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Private Equity Capital Briefing

July 2018

Quarterly insights and intelligence on PE trends

PE turns to deploymentPE deal activity sees its busiest first half in more than a decade

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 7

Section 2 Infrastructure 8

Section 3 Private credit 9

Section 4 M&A 10

Section 5 IPOs 12

Section 6 Loans 13

Section 7 Bonds 14

AppendicesAppendix A PE activity by geography 16

Appendix B M&A activity monthly flash 25

Appendix C M&A multiples and bid premium 26

1.i. Private equity: fundraising

Executive summary

• Fundraising activity remained strong in 1H18, albeit off last year’s record levels. PE firms have closed 376 funds so far this year with aggregate commitments of US$267.8b.

• Activity was driven by closings from a number of large funds. The average size of PE funds closed in 1H18 increased by 27% versus a year ago.

• Buyout funds remain the most active strategy, accounting for 36% of funds raised in 1H18, followed by real estate (20%) and infrastructure (13%).

Current state

Investor confidence remained intact as PE fundraising continued its momentum into 1H18 amid a highly competitive environment.

• Fundraising activity remained robust in 1H18, albeit off last year’s record levels. PE firms raised US$267.8b, down 29% from a year ago. Activity was driven by closings from a number of large vehicles; the average size of PE funds closed in 1H18 increased 27% versus a year ago, a trend expected to prevail throughout this year and next.

• Dry powder is currently growing at a three-year compounded growth rate of 9%, significantly lower than the 36% rate at which dry powder grew between 2005-2007, when the industry experienced its fastest growth spurt.

Environment and horizon

Outlook to remain strong in light of PE’s tailwinds.

• Fundraising is expected to remain strong through the rest of 2018, driven by a number of strong tailwinds, including new investors in the asset class, increased allocations from large LPs and a 10% uptick in exit activity last year that is poised to be reallocated to new funds.

• PE capital is finding its way into the impact space. Global Impact Investing Network’s Eighth Annual Impact Investor Survey found that, relative to three years ago, 84% of respondents said they were making more impact investments and had a greater commitment to measuring and managing the impact of their investments. Seventy-two percent reported that there was greater buy-in from internal stakeholders around developing an impact investment arm.

• US pensions are getting serious about direct investments. New players, including sovereign wealth funds, pension funds and family offices are now vying for the same deals as traditional PE firms. Both CalPERS and CalSTRS have recently announced steps to build out their capabilities, albeit using different models. CalPERS is creating a separate entity – “CalPERS Direct,” governed by a separate board and consisting of two separate funds – one focused on late-stage investments in technology, life sciences and health care, and the other on long-term investments in established companies. CalSTRS is taking a more collaborative approach, and has formed a committee to develop a formal plan of action.

PE fundraising by half year (US$b)Source: Preqin.

Top funds raised so far this yearSource: Preqin.

4 Private Equity Capital Briefing

Fund TypeValue

(US$b)

EQT VIII Buyout $13.2

BC European Cap X Buyout $8.5

Starwood Global Opportunity Fund XI Real estate $7.6

GSO Capital Solutions Fund III Distressed debt $7.4

American Securities Partners VIII Buyout $7.0

Blackstone Real Estate Partners Asia II Real estate $7.0

Carlyle Asia Growth Partners V Buyout $6.6

ISQ Global Infrastructure Fund II Infrastructure $6,5

PAI Europe VII Buyout $6.7

Bain Capital Europe V Buyout $5.1

Buyout dry powder – three-year compounded growth rates Source: Preqin.

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Commitments Number of funds closed

-15%-10%

-5%0%5%

10%15%20%25%30%35%40%

Americas: 1H17 – US$215b1H18 – US$139b

EMEA: 1H17 – US$97b1H18 – US$92b

Asia-Pacific: 1H17 – US$55b1H18 – US$36b

PE fundraising by regionSource: Preqin.

Source: Exclusive of diversified multi-regional funds.

1.ii. Private equity: acquisitions

Executive summary

• Investment activity grew markedly in 1H18 versus the same period last year, jumping 61% to US$250b across more than 800 deals.

• It was the busiest first half of the year in more than a decade.

• Activity in the Americas grew the most, increasing by 71% versus a year ago, followed by EMEA and Asia-Pacific, where acquisition activity increased by 59% and 42% respectively.

Current state

PE deal activity sees its busiest first half in more than a decade.

• PE firms turned their attention in 1H18 to deploying record levels of dry powder, announcing 805 acquisitions valued at US$250b, up 61% by value from the same period a year ago, and up 2% by volume. It was the busiest first half for PE since 2007.

• Upswings were evident across all major regions: In the Americas, PE firms announced deals valued at US$128b, up 71% from last year; in EMEA, firms announced deals valued at US$76b, up 59% from last year; in Asia-Pacific, firms announced deals valued at US$47b, up 42% from last year.

• Fund managers are increasingly pursuing opportunities in large multibillion-dollar deals. A recent survey conducted by Mergermarket found that more than 76% of the respondents anticipated that there will be 5-10 more PE megadeals in 2018 than last year.


PE continues to lure large institutional investors, which increased capital allocation in a bid to increase returns.

• The California Public Employees’ Retirement System (CalPERS) reported an investment gain of 8.6% during the fiscal year ended June 2018, higher than its long-term annual target but trailing last year’s performance. Private equity was a key contributor to the fund’s overall performance, generating a 16.1% return, versus a preliminary net return of 11.5% for public equities, which comprise more than half the portfolio. Real assets, primarily real estate, generated a return of 8% and fixed income increased by 0.4%.

• Add-on deals by PE investors are increasing. Amid the current high-valuation environment, PE firms are increasingly adapting the “buy-and-build” model as a key value creation strategy. Pitchbook’s data suggests add-ons represent nearly 65% of all buyouts until 1H18.

• The American Investment Council (AIC) recently named Drew Maloney as its President and CEO. Maloney joins the AIC from the US Department Treasury, where he served as Assistant Secretary for Legislative Affairs.

PE acquisition values and volumes by half year (US$b)Source: Dealogic.

5

Top deals so far this yearSource: Dealogic.

Target Industry SponsorValue

(US$b)

Thomson Reuters Financial & Risk (F&R) Business

Technology Canada Pension Plan Investment Board; GIC Special Investments Pte Ltd.; Blackstone Group LP

$17.5

Ant Small & Micro Financial Services Group

Technology Canada Pension Plan Investment Board; GIC Special Investments Pte Ltd, Carlyle Group LP; Warburg Pincus LLC; General Atlantic LLC; Primavera CapitalManagement Ltd.; Silver Lake Group LLC

$12.5

Akzo Nobel NV (specialty chemicals business)

Materials GIC Special Investments Pte Ltd.; Carlyle Group LP

$12.5

TDC A/S Telecom Macquarie Infrastructure & Real Assets Pty Ltd.

$10.7

Envision Healthcare Health care KKR & Co. LP $9.6

BMC Software Inc. Technology GIC Special Investments Pte Ltd;Golden Gate Capital Corp; Bain Capital LLC; Insight Venture Management LLC; KKR & Co. LP

$8.3

Gramercy Property Trust

Real Estate Blackstone Group LP $7.7

Recordati SpA Health care CVC Advisers Ltd. $7.4

Techem GmbH Consumer services

Partners Group Holding AG; Macquarie Infrastructure & Real Assets Pty Ltd.

$5.4

LaSalle Hotel Properties

Real Estate Blackstone Group LP $4.9


PE deal activity by value (US$b), 1H17 vs.. 1H18Source: Dealogic.

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Deal value (US$b) Number of deals

$0

$50

$100

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Americas EMEA Asia-Pacific

H1 2017 H1 2018

$0

$100

$200

$300

1H 2013 1H 2014 1H 2015 1H 2016 1H 2017 1H 2018

Average PE deal size by half year (US$m)Source: Dealogic.

1.iii. PE acquisition activity by region

Analysis as at 30 June 2018.

Source: Dealogic. All Rights Reserved.

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

6 Capital Briefing

PE acquisition activity by key regions and countries(YTD 2017 vs. YTD 2018)

PE deal activity by country and region (by quarter, 2015 through Q2 2018, US$b)

Target nationalityQ1

2015Q2

2015Q3

2015Q4

2015Q1

2016Q2

2016Q3

2016Q4

2016Q1

2017Q2

2017Q3

2017Q4

2017Q1

2018Q2

2018

% Q22017 vs. Q2 2018

% Q12018 vs. Q2 2018

Americas

Canada $0.2 $3.2 $1.0 $0.5 $0.3 $1.6 $2.1 $0.1 $0.0 $1.1 $0.1 $4.6 $2.9 $8.2 634% 181%

US $25.0 $47.6 $58.7 $57.3 $19.0 $62.6 $50.6 $32.6 $30.8 $42.3 $44.3 $34.4 $46.2 $70.1 66% 52%

Latin America $0.7 $1.0 $0.6 $3.2 $0.0 $3.9 $0.2 $2.1 $0.4 $0.5 $0.8 $5.7 $0.5 $0.0 N/A N/A

EMEA

UK&I $12.4 $12.2 $8.1 $10.5 $1.5 $4.7 $2.7 $20.5 $5.3 $3.8 $15.1 $13.7 $3.8 $7.2 89% 90%

Germany / Switzerland / Austra $1.4 $7.0 $5.7 $1.2 $4.0 $10.4 $1.5 $12.6 $2.6 $3.2 $4.7 $4.7 $3.2 $6.3 94% 100%

Belgium / Luxembourg / Netherlands / France $3.2 $4.7 $8.3 $4.0 $2.5 $12.7 $3.6 $2.4 $4.2 $8.2 $3.5 $6.4 $16.5 $7.4 -10% -55%

Nordics $0.4 $0.8 $5.0 $1.8 $0.2 $3.0 $2.1 $0.8 $0.1 $7.4 $6.9 $5.5 $12.4 $3.0 -59% -76%

Mediterranean $2.0 $4.2 $2.6 $4.4 $2.6 $10.0 $0.9 $4.6 $6.3 $2.4 $10.2 $11.1 $7.4 $12.9 433% 74%

Western Europe $19.1 $28.1 $24.8 $20.2 $10.5 $38.7 $8.6 $40.0 $18.4 $17.7 $33.5 $36.0 $30.8 $39.9 126% 29%

Asia-Pacific

China $1.0 $4.2 $0.4 $0.9 $1.5 $0.1 $0.1 $0.7 $5.1 $8.0 $0.8 $0.2 $4.1 $20.1 152.0% 390.2%

SE Asia $0.1 $0.3 $0.3 $1.5 $0.4 $0.1 $1.4 $0.7 $0.4 $0.8 $17.6 $0.3 $0.6 $0.8 5% 43%

India $0.9 $0.6 $1.4 $0.8 $0.1 $1.0 $0.7 $0.5 $2.2 $0.6 $1.8 $0.4 $4.1 $1.7 191% -59%

Australia $1.8 $2.1 $0.0 $0.8 $0.6 $0.2 $1.1 $5.8 $1.5 $3.8 $21.1 $1.8 $0.2 $0.0 -100% -89%

Japan $6.5 $2.4 $0.9 $3.3 $9.3 $1.3 $2.6 $13.0 $0.5 $2.7 $2.3 $0.7 $1.3 $10.1 271% 647%

YTD 2017: $73.1bYTD 2018: $116.3b

Change: 59%

US

YTD 2017: $1.2bYTD 2018: $11.2b

Change: 870%Ca

na

da

YTD 2017: $9.2bYTD 2018: $11.0b

Change: 21%

UK

I

YTD 2017: $13.1bYTD 2018: $24.2b

Change: 85%Ch

ina

YTD 2017: $1.2bYTD 2018: $1.4b

Change: 18%SE

Asi

a

YTD 2017: $2.8bYTD 2018: $5.7b

Change: 104%Ind

ia

YTD 2017: $bYTD 2018: $b

Change: %We

ste

rn

Eu

rop

e

YTD 2017: $3.2bYTD 2018: $11.4b

Change: 252%

Au

stra

lia

1.iv. Private equity: exits

Executive summary

• PE exits have witnessed a modest decline so far this year, with 526 deals valued at US$178b, down 6% from a year ago.

• Declines in exit activity were evident in both M&A and IPOs.

• Overall, PE exits are falling, although secondaries are increasing as PE firms seek ways to deploy dry powder.

• From a regional perspective, while the Americas and EMEA regions saw declines in exits, activity in Asia-Pacific increased substantially.

Current state

Exits continue to see declines as firms focus on deployment.

• PE exit activity witnessed a modest decline in 1H18 as PE fund managers continued to focus on deployment. Firms announced 526 exits valued at US$178b in the first half of 2018, down 6% from the same period a year ago.

• Exits by M&A fell 4% over the period versus a year ago, to US$160b, with declines evident across the Americas and EMEA regions; activity by value was down 21% in the Americas, and down 12% in EMEA. Asia-Pacific, however, witnessed a notable increase, with deal value up 46% from last year.

• PE-backed IPOs proceeds were down 22% from the first half of 2017. The number of PE-backed IPO deals declined 20%, from 64 deals in 1H17, to 51 deals in 1H18.


Secondary buyout deals have gained popularity recently.

• A recent Pitchbook report stated that amid the decline in overall PE exit activity, there are several reasons pushing secondary deals up:

• Record levels of dry powder, and a hypercompetitive dealmaking environment in which sourcing proprietary dealflow is increasingly challenging.

• The existence of an aging cohort of PE assets that need to be divested, in many cases at attractive prices.

• Perhaps most importantly, the continued development of the expansion of the PE ecosystem in recent years has driven many such sales. Smaller and middle market firms are able to provide very different value-adds from larger firms; however, each can be indispensable for companies at the appropriate stage of their growth.

PE M&A exits by half year (US$b)Source: Dealogic.

Largest PE exit deals so far this yearSource: Dealogic.

7

PE-backed IPOs by half year (US$b)Source: Dealogic.


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Deal value Number of deals

Target Industry Value (US$b) Sponsor Type

ADT Inc. Consumer services

$10.5 Apollo Global Management LLC

IPO

BMC Software Inc. Technology $8.3 GIC Special Investments Pte Ltd.;Golden Gate Capital Corp.;Bain Capital LLC;Insight Venture Management LLC;KKR & Co. LP

M&A

Adyen BV Technology $8.3 Blackstone Group LP

IPO

Blue Buffalo Pet Products Inc.

Consumer goods

$8.0 Invus Group LLC M&A

Gates Industrial Corp. plc

Industrials $5.5 Blackstone Group LP

IPO

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PE secondary buyout deals (US$b)Source: Dealogic.

2. Infrastructure

Executive summary

• PE fundraising for infrastructure continues to set new records. Unlisted funds raised US$50b in the first half of 2018, up 12% from a year ago.

• Infrastructure funds have more than US$167b in capital to deploy. This is up more than 50% from just 2½ years ago.

• Deal activity however, remains off the pace of the last several years, as competition for assets pushes valuations higher. Dealsfor assets valued at US$151b were announced in 1H18, down 21% from a year ago.

Current state

• Infrastructure fundraising remained active in the first half of 2018. Firms raised a record US$50b in the first half of the year as LPs continue to seek exposure to the asset class. This represented an increase of 12% from the first half of 2017, and was nearly double the amount raised in the second half of 2017.

• Firms have more dry powder to deploy than ever before. Infrastructure funds currently have US$167b in commitments from investors, up 5% from six months ago, and up a remarkable 53% from just 2½ years ago.

• Funds that closed in the first 6 months of 2018 took 19 months to reach final close, slightly higher than last year’s average of 17 months. However, they’re raising more capital relative to their initial target – funds closed this year raised 117% of their target, versus 107% of funds that closed in 2017.

• While fundraising remains robust, the pace of deployment remains muted, the result of persistently high valuations. Firms announced deals for asset valued at US$151b in 1H18, down 21% from a year ago. It was the quietest six-month period since 2015.


• Panelists at the recent IFC/Emerging Markets Private Equity Association annual conference discussed the impact and the potential of “disruptive infrastructure”: technology-enabled infrastructure assets that have very different profiles from traditional deals. As the risks of obsolescence increase, investors have to be increasingly careful about viewing infrastructure as a long-term asset class; emergent technologies can leapfrog over constraints very quickly. As a result, many are predicting that the infrastructure as a service model will become increasingly important, and that firms need to be increasingly flexible in their approach to developing and extracting value from assets. One example – electrified roads are being developed that can charge electric vehicles as they drive, something that could create significant opportunities for investors in roadways and change the model, from charging tolls to selling electricity. Many of these emergent opportunities are likely to be less regulated with fewer incumbents.

8


Top infrastructure funds raised YTD 2018Source: Preqin.

Infrastructure fundraising (US$b)Source: Preqin.

FundCommitments (US$b) Type Sector focus

BlackRock Infrastructure Debt – Aggregated Separate Accounts

7.6 Debt Diversified

ISQ Global Infrastructure Fund II

6.5 Core plus Diversified

Copenhagen Infrastructure III

4.3 Core plus Renewable energy

Macquarie Asia Infrastructure Fund II

3.3 Core Diversified

GCM Grosvenor Infrastructure Separately Managed Account

3.2 Opportunistic Diversified

Infrastructure dry powder (in US$b)Source: Preqin.

Infrastructure deals by half year (US$b)Source: Preqin.

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02004006008001,0001,2001,4001,6001,800

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3. Private credit

Executive summary

• Fundraising for private credit funds declined modestly in the first half of the year to US$45b, down 9% from the same period a year ago.

• Direct lending strategies have been a major driver of fundraising recently, but interest in distressed vehicles is rising.

• The outlook for private credit vehicles remains strong, with 400 private debt funds at various stages of the fundraising process seeking more than US$180b from investors.

Current state

• Fundraising for private credit softened in the first half of 2018 after a record year last year. Firms closed 55 funds valued at US$45b for the asset class in 1H18, down 9% from the same period a year ago.

• Direct lending strategies have been a major driver of fundraising in recent years, driven by increasing interest from pension funds and other large investors. However, the first half of 2018 saw a rise in vehicles targeting the distressed space, as some investors seek to position themselves for a potential downturn after one of the longest and largest economic expansions on record. Fundraising for such vehicles hit US$17.4b in the first half of 2018, outpacing the US$14.6b raised for direct lending.

• Dry powder for credit funds continues its rise. Currently, credit fund have more than US$250b in capital available for new deals, up from approximately US$220b just 18 months ago. Sixty-three percent of these assets are targeting opportunities in North America, while 30% are targeting opportunities in Europe and another 7% are seeking opportunities in Asia-Pacific and other emerging markets.


• Despite modest softening in fundraising over the last six months, the outlook for private credit vehicles remains strong. Currently, there are nearly 400 private debt funds at various stages of the fundraising process; in aggregate, they are seeking more than US$184b from investors, who continue to clamor for exposure to the space.

• Pitchbook reported that private debt funds outperformed Bloomberg Barclays US Corporate High Yield Index in 10 of the 15 vintages between 2001-2015. Private debt funds were able to return capital faster to their investors as their historical median distribution-to-paid-in (DPI) reached 1.0x in its sixth year, compared with the eighth year for PE. The primary reason for the speedier return of capital is its strategy to rely on interest payments, rather than principal appreciation.

9


Top credit funds raised YTD 2018Source: Preqin.

Private credit fundraising (US$b)Source: Preqin.

FundCommitments (US$b) Type

GSO Capital Solutions Fund III 7.4 Distressed debt

Clearlake Capital Partners V 3.6 Special situations

CVI Credit Value Fund IV 3.0 Distressed debt

Strategic Value Special Situations Fund IV

2.9 Distressed debt

KKR Private Credit Opportunities Partners II

2.2 Mezzanine

Guggenheim Private Debt Fund II 2.0 Direct lending

AlbaCore Partners I 1.8 Direct lending

Summit Partners Credit Fund III 1.5 Direct lending

Alchemy Special Opportunities Fund IV

1.2 Distressed debt

Capzanine IV (Private Debt) 1.2 Direct lending

Credit fundraising by type, 1H17 vs.. 1H18 (as a percentage of total)Source: Preqin.

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Private credit fundraising by region in YTD 2018 (US$b)Source: Preqin.

Direct lending,

45%Distressed debt, 29%

Mezzanine, 12%

Other, 14%

Direct lending,

33%

Distressed debt, 39%

Mezzanine, 13%

Other, 15%

1H17 1H18

The growth of credit dry powder since 2009 (US$b)Source: Preqin.

2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun-18

$0

$50

$100

$150

$200

$250

$300

$29.7

$12.8

$1.9

North America Europe Asia and RoW*

Note: *Rest of the world

4. M&A

Executive summary

• Global M&A value was at a record level in 1H18, with 16,854 deals worth US$2.3t.

• Megadeals (US$10b+) were a prominent feature, with 33 in the year so far — the highest number ever recorded in the first half of the year.

• After a stellar first half of 2018, the M&A outlook is expected to remain robust for the remainder of the year, driven by surplus cash with corporates and rising PE buyouts.

• A major trend is large companies merging with older rivals to compete with increasing competition and technological disruption through scale.

Current state

• Global M&A activity reached new highs in the first half of 2018, totaling US$2.3t in value. The deal value was up by 66% from same time last year. There were 1,750 deals worth more than US$100m compared with 1,635 recorded at the same time in 2017 – an increase of 7% YOY.

• The continued upbeat momentum of megadeals (US$10b+) has led to a rise in global deal value. So far, 2018 has witnessed 33 megadeals – a record-high level. Deals above the US$10b mark account for 38% of the total transaction value announced this year.

• In 1H18, technology was the top-performing target sector, by both deal value and volume, reaching 4,979 deals worth US$306b. However, bigger deals were focussed on life sciences and media & entertainment. This includes the acquisition of Irish drugmaker Shire by Japan’s Takeda and the ongoing bidding war between Comcast and Disney.

• Despite geopolitical tensions, cross-border deal value increased in line with global deal value (65%) in 1H18 as compared with 1H17. The UK remained the second most popular target nation for M&A, behind the US, with 350% increase in deal value from the same period in 2017.


• The M&A outlook remains robust for the second half of 2018, despite complexities arising from protectionism and geopolitical headwinds. Deal fundamentals, including the availability of cash with corporates, strong balance sheets, rising private equity buyouts and a strong deal pipeline all point to healthy deal activity in the near term.

• Rising protectionist sentiment is becoming a concern for the global business community. It has had a negative impact on Chinese outbound M&A activity, but the material impact on global deal value is expected to be less significant. However, the sentiment inevitably feeds through to the M&A market, increasing deal scrutiny and lengthening deal timelines.

• As companies continue to face technological disruption from digital, cloud, analytics, Internet of things or Artificial intelligence, they have had to review their business models more frequently and forge more strategic business combinations. Established players are acquiring companies with technological expertise that they can then use to develop new offerings, redefine industry boundaries and drive topline growth. Acquiring next-generation technology will continue to be the main trigger for deal activity.

• One of the major trends that may become more prominent is large companies merging with old rivals to tackle rising competition within the industry through scale. This trend has been exhibited frequently across sectors, including consumer products and retail, media and entertainment, health care and life sciences. The main barrier to such deals is increasing competition scrutiny. Companies need to be able to convince regulators that there will be benefits to customers, outlining any divestitures as part of the deal narrative, as required.

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Americas Asia-Pacific EMEA

1H17 1H18

Deal environment: by target area (US$b)

1H 2018 vs. 1H 2017Source: Dealogic and EY analysis.

Top 10 announced deals YTD 2018 by valueSource: Dealogic and EY analysis.

M&A analysis as at 1 July 2018.


Figures have been rounded off to nearest decimal place.

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

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

Capital Briefing

Month Target Sector Nation Acquiror Value (US$m)

April Shire plc Life sciences UK Takeda Pharmaceutical Co Ltd81,455

June Twenty-First Century Fox Inc

Media and entertainment

US Comcast Corp78,484

March Express Scripts Holding Co Insurance US Cigna Corp69,829

April Sprint Corp Telecommunications US T-Mobile US Inc59,889

March innogy SE Power and utilities Germany E.ON SE54,577

February Sky plc Media and entertainment

UK Comcast Corp41,452

April Sky plc Media and entertainment

UK Walt Disney Co37,149

April Andeavor Corp Oil and gas US Marathon Petroleum Corp35,600

March Abertis InfraestructurasSA

Automotive and transportation

Spain Atlantia SpA29,748

January Altice USA Inc Media and entertainment

US Existing Shareholders; Next LP28,553

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

Key cross-border M&A deal flow(LTM to June 2018)(Total = US$1.2t)

N America to:UK&I – $125b

W Europe – $50bLatin America – $22b

Japan to:UK&I - $88b

N America – $30b

UK&I to:W Europe – $36bN America – $25b

L America to:N America – $4bMiddle East - $2b

Greater China andMongolia to:

W Europe – $56bOceania – $24b

N America – $16bW Europe to:N America – $98b

UK&I – $27bL America - $15b

Cross-border M&A deal flow (LTM to June 2018)

(US$m)

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

# Acquiror refers to acquiror’s ultimate holding company.

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

M&A analysis as at 1 July 2018.

Source: Dealogic. All Rights Reserved.


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

% vs.PTM

Africa 1,433 148 875 143 2,474 10 590 - 1,030 1,330 166 1,134 9,334 -59%

SE Asia (including Korea)

327 4,866 12,818 4 1,220 326 8,426 - 27 4,456 640 3,328 36,436 29%

Greater China andMongolia $

29 3,713 25,719 - 829 - 9,531 - 662 6,864 348 1,004 48,698 35%

Russia, CIS and CSE - 176 2,631 7,422 7,074 17 1,808 94 7,999 1,455 30 1,235 29,941 -26%

W Europe (excluding UK&I)

1,061 10,491 56,505 371 126,737 682 3,148 27 2,926 49,882 1,879 35,763 289,472 -9%

India 251 3,121 3,360 38 3,559 32 3,495 - 418 19,312 6 237 33,828 25%

Japan - 689 984 - - 515 - - 6 503 - - 2,698 -51%

Latin America 193 334 12,607 - 15,292 - 1,763 5,358 358 22,221 367 734 59,226 0%

Middle East 187 3,119 2,572 - 5,015 1,259 1,086 1,526 2,902 16,415 500 731 35,312 -22%

North America 1,163 5,187 15,523 801 97,764 988 30,221 4,117 1,172 72,073 7,532 25,261 261,801 -39%

Oceania 20 3,360 24,397 0 7,558 43 2,589 110 453 14,100 552 148 53,329 66%

UK&I 2,173 1,078 3,654 309 27,015 99 87,791 12 212 125,153 1,638 10,065 259,199 99%

Outbound total 6,838 36,282 161,645 9,087 294,535 3,971 150,448 11,243 18,164 333,765 13,657 79,639 1,119,275 -5%

% versus previous 12 months (PTM)

-52% 0% -3% -53% 35% -17% 31% -32% -49% -16% -6% -42% -5%

11 Capital Briefing

Current state

• After a strong 1Q18, risks and uncertainties returned to the IPO market in 2Q18 as geopolitical frictions and shifting trade policies softened IPO confidence in many parts of the world, resulting in mixed IPO activity for 1H18. While activity was down by 18% in terms of number of deals, it was up by 9% by proceeds compared with 1H17. With 682 IPOs raising US$97.4b in 1H18, we saw the highest proceeds for the first half of the year since 1H15 (704 IPOs raising US$110.1b).

• Despite investor appetite for IPOs across the Asia-Pacific region, 1H18 volumes declined 29% while proceeds were down 13% compared with 1H17. However, Asia-Pacific still accounted for a 59% share of global IPOs and 35% of global IPO proceeds in 1H18. Eight of the 10 most active exchanges by deal numbers were from this region in 1H18.

• EMEA IPO markets got off to a strong start in 1Q18, but ongoing geopolitical uncertainty and shifting trade policies had EMEA investors proceeding with caution in 2Q18. Despite a 12% decline in deal volumes in 1H18, deal proceeds rose 9% compared with 1H17.

• US markets kept a strong pace in 1H18, accounting for the majority of IPOs by volume and proceeds across the Americas. The US saw 108 IPOs in 1H18 raising US$32.1b, an increase of 29% and 39% by number of deals and proceeds respectively. The momentum has been strong in the US market, with IPOs posting average first-day returns above 10% and share price performance post-IPO exceeding broad equity indices.


• Global IPO activity is expected to be driven by strong equity markets, solid corporate earnings and healthy pipelines across sectors and markets despite witnessing a decline in 1H18 compared with 1H17. However, increasing economic and political uncertainty is likely to cause issuers and investors to take a wait-and-see approach or pursue multitrack strategies to fulfil their capital needs.

• Momentum continues to build for US IPO activity in 2H18, driven by the strong post-IPO performance of 2017 and 2018 IPOs. However, IPO windows will continue to narrow as congressional elections draw closer in the US. A higher level of activity is also expected from Canada, Brazil and Mexico in 2H18.

• Geopolitical uncertainty and trade issues could dampen investor enthusiasm for Greater China IPOs in 2H18. However, repatriation of technology unicorns by the Chinese Government could propel a number of mega IPOs onto the Hong Kong and mainland China IPO markets in 2H18. With combined valuations estimated as high as US$1t, 2018 could become a blockbuster year for Greater China IPOs.

• As we head into second half of 2018, the outlook for EMEA IPO activity is less certain than it was in 1H18. Geopolitical uncertainties and shifts in trade policies across Europe and globally are creating concerns among investors, and many European issuers taking a wait-and-see approach. A flurry of activity in the UK is expected in 2H18 as issuers look to complete their IPOs before Brexit comes into force. MENA IPO activity is expected to increase in 2H18 due to an increasing number of listings by government or quasi-government enterprises.

5. IPOs

Executive summary

• Global IPO activity saw mixed results in 1H18. While IPO activity registered a YOY decrease of 18% in terms of number of deals, it increased 9% by proceeds.

• There were 15 mega IPOs in 1H18 compared with 11 in 1H17, indicating better valuations despite uncertainties and risks.

• While Asia-Pacific saw a notable decline in deal number in 1H18 compared with 1H17, EMEA saw a slight decline in deal number but an increase in proceeds. The Americas saw a marked increase in deal number and proceeds, mainly driven by US activity.

• Global IPO activity is expected to be driven by strong equity markets, solid corporate earnings and healthy pipelines across sectors and markets.

12

Top 10 IPOs by proceeds, 1H18Source: Dealogic.

Issuer name Issuerlocation

Sector Exchange Proceeds(US$m)

Siemens Healthineers AG Germany Life sciences Deutsche Boerse 5,200

Foxconn Industrial Internet Co. Ltd.

China Technology Shanghai (SSE) 4,257

AXA Equitable Holdings IncUnited States

Insurance New York (NYSE) 3,157

PagSeguro Digital Ltd. Brazil Technology New York (NYSE) 2,606

iQIYI Inc. ChinaMedia and entertainment

NASDAQ 2,424

DWS Group GmbH & Co. KGaA

GermanyWealth and asset Management

Deutsche Boerse 1,638

Fibra E - Grupo Aeroportuario de la Ciudad de Mexico

MexicoAutomotive and transportation

Mexican (BMV) 1,474

ADT Inc.United States

Other sectors New York (NYSE) 1,470

VICI Properties Inc.United States

Real estate New York (NYSE) 1,392

Vinhomes JSC Vietnam Real estateHo Chi Minh (HOSE)

1,349

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

LTM to June 2018Source: Dealogic; regional classification on the basis of exchange nationality.

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

Americas Asia-Pacific EMEA Total

Technology 3% 9% 5% 17%

Real estate 1% 9% 3% 13%

Consumer products and retail 1% 10% 2% 13%

Diversified industrial products 1% 10% 1% 12%

Life sciences 5% 3% 2% 10%

Automotive and transportation 0% 5% 1% 6%

Other sectors 0% 4% 1% 6%

Mining and metals 1% 4% 1% 6%

Banking and capital markets 1% 2% 1% 4%

Others 2% 8% 3% 14%

Total 17% 63% 20% 100%

Quarterly IPO activity by number of deals and proceeds(1Q16 to 2Q18)Source: Dealogic.

Capital Briefing

$14 $30 $38 $53 $34 $56 $43 $60 $50 $48

192

262 272

367394

437

386

496

335 347

0

10

20

30

40

50

60

70

0

100

200

300

400

500

600

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

Proceeds (US$b) Number of deals

M&A

Refinancing

Dividend recap

Other

M&A

Refinancing

Dividend recap

Other

106

147162

144

247

192177 171

212

234

0

50

100

150

200

250

300

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

Europe US

6. Loans

M&A supply dominates loan market dynamics in 2Q18

Leveraged loan new-issue volume (US$b)Source: LCD comps.

YTD leveraged loan volume by purposeSource: LCD comps.

YTD leveraged loan volume by industry (top 5)Source: LCD comps.

YTM at issue for TLBs rated B (rolling 3-months)Source: LCD comps.

13

• The second quarter was the busiest for global leveraged loan issuance since the record US$247m in 1Q17, and the fourth-highest quarterly figure ever.

• M&A-related financings were the main driver behind a jump in leveraged loan issuance in the second quarter.

• The recent surge in M&A-related financings was driven by the global M&A boom. Total announced acquisitions in Europe and the US combined for the half-year to June 18 increased by 81% (vs.. 1H17) to US$1.2t. The positive trend in M&A-related financings is also expected to continue in the third quarter.

Capital Briefing

Trends and outlook

• The second quarter was the busiest for global leveraged loan issuance since the record US$247m in 1Q17, and the fourth-highest quarterly figure ever.

• There was an increase of 19% in new-issue volume in the US market during 2Q18 compared with 1Q18, while new-issue volume was down by 26% in the European market.

• M&A-related financings were the main driver behind a jump in leveraged loan issuance in the second quarter:

• M&A-related financings accounted for more than 55% of total leveraged loan activity in 2Q18 in the US. Similarly, M&A-related financings also drove the European market, accounting for more than 80% of total leveraged loan activity in 2Q18.

• Total announced acquisitions in Europe and the US combined for the half-year to June 18 increased by 81% (vs.. 1H17) to US$1.2t.

• Private equity-backed companies looking to grow through acquisitions have been highly active in the US leveraged loan market in 2018. PE firms are increasingly focused on growing existing portfolio companies through acquisitions that can help reduce the average cost of a transaction over time.

• The European leveraged loan market saw more of a balance between issuers and investors in 2Q18, and this is expected to continue in the coming quarters. Generally, investors have demanded higher yields, partly to compensate for increased volatility, but in the loan market, the significant new money supply has left investors under less pressure to buy the market.

• Documentation is also a challenge in the European market; as a result, a large proportion of transactions in the last month have had to tighten terms in order to get deals done.

• The gap between YTMs for US and European TLBs rated B on a rolling-three-month basis has continued to widen, caused primarily by a ballooning gap in the underlying base rate.

• Total syndicated lending in Asia-Pacific, excluding Japan, showed a steep 31% decline YOY to US$94.17b in the second quarter, the lowest quarterly volume in the past five years, as the combination of China's slowdown in its economic growth rate, fewer M&A financings and increased bond issuance hit loan volumes.

Pro forma debt/EBITDA ratioSource: LCD comps.

Europe US

Europe US

2016: US$559 2017: US$787 1H18:US$4462016: US$559

Services and retail

Computers &electronics

Industrial

Food andbeverage

Health care

Services and retail

Computers andelectronics

Industrial

Health care

Entertainment &leisure

3%

4%

5%

6%

7%

Jun17

Jul 17 Aug17

Sep17

Oct17

Nov17

Dec17

Jan18

Feb18

Mar18

Apr18

May18

Jun18

Europe US

4.2x

4.4x

4.6x

4.8x

5.0x

5.2x

5.4x

5.6x

5.8x

Jun17

Jul17

Aug17

Sep17

Oct17

Nov17

Dec17

Jan18

Feb18

Mar18

Apr18

May18

Jun18

Europe US

Oil & gas

Healthcare

Financial services

Telecommunications

Chemicals

Computers andelectronics

Automotive

Financial services

Professional andbusiness services

Telecommunications

7. Bonds

Volatility puts pressure on high-yield bond issuance in 2Q18

High-yield new-issue volume (US$b)Source: LCD comps.

Global YTD high-yield volume by purposeSource: LCD comps.

YTD high-yield volume by industry (top 5)Source: LCD comps.

New-Issue yieldsSource: LCD comps.

14

• Overall, the global high-yield market saw a slowdown in 2Q18 driven by a slower US market, even as the European high-yield market saw a healthy new-issue volume.

• Borrowers have been faced with a rising cost of financing in the 2Q18, which saw the largest quarter-on-quarter increase in the average new-issue yield in the last five years.

• Amid the rising rates environment, the market saw a gradual movement towards longer term debt issuance.

Capital Briefing

US High grade bond issuances (US$b)Source: LCD comps.

Europe US

EuropeUS

44

102

84

58

108

8691

102

88

73

0

20

40

60

80

100

120

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

Europe US

Trends and outlook

• The global high-yield market saw a slowdown in 2Q18, primarily due to the US market. However, new-issue volumes remained healthy by historic standards in the European high-yield market.

• US high-yield issuance declined in 2Q18, as leveraged borrowers materially increased the proportion of leveraged loans in their capital structures due to high volatility and fast-rising rates in the bond market.

• The 10-year US Treasury yield breached the 3% threshold while political issues in Italy and geopolitical concerns also contributed to the decline in volumes.

• Refinancing efforts have driven roughly two-thirds of total US high-yield issuance volume in 2018 thus far.

• Power moved further away from borrowers in the 2Q18 as new-issue yields shot wider, a stream of deals tightened covenants, and those unwilling to meet investor demands had to postpone their transactions, leading to a record number of pulled deals in the quarter.

• Despite this backdrop, new-issue volumes were healthy in the European high-yield market as companies still flocked to market to refinance. 2Q18 total was the third-largest quarterly volume recorded during the last three years.

• Borrowers have been faced with a rising cost of financing in the 2Q18, which saw the largest quarter-on-quarter increase in the average new-issue yield in the last five years.

• Whilst spreads have indeed widened generally in the last 4-6months, it’s also true that US Treasury yields have increased, which has driven increases in bond yields overall.

• Overall, in the rising rates environment, issuers have been keen to lock in longer-term financing. Although there is still reluctance from high-yield investors for 10-year debt, in 2018 so far the market has continued to edge out beyond 7-years towards 8–9 year dated transactions.

• US high-grade new-issue volumes remain comfortably behind the record 2018 equivalent volume. Refinancing-driven issuances were down due to increased volatility in rates in 2Q18 compared with the previous year. M&A-related bond placements remained a key part of issuance in 2Q18.

• Cross-border supply has increased in the European market in 2018, reflecting the growing depth of the European market and its ability to take price risk amid a lower yield environment.

2016: US$288 2017: US$386 1H18:US$161

Refinancing

Acquisition-related

CorporatePurpose

Other

Refinancing

Acquisition-related

CorporatePurpose

Other

2%

4%

6%

8%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

Europe senior B-rated bonds Europe senior BB-rated bonds

US senior BB-rated bonds US senior B-rated bonds

350321 323

204

383

287

327

246

322 322

0

100

200

300

400

500

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

M&A and LBO Other

Appendices

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

Global PE fundraising (US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin.

Source: Preqin.

Private Equity Capital Briefing12

0

200

400

600

800

1,000

1,200

1,400

$0

$100

$200

$300

$400

$500

$600

$700

$800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD2018


$0

$100

$200

$300

$400

$500

$600

$700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD2018

North America Europe Asia-Pacific Rest of the world

Source: Dealogic.

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

PE acquisitions by year — value and volume — quarterly trend (US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic.


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

$0

$100

$200

$300

$400

$500

$600

$700

$800

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD2018


0

100

200

300

400

500

600

700

$0

$20

$40

$60

$80

$100

$120

$140

$160

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Americas PE acquisitions — the top deals with disclosed financial terms 1H18

Appendix AGlobal PE acquisition activity by region — Americas

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

Source: Dealogic

Source: Dealogic.

Announcementdate

Completion date

Company SectorValue (US$b)

Acquiror

30-Jan-18Thomson Reuters Corp. (Financial & Risk business)

Technology 17.5

Blackstone Group LP;Canada Pension Plan Investment Board-CPPIB;GIC Pte Ltd.

11-Jun-18 Envision Healthcare Corp. Health care 9.5 KKR & Co. LP

29-May-18 BMC Software Inc. Technology 8.3 KKR & Co. LP

07-May-18 Gramercy Property Trust Real estate 7.6 Blackstone Group LP

21-May-18 LaSalle Hotel Properties Real estate 4.9 Blackstone Group LP

22-Apr-18 03-Jun-18 GFL Environmental Inc. Utilities 4.0

BC Partners LLP;Existing Management;Ontario Teacher’s Pension Plan

09-Apr-18 VeriFone Systems Inc. Technology 3.5

Francisco Partners Management LP;British Columbia Investment Management Corp

16-Jan-18Blackhawk Network Holdings Inc.

Technology 3.2Silver Lake Group LLC;P2 Capital Partners LLC

30-Apr-18 Financial Engines Inc. Financials 3.2 Hellman & Friedman LLC

25-Jun-18

General Electric Co. (Industrial engine business);GE Jenbacher GmbH & Co. OG

Industrials 3.2 Advent International Corp.


0

50

100

150

200

250

300

350

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions – value and volume — quarterly trend (US$b)

Source: Dealogic

Source: Dealogic.

EMEA PE acquisitions — the top deals with disclosed financial terms 1H18


0

50

100

150

200

250

300

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Announcementdate

Completion date


Acquiror

27-Mar-18Akzo Nobel NV (specialty chemicals business)

Materials 12.5Carlyle Group LP;GIC Pte Ltd

12-Feb-18 09-Apr-18 TDC A/S Telecom 10.7

PFA Pension Forsikrings A/S;Macquarie Infrastructure & Real Assets Pty Ltd;Arbejdsmarkedets Tillaegspension – ATP;Pensionskassernes Administration A/S – PKA

29-Jun-18 Recordati SpA Health care 7.3

CVC Advisers Ltd.;Public Sector Pension Investment Board – PSP INVESTMENTS;StepStone Group LP

25-May-18 Techem GmbH Consumer services 5.3

Partners Group Holding AG;Caisse de Depot et Placement du Quebec-CDPQ;Existing Management;Ontario Teachers’ Pension Plan Board

22-Feb-18 18-May-18 Gas Natural SDG SA Utilities 4.6CVC Capital Partners Ltd.Corporacion Financiera Alba SA

11-May-18 11-Jul-18 ZPG plc Technology 3.2 Silver Lake Group LLC

05-Apr-18Hispania Activos Inmobiliarios SOCIMI SA

Real estate 2.7 Blackstone Group LP

17-Apr-18 Zentiva NV Health care 2.3 Advent International Corp.

18-May-18 Mehilainen Oy Health care 2.1 CVC Capital Partners Ltd.

20-Jun-18Altice France SA (Telecommunication towers)

Telecom 2.0 KKR & Co. LP

Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions — value and volume — quarterly trend (US$b)

Source: Dealogic

Source: Dealogic.

Asia-Pacific PE acquisitions — the top deals with disclosed financial terms 1H18


0

20

40

60

80

100

120

140

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Announcementdate

Completion date


Acquiror

08-Jun-18 08-Jun-18Ant Small & Micro Financial Services Group Co. Ltd.

Technology 14.0

Consortium including Warburg Pincus LLC;Temasek Holdings (Pte) Ltd.; Primavera Capital Management Ltd.; Carlyle Group LP;Canada Pension Plan Investment Board-CPPIB;Silver Lake Group LLC; General Atlantic LLC

26-Apr-18 Healthscope Ltd. Health care 3.9Westscheme Pty Ltd.; Canada Pension Plan Investment Board-CPPIB; BGH Capital Pty Ltd.;Ontario Teachers' Pension Plan Board; GIC Pte Ltd.

19-Jun-18China Biologic Products Holdings Inc.

Health care 3.7 CITIC Capital Holdings Ltd.

28-May-18 Investa Office Fund Real estate 3.1 Blackstone Group LP

06-May-18 ADT Caps Co. Ltd. Consumer services 2.7SK Telecom Co. Ltd.; Macquarie Infrastructure & Real Assets Pty Ltd.

28-Apr-18Baidu Financial Services Group

Technology 1.9TPG Capital LP; Carlyle Group LP;Taikang Insurance Group Inc.; Agricultural Bank of China Ltd.

01-Mar-18 01-Mar-18

National Highways Authority of India (NHAI) (648 kms of highways)

Industrials 1.4 Macquarie Infrastructure & Real Assets Pty Ltd.

24-Mar-18 29-Mar-18

Indiabulls Properties Pvt Ltd.Indiabulls Real Estate Co. Pvt Ltd.

Materials 1.4 Blackstone Group LP

04-May-18Sirtex Medical Ltd (Bid No 2)

Health care 1.4CDH Investments Ltd.; China Grand Pharmaceutical & Healthcare Holdings Ltd.

02-Jan-18 eHi Car Services Ltd. Industrials 1.4Baring Private Equity Asia Ltd.; MBK Partners Ltd.;Existing Management; Dongfeng Asset Management Co. Ltd.; Redstone Capital Partners

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)

Source: Dealogic.


0

50

100

150

200

250

300

350

$0

$20

$40

$60

$80

$100

$120

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


0

10

20

30

40

50

60

70

80

90

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top exits with disclosed values 1H18

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

Announcementor filing date

Completion orpriced date


Sponsor Type

21-Dec-17 18-Jan-18 ADT Inc. Consumer services 10.5 Apollo Global Management LLC IPO

29-May-18 BMC Software Inc. Technology 8.3

GIC Special Investments Pte Ltd.;Golden Gate Capital Corp.;Bain Capital LLC;Insight Venture Management LLC;KKR & Co. LP

M&A

23-Feb-18 24-Apr-18Blue Buffalo Pet Products Inc.

Consumer goods 8.0 Invus Group LLC M&A

24-Jan-18 27-Dec-17Gates Industrial Corp. plc

Industrials 5.5 Blackstone Group LP IPO

27-Apr-18 23-May-18 GreenSky Inc. Technology 4.5 TPG Capital LP IPO

26-Mar-18 25-Apr-18Ceridian HCM Holding Inc.

Technology 3.0 Thomas H Lee Partners LP IPO

27-Apr-18 23-May-18 SRS Distribution Inc. Materials 3.0Berkshire Partners LLC;Leonard Green & Partners LP

M&A

19-Jun-18 Varsity Brands LLC Consumer goods 2.5Charlesbank Capital Partners LLC;Bain Capital LLC;Partners Group Holding AG

M&A

17-Apr-18 24-May-18Hearthside Food Solutions LLC

Consumer goods 2.4

Goldman Sachs Capital Partners;Charlesbank Capital Partners LLC;Partners Group Holding AG;Vestar Capital Partners LLC

M&A

31-Jan-18 16-Apr-18 Ply Gem Holdings Inc. Materials 2.4CI Capital Partners LLC;Clayton Dubilier & Rice LLC

M&A

22

Source: Dealogic.


0

20

40

60

80

100

120

140

160

180

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top exits with disclosed values 1H18

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




Sponsor Type

27-Feb-18 12-Jun-18 Adyen BV Technology 8.3 General Atlantic LLC IPO

25-May-18 Techem GmbH Consumer services 5.4Partners Group Holding AG;Macquarie Infrastructure & Real Assets Pty Ltd.

M&A

21-Apr-18 10-Jul-18 Sky Betting & Gaming Consumer goods 5.0 CVC Advisers Ltd. M&A

07-Nov-17 10-May-18 Avast plc Technology 3.2Summit Partners LP;

CVC Advisers Ltd. IPO

05-Feb-18 26-Apr-18Italo-Nuovo Trasporto Viaggiatori SpA

Industrials 3.0 Peninsula Capital Advisors LLP M&A

04-May-18 Vivo Energy plc Oil and gas 2.7 Helios Investment Partners LLP IPO

11-Jun-18 11-Jun-18 AniCura AB Health care 2.4 Nordic Capital Svenska AB M&A

26-Feb-18 31-May-18Interoute Communications Ltd.

Telecom 2.3Crestview Partners LP;Aleph Capital Partners LLP

M&A

17-May-18 iZettle AB Technology 2.2 MCI Capital SA M&A

18-May18 Mehilainen Oy Health care 2.1KKR & Co LP;Triton Advisers Ltd;CVC Advisers Ltd

M&A

23

Source: Dealogic.


0

20

40

60

80

100

120

140

160

180

$0

$10

$20

$30

$40

$50

$60

$70

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018


Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Asia-Pacific PE exits — top exits with disclosed values 1H18

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

24

Source: Dealogic.


0

10

20

30

40

50

60

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Q22012

Q32012

Q4201

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018





Sponsor Type

04-Apr-18 04-Apr-18Beijing Mobike Technology Co. Ltd.

Technology 3.7 Warburg Pincus LLC;TPG Capital LP

M&A

06-May-18 ADT Caps Co. Ltd. Consumer services 2.8 Carlyle Group LP;Macquarie Infrastructure & Real Assets Pty Ltd.

M&A

25-Apr-18COFCO Capital Investment Co. Ltd.

Consumer goods 1.9 Hony Capital Management Ltd. M&A

26-Jun-18 Wanda Media Co. Ltd. Consumer goods 1.5 Hony Capital Management Ltd. M&A

14-Mar-18 14-Mar-18Greater China Intermodal Investments LLC

Industrials 1.4 Carlyle Group LP M&A

24-Jun-16 17-Feb-18Aster DM Healthcare Ltd.

Health care 1.3 Olympus Capital Holdings Asia (Hong Kong) Ltd.;True North Managers LLP

IPO

11-Jan-18 Capital First Ltd. Financials 1.2 Warburg Pincus LLC M&A

18-May-18 Viva Industrial Trust Real estate 1.1 Warburg Pincus LLC M&A

27-Jan-18 21-Feb-18I-MED Radiology Network Ltd.

Health care 1.0 EQT Partners AB;Permira Ltd.

M&A

14-Jun-18Intelenet Global Services Pvt Ltd

Consumer services 1.0 Blackstone Group LP M&A

Appendix BM&A activity monthly flash

Volume Value Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2018(to June 18)

vs. 2017(to June 17)

2018(to June 18)

vs. 2017(to June 17)

LTM(to June 18

vs. PTM(to June 17)

LTM (to June 18)

vs. PTM(to June 17)

M&A activity by areas and regions

Global 16,854 -14% 2,300,111 66% 35,631 -4% 4,002,073 19%

Americas 5,939 -16% 1,265,266 66% 12,357 -9% 2,173,476 10%

Canada 870 -17% 90,121 -4% 1,805 -21% 166,586 -24%

MeCAR 156 -21% 7,042 -31% 312 -17% 30,517 18%

SA region 265 -19% 37,140 -9% 594 -12% 88,593 9%

US 5,068 -15% 1,174,130 80% 10,472 -6% 1,977,084 12%

EMEA 6,146 -18% 837,238 68% 12,755 -7% 1,291,955 8%

Africa 194 -41% 8,238 -45% 499 -14% 20,901 -47%

CIS 448 -16% 20,099 115% 1,039 10% 29,147 -49%

CSE 449 -4% 22,884 51% 941 10% 36,657 -21%

GSA 1,168 -25% 184,665 81% 2,523 -5% 297,935 29%

Israel 190 10% 18,547 1% 373 36% 30,888 -11%

Mediterranean 658 -27% 136,195 77% 1,310 -14% 182,149 36%

MENA 126 -12% 29,870 2% 232 -10% 40,355 -49%

Nordics 740 -17% 67,354 38% 1,524 -1% 147,557 77%

UK&I 1,585 -9% 337,023 187% 3,051 -16% 465,156 33%

WEM 1,443 -16% 117,620 -16% 3,025 -6% 217,686 -24%

Asia-Pacific 6,578 -7% 637,337 61% 14,247 1% 1,196,777 21%

ASEAN 612 -35% 42,086 55% 1,475 -19% 100,026 49%

Greater China 2,954 3% 328,203 37% 6,357 7% 680,891 21%

India 582 -15% 66,937 98% 1,037 -13% 95,370 36%

Japan 1,755 2% 152,544 173% 3,566 7% 237,330 33%

Korea 401 -17% 30,100 -14% 1,097 4% 64,187 -5%

Oceania 617 -20% 60,068 66% 1,448 -12% 97,543 -3%

M&A activity by sectors

Aerospace and Defense 176 -9% 25,791 30% 372 -1% 86,818 104%

Automotive and Transportation

1,132 -18% 159,986 93% 2,362 -10% 254,771 26%

Banking and Capital Markets 908 -20% 127,675 7% 2,016 -8% 228,236 -18%

Consumer Products and Retail 2,304 -17% 224,925 -8% 5,001 -6% 483,462 1%

Diversified Industrial Products 2,283 -11% 230,627 67% 4,817 -4% 443,324 9%

Govt., Public Sector 311 -7% 17,026 119% 607 -3% 37,264 34%

Health Care 584 -10% 50,689 54% 1,169 -3% 79,182 21%

Insurance 546 2% 159,987 277% 1,128 8% 334,948 173%

Life Sciences 1,214 -4% 263,198 55% 2,518 3% 366,556 30%

Media and Entertainment 957 -24% 244,558 378% 2,105 -12% 393,084 75%

Mining & Metals 678 -33% 49,675 16% 1,658 -19% 97,227 -3%

Oil & Gas 538 -24% 217,607 14% 1,178 -19% 365,757 -30%

Other Sectors 1,838 -19% 62,817 22% 3,739 -11% 120,228 0%

Power and Utilities 653 -18% 206,674 145% 1,482 -4% 349,761 49%

Real Estate 1,546 -18% 139,783 51% 3,312 -8% 267,112 16%

Technology 5,359 -5% 346,531 53% 10,993 6% 670,147 18%

Telecommunications 292 -22% 146,042 88% 645 -10% 227,963 -20%

Wealth and Asset Management

349 -24% 42,194 57% 806 -15% 71,836 38%

25

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 July 2018. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

Capital Briefing

2017 2018

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 2018

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

Appendix CM&A multiples and bid premium

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

26

Median deal multiple — EV/EBITDA

Global Americas Asia-Pacific EMEA

LTM(to June 18)

PTM(to June 17)

LTM(to June 18)

PTM(to June 17)

LTM(to June 18)

PTM(to June 17)

LTM(to June 18)

PTM(to June 17)

Aerospace and Defense 8.3x 9.7x 19.8x 11.9x 7.9x 4.6x - 12.0x

Automotive and Transportation 11.2x 10.2x 10.0x 9.8x 11.5x 10.2x 11.4x 10.5x

Consumer Products and Retail 10.2x 9.7x 9.7x 10.5x 10.8x 10.0x 10.0x 9.2x

Diversified Industrial Products 10.9x 10.0x 10.7x 10.0x 12.5x 11.8x 9.4x 8.8x

Financial Services 11.2x 10.3x 12.3x 13.6x 10.6x 7.8x 9.8x 7.5x

Govt, Public Sector 10.1x 8.6x 11.1x 8.6x 9.1x 10.5x 8.3x 7.7x

Health care 13.4x 13.3x 12.6x 11.8x 16.5x 18.2x 12.9x 11.3x

Life Sciences 10.7x 9.2x 9.5x 11.0x 12.7x 9.8x 10.5x 8.9x

Media and Entertainment 9.4x 6.9x 14.0x 9.8x 10.8x 5.6x 6.6x 6.8x

Mining and Metals 10.7x 10.0x 11.5x 11.5x 12.3x 14.2x 6.7x 5.4x

Oil and Gas 10.4x 10.4x 11.9x 10.4x 10.6x 11.5x 9.7x 10.2x

Other Sectors 10.2x 9.7x 10.7x 12.7x 9.9x 15.0x 11.3x 7.9x

Power and Utilities 13.4x 11.1x 9.1x 4.6x 17.1x 8.5x 11.7x 12.5x

Real Estate 9.5x 10.7x 10.6x 12.9x 8.6x 12.4x 8.3x 9.6x

Technology 11.8x 11.4x 11.5x 12.4x 12.0x 12.0x 11.4x 10.2x

Telecommunications 7.9x 8.4x 16.6x 7.9x 7.3x 10.2x 8.6x 8.4x

Total 10.7x 10.2x 11.0x 11.2x 11.4x 10.7x 9.6x 9.1x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEA

LTM(to June 18)

PTM(to June 17)

LTM(to June 18)

PTM(to June 17)

LTM(to June 18)

PTM(to June 17)

LTM(to June 18)

PTM(to June 17)

Aerospace and Defense 24% 29% 28% 37% 20% 12% - 29%

Automotive and Transportation

19% 19% 25% 21% 19% 18% 12% 20%

Consumer Products and Retail 19% 18% 19% 26% 20% 16% 13% 16%

Diversified Industrial Products 18% 23% 22% 30% 17% 23% 13% 15%

Financial Services 21% 18% 26% 28% 16% 13% 15% 14%

Govt, Public Sector 16% 23% 42% - 16% 16% - 23%

Health care 25% 26% 37% 36% 19% 14% 21% 13%

Life Sciences 19% 21% 15% 27% 20% 19% 20% 22%

Media and Entertainment 24% 21% 33% 24% 23% 20% 11% 18%

Mining and Metals 19% 18% 19% 18% 10% 11% 27% 19%

Oil and Gas 20% 24% 20% 30% 16% 20% 35% 28%

Other Sectors 18% 12% 15% 15% 19% 17% 10% 11%

Power and Utilities 18% 26% 24% 27% 17% 35% - 6%

Real Estate 20% 25% 15% 26% 26% 24% 15% 24%

Technology 18% 26% 22% 35% 18% 18% 14% 22%

Telecommunications 27% 11% 24% 36% 11% 7% 40% 10%

Total 20% 21% 22% 29% 19% 18% 18% 17%

Capital Briefing

Notes


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