From 2000 to 2012 capital calls were significant However on a net basis since 2013 secondary funds no longer support significant

upfront net capital deployment as the distributions have outpaced capital calls

Secondaries come short of providing greater exposures in short run

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Quarterly capital calls and distributions of secondary funds Source eFront Insight

Featured Alternative Markets Insights

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Q3 and Q4 2018 have shown a global stabilization of the performance of active LBO funds

2019 appears in that respect as a crossroad One direction points towards further performance stabilization thus indicating robust sector

health Another is the initiation of a downward trend of performance

Golden year In 2018 the performance of LBO funds stabilizes at levels fairly close to the records set in 2017

Return evolution of active LBO funds Source eFront Insight

While investors perform very well across a number of key metrics their sophistication score sits below half marks in six of the ten skill

categories studied

LPs are least inclined to adopt the best practices in position monitoring information exchange and negotiation

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Better than you think as an LP you can expect gt70 of your GPs to provide gt70 more information to youTop quartile LPs can expect gt70 of their GPs to conform with their reporting templates requests

Conformant funds (using reporting templates ndash RT) provide almost 20 more of the total required information than non-conformant funds (using quarterly report non-standardized documents ndash QR)

Of conformant funds the top quartile funds provide 71 more information than the average non-conformant fund

Completion rate for the all non-conformant funds all conformant funds

and a top quartile conformant fund

Source eFront Insight

GP conformance rate achieved by LPs

by quartiles

There seems to be an inverse correlation between the amount of capital deployed in Year 1 and the overall performance of funds (-032)

The same direction movements occur exclusively in the years that follow the recessions

Deploying capital early is negatively related to fund performance

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TVPI and 1-year PICC of US LBO funds (vintage years 2000-2010) Source eFront Insight

In 2018 the performance of LBO funds stabilizes at levels fairly close to the records set in 2017

LPs are least inclined to adopt the best practices in position monitoring information exchange and negotiation

LPs can expect gt70 of their GPs to provide gt70 more information to them

Deploying capital early is negatively related to fund performance

PE funds struggle to deploy capital at the same pace they raise it

Small LBO funds return cash to their investors earlier than their mega funds peers

Distressed debt funds perform better when macroeconomic conditions are challenging

Secondaries come short of providing greater exposures in short run

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The main bottleneck for private equity to continue to thrive is

not so much on the fundraising side but on the sourcing side

Making new investments can be challenging at the current time

not only because of high asset prices but also because of rising

competition from corporates who tend to be willing to spend

more because of expected synergies

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PE funds struggle to deploy capital at the same pace they raise it

Small US LBO funds are more prone to recycle early distributions back into new deals which partially explains them overperfoming

mega US LBO funds

Small LBO funds return cash to their investors earlier than their mega funds peers

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Cumulated cash-flows of US LBO funds by size of deals Source eFront Insight

Private equity investors cannot reasonably expect to time the market and only invest in distressed debt prior to recessions but including these

funds even when macroeconomic conditions are benign ends up being rewarding

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Distressed debt funds perform better when macroeconomic conditions are challenging

1

11

12

13

14

15

16

2010 2011 2012 2013 2014 2015 2016 2017 2018

TVPI

QUARTER

063

060

058

051

049

044

042

037

036

030

0 01 02 03 04 05 06

Return metrics

Risk management

Private equity allocation

Manager selection and diligence

Liquidity targets

Negotiation

Portfolio construction

Performance benchmarking

Reporting and information exchange

Position monitoring

Proficiency ScoreCompetency area Source eFront Insight

Global private equity capital calls and distributions by quarter Source eFront Insight

00

05

10

15

20

25

30

35

40

45

50

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

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

PER

CEN

TAG

E O

F TH

E FU

ND

SIZ

E

QUARTERCapital Calls Distributions

Pooled average TVPI RVPI and DPI of distressed debt funds by vintage year Source eFront Insight

0

1

2

3

4

5

6

7

8

9

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018

Capital Calls Distributions

0

1

2

3

4

5

6

7

8

9

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018

Capital Calls Distributions

QUARTER

O

F F

UN

DS

SIZ

E

-100

-50

0

50

100

150

200

250

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

Year11

Year12

Year13

Year14

Year15

Year16

Year17

Year18

CUM

ULA

TED

CA

SH F

LOW

S

QUARTERMega Large Medium Small

-100

-50

0

50

100

150

200

250

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

Year11

Year12

Year13

Year14

Year15

Year16

Year17

Year18

CUM

ULA

TED

CA

SH F

LOW

S

QUARTERMega Large Medium Small

198

107 108 127102

137090 089

055 057 055

007

107

000

044 024031

031

037

034058

072 076 085

112

040

000

050

100

150

200

250

2001 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 All

TVPI

DPI RVPI

198

107 108 127102

137090 089

055 057 055

007

107

000

044 024031

031

037

034058

072 076 085

112

040

000

050

100

150

200

250

2001 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 All

TVPI

DPI RVPI

VINTAGE YEAR

Top eFrontResearch Findings

0

05

1

15

2

25

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

TVPIPI

CC

VINTAGE YEAR

Year 1 (lhs) TVPI (rhs)

820

41

Bottom Quartile LP

52

Median LP

72

LabelTop Quartile LP RT average completion rate

82

48

RT top quartile completion rate

QR average completion rate

65

+71

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