so again in 2018. The outlook of the US CLO market is still positive and new issuances are expected to be strong in 2018.

• Issuance in 2018 is expected to be supported by liability spreads that look to go lower as the attractive relative value, rising interest rates, and limited defaults continue to bring investor interest to the space.

Opportunities

• Demand for leveraged loans is expected to increase in the coming months with a growing desire of both sponsors and corporates to use the asset class. Also, the global search for yield and expectations for rising interest rates are expected to fuel strong demand from all channels.

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Retail

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Proceeds (US$b)


Current state• Global high-yield activity declined on a monthly basis in December. High-

yield issuance was US$18.5b in the US and €6.1b in Europe, taking the 2017 total global issuance to US$385.8b, up 34% compared with the total issuance in 2016.

• December saw a slowdown in issuance in the European high-yield bond markets and was one of quietest month of 2017. Despite this fact, it the highest total on record for December. The European high-yield market saw €6.1b of high-yield issuance in December, down from €8.6b in November. The European high-yield bond market saw a record-breaking year in 2017, with €93.6b of supply, up from €53b in 2016.

• The US high-yield bond issuance in 2017 was the highest for three years. Total volume was US$280.0b, a 22% increase compared to the US$228.7b in 2016.

• The bulk of new issuances were used to fund refinancing during 2017 with such issues accounting for 66% of total volume in the US and 64% in Europe. High-yield issuance for M&A activity accounted for 22% of volume in the US and 16% of volume in Europe.

• New-issue yields for single B- rated bonds for 4Q17 widened in the US to 6.73% from 6.04% at the end of 3Q17. At the same time, yields also widened in Europe to 5.41% in 4Q17 from 5.34% at the end of 3Q17.

• December was modest for the high-grade market with a US$22.6b issuance. Total issuance in 2017 reached a record-high of US$1,243b, or 4% more than the US$1,199b in 2016, and 7.2% more than the $1,161b placed in 2015.


• The high-yield market unexpectedly set a new gross volume record in 2017, largely supported by high refinancing activity, low volatility, positive fundamentals and technical. These supporting factors should still be in play in 2018.

• Strong momentum is expected to carry over into the first half of 2018.

• Capital market conditions for high-yield issuers are expected to remain robust, an uptick in M&A volumes and a reduced emphasis on refinancing are expected.

Opportunities• M&A remains a wild card for the 2018 outlook, after global value

declined slightly for a second consecutive year in 2017. This was mainly due to a slowdown in the number of mega-deals above US$10b.

• The promise of tax-reform boosted sellers' valuation expectations and a perceived reduction in trade-policy risk may boost cross-border transactions.

• The interest rate and default rate remain low, while global GDP growth is solid. Companies are expected to be looking to lock-in cheap financing, while demand for yield will be strong.

Executive summary

Euro bond issuances (US$b)Source: Thomson ONE.

US bond issuances (US$b)Source: Thomson ONE.

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

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

Issuer Nation Industry Proceeds

AT&T Inc. US Telecommunications 44.7

Apple Inc. US High technology 35.8

China Railway Corporation China Industrials 35.5

Verizon Communications Inc. US Telecommunications 24.6

Broadcom Corporation US High technology 17.6

Microsoft Corporation US High technology 17.0

Amazon.com Inc. US Retail 16.0

SoftBank Group Corporation Japan Telecommunications 14.5

State Power Investment Corporation

China Energy and power 14.0

Qualcomm Incorporated US Telecommunications 11.0

7. Bonds

• Global high-yield activity declined on a monthly basis in December, but full year 2017 volume was up 34% compared with the total issuance in 2016.

• December was one of quietest month of 2017. However, despite this fact, it was the biggest total on record for December.

• The high-yield market unexpectedly set a new gross volume record in 2017, largely supported by high refinancing activity, low volatility, positive fundamentals and technical. These supporting factors should still be in play in 2018.

• M&A remains a wild card for the 2018 outlook, after a slight decline in M&A driven value for the second consecutive year in 2017, driven by a fall in the number of mega-deals above US$10b.

12

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Proceeds(US$bn)


Appendices

Dry powder — buyout funds — by region (in US$b)

Global PE fundraising (in US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin

Source: Preqin

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Commitments Number of funds

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

Private Equity Capital Briefing14

Source: Dealogic

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

PE acquisitions by year (in US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic

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Value Number of deals

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1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Value Volume


Americas PE acquisitions — the top deals with disclosed financial terms in 4Q17

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

Source: Dealogic

Source: Dealogic

Announcement date

Completion date Company SectorValue

(US$b)Acquiror

19-Dec-17 Kindred Healthcare Inc. Health care 3.9

Humana Inc. (40% ); TPG Global LLC; Welsh, Carson, Anderson & Stowe LP

18-Dec-17Husky Injection Molding Systems Ltd. Machinery 3.9 Platinum Equity LLC

26-Nov-17

IC Power Ltd. (Latin American and Caribbean businesses of IC Power Ltd.) Utility and energy 3.7

I Squared Capital Advisors (US) LLC

4-Dec-17Hartford Financial Services Group Inc. (Talcott Resolution) Insurance 1.9

Cornell Capital LLC; Global Atlantic Financial Group Ltd.; TRB Advisors LP; Pine Brook Road Partners LLC; Grupo SafraSA; Atlas Merchant Capital LLC

1-Nov-17 Duff & Phelps Corp. Finance 1.8 Permira Ltd.

27-Nov-17 Barracuda Networks Inc. Computers and electronics 1.6 Thoma Bravo LLC

22-Dec-17 InterGen NV (Mexico assets) Utility and energy 1.3 Actis LLP

6-Nov-17AmTrust Financial Services Inc. (U.S.-based fee businesses) Insurance 1.2 Madison Dearborn Partners LLC

17-Oct-17 14-Nov-17 IntraLinks Holdings Inc. Computers and electronics 1.0 Siris Capital Group LLC

23-Oct-17 Exactech Inc. Health care 0.7 TPG Capital LP

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Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Source: Dealogic

Announcement date

Completion date

Company Sector Value (US$b) Acquiror

15-Dec-17 Unilever plc (Spreads business) Food and beverage 8.0 KKR & Co. LP

29-Nov-17

Banco Bilbao Vizcaya Argentaria SA - BBVA (Real estate business in Spain) Real estate 4.7 Cerberus Capital Management LP

3-Oct-17 Refresco Group NV Food and beverage 3.9PAI Partners SAS; British Columbia Investment Management Corp.

16-Oct-17 OHL Concesiones SA Transportation 3.3 IFM Global Infrastructure Fund

11-Oct-17 CeramTec GmbH Machinery 3.1

BC Partners LLP; Ontario Teachers Pension Plan; Public Sector Pension Investment Board (PSP INVESTMENTS)

27-Oct-17 TMF Group Holding BV Finance 2.0 CVC Capital Partners Ltd.

4-Dec-17 4-Dec-17 Alloheim Senioren-Residenzen SE Health care 1.3 Nordic Capital Svenska AB

10-Nov-17 Stark Group A/S Construction 1.2 Lone Star Global Acquisitions Ltd.

7-Dec-17Israel Chemicals Ltd. (Fire safety, oil additives units) Chemicals 1.0 SK Capital Partners LP

23-Nov-17 BGL Group Ltd. (30%)Computers and electronics 0.9 Canada Pension Plan Investment Board (CPPIB)

Source: Dealogic

EMEA PE acquisitions — the top deals with disclosed financial terms in 4Q17

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Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

Announcement date Completion date Company SectorValue

(US$b)Acquiror

28-Dec-17Harbin Pharmaceutical Group Co. Ltd. (51.7383%) Health care 1.2 CITIC Capital Holdings Ltd.

2-Oct-17 6-Dec-17 Asatsu-DK Inc. (87.05%) Professional services 1.2 Bain Capital LLC

14-Dec-17

Li & Fung Ltd. (Furniture, beauty products and sweaters wholesaling business) Consumer products 1.1

King Lun Holdings Ltd. (55% / 45%); Hony Capital Management Ltd.

31-Oct-17 15-Dec-17 Kuroda Electric Co. Ltd. (68.31%) Computers and electronics 0.6 MBK Partners Ltd.

19-Dec-17 Trans Maldivian Airways (Pvt) Ltd. Transportation 0.5

Bain Capital LLC; RJ Capital Group; Shenzhen Tempus Global Business Service Holding Ltd.; Tempus Holdings Ltd.

12-Dec-17 12-Dec-17 Bharti Telemedia Ltd. (20%) Telecommunications 0.4 Warburg Pincus LLC

28-Dec-17Harbin Pharmaceutical Group Holding Co. Ltd. (28.8462%) Health care 0.2 CITIC Capital Holdings Ltd.

28-Nov-17 28-Nov-17Beijing Sunsea Parking Management Co. Ltd. Transportation 0.2

Warburg Pincus LLC; Red Star Macalline Group Corp Ltd.

18-Dec-17 18-Dec-17La Trobe Financial Services Pty Ltd. (80%) Finance 0.2 Blackstone Group LP

6-Oct-17 Finders Resources Ltd. Mining 0.2 Eastern Field Developments Ltd.

Source: Dealogic

Asia-Pacific PE acquisitions — the top deals with disclosed financial terms in 4Q17

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Source: Dealogic

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

Appendix AGlobal PE exit activity

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

Source: Dealogic

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Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top exits in 4Q17

Americas PE exits (in US$b)

Announcementor filing date

Completion orpriced date

Company Sector Value (US$b) Sponsor Type

18-Jul-17 1-Nov-17 LTS Group Holdings LLC Telecommunications 7.1Berkshire Partners LLC; ABRY Partners Inc,; Pamlico Capital Management LP M&A

9-May-17 10-Oct-17 West Corp. Telecommunications 4.9

Thomas H Lee Partners LP; Quadrangle Group LLC; Apollo Global Management LLC M&A

10-Oct-17 15-Dec-17 CareCore National LLC Health care 3.6

General Atlantic LLC; Ridgemont Partners Management LLC; TA Associates Management LP M&A

2-Aug-17 18-Dec-17 CH2M Hill Cos Ltd. Construction 3.3 Apollo Global Management LLC M&A

4-May-17 1-Dec-17Capital Bank Financial Corp. Finance 2.2 Crestview Partners LP M&A

2-Jun-17 4-Dec-17 Aquarion Water Co. Utility and energy 1.7Macquarie Infrastructure & Real Assets Pty Ltd. M&A

4-Sep-17 22-Oct-17Royal Adhesives & Sealants LLC Chemicals 1.6 American Securities LLC M&A

3-Jul-17 8-Nov-17 Bankrate Inc.Computers andelectronics 1.5 Apax Partners LLP M&A

14-Aug-17 2-Oct-17 Neff Corp. (Bid No 2) Construction 1.3 Wayzata Investment Partners LLC M&A

21-Aug-17 29-Nov-17Williams Scotsman International Inc. Real estate 1.1 TDR Capital LLP M&A

20

Source: Dealogic

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


Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top exits in Q417

EMEA PE exits (in US$b)




27-Jul-17 11-Oct-17 ista International GmbH Professional services 6.5

Canada Pension Plan Investment Board-CPPIB; CVC Capital Partners Ltd. M&A

29-Aug-17 1-Nov-17 CPA Global Ltd.Computers and electronics 3.1

Leonard Green & Partners LP; Cinven Ltd. M&A

25-Sep-17 2-Nov-17Alliance Automotive Group SAS Automotive 2.0 Blackstone Group LP M&A

24-Oct-17 BAWAG Group AG Financials 2.0 Cerberus Capital Management LP IPO

7-Mar-17 28-Nov-17 Allfunds Bank SA Finance 1.9Warburg Pincus LLC; Hellman & Friedman LLC; General Atlantic LLC M&A

20-Jul-17 14-Nov-17 Bambora Group ABComputers and electronics 1.7 Nordic Capital Svenska AB M&A

4-Dec-17 4-Dec-17Alloheim Senioren-Residenzen SE Health care 1.3

Carlyle Group LP; Nordic Capital Svenska AB M&A

13-Dec-17 20-Dec-17 Jurys Inn Group Ltd. Dining and lodging 1.1 Lone Star Global Acquisitions Ltd. M&A

24-Jul-17 7-Dec-17ANF Immobilier SA (84.6506%) Real estate 1.0 Eurazeo SA M&A

17-Jul-17 13-Oct-17 ADB Safegate BVBA Consumer products 1.0 PAI Partners SAS; Carlyle Group LP M&A

21

Source: Dealogic

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Capital Briefing22

Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Asia-Pacific PE exits — top exits in Q417

Asia-Pacific PE exits (in US$b)

Source: Dealogic




25-Sep-17 1-Nov-17 Carver Korea Co. Ltd. Consumer products 2.7Goldman Sachs Capital Partners; Bain Capital LLC M&A

20-Sep-17 25-Oct-17 Coates Hire Ltd. (53.3%) Professional services 1.3 Carlyle Group LP M&A

12-Oct-17 12-Oct-17

Myanmar Distillery Co Ltd. (75%); Myanmar Supply Chain & Service Co. Ltd. Food and beverage 0.7 TPG Capital LP M&A

26-Oct-17 Vincom Retail JSC Real estate 0.7 Warburg Pincus LLC IPO

29-Sep-17 14-Nov-17Sushiro Global Holdings Ltd. (32.72%) Dining and lodging 0.3 Permira Ltd. M&A

4-Dec-17 Katitas Co. Ltd. Industrials 0.3 IPO

5-Dec-17 Aruhi Corp. Financials 0.2 IPO

19-Oct-17Rise Education Cayman Ltd.

Consumer products and services 0.2 Bain Capital LLC IPO

11-Sep-17 6-Nov-17Integrated Packaging Group Pty Ltd. Chemicals 0.1 Advent Partners Pty Ltd. M&A

30-Nov-17 5-Dec-17Bellsystem24 Holdings Inc. (14.43%) Professional services 0.1 Bain Capital LLC M&A

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Appendix BM&A activity monthly flash

Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆

2017(to December 17)

vs. 2016(to December 16)

2017(to December 17)

vs. 2016(to December 16)

M&A activity by areas and regions

Global 37,533 3% 3,213,608 -7%

Americas 13,313 -2% 1,763,477 -14%

Canada 1,968 -26% 169,360 -27%

Latam North 352 -2% 33,359 -3%

Latam South 647 -7% 88,096 31%

US 11,223 4% 1,555,213 -17%

EMEA 13,848 5% 1,042,424 -12%

Africa 630 6% 28,935 -40%

CIS 1,105 21% 26,681 -58%

CSE 944 -3% 26,328 -48%

GSA 2,884 30% 265,670 -13%

Israel 354 51% 30,567 36%

Mediterranean 1,530 12% 206,522 70%

MENA 248 -18% 40,532 -36%

Nordics 1,632 16% 135,675 81%

UK&I 3,115 -16% 243,021 -22%

WEM 3,246 1% 236,795 1%

Asia-Pacific 14,322 3% 905,717 -18%

ASEAN 1,796 -2% 84,694 3%

Greater China 6,040 7% 547,217 -17%

India 1,125 -1% 60,553 -1%

Japan 3,421 8% 131,811 -29%

Korea 1,160 -8% 68,609 7%

Oceania 1,567 -6% 75,665 -22%

M&A activity by sectors

Aerospace and defense 371 1% 80,826 130%

Automotive and transportation 2,534 3% 255,527 -1%

Banking and capital markets 35,311 3% 2,992,700 -5%

Consumer products and retail 5,381 0% 503,707 29%

Diversified industrial products 5,012 3% 285,928 -49%

Government and public sector 619 1% 27,921 0%

Health care 1,196 6% 60,163 3%

Insurance 36,427 3% 2,994,755 -10%

Life sciences 2,506 3% 275,410 -22%

Media and entertainment 2,373 0% 180,223 -26%

Mining and metals 1,990 -7% 94,881 -16%

Oil and gas 1,340 -8% 342,395 -22%

Other sectors 4,117 3% 108,352 -22%

Power and utilities 1,580 10% 234,193 -9%

Real estate 3,584 4% 260,366 10%

Technology 10,999 13% 618,871 -3%

Telecommunications 720 4% 149,107 -41%

Wealth and asset management 1,055 5% 55,088 0%

Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region. Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped.M&A analysis as at 1 January 2018. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

2016 2017

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

2016 2017

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


Appendix CM&A multiples and bid premium

Deal multiples greater than 30x and bid premium greater than 100% have been excluded from calculation of median.M&A analysis as at 1 January 2018. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

Median deal multiple — EV / EBITDA

Global Americas Asia-Pacific EMEA

LTM(to Dec 17)

PTM(to Dec 16)

LTM(to Dec 17)

PTM(to Dec 16)

LTM(to Dec 17)

PTM(to Dec 16)

LTM(to Dec 17)

PTM(to Dec 16)

Aerospace and defense 10.6x 10.3x 21.0x 9.9x 4.5x 13.9x 18.0x 13.6x

Automotive and transportation 9.9x 10.4x 9.7x 11.8x 10.1x 11.7x 10.4x 9.4x

Consumer products and retail 9.4x 10.5x 10.4x 10.6x 9.4x 11.6x 9.1x 9.7x

Diversified industrial products 10.7x 9.4x 10.3x 9.3x 12.3x 11.0x 8.8x 8.8x

Financial services 10.7x 10.6x 13.9x 12.8x 7.1x 9.4x 7.4x 7.9x

Government and public sector 10.0x 8.6x 10.6x 7.8x 10.3x 8.2x 8.9x 8.8x

Health care 13.8x 11.0x 13.4x 10.0x 16.6x 16.8x 13.3x 9.6x

Life sciences 9.4x 10.3x 9.1x 8.3x 9.5x 12.6x 9.1x 9.3x

Media and entertainment 6.9x 8.9x 12.8x 7.9x 6.9x 10.8x 5.9x 9.7x

Mining and metals 11.5x 7.8x 12.4x 8.9x 12.3x 9.7x 7.9x 5.8x

Oil and gas 10.1x 9.2x 9.6x 13.2x 9.9x 10.5x 10.3x 8.0x

Other sectors 10.4x 10.2x 11.8x 10.9x 10.0x 15.7x 9.6x 8.9x

Power and utilities 10.1x 12.2x 9.8x 7.4x 8.5x 24.1x 12.0x 13.0x

Real estate 11.1x 9.8x 11.1x 10.3x 12.3x 9.8x 9.8x 9.6x

Technology 11.6x 10.6x 12.8x 12.2x 11.6x 11.7x 10.5x 9.4x

Telecommunications 7.2x 8.6x 6.6x 10.4x 6.2x 8.2x 7.9x 8.4x

Total 10.4x 10.1x 11.5x 10.4x 10.6x 10.9x 9.1x 9.2x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEA

LTM(to Dec 17)

PTM(to Dec 16)

LTM(to Dec 17)

PTM(to Dec 16)

LTM(to Dec 17)

PTM(to Dec 16)

LTM(to Dec 17)

PTM(to Dec 16)

Aerospace and defense 23% 29% 28% 48% 11% 22% 33% 22%

Automotive and transportation

18% 19% 20% 38% 18% 16% 12% 31%

Consumer products and retail 15% 18% 21% 33% 15% 15% 11% 18%

Diversified industrial products 18% 23% 29% 30% 22% 19% 7% 24%

Financial services 17% 22% 25% 30% 13% 15% 13% 14%

Government and public sector 24% 31% 14% 65% 27% 10% 23% -

Health care 25% 33% 38% 43% 13% 31% 21% 11%

Life sciences 18% 26% 24% 36% 17% 24% 17% 26%

Media and entertainment 25% 29% 32% 37% 25% 21% 26% 19%

Mining and metals 21% 21% 17% 28% 23% 21% 27% 18%

Oil and gas 18% 24% 34% 30% 12% 22% 18% 25%

Other sectors 12% 23% 13% 26% 15% 22% 10% 17%

Power and utilities 18% 25% 28% 10% 14% 37% 6% -

Real estate 19% 25% 17% 27% 23% 25% 19% 19%

Technology 20% 24% 24% 37% 19% 19% 13% 15%

Telecommunications 12% 25% 17% 41% 13% 7% 11% 15%

Total 19% 23% 24% 33% 17% 19% 13% 19%


Appendix DCapital Confidence Barometer (October 2017): by area

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

56%59%

50%

57% 56% 56%

0%

25%

50%

75%

100%

Apr 15 Oct 15 Apr 16 Oct 16 Apr 17 Oct 17

57%

67%

54%

62%

81%

51%

0%

25%

50%

75%

100%


50% 48%44%

47% 46%

58%

0%

25%

50%

75%

100%


Global Americas EMEA

45% 44%

38%

47% 46%

57%

0%

25%

50%

75%

100%


Asia-Pacific China Germany

51%56%

50%

61%

33%

63%

0%

25%

50%

75%

100%


Japan UK US

58%

52%

59%

48%51%

60%

0%

25%

50%

75%

100%


61%

74%

57%

75%79%

42%

0%

25%

50%

75%

100%


43%40%

43%

49%

43%

58%

0%

25%

50%

75%

100%


51%

43%

35%

61%

37%

50%

0%

25%

50%

75%

100%



Notes


Notes


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