private equity capital briefing - ernst & young · buyout funds have accounted for 46% of funds...

Private Equity Capital Briefing

June 2017

Monthly insights and intelligence on PE trends

PE firms get back into brands

Consumer products the most active sector ytd 2017

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

Private Equity Capital Briefingcan provide 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 5Private equity: exits 6

Section 2 M&A 7Section 3 IPOs 9Section 4 Loans 10Section 5 Bonds 11

AppendicesAppendix A PE activity by geography 13Appendix B M&A activity monthly flash 22Appendix C M&A multiples and bid premium 23Appendix D Capital Confidence Barometer 24

1.i. Private equity: fundraising

Executive summary • PE fundraising is up 9% through the end of May, with firms raising US$231b for commingled funds.

• Buyout and infrastructure is driving the trend. Buyout funds have accounted for 46% of funds raised this year, up from 39% last year.

• Dry powder remains the most important dynamic in the industry. Buyout firms have more than US$570b available for new deals. Adding other asset classes brings the total to more than US$1.5t available for investment.

Current stateFundraising• PE fundraising is seeing another strong year. To date, PE firms have

closed funds valued at US$231b, up 9% from the same period last year. This represents the second-most active start to a year on record.

• Funds with the inherent ability to deploy large amounts of assets into the market are driving the trend. In the first five months of last year, buyout fundraising represented 39% of total PE fundraising. So far this year, buyout fundraising is 46% of total fundraising. Similarly, infrastructure increased from 10% of aggregate fundraising to 14%. Growth capital, real estate funds and other strategies have seen relative declines.

• Activity is currently centered on the US. Firms have raised US$165b for US-focused funds this year, up 45% from the same period a year ago. The Asia-Pacific region has seen a modest increase, with US$18.6b raised, up 11% from a year ago.

• After an active 2016 that saw fundraising increase nearly 30% vs. the prior year, activity in Europe has declined, from US$76b last year, to US$38b raised through the first five months of 2017.

Dry powder• Dry powder continues to climb. Buyout firms currently have nearly

US$570b in capital available for new deals, far surpassing the US$478b they had at the former market peak in 2007-2008. Including other fund types – growth capital, real estate, infrastructure and others – firms have more than US$1.5t available for investment.

Environment and horizon• The expectation at the beginning of this year was that the industry

may begin to see a slowdown in the pace of commitments as LPs looked for firms to deploy dry powder. However, five months in, there has been little indication that investors are slowing down. The secular trends driving capital into the asset class (new investors like high net worth (HNW) and family offices, and the need for pension funds to bridge their funding gaps) are winning out vs. the cyclical headwinds (slowing distributions).

• Blackstone announced a new fund targeting the infrastructure space, including a cornerstone commitment of US$20b from Saudi Arabia’s Public Investment Fund. Blackstone has said it plans to raise an additional US$20b for the fund from other investors, which, with leverage, could give Blackstone approximately US$100b in purchasing power. The Trump Administration has repeatedly stated it intends to help invest more than US$1t in US infrastructure projects through a combination of direct funding, tax reform and public-private partnerships.

4

Source: Preqin

Source: Preqin

Fundraising by region – YTD 2016 vs. YTD 2017 (US$b)

Global PE fundraising – 2003 through YTD 2017 (in US$b)

Top funds raised in 2017

Source: Preqin

Source: Preqin


Global PE fundraising by type – YTD 2016 vs. YTD 2017 (as a percent of total)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2016

YTD2017

$0

$100

$200

$300

$400

$500

$600

$700

39%

10%

23%

5% 7%

16%

46%

14% 13%

4%10%

13%

Buyout Infrastructure Real Estate Growth capital Secondaries Other

YTD 2016 YTD 2017

Fund Type Target (in US$b)

Raised (in US$b)

Firmnationality

Global Infrastructure Partners III Infrastructure 12.5 15.8 US

Silver Lake Partners V Buyout 12.5 15.0 US

KKR Americas XII Fund Buyout 10.0 13.9 US

Vista Equity Partners Fund VI Buyout 8.0 11.0 US

Clayton Dubilier & Rice X Buyout 8.5 9.4 US

US: YTD 2016 – US$113bYTD 2017 – US$165b

Europe: YTD 2016 – US$76bYTD 2017 – US$38b

Asia-Pac: YTD 2016 – US$19bYTD 2017 – US$21b

Buyout, 38%

Distressed, 6%

Real estate,

16%

Venture, 11%

Growth, 7%

Other, 22%

Global dry powder by type – (as a percent of total)

Source: Preqin

1.ii. Private equity: acquisitions

Executive summary• Acquisition activity remains strong, with firms announcing 565 deals valued at US$123.6b, up 0.6% from the same period a

year ago.

• On a sector basis, technology remains active, though not at the levels seen last year.

• Consumer products and retail has seen an increase in activity this year, with deals accounting for 20% of aggregate PE investment, up from 10% last year.

• Add-ons have declined as increased competition and higher valuations extend deeper into the middle market.

Current state• Deal activity remains strong. PE firms announced 117 deals valued at

US$27.2b in May, bringing the YTD total to 565 deals valued at US$123.6b, up 0.6% from the same period a year ago.

• On a sector basis, technology remains active, accounting for 17% of the capital invested. This is down from last year, however, when technology was 29% of capital invested. The consumer products and retail sector has been more active than last year, accounting for 20% of PE investment, up from 10% a year ago. Large deals in the space include Bain’s acquisition of Diversey for US$3.2b; CDH’s investment in Belle International for US$5.8b; and L Catterton’s investment in Leslie’s Poolmart for US$1.8b.

• In 2014 and 2015, add-ons were an attractive way for firms to put capital to work amid a high-price environment. Firms announced add-on deals valued at US$260b in 2015, which was a record. However, since then the pace of bolt-ons has decreased as increased competition for deals has extended well into the middle market, negating some of the lower multiples such deals have historically

provided. deals.

Environment and horizon• Investors at the annual Emerging Markets Private Equity Association

(EMPEA) conference in Washington, DC in May discussed the growing importance of impact investing across the emerging markets. While smaller mid-market and growth capital funds have been active in impact investing for many years, recent months have seen large global players get involved as well. In late 2016, TPG Growth launched the US$2b Rise Fund, which focuses on achieving social and environmental impact alongside financial returns. It followed Bain’s entry into the impact market, with its Double Impact Fund. Participants noted that the industry is currently in the process of moving from a “do no harm” type mentality to “actively doing good,” and agreed that effective measurement of both financial and impact progress is the key to being able to do it consistently.

• Pricing levels continue to push higher. The latest data point comes from Epsilon Research and French investment firm Argos Soditic’sArgos Mid-Market Index, which showed that multiples paid for European mid-market companies topped 8.6 times EBITDA in Q1 2017, up 1.2% from the prior quarter. For PE acquisitions, multiples averaged 9.2x over the same period, the result of continued high levels of dry powder and increased competition for deals. The Argos Index defines a mid-market company as those valued between €15m and €500m.

5


Source: Dealogic

Date Target Value (in US$b) Sector Sponsor

12-Feb-17 Stada Arzneimittel AG $5.6 Health careBain Capital LLC; CinvenLtd.

9-May-17 West Corp. $4.9 TelecomApollo Global Management LLC

10-Feb-17Aon Hewitt LLC (BPO platform) $4.8 Technology Blackstone Group LP

17-Mar-17USI Insurance Services LLC $4.3 Insurance KKR & Co. LP

5-Jun-17 Sponda Oyj $4.1 Real estate Blackstone Group LP

13-Mar-17 DH Corp. $3.4 TechnologyVista Equity Partners LLC

24-May-17 Q-Park NV $3.3 Transportation KKR & Co. LP

27-Mar-17 Diversey Inc. $3.2Consumer products Bain Capital LLC

14-Mar-17 Air Methods Corp. $2.5 Transportation American Securities LLC

18-May-17 Fairfax Media Ltd. $2.2 Publishing Hellman & Friedman LLC

Top PE deals YTD 2017

Global PE acquisitions YTD 2016 vs. YTD 2017 (in US$b)

PE deal value by sector – YTD 2016 vs. YTD 2017 (as a percentage of total)

Source: Dealogic

$0

$20

$40

$60

$80

$100

$120

$140

Americas EMEA Asia-Pacific All regions

YTD 2016 YTD 2017

0%

5%

10%

15%

20%

25%

30%

35%

Source: Dealogic

$0$50

$100$150$200$250$300

Global PE add-on deals (in US$b)

Source: Dealogic

1.iii. Private equity: exits

Executive summary• 2017 has seen a rebound in exit activity, with PE firms announcing deals valued at US$146.6b, up 29% from the same period

a year ago.

• Strength is evident across all routes – trade sales, secondaries, and IPOs.

• Secondaries and IPOs are accounting for a larger proportion of the exit market.

Current state• May was an active month for PE exit activity, with firms announcing 94

deals valued at US$42.3b, a 41% increase over last year.

• Overall, 2017 has seen a rebound in exit activity after a quiet year in 2016. Firms have announced deals valued at US$146.6b, up 29% from last year, with activity increasing across all exit routes: Firms have announced 239 exits via trade sale valued at US$91.9b, up 21% from a year ago; exits via secondary buyouts are up 41% by value vs. a year ago, to US$39.7b across 133 deals; and PE-backed IPOs have increased markedly vs. last year, when global new issuance markets were largely closed on macro concerns and negative investor sentiment. PE firms have taken 49 companies public with an aggregate value of US$16.2b.

• While sales to strategic investors still account for the bulk of PE sales, their relative importance has declined this year as PE firms became more active in secondary sales and IPOs. Last YTD, sales to strategic investors accounted for 67% of total exited value; this year, such sales have accounted for 62% of total exit value. Sales via secondary and IPO have both increased as a percentage of exits.

Environment and horizon• PE firms will continue to exit companies on a programmatic basis as long

as high valuations remain in the M&A and IPO markets. Nonetheless, the bulk of companies acquired at the top of the last cycle have now been exited and cash returned to LPs. Thus, despite the uptick in exit activity this year, the top of the exit cycle has likely passed, and firms will continue to focus on deployment.

• Barring any exogenous shocks, IPO markets should remain active for the balance of the year. Strong investor sentiment and an IPO window that was closed for most of 2016 has led to strong demand for current issues. A number of successful launches by high-profile companies in recent months is emboldening companies to enter the pipeline.

PE exits by year (US$b)

Top PE IPOs YTD 2017

6


Source: Dealogic

Source: Dealogic

PE exits by type – YTD 2016 vs. YTD 2017

Announced CompanyValue

(US$b)Sector Sponsor

2-Jun-17Logicor Europe Ltd. $13.8 Transportation Blackstone Group LP

15-May-17 Patheon NV $7.2 Health care JLL Partners LLC

8-May-17Tribune Media Co. $6.6 Telecom

Angelo Gordon & Co. LP;Oaktree Capital Group LLC

9-May-17 West Corp. $4.9 Telecom

Thomas H Lee Partners, LP;Quadrangle Group LLC;Apollo Global Management LLC

17-Mar-17USI Insurance Services LLC $4.3 Insurance Onex Corp.

PE IPOs by year (US$b)

Source: Dealogic

Source: Dealogic

PE exits by type and region (US$b)

$189.4

$162.1

$113.6

$146.6

360

380

400

420

440

460

480

500

YTD 2014 YTD 2015 YTD 2016 YTD 2017

Deal value No. of deals

67%

25%

8%

62%

27%

11%

Strategic Secondary IPO

YTD 2016 YTD 2017

0

50

100

150

200

250

$0

$20

$40

$60

$80

$100

$120

Pricing date Company SectorMarket value

(US$b)Sponsor

31-Jan-17 Invitation Homes Inc. Real estate $6.3 Blackstone Group LP

3-May-17 Antero Midstream GP LP Oil and gas $4.4

Warburg Pincus LLC;Trilantic Capital Management LP

11-May-17Gardner Denver Holdings Inc. Machinery $3.9 KKR & Co. LP

26-Jan-17 Jagged Peak Energy Inc. Oil and gas $3.2Quantum Energy Partners

26-Jan-17 JELD-WEN Holding Inc. Construction $2.4 Onex Corp.

Current state• The M&A market remained firm, with US$247b of deals announced in May

2017, up 6% against April 2017 and down 23% against May 2016 (which was largely inflated due to the announcement of the Bayer-Monsanto deal). An interesting thing to note is that the month saw deals worth US$116b in the US$1b−US$10b band, compared with US$114b deals in May 2016 and US$104b in the same period of 2015. In terms of volume, the month recorded 2,833 deals, compared with 2,522 deals recorded at the same time last year.

• US-based companies continued to drive cross-border deals, with US$107b in announced acquisitions so far this year. There has been a sharp increase in the announced acquisitions of European companies by US firms. 2017 has seen US$76b worth of such deals, which is a record-high figure at this stage and up 61% on the same period last year. One of the major drivers of this trend is the relative strength of the dollar against pound and the euro, which has made foreign acquisitions more attractive for US companies.

• The merger between US-based chemical firm Huntsman Corp and European rival Swiss Clariant AG is the latest in a series of chemicals tie-ups as growth in parts of the industry has slowed. It is the latest example of the spate of big deals between the US and Europe. This all-stock transaction would create a chemical giant with approximately US$20b enterprise value.

• The month saw the largest deal of 2017 worth US$34b, in which Italy's Atlantia S.p.A launched a cash-and-share offer for Spain's AbertisInfraestructuras S.A. The deal will create the world's biggest operator of toll roads, with 14,095km under its management. A tie-up with Abertis, which gets a third of its core earnings from France and has extensive operations in Latin America, would allow Atlantia to generate around 60% of core earnings outside its home turf, well ahead of a self-imposed 2020 deadline.

Environment and horizon• M&A is expected to remain firm in the coming months as dealmakers

continue to pursue growth opportunities and technological advantage amid ongoing disruption. Many of the head winds that affected M&A activity in 2016 have subsided. New geopolitical complexities have emerged in 2017 — but we may be witnessing a new kind of M&A market, where these geopolitical concerns might not derail deals, unlike in previous cycles.

• Boardroom agendas continue to be dominated by growth demands and companies look set to retain their focus on expansion to tap into new areas of opportunity. Improving economic conditions underpin M&A activity.

• Cross-border dealmaking should continue to rise. Despite concerns about political risk and uncertainty, 2017 has seen a substantial increase in cross-border deals. This indicates that companies are taking such challenges in today’s hostile business environment in their stride and making moves they consider necessary to achieve growth. Cross-border M&A enables companies to buy into pockets of opportunity and secure supply chains.

• Technology and digital disruption remain the major drivers of the current M&A market. Unrelenting advances in technology and digitalization have led to disruption in business models and changing customer behaviors, making it imperative for executives to reassess and reinvent their portfolios continually, with an aim to future-proof them. Many companies are showing interest in acquiring technological capabilities, such as artificial intelligence and robotics that can help them survive and thrive in the digital world.

• M&A would continue to be dominated by other factors such as convergence across industries and sectors, and portfolio reorganization. Companies are more frequently conducting strategic reviews and looking for acquisitions outside their core sector to remain relevant in today’s business environment. We should expect to see an uptick in divestments, as companies reorganize their portfolios and shift to new business models in order to invest in growth opportunities.

Deal environment: by area (US$b)Last 12 months (LTM) to May 2017 versus previous 12 months (PTM) to May 2016Source: Dealogic and EY analysis.

Deal environment: by target sector and target area (% share of global value)LTM to May 2017Source: Dealogic and EY analysis; excludes real estate asset sales.

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

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

M&A analysis as at 1 June 2017.

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

Figures have been rounded off to nearest decimal place.7

Executive summary• May continued to exhibit the firm M&A market seen so far in 2017, with US$247b of deals announced.

• US$1b−US$10b deals are driving the current market, worth US$116b in this band announced in May 2017.

• US acquisitions for European companies reach a record level of US$76b in 2017 so far.

• The M&A outlook for 2017 remains positive as companies look keen to conduct strategic reviews of their portfolio more frequently.

• Cross-border M&A should continue to increase further in 2017.

2. M&A

Target Sector Country Acquiror Value (US$m)

AbertisInfraestructuras SA

Automotive and transportation

Spain Atlantia SpA 34,320

Huntsman Corp. Diversified industrial products

US Clariant AG 10,249

Patheon NV Life sciences US Thermo Fisher Scientific Inc.

7,138

Tribune Media Co. Media and entertainment

US Sinclair Broadcast Group Inc.

6,609

VWR Corp. Life sciences US Avantor Performance Materials Holdings LLC

6,286

1&1 Telecommunication SE

Technology Germany Drillisch AG 6,182

Endeavour Energy (50.4%)

Power and utilities Australia Investor group 5,614

Veresen Inc. Oil and gas Canada Pembina Pipeline Corp. 5,580

West Corp. Telecommunications US Apollo Global Management LLC

4,921

InVentiv Health Inc. Life sciences US INC Research Holdings Inc.

4,583

Americas Asia-Pacific EMEA Total

Technology 7% 3% 5% 16%

Oil and gas 10% 1% 2% 14%

Consumer products and retail 6% 2% 3% 10%

Diversified industrial products 3% 2% 4% 10%

Life sciences 5% 1% 2% 8%

Power and utilities 3% 2% 2% 7%

Media and entertainment 4% 1% 1% 6%

Automotive and transportation 1% 2% 2% 5%

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

Others 9% 6% 5% 20%

All sectors 50% 21% 28% 100%

-

1,000

2,000

3,000

Americas Asia-Pacific EMEA

LTM value PTM value

Capital Briefing

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

Key cross-border M&A deal flow(LTM to May 2017)(Total = US$1.27t)

N America to:W Europe – $185b

UK&I – $58bMiddle East – $20b

Japan to:N America – $48b

UK&I - $35bW Europe – $10b

UK&I to:N America – $105bW Europe – $10b

Africa – $3bMiddle East – $3b

L America to:N America – $8b

Russia, CIS and CSE - $1b

Greater China andMongolia to:

N America – $45bW Europe – $31b

Oceania – $21bW Europe to:N America – $152bL America - $15b

Russia, CIS and CSE - $9b

Cross-border M&A deal flow (LTM to May 2017)(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 June 2017. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

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

Intra-area cross-border deals

Target 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 1,905 68 3,972 1,577 3,746 26 1,082 - 110 7,661 883 3,253 24,284 69%

SE Asia (including Korea)

10 6,468 9,587 126 2,577 10 3,016 24 1,170 4,943 378 1,237 29,546 -20%

Greater China andMongolia $

- 3,107 24,427 450 3,819 - 5,946 37 - 3,989 572 190 42,537 -7%

Russia, CIS and CSE 304 347 3,589 2,919 8,684 3,107 8,845 1,048 11,687 1,625 1,759 1,313 45,226 42%

W Europe (excluding UK&I)

594 4,498 30,757 2,164 123,371 1,267 9,546 609 3,534 185,477 967 10,289 373,073 28%

India 579 6,990 3,439 12,922 1,344 - 2,911 - 575 5,288 58 26 34,131 85%

Japan - 295 319 - 320 151 - - - 2,722 29 - 3,835 -88%

Latin America 40 109 17,109 198 14,923 9 304 5,377 1,194 19,220 1,111 321 59,915 36%

Middle East 62 80 16,769 411 6,165 12 254 - 3,615 20,228 79 3,149 50,825 366%

North America 6,898 14,808 44,604 110 88,716 1,686 48,191 7,961 12,311 106,211 5,560 104,623 441,679 -12%

Oceania 910 1,782 21,038 - 1,290 67 1,655 - 484 4,142 1,212 1,576 34,156 -17%

UK&I 3,213 2,129 10,468 228 10,729 867 35,264 - 3,268 58,006 3,611 1,549 129,332 -49%

Outbound total 14,516 40,679 186,078 21,104 265,685 7,202 117,013 15,056 37,947 419,511 16,219 127,527 1,268,539 -4%

% versus PTM 54% 54% -9% 82% -39% 13% 79% -26% -37% 18% 31% 11% -4%

8 Capital Briefing

3. IPOs

Executive summary• This month recorded the strongest year-to-date(YTD) IPO activity in terms of proceeds, witnessing a significant year-on-year (YOY) increase

in terms of both number of IPOs and proceeds.

• Asia-Pacific accounted for 5 of the top 10 deals this month. Two of the top three IPOs this month listed on Korea exchange.

• IPO activity continues to be steady in the Americas and EMEA region, as the investment environment improves.

• Oil and gas is expected to be one of the most active sector in the US as the improvement in oil prices and a large backlog of IPO candidatesare likely to encourage companies to enter the public markets.

9

Current state• May 2017 saw 119 deals raising US$17.3b, registering a YOY

increase of 53% and 92% in terms of number of IPOs and proceeds respectively. This month recorded the strongest IPO activity YTD in terms of proceeds, on the back of 4 of the top 10 deals so far this year.

• Asia-Pacific continued to lead global IPO activity, with 72 deals raising US$8.5b, accounting for 61% and 49% of the global number of IPOs and proceeds respectively. Compared with May 2016, the region registered a 95% and 214% increase by number of IPOs and proceeds respectively. While Greater China region contributed the highest in terms of number of deals, South Korea led by proceeds due to listing of Netmarble Games Corp. (US$2.3b) and ING Life Insurance Korea Ltd (US$1.0b).

• The activity was steady in EMEA, with 28 deals raising US$3.9b. While the number of IPOs increased by 4%, proceeds saw an uptick of 8%.

• IPO activity continues to strengthen in the US with 18 deals raising US$3.8b in May 2017. YOY, this was 20% and 38% more in terms of number of deals and proceeds respectively.

• The top two deals (by proceeds) for this month were:

• Netmarble Games Corp. – raised US$2.3b in the largest South Korean IPO since 2010. It aims to use the proceeds for M&As and raise its ranking in key markets to reach its goal of becoming a global top five game firm by 2020.

• Kinder Morgan Canada Ltd. – raised US$1.3b in the largest oil and gas IPO in Canada since 2014. It aims to use the proceeds to pay down the parent company’s debt.

Environment and horizon• Asia-Pacific will continue to dominate global IPO activity, led by

Greater China, South Korea and Australia. There are several big IPOs, such as Asia Innovations Group, China Tower and Putian, that are expected to hit the market later this year.

• The number of Chinese technology IPOs is expected to reach a record high in 2017 as a result of the faster China Securities Regulatory Commission (CSRC) IPO approval process. Also, companies are getting favorable valuations on the local exchanges and could save on the potential additional listing cost of a cross-border listing, which has resulted in an increase in technology IPOs on Chinese exchanges. According to CB Insights, China has a total of 46 private companies valued at more than US$1.0b, the highest number outside the US.

• India is expected to have another strong year of IPO activity led by IPOs of former state-owned enterprises. The Government could raise close to US$3.0b this year via IPOs. This is due to strong inflows in the market from both foreign and domestic investors, and relative outperformance of the Indian market compared with other emerging economies.

• The momentum will continue to build in the US IPO market, and we expect high levels of activity going forward. Apart from technology sector, the oil and gas sector is expected to be particularly active as the backlog has been building and oil prices have shown steady improvement, leading to more companies going for public listings. A majority of the IPOs in the backlog are related to oilfield services companies, and many of them are poised for significant growth over the next couple of years.

• We expect the demand for IPOs to remain strong this year in the UK after a steady start to 2017. This is evident from the healthy pipeline of decent-sized companies, worth up to nearly US$35.0b, looking to float. Investors seem to be supportive of the right companies coming to the market, which should strengthen confidence for issuers considering going public.

• In the Middle East, Egyptian authorities are in discussion with local and international investment banks to advise the Government on the IPOs of state-run companies. Their listing plans would broaden the ownership of companies and, as a result, bolster Egypt’s capital markets and help the Government raise revenue.

Top 10 IPOs by proceeds, May 2017Source: Dealogic

Issuer name Issuer location Sector Exchange Proceeds(US$m)

Netmarble Games Corp. South Korea Technology Korea 2,336

Kinder Morgan Canada Ltd. Canada Oil and gas Toronto 1,297

ING Life Insurance Korea Ltd.

South Korea Insurance Korea 974

Gardner Denver Holdings Inc.

USDiversified industrial products

New York 950

Antero Midstream GP LP US Oil and gas New York 875

IRB InvIT Fund IndiaAutomotive and transportation

Bombay 783

VolkerWessels B.V. Netherlands Real estateEuronext (Amsterdam)

625

Munters AB SwedenDiversified industrial products

Stockholm 516

China EverbrightGreentech Ltd.

China Power and utilities Hong Kong 434

Jiangsu Provincial Agricultural Reclamation & Development Co. Ltd.

ChinaConsumer products and retail

Shanghai 351

IPO activity by sector and area (% share of global proceeds)LTM to May 2017Source: Dealogic; regional classification on the basis of issuer nationality.

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

Americas Asia-Pacific EMEA Total

Banking and capital markets 1% 14% 0% 15%

Technology 4% 6% 3% 14%

Real estate 2% 7% 2% 11%

Automotive and transportation 1% 6% 2% 10%

Life sciences 1% 5% 3% 9%

Consumer products and retail 2% 5% 1% 9%

Diversified industrial products 1% 5% 1% 8%

Oil and gas 4% 1% 2% 7%

Power and utilities 0% 2% 3% 5%

Others 3% 7% 3% 13%

Total 20% 58% 22% 100%

IPO activity by area (YOY % change)(LTM to May 2017 versus PTM to May 2016)Source: Dealogic; regional classification on the basis of issuer nationality.

-30%

-5%

20%

45%

-35% -25% -15% -5% 5% 15% 25%

Proceeds

Nu

mb

er

of

de

als

Americas(including US)

EMEA

Global

Asia-Pacific

US

Capital Briefing

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 May 2017 (US$b)Source: Thomson ONE.

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

Proceeds Issues

Bank of America Merrill Lynch 104.7 566

JP Morgan 95.3 498

Citi 89.8 336

Mitsubishi UFJ Financial Group 63.8 590

Deutsche Bank 60.3 253

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

Market share Proceeds Issues

Americas 63.4% 952.3 1,573

EMEA 21.1% 316.7 413

Asia-Pacific 15.5% 232.4 1,343

0

200

400

600

0

200

400

600

800

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

Proceeds (LHS) Number of issues (RHS)

0

1,000

2,000

3,000

0

300

600

900

1,200

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

Proceeds (LHS) Number of issues (RHS)

10

• Loan volume in May fell both in Europe and the US due to a decline in refinancing activities along with demand-supply imbalance.

• The European loan issuance has been inclining toward the US-style covenant-lite high-yield bond.

• Global market narrowed the demand-supply gap to surplus after a whopping $15.3b deficit in January.

• European repricing activity is dominated by issuers that participated at the onset of the repricing wave last year and are now jumping back for further reductions.

• The emergence of cov-lite loans has allowed the asset class to win back a lot of lost territory.

0 50 100 150 200 250

Financials

Consumer staples

High technology

Health care

Consumer products and services

Real estate

Government and agenciesProceeds (US$b)

Current state• In May, US$30.2b of loans were issued in the US and €4.4b in Europe,

taking the YTD global issuance to US$361b, up 163% from the same period in 2016. Monthly volume fell in May, making it a low point in 2017 for both regions as refinancing activity, which had been driving volumes from the beginning of the year, tailed off.

• Opportunistic deals, including refinancings and dividend recaps, have been contributing a bigger share in Europe (67%) than the US (51%) as per the new-issue volumes YTD. Both regions are driven by issuers as demand is way higher than supply.

• European loan issuance has been inclining towards US-style high-yield bond incurrence covenants instead of the typically more restrictive covenant package. In 2017, the share of cov-lite volume in Europe (72%) has surpassed that of the US (70%), substantially up from last year in both regions.

• The loan market is finally narrowing the demand-supply gap to surplus after a whopping deficit in January, where demand exceeded supply by US$15.3b. The primary reason for the market shift is the dramatic dip in refinancing activity in May.

• In May, the repricing activity was bolstered by issuers that participated at the onset of the repricing wave last year and are now jumping back in as the deals’ soft coverage can be further extended. At the same time, 42% of repricings had undergone a price cut in 2016.

• In China, syndicated interbank lending rates have become hurdles in the loan market, shutting out potential lenders and leaving borrowers facing higher interest costs. Meanwhile, Japanese lenders are showing greater interest in loans for overseas borrowers as they search for yield in a negative interest rate environment.

• Yields-to-maturity are at or near record lows for both regions. the average clearing yield for single-B rated term loans was unchanged in the US at 5.24%, and tightened to 4.00% from 4.05% in Europe.

Environment and horizon• Europe's loan market is continuing to differentiate between credits

within similar rating categories and command similarly differentiated pricing.

• The European Parliament’s new securitization, simple, transparent and standardized (STS) framework and the possibility of unlocking up to €150b of additional funding for the economy is expected to boost collateralized loan obligation (CLO) volumes.

• M&A by US high-grade companies and many acquisition loans are ramping up after a sparse first quarter as corporations unwilling to wait for the Trump Administration’s delayed tax, trade or health care reforms push the button on new deals.

Opportunities• The emergence of cov-lite loans has allowed the asset class to win back

a lot of territory lost to the capital market, and the in-market trend of loan-for-bond trade is expected to reduce in Europe.

• With the nervousness around the French elections falling away, positive economic data and strong stock markets, European borrowers are planning to secure better terms before event-driven financings hit the market in coming months.

*Data until 31 May 2017.

*Data until 31 May 2017.

Capital Briefing

Current state• Global high-yield activity rose on a monthly basis after a short decline in

April. High-yield issuance was US$24b in the US and €3.7 in Europe, taking the YTD total global issuance to US$162b, up 32% compared with the same period last year. Although the European high-yield bond issuance is experiencing spiked growth, as the YTD volumes are 84% ahead of the same period last year, the US market is only 22% ahead.

• The high-yield bond market was dominated by refinancings and recaps,with only 9% used for M&A in Europe and 21% in US YTD. In Europe, the market saw monthly volume disappointments, but good market conditions persisted due to strong demand.

• The slowdown in the European high-yield was expected, as many bankers had pushed their pipelines ahead in April owing to the French elections. Also, the latter half of May is usually slow due to the earnings season. Issuance was 88% for debt refinancing, making it the first month with no issuance for M&A or Leveraged Buyout (LBO) since January 2016.

• Back on trend, the Nordic bond market showed a strong appetite for new issuance. Many sponsor-backed issuers are taking advantage of the market to refinance their portfolio companies.

• The middle market is observing mispricing of risk. Competition from banks, alongside pressure from sponsors and debt advisors, is driving up leverage and lowering pricing, while pushing funds into ever-higher risk positions in debt structures.

• Clearing yields for single-B rated bonds tightened in the US to 6.52% in the three months to the end of May from 6.57% at the end of April, and yields tightened to 5.14% from 5.20% in Europe, the lowest yield since the first quarter of 2010.

Environment and horizon• Lack of supply along with strong demand is leading deals to issue at the

tighter end of guidance at longer tenors and through syndication.

• The European Central Bank updated the guidelines for total debt calculation for leverage purposes. It now includes all committed debt drawn or undrawn plus Payment In-Kind (PIKs) loans, shareholder loans and facilities permitted by documentation.

Opportunities• New European Central Bank guidelines for excluding high-yield from total

debt when calculating leverage is providing opportunities for sponsorsdesperate for leverage to deliver returns. Similar US guidelines are also under review currently.

• Issuance is expected to pick up soon, as companies with callable bonds can take advantage of record-tight yields. Reverse Yankees should continue to highlight as it continues to be cheaper to issue euros in Europe and as many sterling issuances can be expected ahead of the noise of Brexit negotiations.

0 50 100 150

Energy and power

Industrials

High technology

Telecommunications

Real estate

Consumer staples

Consumer products and services

Materials

Health care

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 May 2017 (US$b)Source: Thomson ONE.

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

Issuer Nation Industry Proceeds

Apple Inc US High technology 20.8

Microsoft Corp US High technology 17.0

China Railway Corp China Industrials 14.5

Broadcom Corp US High technology 13.6

Verizon Communications Inc US Telecommunications 13.5

AT&T Inc US Telecommunications 13.0

Qualcomm Inc US Telecommunications 11.0

Becton Dickinson & Co US Health care 10.5

GE US Industrials 8.7

Petrobras Global Finance BV Netherlands Energy and power 8.0

0

50

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0

50

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250

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Aug16

Sep16

Oct16

Nov16

Dec16

Jan17

Feb17

Mar17

Apr17

May17

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

11

0

100

200

300

400

500

600

0

100

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300

400

Feb16

Mar16

Apr16

May16

Jun16

Jul16

Aug16

Sep16

Oct16

Nov16

Dec16

Jan17

Feb17

Mar17

Apr17

May17

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

5. Bonds

• Global high-yield activity rose on a monthly basis in May, with an increase in the US and a decline in Europe.

• Despite the monthly volume disappointments, good market conditions persisted due to strong demand.

• A slowdown in the European high-yield was expected, as many bankers had pushed their pipelines ahead in April, owing to the French elections.

• Clearing yields for single-B rated bonds tightened further both in the US and Europe.

• New European Central Bank guidelines for calculating leverage is providing opportunities for sponsors.

Capital Briefing

AppendicesAppendices

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

Global PE fundraising (in US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin

0

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400

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800

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1,200

$0

$100

$200

$300

$400

$500

$600

$700

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017

Commitments (US$b) Number of funds

0%

2%

4%

6%

8%

10%

12%

14%

16%

$0

$100

$200

$300

$400

$500

$600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017

North America Europe

Asia-Pacific and rest of world Asia-Pacific and rest of world as percentage of total

Private Equity Capital Briefing13

Source: Preqin

Source: Dealogic

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

PE acquisitions by year (in US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic

0

100

200

300

400

500

600

700

$0

$20

$40

$60

$80

$100

$120

$140

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

Value Number of deals

Private Equity Capital Briefing14

0

500

1,000

1,500

2,000

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3,000

3,500

4,000

$0

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$300

$400

$500

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$700

$800

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017


15

Americas PE acquisitions — the top deals with disclosed financial terms in 2017

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

0

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$10

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$30

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Source: Dealogic

Announcementdate

Completiondate

Company Sector Value (US$b) Acquiror

9-May-17 West Corp. Telecommunications $4.9 Apollo Global Management LLC

10-Feb-17 1-May-17 Aon Hewitt LLC (BPO platform) Technology $4.8 Blackstone Group LP

17-Mar-17 16-May-17 USI Insurance Services LLC Insurance $4.3 KKR & Co. LP

13-Mar-17 DH Corp. Technology $3.4 Vista Equity Partners LLC

27-Mar-17 Diversey Inc. Consumer products $3.2 Bain Capital LLC

14-Mar-17 21-Apr-17 Air Methods Corp. Transportation $2.5 American Securities LLC

12-Jan-17 1-Mar-17 Eagleford shale assets Oil and gas $2.1 Blackstone Group LP

17-Apr-17 EagleClaw Midstream Services LLC Utilities $2.0 Blackstone Group LP

14-Apr-17 14-Apr-17 Ascend Learning, LLC Technology $2.0 Blackstone Group LP

17-Jan-17 Leslie's Poolmart Inc. Consumer products $1.8 L Catterton Management Co. LLC

Source: Dealogic

Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Source: Dealogic

16


Announcement date

Completion date

Company Sector Value (US$b) Acquiror

12-Feb-17 Stada Arzneimittel AG Health care $5.6Bain Capital LLC;Cinven Ltd.

5-Jun-17 Sponda Oyj Real estate $4.1 Blackstone Group LP

24-May-17 Q-Park NV Transportation $3.3 KKR & Co. LP

12-Apr-17 Refresco Group NV Food and beverage $2.2 PAI Partners SAS

2-May-17 19-May-17 Affinity Water Ltd. Utilities $1.9 Allianz Capital Partners GmbH

22-Jan-17 20-Apr-17 Cerba HealthCare SASU Health care $1.9 Partners Group Holding AG

7-Mar-17 Allfunds Bank SA Finance $1.9 Hellman & Friedman LLC

20-Apr-17 20-Apr-17Mubadala Development Co. PJSC PE portfolio Finance $1.8 Ardian SA

20-Mar-17Hansteen Holdings German and Dutch property portfolio Real estate $1.4 Blackstone Group LP

31-Mar-17 31-Mar-17Bradford & Bingley plc mortgage loans portfolio Finance $1.2 Blackstone Group LP

0

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300

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$5

$10

$15

$20

$25

$30

$35

$40

$45

$50



Source: Dealogic

EMEA PE acquisitions — the top deals with disclosed financial terms in 2017

Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

0

20

40

60

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120

140

$0

$5

$10

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17 Private Equity Capital Briefing

Announcement date

Completion date

Company Sector Value (US$) Acquiror

18-May-17Fairfax Media Ltd. (Bid No.3) Publishing $2.2 Hellman & Friedman LLC

8-May-17Fairfax Media Ltd. (Bid No. 2) Publishing $2.1 TPG Capital LP

8-Jan-17McDonald's China Management Ltd. Dining and lodging $2.1

Carlyle Group LP;CITIC Capital Holdings Ltd.

24-Feb-17 24-Mar-17Daesung Industrial Gases Co. Ltd. Chemicals $1.6 MBK Partners Ltd.

26-Apr-17 Hitachi Kokusai Electric Inc. Telecommunications $1.5 KKR & Co. LP

13-Jan-17 22-Mar-17 Hitachi Koki Co Ltd. Consumer products $1.2 KKR & Co. LP

25-Apr-17 Nord Anglia Education Inc. Professional services $1.2Canada Pension Plan Investment Board

28-Mar-17 28-Mar-17 Bharti Infratel Ltd. Telecommunications $0.9Canada Pension Plan Investment Board

21-May-17 21-May-17

E-Land Retail Co., Ltd. (home furnishing wholesale division) Consumer products $0.6 MBK Partners Ltd.

1-Feb-17 1-Feb-17 Hyundai Card Co., Ltd. Finance $0.6

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

Source: Dealogic

Asia-Pac PE acquisitions — the top deals with disclosed financial terms in 2017

Source: Dealogic

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

Appendix AGlobal PE exit activity

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

0

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100

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0

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90

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Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top exits 2017

Americas PE exits (in US$b)

Announcementor filing date

Completion or priced

date

Company Sector Value (US$b) Sponsor Type

15-May-17 Patheon NV Health care $7.2 JLL Partners LLC M&A

8-May-17 Tribune Media Co. Telecommunications $6.6Angelo Gordon & Co. LP;Oaktree Capital Group LLC M&A

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

9-May-17 West Corp. Telecommunications $4.9Thomas H. Lee Partners, LP;Quadrangle Group LLC M&A

28-Mar-17 3-May-17 Antero Midstream GP LP Oil and gas $4.4Warburg Pincus LLC;Trilantic Capital Management LP IPO

17-Mar-17 16-May-17USI Insurance Services LLC Insurance $4.3 Onex Corp. M&A

25-Apr-17AdvancePierre Foods Holdings Inc. Food and beverage $4.3 Oaktree Capital Group LLC M&A

28-Feb-17 11-May-17Gardner Denver Holdings Inc. Machinery $3.9 KKR & Co. LP IPO

9-Jan-17 24-Mar-17Surgical Care Affiliates Inc. Health care $3.5 TPG Capital LP M&A

19-Dec-16 26-Jan-17 Jagged Peak Energy Inc. Oil and gas $3.2 Quantum Energy Partners IPO

0

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

19

Source: Dealogic


Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top exits 2017

EMEA PE exits (in US$b)


Completion orpriced date


2-Jun-17 Logicor Europe Ltd. Transportation $13.8 Blackstone Group LP M&A

15-May-17

Bureau van DijkElectronic Publishing BV Technology $3.3 EQT Partners AB M&A

7-Feb-17 3-Apr-17 Mauser Group NV Chemicals $2.3 Clayton, Dubilier & Rice LLC M&A

2-May-17 19-May-17 Affinity Water Ltd. Utilities $1.9 Partners Group Holding AG M&A

22-Jan-17 20-Apr-17Cerba HealthCare SASU Health care $1.9 PAI Partners SAS M&A

7-Mar-17 Allfunds Bank SA Finance $1.9Warburg Pincus LLC;General Atlantic LLC M&A

24-Apr-17

AWAS Aviation Capital Limited and AwasAviation Capital Designated Activity Company Finance $1.8

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

18-Apr-17 Weetabix Ltd. Food and beverage $1.8 Baring Private Equity Asia Ltd. M&A

14-Mar-17Kemble Water Holdings Ltd. Utilities $1.6

Macquarie Infrastructure & Real Assets Pty Ltd. M&A

6-Mar-17 28-Mar-17 Neinor Homes SAU Real estate $1.4Lone Star Global Acquisitions Ltd. IPO

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20

Source: Dealogic


Capital Briefing21

Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Asia-Pacific PE exits — top exits 2017

Asia-Pacific PE exits (in US$b)

0

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Source: Dealogic



Completion orpriced date


16-Mar-17 24-Apr-17 Alinta Holdings Utilities $3.1 TPG Capital LP M&A

23-Mar-17 24-Apr-17ING Life Insurance Korea Ltd. Insurance $2.4 MBK Partners Ltd. IPO

28-Feb-17 28-Apr-17 USJ Co Ltd.Leisure and recreation $2.3

Goldman Sachs Capital Partners;MBK Partners Ltd. M&A

24-Feb-17 24-Mar-17Daesung Industrial Gases Co. Ltd. Chemicals $1.6

Goldman Sachs Capital Partners M&A

5-Jan-17 22-Mar-17China Modern Dairy Holdings Ltd. Agribusiness $1.5

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

22-Feb-17 21-Mar-17Sushiro Global Holdings Ltd. Dining and lodging $0.9 Permira Ltd. IPO

23-May-17

Integrated Clinical Oncology Network Pty Ltd. Health care $0.7

Quadrant Private Equity Pty Ltd. M&A

8-Feb-17 13-Mar-17 Macromill Inc.Professional Services $0.7 Bain Capital LLC IPO

6-Apr-17 6-Apr-17Zhejiang UniviewTechnologies Co. Ltd. Technology $0.5 Bain Capital LLC M&A

27-Feb-17 25-May-17Crystal Orange Hotel Holdings Ltd. Dining and lodging $0.5 Carlyle Group LP M&A

Appendix AM&A activity monthly flash

Volume Value Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2017(to May17)

vs. 2016(to May 16)

2017(to May 17)

vs. 2016(to May 16)

LTM(to May17

vs. PTM(to May 16)

LTM (to May 17)

vs. PTM(to May 16)

M&A activity by areas and regions

Global 15,131 -3% 1,215,912 2% 36,027 -4% 3,525,769 -8%

Americas 5,613 -4% 659,815 -3% 13,260 -9% 2,066,378 -5%

Canada 786 -32% 79,973 -17% 2,278 -14% 219,448 -2%

MeCAR 90 0% 6,973 -27% 217 -15% 17,195 -38%

SA region 307 -15% 24,561 -22% 779 -25% 76,563 -1%

US 4,816 3% 580,793 -3% 10,933 -6% 1,884,368 -5%

EMEA 5,645 -3% 478,766 21% 12,991 -2% 1,259,147 -2%

Africa 273 -3% 13,589 -36% 588 -9% 39,997 2%

BeNe 374 6% 52,513 260% 886 1% 130,657 -40%

CIS 352 -19% 8,627 -30% 825 -6% 60,647 12%

CSE 324 -33% 11,804 -22% 815 -25% 47,534 10%

FraLux 958 -13% 101,562 80% 2,294 -2% 188,050 15%

GSA 1,190 28% 104,508 -34% 2,473 7% 254,349 -10%

Israel 131 22% 19,349 212% 261 0% 36,373 -33%

Mediterranean 673 8% 100,426 117% 1,407 -3% 175,670 11%

MENA 118 -22% 22,231 527% 271 -25% 82,652 246%

Nordics 659 6% 14,037 -47% 1,439 11% 62,738 8%

UK&I 1,365 -12% 93,881 35% 3,529 -2% 332,425 -23%

Asia-Pacific 5,577 1% 338,661 -21% 13,904 0% 1,028,718 -12%

ASEAN 770 -1% 20,629 -43% 1,840 3% 70,564 -9%

Greater China 2,278 11% 196,381 -30% 5,885 7% 583,484 -24%

India 555 2% 31,083 72% 1,150 -13% 83,325 67%

Japan 1,353 3% 52,929 -9% 3,177 2% 178,857 3%

Korea 327 -41% 24,205 -10% 1,022 -25% 61,152 -8%

Oceania 634 -3% 41,316 50% 1,655 -2% 113,348 43%

M&A activity by sectors

Aerospace and defense 132 -10% 15,697 51% 351 -6% 36,722 1%

Automotive and transportation 1,075 3% 100,414 -22% 2,504 -1% 231,476 -24%

Banking and capital markets 906 -11% 103,120 -2% 2,174 -12% 284,164 -30%

Consumer products and retail 2,136 -8% 170,793 30% 5,195 -6% 433,846 -25%

Diversified industrial products 2,017 1% 143,361 -38% 4,911 0% 451,822 -12%

Government and public sector 273 0% 5,338 -28% 608 -9% 27,602 8%

Insurance 435 -3% 35,038 -16% 1,025 -10% 131,532 -34%

Life sciences 980 -5% 154,314 -29% 2,379 -5% 309,598 -35%

Media and entertainment 955 -9% 41,671 -23% 2,304 -11% 233,671 17%

Mining and metals 817 -10% 33,784 -25% 2,052 -4% 107,553 -23%

Oil and gas 573 -2% 168,622 88% 1,440 1% 513,646 82%

Other sectors 1,806 2% 43,175 -29% 4,061 -7% 118,517 -22%

Power and utilities 590 3% 71,391 -22% 1,452 1% 259,714 13%

Provider care 502 2% 26,571 62% 1,141 -5% 67,197 38%

Real estate 1,421 -3% 84,256 2% 3,420 1% 239,899 11%

Technology 4,358 6% 169,406 -24% 9,861 0% 589,900 -17%

Telecommunications 293 4% 68,351 92% 708 -5% 298,261 118%

Wealth and asset management 353 -18% 20,906 15% 941 -7% 54,375 26%

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

Capital Briefing

2016 2017

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

2015 2016 2017

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

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

23

Median deal multiple — EV / EBITDA

Global Americas Asia-Pacific EMEA

LTM(to May 17)

PTM(to May 16)

LTM(to May 17)

PTM(to May 16)

LTM(to May 17)

PTM(to May 16)

LTM(to May 17)

PTM(to May 16)

Aerospace and defense 16.2x 11.0x 16.2x 9.7x 11.2x 14.1x 16.1x 13.8x

Automotive and transportation 10.4x 8.9x 8.9x 10.3x 10.8x 9.9x 10.4x 8.4x

Consumer products and retail 10.0x 11.1x 10.7x 10.6x 10.6x 12.0x 9.1x 10.5x

Diversified industrial products 9.9x 9.6x 10.7x 10.7x 10.9x 10.5x 8.7x 9.2x

Financial services 10.8x 10.4x 13.4x 12.3x 8.6x 7.9x 9.0x 9.6x

Government and public sector 8.4x 10.2x 8.2x 6.6x 10.5x 21.8x 7.8x 9.5x

Health care 12.9x 11.2x 11.6x 11.2x 19.0x 11.4x 11.1x 11.5x

Life sciences 9.7x 12.5x 11.0x 9.5x 10.3x 14.7x 9.0x 11.5x

Media and entertainment 6.9x 8.8x 9.8x 7.8x 6.1x 11.7x 6.9x 9.6x

Mining and metals 9.0x 8.2x 10.9x 8.2x 13.6x 6.5x 5.5x 11.2x

Oil and gas 9.9x 9.6x 12.6x 11.3x 9.1x 10.5x 9.1x 7.9x

Other sectors 9.9x 11.8x 12.8x 10.3x 15.7x 17.5x 7.9x 10.9x

Power and utilities 11.6x 11.0x 6.5x 9.0x 11.2x 8.6x 12.2x 12.3x

Real estate 11.0x 9.7x 12.4x 10.2x 12.7x 9.3x 10.0x 9.6x

Technology 10.9x 11.3x 12.3x 13.1x 11.8x 11.4x 9.9x 10.3x

Telecommunications 8.2x 7.1x 8.9x 7.4x 7.9x 9.3x 8.4x 6.3x

Total 10.3x 10.3x 11.4x 10.4x 10.6x 11.0x 9.0x 9.8x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEA

LTM(to May 17)

PTM(to May 16)

LTM(to May 17)

PTM(to May 16)

LTM(to May 17)

PTM(to May 16)

LTM(to May 17)

PTM(to May 16)

Aerospace and defense 37% 18% 50% 14% 30% 31% 31% 15%

Automotive and transportation

19% 15% 28% 21% 19% 13% 8% 9%

Consumer products and retail 18% 23% 28% 32% 16% 17% 15% 27%

Diversified industrial products 23% 19% 27% 24% 23% 17% 20% 24%

Financial services 19% 26% 26% 30% 16% 10% 15% 13%

Government and public sector 27% 27% 31% 44% 16% 28% 23% 16%

Health care 28% 32% 39% 43% 17% 22% 12% 17%

Life sciences 21% 14% 22% 34% 21% 10% 23% 11%

Media and entertainment 23% 29% 25% 33% 21% 21% 16% 30%

Mining and metals 20% 27% 18% 36% 22% 25% 19% 14%

Oil and gas 25% 19% 34% 31% 19% 19% 36% 14%

Other sectors 13% 21% 17% 27% 5% 14% 11% 22%

Power and utilities 24% 23% 17% 25% 29% 18% 16% 27%

Real estate 25% 15% 26% 15% 25% 16% 19% 10%

Technology 25% 23% 34% 34% 19% 16% 15% 19%

Telecommunications 11% 24% 43% 29% 9% 27% 10% 15%

Total 22% 23% 30% 31% 19% 17% 17% 18%

Capital Briefing

Appendix CCapital Confidence Barometer (April 2017): by area

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

40%

56%59%

50%

57% 56%

0%

25%

50%

75%

100%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16 Apr 17

34%

57%

67%

54%

62%

81%

0%

25%

50%

75%

100%


30%

50% 48%44%

47% 46%

0%

25%

50%

75%

100%


Global Americas EMEA

57%

45% 44%

38%

47% 46%

0%

25%

50%

75%

100%


Asia-Pacific China Germany

28%

51%56%

50%

61%

28%

0%

25%

50%

75%

100%


Japan UK US

16%

58%

52%

59%

48%

42%

0%

25%

50%

75%

100%


33%

61%

74%

57%

75%

63%

0%

25%

50%

75%

100%


24 Capital Briefing

56%

43%40%

43%

49%

38%

0%

25%

50%

75%

100%


68%

51%

43%

35%

61%

31%

0%

25%

50%

75%

100%


Notes


If you would like to discuss any of the topics covered in this publication, please contact your EY advisor or any of the contacts below.

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Transaction Advisory Services

Steve Krouskos

EY Global Vice Chair


+1 404 817 5090

[email protected]

Bill Casey

EY Americas Leader


+1 305 415 1645

[email protected]

Andrea Guerzoni

EY EMEIA Leader


+39 02 8066 9707

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Harsha Basnayake

EY Asia-Pacific Leader


+65 6309 6741

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Peter Wesp

EY Japan Leader


+81 3 4582 6465

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Private Equity

Herb Engert

EY Global Private Equity Leader

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Bill Stoffel

EY Americas Private Equity Leader

+1 212 773 3141

[email protected]

Jeff Hecht

EY Global PE Tax Leader

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Research and Insights

Mark Temple

EY Knowledge


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Pete Witte

EY Knowledge

Private Equity

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