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Private Equity Capital Briefing
July 2016
Monthly insights and intelligence on PE trends
Brexit and PEChallenges and opportunities as firms look to assess impact of historic vote
The PE 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 distils this intelligence into a succinct and user-friendly publication.
PE Capital Briefing provides perspectives on both recent developments and the longer-term outlook for 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 reverse of this document if you wish to discuss any of the topics covered.
Contents
Section 1 Private equity: fundraising 4
Private equity: acquisitions 5
Private equity: exits 6
Section 2 M&A 7
Section 3 IPOs 9
Section 4 Loans 10
Section 5 Bonds 11
AppendicesAppendix A PE activity by geography 13
Appendix B M&A activity monthly flash 22
Appendix C M&A multiples and bid premium 23
Appendix D Capital Confidence Barometer 24
1.i. Private equity: fundraising
Executive summary
• Buyout fundraising rose nearly 3% in Q2 versus a year ago, to US$122.2b. YTD however, fundraising is trailing last year’s pace by 2.2%, with US$230.8b in aggregate commitments.
• Buyout dry powder ended June up 11% from a year earlier, to a record US$526.6b, partly reflecting industry’s continued patience towards investing.
• Average fund sizes increased 67% in Q2, to US$842.9m, aided by the seven funds that closed above US$5b in the quarter.
Current state
Fundraising
• Buyout fundraising rose modestly in the second quarter, as PE firms continue to attract investors. Fundraising in Q2 rose nearly 3% to US$122.2b from a year earlier, on 39% fewer closes. However, YTD, fundraising is trailing last year’s pace by 2.2%, and stands at US$230.8b. Fundraising has been flat in recent quarters, and could even decline over the near term. Many funds have completed record raises over the last two years, and have limited need to return to the market until dry powder levels decline.
• Blackstone Group LP claimed the top spot in the latest PEI 300 list, which ranked firms based on the amount of PE direct investment capital raised since January 2011 to April 1, 2016. The firm raised nearly US$60b for PE strategies, roughly US$25b more than its closest rival. The New York firm raised US$94b through all its strategies last year, including US$30b from several PE investment vehicles.
• The largest PE fund to close in Q2 involved a French PE firm that closed its latest fund of funds. Ardian Secondaries Fund VII completed its fundraising drive in April with US$10.8b to invest in secondaries. In addition, the investment vehicle collected another US$3.2b for use in primary investments. According to Ardian, the firm brought in new investors by increasing its fundraising efforts in Latin America, Asia and the Middle East. ASF VII is one of two PE investment vehicles that secured at least US$10b. The other was TPG Capital’s TPG Partners VII at US$10.5b. There were seven funds that closed above US$5b in the latest period compared with three a year earlier, which contributed to the 67% increase in average fund size for the latest quarter to US$842.9m from US$504.2m.
Dry powder
• The PE industry continues to have an abundant supply of dry powder, ending June 2016 with US$526.6b in available capital, up nearly 11% from a year earlier. Fundraising is flat in 2016 following two very solid years. PE firms have remained patient in the current volatile environment, which has contributed to the upward trend in buyout dry powder recently. However, it appears that PE firms are ready to increase their investment activity, and may find opportunities from the uncertainty created by Brexit.
Environment and horizon
• The PE industry is facing increased regulatory pressures from several sources. California’s legislature recently introduced Assembly Bill 2833, which would require public retirement systems to ask alternative investment vehicles in which the state invests to provide additional fee and expense disclosures. The bill does not offer a specific methodology, a reason why both the Los Angeles City Employees’ Retirement System and Los Angeles Fire and Police Pension oppose the measure. The SEC is also stepping up its effort to increase oversight of the industry, according to SEC Division of Enforcement director Andrew Ceresney. He was speaking in mid-May at the Securities Enforcement Forum West in San Francisco. The agency recently announced a settlement with a Maryland-based PE firm over allegations the firm engaged in brokerage activities without registering as a broker-dealer.
• PE will continue to find investors from public pensions, despite the challenges posed by increased regulatory oversight and high valuations. California Public Employees Retirement System (CalPERS) said in June that it remains committed to its 10% interim target allocation to PE because the sector outperforms the global public equity benchmark. Without PE’s contribution, CalPERS said the expected annual returns for the Public Employees' Retirement Fund would have been 30-70 basis points lower.
Global PE fundraising by quarter (in US$b)
4 Capital Briefing
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Commitments (US$b) Number of funds
Top five funds closed in Q2 2016 (US$b)
Fund name TypeGeographic focus
Target (US$b)
Close (US$b)
Ardian Secondary Fund VII Secondaries Europe 9.00 10.80
TPG Partners VII Buyout US 8.97 10.50
Green Equity Investors VII Buyout US 8.50 9.60
Brookfield Strategic Real Estate Partners II
Real Estate US 7.00 9.00
Ares Corporate Opportunities Fund V
Buyout US 6.50 7.85
Global PE dry powder by region (in US$b)
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03 04 05 06 07 08 09 10 11 12 13 14 15 YTD16Source: Preqin. YTD through June 30, 2016.
North America Europe Asia and ROW
Source: Preqin
Source: Preqin
The PEI Top 10
2016 Rank
Vs Year ago
2015 Rank
Firm PEI 300 Five-YearFundraising Total ($b)
Headquarters
1 ↑ [4] The Blackstone Group $59.99 New York
2 ↑ [3] Kohlberg Kravis Roberts $35.25 New York
3 ↑ [9] Warburg Pincus $28.63 New York
4 ↑ [8] Advent International $27.01 Boston
5 ↓ [1] The Carlyle Group $25.68 Washington, DC
6 ↓ [5] Apollo Global Management $24.13 New York
7 ↓ [6] CVC Capital Partners $23.46 London
8 ↓ [7] EnCap Investments $21.13 Houston
9 ↓ [2] TPG $20.71 Fort Worth
10 ↑ [12] Partners Group $18.64 Baar-Zug
Source: Private Equity International
1.ii. Private equity: acquisitions
Executive summary
• PE acquisition activity in the second quarter was flat versus a year ago, down 0.2% to US$92.1b. Overall, the industry continues to adjust to a tight financing market, with YTD activity trailing last year’s pace by 14%.
• PE investments declined in the Americas in Q2 by 14%, while EMEA and Asia Pacific saw increased activity versus last year.
• The technology sector received the largest proportion of PE investment in H1 2016. It accounted for 23% of deal value, and a fifth of overall PE deal volume.
Current state
• Private equity firms have been weighed down by an increasingly tight financing market that is contributing to a reduction on the number of announced transactions. PE investments in Q2 fell 0.2% to US$92.1b from a year earlier on 22% fewer transactions. (397 vs. 509) Volume was down worldwide, due to a 14% decline in announced deal value in the Americas. The other two regions reported deal value growth of 10% in EMEA and a 6% increase in Asia Pacific. YTD, PE investments is trailing last year’s pace by nearly 14%, after a slow Q1 ,which was the weakest period since the first quarter of 2010.
• The largest announced PE investment in Q2 involved a consortium led by Hellman & Friedman LLC’s purchase of a majority stake in MultiPlan Inc. for US$7.5b. Partners Group Holding AG and Starr Investment Holdings LLC, will reportedly retain a minority stake in the provider of health care cost management post-close.
• Technology companies remain appealing to PE firms, with the segment accounting for 23% of the total capital PE has put in play during the first half of 2016. It has also accounted for fifth of all announced PE investments. PE is benefitting from the depressed stock prices of many publicly traded technology players to take software companies private. More potential takeover targets may be found in cloud and in fintech sub-sectors.
Environment and horizon
• Improvements in the debt markets should help lift PE deal volume for the rest of 2016. EY’s US Private Equity Leader Bill Stoffel, “We expect to see a buying spree in the second half of 2016 as firms look to spend.” From a sector perspective, PE executives remain intrigued by the oil and gas sector. Stoffel said, “PE is eager to jump into the oil & gas industry. While we haven’t seen a tremendous amount of deals in the space, major players are raising sidecar energy funds from investors, so clearly the industry is doubling down.”
• PE firms are working to understand the implications of Britain's departure from the European Union. PE firms find themselves challenged on several fronts. At the firm level, significant changes are likely in store for the ways PE firms structure and market their funds. At the portfolio level, firms will face a wide array of changes across a range of industries. However, beyond the challenges, firms will also find new opportunities; Britain’s exit from the EU could beget a wide variety of attractive investments for firms that can successfully navigate the new landscape, particularly for U.S. and Asia-based firms that could put dry powder to work if potential target businesses remain uneasy about the ripple effects related to the complexity and timing of Brexit.
• PE firms are readying to deploy capital into the global Oil & Gas sector, with 25% planning acquisitions before the end of the year and 43% by the first half of 2017, according an EY global survey of 100 PE firms active in the space. The survey, Capitalizing on opportunities: Private equity investment in oil and gas, reveals that PE firms are preparing to increase investment into the sector. EY Global Oil & Gas Transactions Leader Andy Brogan said, “Access to financing is arguably the biggest challenge facing oil and gas companies. While many expected PE funds to swoop in with capital during the oil price downturn over the last 18 months, investment has fallen short. But the tide may be turning. Greater consensus over the oil price future and more favorable asset valuations are improving the conditions for PE, and we expect to see an uptick in deals before the end of the year.”
PE acquisitions by quarter (in US$b)
Top five announced acquisitions in Q2 2016
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Value (US$b) Volume
Sector 2016 ValueIndustry
share (%)2016 Volume
Industry share (%)
Technology $28.96 23.0% 157 20.0%
Health care $14.37 11.4% 71 9.1%
Utilities $13.88 11.0% 14 1.8%
Financials $12.93 10.3% 57 7.3%
Consumer goods $12.31 9.8% 101 12.9%
Real Estate $11.30 9.0% 24 3.1%
Materials $10.14 8.1% 114 14.5%
Consumer services $8.84 7.0% 114 14.5%
Industrials $6.39 5.1% 57 7.3%
Oil and gas $4.23 3.4% 21 2.7%
Retail $2.11 1.7% 34 4.3%
Telecom $0.488 0.4% 20 2.6%
PE acquisitions by sector, YTD 2016 (US$b)
Annouc-ment Date
Company Acquirer Value (US$b)
Sector
7-Jun-16 * MultiPlan Inc. Hellman & Friedman LLC/ Leonard Green & Partners LP/GIC Pte. Ltd.
7.5 Health care
3-Jun-16 Talen Energy Corp. (65%)
Riverstone Holdings LLC 5.0 Utilities
23-Jun-16 GE Money Bank SCA
Cerberus Capital Management LP
4.6 Financials
18-Apr-16 Vattenfall AB (Lignite Business)
Energeticky a Prumyslovy Holding as/PPF Investments Ltd.
3.8 Utilities
29-Apr-16 Parkway Properties Inc.
Cousins Properties Inc. 3.8 Real estate
Source: Dealogic. Note: *-- refers to closing date.
Source: Dealogic. Data through June 30, 2016.
Source: Dealogic
1.iii. Private equity: exits
Executive summary
• PE M&A exit value fell 25% in Q2 to US$66.2b versus a year ago, as PE firms have a reduced imperative to realize investments.
• There were 20 fewer announced M&A exit transactions during the quarter, as the industry shifts its focus from realizations towards deployment.
• The value of PE-backed IPOs fell 51% in Q2 versus a year ago, to US$9b. However, activity increased markedly from Q1, which was the slowest quarter for PE deals since 2009.
Current state
• Exit activity has moderated significantly in 2016. Firms have already exited substantial portions of their portfolios over the last 2-3 years, and now have reduced imperatives to exit. Activity that has taken place so far this year has been driven by sales to strategic acquirers. These buyers have an appetite for deals as they pursue growth through acquisitions. Their activity is driven by their significant amount of corporate cash reserves, elevated stock prices, and readily available financing.
• There were 20 fewer PE M&A exit transactions in Q216, and a 25% decrease in announced deal value. The latest period saw deals valued at US$66.2b, and saw just a dozen large deals with values north of US$1b. By comparison, the year earlier period included nearly 40 transactions of that size. The largest PE-backed M&A exit for Q2 2016 was the sale of MultiPlan Inc. by Partners Group Holding AG and Starr Investment Holdings LLC. They sold the business to a consortium led by Hellman & Friedman LLC for US$7.5b. YTD, deal value for PE M&A exits fell 26% to US$128.6b from a year earlier.
• The IPO markets are currently providing a limited avenue for PE exits. Global activity for IPOs with PE backers slowed significantly in Q216 versus a year ago, with 35 offerings raising US$9b. This represents a 40% drop in volume and a 51% decline in total capital from a year earlier. Part of the decline can be attributed to a “cooling off” effect after several years of strong IPO activity across major markets. It also reflects the fact that many businesses are delaying their IPOs and waiting better timing and improved market sentiment so they can obtain higher valuations. The largest PE-backed IPO for the period involved KKR & Co. LP and Clayton Dubilier & Rice LLC’s US Food Holdings Corp. The food distribution raised about US$1.2b and its shares now trades on the NYSE under the symbol, USFD. Neither KKR or Clayton Dubilier sold shares in the offering. YTD, deal value for PE-backed IPOs decreased 66% to US$11.2b from a year earlier. Despite the year-over-year decline, Q2 activity was up more than 300% from Q1, which was the slowest quarter for PE-backed deals since 2009.
Environment and horizon
• IPO markets could remain subdued through the balance of the year given the uncertainty from Brexit and the US presidential election. PE-backed IPOs declined during the first half of 2016 as a result of global macro volatility that led to increased risk aversion and a decline in equity prices. Geopolitical events could further limit activity moving into 2H16, with businesses likely to hold off on pursuing IPOs because the prospect of pricing at the low end or below target ranges appears more likely in the current environment.
• PE firms can take advantage of China’s continued appetite for deal opportunities in the U.S. The aggregate value of deals for Chinese companies investing in US targets increased more than 500% between H1 2015 and H2 2016. There is interest in energy, commodities and financial services, among other sectors. “Chinese companies have helped and will continue to help prop up deal values. As they look to expand into new markets, the US remains attractive for its stable growth and currency,” said Rich Jeanneret, EY Americas Vice Chair, Transaction Advisory Services.
PE M&A exits by quarter (US$b)
PE IPOs by quarter (in US$b)
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Value (US$b) Volume
Top 5 announced M&A exits in Q2 2016
Date Company SponsorValue (US$m)
Sector
7-Jun-16 MultiPlan Inc. Leonard Green & Partners LP/Hellman & Friedman LLC/Partners Group Holding AG/Starr Investment Holdings LLC
7,500.0 Health care
12-Jun-16 Blue Coat Systems Inc.
Bain Capital LLC 4,650.0 Technology
28-Jun-16 Change Healthcare Holdings Inc. (Excluding pharmacy switch and prescription routing business)
Blackstone Group LP;Hellman & Friedman LLC
4,016.6 Technology
24-Jun-16 Sun Products Corp.
Vestar Capital Partners Inc.
3,600.0 Consumer goods
2-Jun-16 Vogue International Inc
Carlyle Group LP 3,300.0 Consumer Products
6-May-16 Ethypharm SA Astorg Partners SA 858.66 Health care
Source: Dealogic
Source: Dealogic
Source: Dealogic
-25%
-20%
-15%
-10%
-5%
0%
5%
0% 20%
Current state
• 1H16 values stood at US$1.519t, down 18% compared with 2015, flat on 2014 and up 35% against 2013. The difference against 2015 is almost entirely driven by eight fewer megadeals (over US$10b) witnessed in 2016. The number of deals recorded was 17,642, as against 17,665 in 2015 – which shows that the volume remains flat.
• 2Q16 inbound deal activity in the UK was not significantly impacted by the UK referendum. The UK recorded 184 inbound deals worth US$14.4b in the second quarter of 2016. While this is 84% lower by value than2Q15, that quarter included the massive US$66b merger of Royal Dutch Shell and BG Group. In volume terms, the recent quarter was broadly in line with previous quarter (181 deals).
• 2016 is shaping up to be a record year for busted deals in the wake of concerns over regulatory and tax risks or national security. As regulators put more pressure on M&A, over US$500b worth of deals have been cut short so far, the highest since 2007.
• Outbound acquisitions by Chinese companies set a new record in 1H16. Slowing domestic growth and the Government’s efforts to support global expansion plans of Chinese companies propelled domestic firms to acquire foreign companies, brands and technology. We saw 378 such deals in the first half of 2016 with a cumulative value of US$129b, surpassing the 2015 full-year record of US$97.9b.
• In the largest deal of the month, Microsoft Corp. agreed to acquire LinkedIn Corp. in the largest acquisition in its history, for US$28b. The deal hopes to create synergies between LinkedIn, Microsoft Office 365 and Microsoft Dynamics, and help bolster Microsoft’s revenue and competitive position.
• In another significant deal, Mondelez International Inc. made a US$25b bid for Hershey Co. in an effort to create the world’s largest candy maker at a time when both companies’ sales are under pressure. The bid was promptly rejected by the Hershey’s Board, which stated that it provided no basis for further discussion.
Environment and horizon• The unexpected vote by the UK to leave the EU has raised levels of
uncertainty and volatility in the capital and M&A markets. The turmoil in financial markets in the immediate wake of the UK’s decision drove sterling to a 31-year low against the US dollar and drove global equity markets down. While equities recovered by the end of the month, many asset classes are showing signs of a risk-off investor mindset.
• The Brexit vote triggered fears that Europe could be enveloped by a “tsunami” of similar plebiscites on EU membership across the continent, in countries including France, the Netherlands, Denmark and Sweden. There are concerns that this decision may have an economic impact in the short term and economic and political consequences in the long term, which might delay or derail planned dealmaking and other corporate investment.
• The far-reaching consequences of Brexit on global M&A are hard to predict but, in the short term, heightened uncertainty could see companies hit the brakes on planned deals, as happened in the wake of the Eurozone debt crisis. The increased political risk may negatively impact investor confidence and business sentiment, which could reduce dealmaking across the globe. However, how pronounced this might be, and how long markets would take to adjust, is difficult to predict.
• However, acquisitions of UK and EU assets and companies by US and Asia-Pacific companies may accelerate, as the relative value of IP-rich assets with a global customer base become more attractive. This may be seen in the technology, industrial, life sciences and consumer products sectors in the UK and wider EU.
• Brexit may present additional "headwinds" for the US economy. There are increased concerns around the US economic outlook due to the financial turmoil the world economy is facing. The biggest impact economically could be the strengthening currency. If the dollar continues its post-Brexit gains, it would potentially hurt US trade and manufacturing, which reported strong momentum in June and finally looked to be on an upward trajectory.
• The direct impact of Brexit on Asia-Pacific companies and economies may be limited. The biggest impact on the Asia-Pacific economies is expected to come from lowered confidence in global growth.
Deal environment: by area (YOY % change)
Last 12 months (LTM) to June 2016 versus LTM to June 2015Source: Dealogic and EY analysis
Deal environment: by target sector and target area (% share of global value)
LTM to June 2016Source: Dealogic and EY analysis; excludes real estate asset transactions.
Note: because of rounding, percentages may not add up to total.
Top 10 announced deals by value, June 2016Source: Dealogic
M&A analysis as at 1 July 2016.
Note: data is continually updated and therefore subject to change.
7
Executive summary
• Global M&A remained stable during the first half of 2016, recording 17,642 deals worth US$1.5t.
• Although inbound deal activity into the UK did not suffer extensively in 2Q16, the environment will likely be uncertain for capital and M&A markets due to the Brexit vote.
• Strategic deals, including spin-offs, could drive the next wave of M&A.
• Low economic growth, disruptive technology, sector convergence and changing consumer behavior will remain key deal drivers in 2016.
2. M&A
Target Sector Country Acquiror Value (US$m)
LinkedIn Corp. Technology US Microsoft Corp. 28,120
Hershey Co. Consumer products and retail
US Mondelez International Inc. 25,427
Fortive Corp. Life sciences US Spin-off 18,042
Supercell Oy Technology Finland Tencent Holdings Ltd. 8,600
Wind business of Siemens AG
Diversified industrial products
Spain Gamesa CorporacionTecnologica SA
7,721
AmSurg Corp. Provider care US Envision Healthcare Holdings Inc.
6,970
Shenzhen Metro Qianhai International Development Co. Ltd.
Automotive and transportation
China China Vanke Co. Ltd. 6,925
SolarCity Corp. Power and utilities US Tesla Motors Inc. 5,675
Talen Energy Corp. Power and utilities US Riverstone Holdings LLC 5,045
Blue Coat Systems Inc.
Technology US Symantec Corp. 4,650
Value
Vo
lum
e
Americas
EMEA
Global
Asia-Pacific
Americas Asia-Pacific EMEA Total
Technology 11% 4% 2% 18%
Consumer products and retail 7% 2% 5% 14%
Life sciences 7% 1% 1% 10%
Diversified industrial products 4% 2% 3% 9%
Banking and capital markets 3% 2% 2% 8%
Oil and gas 4% 1% 1% 6%
Automotive and transportation 1% 3% 1% 5%
Power and utilities 3% 1% 1% 5%
Media and entertainment 2% 2% 1% 4%
Others 9% 5% 5% 19%
All sectors 52% 25% 23% 100%
Executive Briefing
2.i. M&A: cross-border deal flow
Key cross-border M&A deal flow(LTM to June 2016)(Total = US$1.3t)
N America to:W Europe – $83b
UK&I – $69bOceania – $24b
Japan to:N America – $24b
W Europe – $8bUK&I - $8b
UK&I to:N America – $66bW Europe – $21bL America – $3b
L America to:W Europe – $9bN America – $2b
Greater China andMongolia to:
W Europe – $98bN America – $48b
SE Asia – $13bW Europe to:N America – $191b
UK&I – $146bJapan – $15b
Cross-border M&A deal flow (LTM to June 2016)
(US$m)
Key
>$100b
>$50b
>$10b
Note: all figures are in US$.
# Acquiror refers to acquiror ultimate holding company.
$ Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan.
M&A analysis as at 1 July 2016.
Source: Dealogic. All Rights Reserved.
Note: data is continually updated and therefore subject to change.
Key >US$100b >US$50b >US$10b
Intra-area cross-border deals
Target Acquiror# Africa SE Asia (including Korea)
Greater China and Mongolia$
Russia, CIS and CSE
W Europe (excluding UK&I)
India Japan Latin America
Middle East
North America
Oceania UK&I Inboundtotal
% versus PTM
Africa 923 350 3,152 55 1,912 28 957 - 514 4,733 92 1,702 14,418 30%
SE Asia (including Korea)
5 5,843 12,541 - 7,375 23 4,205 360 307 1,553 2,911 349 35,473 -5%
Greater China andMongolia $
- 3,596 29,008 313 4,386
- 363 - - 14,168 334 126 52,294 -4%
Russia, CIS and CSE 2,428 2,097 6,768 2,570 5,230 4,397 132 433 4,604 2,739 59 1,212 32,669 12%
W Europe (excluding UK&I)
1,538 873 98,310 7,237 50,453 737 8,355 9,200 3,828 82,989 2,240 20,875 286,636 3%
India 240 4,324 2,092 - 1,486 - 2,609 - 795 6,578 176 634 18,934 128%
Japan - 151 8,920 - 14,544 293 - - - 8,285 0 693 32,887 289%
Latin America 70 1,224 6,708 502 9,456 11 1,018 6,293 2,498 15,395 637 2,831 46,643 -16%
Middle East 2,206 77 583 104 1,880 99 256 140 5,024 3,131 66 335 13,901 70%
North America 556 4,403 48,382 1,219 191,088 2,693 23,909 2,420 46,989 97,827 3,663 66,143 489,294 39%
Oceania 61 904 6,491 1 5,080 122 2,512 49 89 23,931 2,449 503 42,193 30%
UK&I 1,053 1,739 7,597 37 145,728 367 7,502 51 1,382 68,773 2,789 7,175 244,192 27%
Outbound total 9,081 25,582 230,551 12,039 438,617 8,772 51,818 18,947 66,030 330,104 15,416 102,579 1,309,535 23%
% versus previous 12 months (PTM)
-7% -9% 152% 26% 24% 295% -32% 7% 70% 0% -34% 15% 23%
8 Executive Briefing
3. IPOs
Executive summary
• Global IPO activity registered a YOY decline of 71% and 51% in deal value and volume respectively.
• June 2016 recorded the strongest IPO activity YTD in terms of capital raised with three US$1b+ deals.
• This month, EMEA and Asia-Pacific led in terms of deal value and volume respectively.
• Global IPO activity is expected to remain subdued in the near term, as current market conditions remain challenging due to uncertainties arising from UK’s vote for the Brexit and concerns regarding global economic growth.
9
Current state• 1H16 saw suppressed IPO levels due to volatile markets and a challenging
investment environment; the half-yearly activity was down by 60% and 37% in terms of deal value and volume respectively against 1H15 – deal value being the lowest since 2009. Furthermore, June 2016 was down by 71% and 51% in terms of deal value and volume respectively as compared to June 2015, despite the month witnessing the highest IPO activity in terms of deal value this year as companies continued to delay their plans to go public across major markets, waiting for reduced volatility levels and improved market sentiment.
• EMEA continued to lead IPO activity in terms of deal value, accounting for 47% of global proceeds in June 2016. This was mainly due to the largest IPO of the year, the US$3.0b listing of Dong Energy A/S. However, half-yearly deal value was down by 55%. The region accounted for two of the month’s three billion-dollar-plus deals:
• Dong Energy A/S, the world’s largest offshore wind park operator, raised US$3.0b in the largest IPO of the year. The proceeds will help retain and develop the company’s position as one of the leading green energy companies in the world.
• ASR Nederland NV, a Dutch insurance group, raised US$1.2b to help recover some of the money it spent on bailing out its parent, Fortis, during the financial crisis.
• BOC Aviation Ltd, the second largest Asian IPO of 2016, raised US$1.1b to fund expansion and realize the immense growth potential of the aviation sector.
• Asia-Pacific led the IPO activity in terms of deal volume in June 2016, accounting for 63% of global deals on the back of strong activity from China, Japan and Australia. However, overall volume was down by 32% this YTD as compared with an year earlier.
Environment and horizon• The unexpected decision by the UK to leave the EU has led to a high
degree of uncertainty in capital markets. While the long-term impact on the IPO landscape is difficult to predict, in the short term, we are likely to see many companies put their listing plans on hold, especially in London and mainland Europe, until a clearer picture of the implications emerges. More broadly, this is likely to impact recent efforts by the EU to develop more integrated capital markets.
• Brexit also pressurizes the planned merger between the London Stock Exchange and Germany’s Deutsche Bourse, with both companies re-evaluating the original terms of the £20b deal. The politicians and regulators in Germany and the EU are evaluating whether to move the headquarters from London to a city that will remain in the EU post-Brexit.
• Global IPO activity is expected to remain subdued in the coming months as current market conditions remain challenging due to concerns regarding global growth and uncertainty arising from vote for the Brexit. Although we are still seeing investor appetite for new listings, IPO windows are likely to be sporadic, with the stop-start market continuing well into the second half of the year.
• The outlook for US IPO activity is softening as we move into the traditionally quiet third quarter and look further ahead toward the US presidential election. This moderation is expected to continue in the second half of 2016, as growth prospects for the US appear somewhat constrained in the near term due to a strong US dollar, sluggish global demand, and reduced oil and gas investments. However, we are seeing momentum gradually build in US capital markets, and investor appetite remains strong.
• The Hong Kong IPO market should heat up through the remainder of 2016 as a strong pipeline of companies wait for the IPO window to open – and some mega listings on the horizon, including China Postal Savings Bank, are expected to raise over US$7b. Recent tightening of the vetting process by the Hong Kong Stock Exchange may act as a counterbalance, in particular for applicants with smaller market capitalization and those looking for a Growth Enterprises Market (GEM) board listing.
• IPO activity is expected to be steady in mainland China as an ever-growing pipeline of 800-plus companies patiently wait to go public. However, in the short term, the regulator will continue to keep a close eye on market conditions; it recently launched a new inspection campaign to identify unqualified listing applicants, in a move to crack down on fears of an equity influx amid the volatile stock market earlier this year.
IPO activity by area (YOY % change)
(LTM to June 2016 versus LTM to June 2015)Source: Dealogic; regional classification on the basis of issuer nationality.
Top 10 IPOs by proceeds, June 2016Source: Dealogic
Issuer name Issuerlocation
Sector Exchange Proceeds(US$m)
Dong Energy A/S Denmark Oil and gasNASDAQ OMX Copenhagen 3,006
ASR Nederland N.V. Netherlands InsuranceEuronext (Amsterdam) 1,158
BOC Aviation Ltd. Singapore Other sectors Hong Kong1,126
Frasers Logistics & Industrial Trust
Singapore Real estate Singapore 669
Komeda Holdings Co. Ltd. Japan Real estate Tokyo 489
CEMEX Holdings Philippines Inc.
PhilippinesDiversified industrial products
Philippines 464
Basic Fit N.V. NetherlandsMedia and entertainment
Euronext (Amsterdam)
455
China Nuclear Engineering Corp. Ltd.
China Real estate Shanghai 278
PT Cikarang Listrindo Indonesia Power and utilities Indonesia 265
Scottish Pacific Group Ltd. AustraliaBanking and capital markets
Australia 219
IPO activity by sector and area (% share of global proceeds)
LTM to June 2016Source: Dealogic; regional classification on the basis of issuer nationality.
Note: because of rounding, percentages may not add up to total.
Americas Asia-Pacific EMEA Total
Banking and capital markets 1% 10% 7% 18%
Technology 2% 7% 4% 12%
Real estate 4% 2% 5% 11%
Consumer products and retail 3% 5% 2% 10%
Diversified industrial products 0% 4% 4% 9%
Life sciences 0% 5% 3% 8%
Government and Public Sector 3% 2% 1% 6%
Automotive and transportation 0% 3% 1% 4%
Power and utilities 0% 2% 1% 4%
Others 3% 8% 7% 18%
All sectors 15% 48% 36% 100%
-60%
-40%
-20%
0%
20%
40%
60%
-80% -60% -40% -20% 0%ValueV
olu
me
US
Americas(including US) EMEA
Global
Asia-Pacific
Executive Briefing
0 100 200 300 400
Energy and power
Industrials
High technology
Consumer staples
Consumer products and services
Media and entertainment
Government and agencies
Proceeds (US$b)
Current state• In June, US$45.4b of loans were issued in the US and €4.2b in Europe,
taking the YTD global issuance to US$243b, down 12% from the same period in 2015. Up until the Brexit vote, the more attractive financing conditions allowed opportunistic transactions to appear in June, but led to a decline in sponsored activity when measured against May numbers.
• After a slight rise last month, June accounted for 58% of loan deals in the US, and 70% of those in Europe came in from M&A activities. Thanks to uncongenial conditions in 1Q16, 1H16 M&A volume was lower than the previous year, and as were cross-border and refinancing volumes, although buyout issuances have increased. The increase of 30% in the European market was not huge, but the pace of buyout financing has been steady and relatively strong compared with recent years.
• Following the Brexit vote, the news is not all that dire in the US loan market. Conditions are improving after an initial knee-jerk reaction when Britain decided to leave the EU against the market expectations of remaining. The leveraged loan pipeline is also building.
• In the European market, the year began with a flurry of M&A-driven primary deals in January, but global volatility and a glut of supply led many deals to flex, and it has entered a period of uncertainty after the Brexit announcement. The referendum decision could hit loan volumes further during the remainder of the year.
• The Asia-Pacific loan market retained its sluggish pace in 2Q16, as regional economies remained weak. Syndicated lending in 1H16 declined 13% to US$271b, the lowest half-year volume since 2013, but conditions may improve, as 2Q16 fared better than 1Q16.
• June 2016 continued to observe tightening of pricing during syndication;the average clearing yield for single-B rated TLBs tightened in the US to 5.63% (on a rolling three-month basis) from 5.77% the previous month, and to 5.52% from 6% in Europe.
Environment and horizon• June’s start was strikingly different from how it ended. Coming off a very
technically lopsided May, issuers continued to come to market fast and furious with deals in the first half of June after a hectic May, though issuance slowed late in the month, as Brexit-related concerns put a damper on the market.
• The European market is demonstrating a stoic pragmatism to Brexit, with the expectation of markets remaining relatively stable over the coming few months, but it will take more time to get full clarity on prospects for new issuance and investor appetite. However, some UK borrowers could face pricing increases on their loans and more restricted access to the bond market, depending on currency, sector and size.
• As the bulk of the leveraged loan market is based in euros and is senior secured, the impact of Brexit should be minimal. Although there will be equity volatility, and valuations might alter, it’s unlikely to affect the bulk of the credit in the market, which should remain relatively stable.
Opportunities• Looking forward, there isn’t much visibility, though market participants
are forecasting slow activity in the near future. Brexit-related volatility at the end of June is expected to put a damper on the opportunistic business that inflated June’s volume, and the M&A pipeline is very thin.
• In the long term, the loan market remains a stable option for investorsand issuers, despite volatile wider markets, and the new money transactions that are well structured and positively priced can continue to get traction.
4. Loans
Executive summary
Global investment-grade loans (US$b)Source: Thomson ONE
Global high-yield loans (US$b)Source: Thomson ONE
Top arrangers ranking, YTD 2016 (US$b)Source: Thomson ONE
Global loan issuance by industry, YTD 2016Source: Thomson ONE
Proceeds Issues
Bank of America Merrill Lynch 151.3 680
J.P. Morgan 108.5 559
Citigroup Inc. 100.5 396
Mizuho Financial Group, Inc. 83.0 515
Wells Fargo & Company 80.5 527
All loans by region, YTD 2016 (US$b)Source: Thomson ONE
Market share Proceeds Issues
Americas 61.1% 1,247.6 2,179
EMEA 21.7% 442.8 751
Asia-Pacific 17.2% 351.3 1,659
0
200
400
600
0
200
400
600
800
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Proceeds (LHS) Number of issues (RHS)
0
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2,000
3,000
0
300
600
900
1,200
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Proceeds (LHS) Number of issues (RHS)
10
• More opportunistic transactions appeared in June, along with a decline in sponsored activity.
• We saw lower M&A volume, along with lower cross-border and refinancing volumes, but higher buyout issuances.
• Following the Brexit vote, the US market is not all that dire, European markets are believed to be holding up and Asia-Pacific remains sluggish at the end of second quarter.
• The bulk of the leveraged loan market is based in euros and is senior secured, so the impact of Brexit should be minimal.
• Although market participants are forecasting slow activity in the near future, the loan market remains a stable option for investors in the long term.
Executive Briefing
0 50 100 150 200
Energy and power
Health care
Consumer staples
Materials
Retail
Media and entertainment
Proceeds (US$b)
Executive summary
Euro bond issuancesSource: Thomson ONE
US bond issuancesSource: Thomson ONE
Top 10 corporate bond issuers, YTD 2016 (US$b)Source: Thomson ONE
Global bond issuance by industry, YTD 2016Source: Thomson ONE
Issuer Nation Industry Proceeds
Apple Inc. US High technology 17.9
Anheuser-Busch InBevSA/NV
Belgium Consumer staples 14.9
Oracle Corporation US High technology 14.0
Aetna, Inc. US Health care 13.0
Johnson & Johnson US Health care 12.1
Daimler AG Germany Industrials 11.0
AT&T Inc. US Telecommunications 10.0
Shell International Finance BV
Netherlands Energy and power 9.2
Berkshire Hathaway Inc. US Industrials 8.5
Southern Company US Energy and power 8.5
0
50
100
150
200
0
50
100
150
200
250
Jul15
Aug15
Sep15
Oct15
Nov15
Dec15
Jan16
Feb16
Mar16
Apr16
May16
Jun16
Proceeds (US$b) (LHS) Number of issues (RHS)
11
0
100
200
300
400
500
0
100
200
300
400
Jul15
Aug15
Sep15
Oct15
Nov15
Dec15
Jan16
Feb16
Mar16
Apr16
May16
Jun16
Proceeds (US$b) (LHS) Number of issues (RHS)
5. Bonds
• Global high-yield activity slumped in June but continued the trend of double-B issuers.
• The European high-yield primary market stability was aided by the knock-on effects of the ECBs corporate bond buying program.
• Price action has been volatile following the Brexit vote, with clearing yields rising in both the US and the UK.
• European market conditions remain uncertain; borrowers raising debt in the US turned out to be largely immune to the turmoil.
• European markets to witness risk-off reaction for sometime.
Current state• Global high-yield activity slumped in June after high-yield issuance in the
US hit US$21.8b and, in Europe, €4.6b, down 38% from the same time last year. In the European market, double-B issuers continued to pile into the market, locking in low yields by refinancing debt. Issuers such as Monierand Stora Enso were some examples this month.
• The European high-yield primary market stability was aided by the knock-on effects of the ECB's corporate bond buying program. For much of 2016 to date, the European bond market has been dominated by double-B issuers, with little single-B activity attributed to volatility in high-yield bond market in the early part of the year, as well as uncertainty over the depth of bond investors’ appetite for higher-levered and more complex credits.
• High-yield issuance M&A activity was only 29% of the US high-yield issuance, or US$34.25b, a 47% YOY decrease. In Europe, it was 19% of high-yield issuance, or €4.6b, a 67% decline from last year.
• As expected, price action has been volatile following the Brexit vote. Euro-denominated bonds have largely pared their losses but are still down. Sterling bonds have underperformed and are still way down on their pre-vote levels. Clearing yields for double-B rated bonds rose in the US to 5.56% in the three months to the end of June from 5.53% at the end of May and rose to 3.41% from 3.26% in Europe.
Environment and horizon• As growth in the Eurozone is likely to be dented, the case for the ECB to
expand its quantitative easing (QE) through bond purchases in coming months will be strengthened.
• European market conditions remain uncertain and, with markets not benefiting from the Corporate Sector Purchase Programme (CSPP), prospects of new issuance remain low for the foreseeable future. Due to high cash balances, the secondary high-yield market is weathering the storm better than expected. The net impact of the result of the UK referendum has been lower government bond yields and wider credit spreads in fixed-income markets.
• Despite the surprising exit of Britain from the EU, borrowers raising debt in the US turned out to be largely immune to the turmoil. Yields have dropped, easing the cost of borrowing for US companies that have lined up for months to raise new capital.
• Risk-off reaction prevailing in European markets with Brexit are currently showing a minimal impact on returns, stable commodity prices, with looser monetary conditions in the US and falling risk-free yields all contributing. It is believed that the volatility at the start of the year had a much more negative impact on corporate bond returns then Brexit.
Opportunities• QE everywhere could help markets if it boosted expectations for growth
and inflation. But at the zero lower bound and with little hope of massive fiscal stimulus, central banks might struggle to raise animal spirits.
• Lenders are hoping that the drop in valuations as markets digest the UK exit may encourage both corporations and sponsors to pull the trigger in the second half of the year, although only a few companies had been considering issuing before the August break anyway — mostly opportunistic borrowers seeking to refinance bonds that will now wait.
Executive Briefing
Appendices
Dry powder — buyout funds — by region
Global PE fund-raising (in US$b)
Appendix AGlobal PE fundraising activity
Source: Preqin
0
200
400
600
800
1,000
1,200
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Commitments (US$b) No. of funds
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
North America Europe Asia and rest of world Asia-Pac and ROW as percentage of total
Capital Briefing13
Source: Preqin
Source: Dealogic
Global PE value and volume — quarterly trend (US$b)
PE acquisitions by year (in US$b)
Appendix AGlobal PE acquisition activity
Source: Dealogic
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500
600
700
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Value No. of deals
Capital Briefing14
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1,500
2,000
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4,000
$0.0
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$800.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Value Number of deals
15
Americas PE acquisitions — top 10 in Q2 2016
Appendix AGlobal PE acquisition activity by region — Americas
Americas PE acquisitions (in US$b)
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350
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Value No. of deals
Capital Briefing
Source: Dealogic
Announcementdate
Completiondate
Company SectorValue
(US$m)Acquiror
5-May-16 7-Jun-16 MultiPlan Inc. Health care 7,500.00 Hellman & Friedman LLC/Leonard Green & Partners LP/GIC Pte. Ltd.
3-Jun-16 Talen Energy Corp. (65%) Utilities 5,044.59 Riverstone Holdings LLC
29-Apr-16 Parkway Properties Inc. Real Estate 3,775.66 Cousins Properties Inc.
19-Apr-16 Lexmark International Inc. Technology 3,613.83 Apex Technology Co. Ltd. (51.18%)/Legend Capital Co. Ltd. (42.94%)/PAG Asia Capital Ltd. (5.88%)
23-May-16 American Capital Ltd. Financials 3,368.92 Ares Capital Corp.
29-Jun-16 Diamond Resorts International Inc.
Consumer goods 3,164.34 Apollo Global Management LLC
2-Jun-16 Qlik Technologies Inc. Technology 2,986.48 Thoma Bravo LLC
27-Apr-16 ExamWorks Group Inc. Health care 2,0601.00 Leonard Green & Partners LP
31-May-16 Marketo Inc. Technology 1,788.76 Vista Equity Partners LLC
18-Apr-16 Cvent Inc. Technology 1,647.44 Vista Equity Partners LLC
Source: Dealogic
EMEA PE acquisitions — top 10 in Q2 2016
Appendix AGlobal PE acquisition activity by region — EMEA
EMEA PE acquisitions (in US$b)
Source: Dealogic
16
Capital Briefing
Announcement date
Completion date
Company SectorValue
(US$m)Acquiror
23-Jun-16 GE Money Bank SCA Financials 4,600.00 Cerberus Capital Management LP
18-Apr-16 Vattenfall AB (Lignite Business)
Utilities 3,836.39 Energeticky a Prumyslovy Holding as/PPF Investments Ltd.
6-Apr-16 Glencore plc (Agriculture business)
Consumer goods 2,500.00 Canada Pension Plan Investment Board
9-Jun-16 Foncia Groupe SA Real estate 2,048.13 Partners Group Holding AG
2-Jun-16 Bilfinger SE (The Building and Facility business)
Materials 1,561.19 EQT Partners AB
28-Apr-16 Hotelbeds SLU Technology 1,317.65 Cinven Ltd./Canada Pension Plan Investment Board
7-Apr-16 Vibracoustic GmbH (50%) Industrials 1,213.31 Freudenberg & Co. KG
2-May-16 Setefi SpIntesa Sanpaolo Card Ltd.
Financials 1,184.96 Advent International Corp./ClessidraSgr SpA/Bain Capital LLC
1-Apr-16 Sitecore A/S Technology 1,135.65 EQT Partners AB/Existing Management
30-May-16 Sisal Group SpA Consumer goods 1,111.42 CVC Capital Partners Ltd.
0
50
100
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200
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300
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Value No. of deals
Source: Dealogic
Asia-Pacific PE acquisitions — top 10 in Q2 2016
Appendix AGlobal PE acquisition activity by region — Asia-Pacific
Asia-Pacific PE acquisitions (in US$b)
Source: Dealogic
0
20
40
60
80
100
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140
$0.00
$2.00
$4.00
$6.00
$8.00
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$12.00
$14.00
$16.00
$18.00
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Value No. of deals
17 Capital Briefing
Announcement date
Completion date
Company SectorValue
(US$m)Acquiror
18-Apr-16 Autohome Inc. (97.1673%) (Bid No 2)
Computers & Electronics 3,608.964 Boyu Capital Advisory Co. Ltd./Sequoia Capital China/HillhouseCapital Management Ltd.
2-Jun-16 ALS Ltd. Professional Services 2,256.995 Advent International Corp./Bain Capital LLC
6-Jun-16 iKang Healthcare Group Inc.
Healthcare 1,521.130 Yunfeng Capital
29-Jun-16 SsangYong Cement Industrial Co. Ltd. (32.36%)
Construction/Building 1,157.096 Hahn & Co. Eye Holdings Co. Ltd.
4-Apr-16 MphasiS Ltd. (50.53%) Computers & Electronics 690.211 Blackstone Group LP
11-May-16 AWE Ltd. Oil & Gas 454.069 Lone Star Global Acquisitions Ltd.
9-May-16 23-Jun-16 Shopping Centers (Clifford Gardens, Forest Hill Chase and Brimbank shopping centers)
Real Estate/Property 451.836 Blackstone Group LP
25-May-16 Carver Korea Co. Ltd. (80%)
Consumer Products 437.449 Goldman Sachs & Co./Bain Capital LLC
4-Apr-16 MphasiS Ltd. (26.14%) Computers & Electronics 379.882 Blackstone Group LP
13-May-16 Crompton Greaves Consumer Electricals Ltd. (26%)
Consumer Products 348.433 Advent International Corp./TemasekHoldings (Pte.) Ltd.
Source: Dealogic
Source: Dealogic
Global PE-backed IPOs — value and volume — quarterly trend (US$b)
Appendix AGlobal PE exit activity
Global PE-backed exits by M&A — value and volume — quarterly trend (US$b)
0
50
100
150
200
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300
350
$0.00
$20.00
$40.00
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$80.00
$100.00
$120.00
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Value No. of deals
0
10
20
30
40
50
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70
80
90
$0.00
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$45.00
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
Value No. of deals
18 Capital Briefing
Source: Dealogic
Source: Dealogic
Appendix AGlobal PE exit activity — Americas
Americas PE exits — top 10 in Q2 2016
Americas PE exits (in US$b)
Announcementor filing date
Completion or priced date
Company Sector Value (US$m)
Sponsor Type
5-May-16 7-Jun-16 MultiPlan Inc. Health care 7,500.00 Leonard Green & Partners LP/Hellman & Friedman LLC/Partners Group Holding AG/Starr Investment Holdings LLC
M&A Exit
12-Jun-16 Blue Coat Systems Inc. Technology 4,650.00 Bain Capital LLC M&A Exit
28-Jun-16 Change Healthcare Holdings Inc. (Excluding pharmacy switch and prescription routing business)
Technology 4,016.57 Blackstone Group LP/Hellman & Friedman LLC
M&A Exit
24-Jun-16 Sun Products Corp. Consumer goods 3,600.00 Vestar Capital Partners Inc. M&A Exit
2-Jun-16 Vogue International Inc. Consumer goods 3,300.00 Carlyle Group LP M&A Exit
19-May-16 LifeStorage LP Industrials 1,264.27 TPG Capital LP M&A Exit
25-May-16 25-May-16 US Foods Holding Corp. Consumer goods 1,175.56 Technology Crossover Ventures/EQT Partners AB
IPO
20-Jun-16 PayRock Energy LLC Oil and gas 888.00 PAI Partners SAS/Astorg Partners SA
M&A Exit
16-Jun-16 Elizabeth Arden Inc. Consumer goods 834.99 Quadrant Private Equity Pty. Ltd. M&A Exit
11-Apr-16 AssetMark Inc. Technology 780.00 Riverstone Holdings LLC M&A Exit
0
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140
160
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
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$70.0
$80.0
$90.0
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
M&A value IPO value M&A volume IPO volume
19Capital Briefing
Source: Dealogic
Source: Dealogic
Appendix AGlobal PE exit activity — EMEA
EMEA PE exits — top 10 deals in Q2 2016
EMEA PE exits (in US$b)
Announcementor filing date
Completion orpriced date
Company Sector Value (US$m) Sponsor Type
21-Jun-16 Dematic Group SARL Industrials 3,250.00 AEA Investors LLC/Teachers Private Capital
M&A Exit
9-Jun-16 Foncia Groupe SA Real estate 2,048.13 Eurazeo SA/Partners Group Holding AG/BridgepointAdvisers Ltd.
M&A Exit
23-May-16 WMF Wuerttembergische Metallwarenfabrik AG
Consumer goods 1,919.08 KKR & Co. LP M&A Exit
13-Jun-16 WindMW GmbH (80%) Materials 1,440.23 Blackstone Group LP M&A Exit
1-Apr-16 Sitecore A/S Technology 1,135.65 CVC Capital Partners Ltd./Permira Ltd./ClessidraSgr SpA/Apax Partners LLP
M&A Exit
30-May-16 Sisal Group SpA Consumer goods 1,111.42 EQT Partners AB M&A Exit
30-May-16 Atos Medical AB Health care 944.71 Bain Capital LLC M&A Exit
2-Jun-16 FTE automotive GmbH Industrials 913.63 EnCap Investments LP M&A Exit
6-May-16 Ethypharm SA Health care 858.66 Palamon Capital Partners LP M&A Exit
4-Apr-16 Towry Holdings Ltd. Financials 853.67 Rhone Group LLC M&A Exit
0
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40
60
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120
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160
$0.0
$10.0
$20.0
$30.0
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$50.0
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$70.0
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
M&A value IPO value M&A volume IPO volume
Capital Briefing20
Source: Dealogic
Capital Briefing21
Source: Dealogic
Appendix AGlobal PE exit activity — Asia-Pacific
Announcement or filing date
Completion orpriced date
Company Sector Value (US$m) Sponsor Type
19-May-16 Canberra Data Centres Pty. Ltd.
Technology 812.43 Esas Holding AS M&A Exit
8-Apr-16 31-May-16 Doosan Dst Co. Ltd. Industrials 600.90 3i Group plc M&A Exit
29-Jun-16 29-Jun-16 Komeda Holdings Co Ltd.
Real estate 489.28 Clessidra Sgr SpA/Mandarin Capital Partners SA
IPO
13-May-16 Tri-Wall Ltd. Materials 221.75 Thomas McNerney & Partners LLC M&A Exit
3-May-16 3-May-16 Tegel Group Holdings Ltd.
Consumer goods
208.53 3i Group plc/Gilde Buy Out Partners BV
IPO
29-Jun-16 29-Jun-16 Solasto Corp. Other Sectors 119.54 Pfingsten Partners LLC IPO
19-Apr-16 19-Apr-16 Botanical Food Co. Pty. Ltd. - Gourmet Garden
Consumer goods
115.47 DRC Capital Ltd. M&A Exit
19-May-16 Tapex Inc. Materials 105.56 Audax Group LP/Harvest Partners LP
M&A Exit
20-May-16 Actions Semiconductor Co. Ltd. (65.3726%)
Technology 88.84 BlackFin Capital Partners SAS M&A Exit
22-Apr-16 22-Apr-16 Classic Stripes Pvt. Ltd. (51%)
Consumer services
54.28 Clayton Dubilier & Rice LLC M&A Exit
Asia-Pacific PE exits — top 10 deals in Q2 2016
Asia-Pacific PE exits (in US$b)
0
5
10
15
20
25
30
35
40
45
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216
M&A value IPO value M&A volume IPO volume
Capital Briefing
Source: Dealogic
Appendix BM&A activity monthly flash
Volume Value Volume Value
Calendar YTD
YTD % ∆ Calendar YTD
YTD % ∆ LTM LTM % ∆ LTM LTM % ∆
2016(to May 16)
vs. 2015(to May 15)
2016(to May 16)
vs. 2015(to May 15)
LTM (to May 16)
vs. PTM(to May 5
LTM (to May 16)
vs. PTM(to May 15)
M&A activity by areas and regions
Global 14,585 -10% 1,200,960 -20% 36,551 -7% 4,005,902 15%
Americas 5,585 -9% 657,189 -21% 14,257 -4% 2,337,439 16%
Canada 1,129 13% 96,643 32% 2,638 18% 223,616 20%
MeCAR 87 -19% 10,354 1% 254 -18% 28,767 -11%
SA region 356 -23% 30,327 95% 1,018 -15% 76,718 -1%
US 4,424 -12% 578,566 -25% 11,410 -6% 2,139,683 18%
EMEA 5,316 -13% 406,722 -10% 12,738 -16% 1,266,500 15%
Africa 267 2% 15,502 37% 651 3% 35,451 -19%
BeNe 296 -31% 14,098 -87% 811 -19% 200,128 44%
CIS 431 -30% 13,813 53% 879 -55% 51,815 72%
CSE 458 -12% 15,728 2% 1,070 -14% 44,635 6%
FraLux 1,022 -3% 64,267 -14% 2,255 -9% 165,416 5%
GSA 839 -16% 170,586 352% 2,217 -13% 297,997 63%
Israel 109 8% 6,882 -39% 270 8% 57,956 195%
Mediterranean 553 -26% 52,007 -24% 1,371 -23% 160,441 -17%
MENA 142 2% 3,319 -84% 354 3% 24,015 -40%
Nordics 565 -16% 25,849 -17% 1,226 -25% 57,590 -26%
UK&I 1,361 0% 74,984 -61% 3,411 6% 420,079 7%
Asia-Pacific 5,296 -6% 451,470 -6% 13,674 3% 1,234,531 26%
ASEAN 710 -1% 36,153 65% 1,696 -12% 78,908 23%
Greater China 2,063 -7% 305,653 4% 5,572 10% 823,440 35%
India 523 -9% 16,755 -30% 1,294 6% 44,644 -6%
Japan 1,162 -13% 59,729 -3% 2,906 -5% 181,768 54%
Korea 549 17% 26,450 -54% 1,361 18% 69,048 -30%
Oceania 612 -2% 31,032 -36% 1,664 0% 88,212 -8%
M&A activity by sectors
Aerospace and defense 135 -23% 9,684 12% 356 -17% 35,432 30%
Automotive and transportation 958 -14% 111,907 9% 2,464 -9% 295,634 40%
Banking and capital markets 972 -14% 113,009 -2% 2,435 -12% 413,663 42%
Consumer products and retail 2,205 -11% 192,858 -9% 5,522 -8% 637,330 36%
Diversified industrial products 1,913 -12% 166,427 9% 4,856 -9% 457,555 20%
Government and public sector 261 -25% 10,638 -33% 663 -17% 27,903 -2%
Insurance 418 -11% 40,100 -36% 1,100 1% 288,607 114%
Life sciences 966 -8% 221,343 19% 2,454 2% 485,024 2%
Media and entertainment 980 -10% 60,059 -61% 2,495 -9% 207,767 -16%
Mining and metals 895 6% 49,875 10% 2,153 4% 142,972 36%
Oil and gas 552 -3% 80,454 -43% 1,413 -16% 332,462 -27%
Other sectors 1,679 -16% 60,760 55% 4,312 -14% 157,078 37%
Power and utilities 526 -13% 90,930 93% 1,399 -14% 231,933 38%
Provider care 455 -9% 13,990 -48% 1,174 0% 52,736 -5%
Real estate 1,320 -15% 73,292 -50% 3,245 -16% 207,316 -33%
Technology 3,881 -4% 226,946 -14% 9,520 4% 742,274 61%
Telecommunications 274 -29% 39,224 -60% 757 -19% 148,424 -33%
Wealth and asset management 412 -9% 19,355 -82% 1,019 -5% 42,204 -68%
22
Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region. Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped.M&A analysis as at 1 June 2016. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.
Capital Briefing
2015 2016
J F M A M J J A S O N D J F M A M J J A S O N D
2014 2015 2016
M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N
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 June 2016. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.
23
Median deal multiple — EV / EBITDA
Global Americas Asia-Pacific EMEA
LTM(to May 16)
PTM(to May 15)
LTM(to May 16)
PTM(to May 15)
LTM(to May 16)
PTM(to May 15)
LTM(to May 16)
PTM(to May 15)
Aerospace and defense 10.3x 11.3x 10.1x 16.6x 14.1x 11.5x 10.9x 10.6x
Automotive and transportation 8.9x 10.3x 9.8x 9.2x 9.9x 10.2x 8.2x 10.6x
Consumer products and retail 10.9x 11.3x 10.4x 14.7x 12.0x 11.0x 10.0x 9.6x
Diversified industrial products 9.8x 10.5x 10.8x 10.7x 11.0x 11.7x 9.1x 9.2x
Government and public sector 10.2x 15.0x 4.6x 15.6x 21.8x 5.5x 10.2x 25.4x
Life sciences 11.0x 17.2x 12.4x 19.2x 11.4x 18.3x 10.8x 12.5x
Media and entertainment 12.0x 12.4x 8.8x 10.8x 15.2x 13.8x 10.7x 11.9x
Mining and metals 8.8x 9.1x 7.8x 12.7x 10.4x 8.5x 9.4x 8.5x
Oil and gas 8.0x 7.4x 8.0x 6.6x 6.5x 9.7x 9.3x 7.7x
Other sectors 9.2x 9.5x 10.6x 8.6x 10.5x 11.6x 7.8x 8.6x
Power and utilities 11.9x 11.6x 11.5x 11.7x 18.0x 8.8x 10.2x 10.1x
Provider care 11.9x 11.1x 10.2x 11.6x 10.4x 9.1x 12.6x 12.7x
Real estate 10.0x 10.4x 10.4x 10.3x 10.5x 10.1x 8.7x 10.6x
Technology 11.2x 10.7x 13.6x 17.1x 11.3x 9.4x 10.2x 10.6x
Telecommunications 7.3x 10.5x 6.9x 10.1x 8.2x 11.6x 7.3x 9.6x
Total 10.3x 10.7x 10.4x 11.7x 11.1x 10.8x 9.5x 10.0x
Median bid premium to four-week stock price
Global Americas Asia-Pacific EMEA
LTM(to May 16)
PTM(to May 15)
LTM(to May 16)
PTM(to May 15)
LTM(to May 16)
PTM(to May 15)
LTM(to May 16)
PTM(to May 15)
Aerospace and defense 15% 26% 14% NA 31% 32% 14% 13%
Automotive and transportation 14% 17% 21% 7% 13% 17% 9% 18%
Consumer products and retail 23% 17% 32% 24% 16% 16% 27% 9%
Diversified industrial products 19% 14% 24% 24% 17% 12% 24% 27%
Government and public sector 22% 20% 44% 23% 21% 12% 16% 14%
Life sciences 27% 22% 43% 31% 17% 16% 17% 23%
Media and entertainment 17% 20% 34% 34% 11% 20% 14% 18%
Mining and metals 23% 24% 28% 29% 18% 20% 36% 12%
Oil and gas 27% 18% 34% 17% 24% 18% 14% 30%
Other sectors 19% 25% 28% 27% 16% 17% 18% 31%
Power and utilities 17% 11% 27% 17% 10% 7% 17% 8%
Provider care 23% 12% 34% 21% 18% 13% 5% 3%
Real estate 14% 21% 13% 30% 15% 18% 3% 11%
Technology 22% 25% 34% 28% 15% 21% 23% 20%
Telecommunications 25% 14% 28% 12% 27% 13% 16% 17%
Total 21% 20% 30% 26% 16% 17% 18% 19%
Capital Briefing
Appendix DCapital Confidence Barometer (April 2016): by area
Respondents who expect their company to pursue acquisitions in the next 12 months
31%
40%
56%59%
50%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
28%
34%
57%
67%
54%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
32% 33%
49% 48% 47%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
Global Americas EMEA
26%
57%
45% 44%
38%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
Asia-Pacific China Germany
23%28%
51%56%
50%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
Japan UK US
26%
16%
58%
52%
59%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
29%33%
61%
74%
57%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
24 Capital Briefing
33%
56%
43%40%
43%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
16%
68%
51%
43%
35%
0%
25%
50%
75%
100%
Apr 14 Oct 14 Apr 15 Oct 15 Apr 16
Notes
25 Capital Briefing
Notes
26 Capital Briefing
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