Dear Spotlight Reader, Welcome to October’s new look Spotlight, redesigned to bring you the same unique quality content in a fresh new format. This month’s edition brings you vital insights on a range of topics: We hope that you like the new Spotlight – as ever, we welcome your feedback and suggestions. Subscribers to our online services will also notice that these have been completely redesigned. The new website brings you: If you haven’t yet tried out Performance Analyst, Funds in Market and Investor Intelligence why not arrange trial access at no cost or obligation – please call +44 (0)20 7038 1650 or visit www.preqin.com With kindest regards from all of us at Private Equity Intelligence, Mark O’Hare Managing Director Private Equity Spotlight Buyouts Dealflow: new analysis from Dealogic on the continuing pace of global buyouts deal activity. Carry Review: how much carry has the industry earned in recent years, and how does 2006 compare with 2005? Where has most wealth been generated for LPs and GPs alike? Q3 Fundraising Update: details on the booming fundraising market as commitments made in 2006 exceed $300 billion for the first time in the history of the industry Enhanced Navigation and Speed: easier and quicker to find precisely the data you need. New Features: e.g. see at a glance which LP profiles on Investor Intelligence have been updated during the past month. New Data: Performance Analyst now includes information from Dealogic on the latest deals done by all the leading firms. More Funds: Performance Analyst now has returns data for over 3,000 funds. • • • • • • •
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Dear Spotlight Reader,
Welcome to October’s new look Spotlight, redesigned to bring you the same unique quality content in a fresh new format.This month’s edition brings you vital insights on a range of topics:
We hope that you like the new Spotlight – as ever, we welcome your feedback and suggestions.
Subscribers to our online services will also notice that these have been completely redesigned. The new website bringsyou:
If you haven’t yet tried out Performance Analyst, Funds in Market and Investor Intelligence why not arrange trial accessat no cost or obligation – please call +44 (0)20 7038 1650 or visit www.preqin.com
With kindest regards from all of us at Private Equity Intelligence,
Mark O’HareManaging Director
Private EquitySpotlight
Buyouts Dealflow: new analysis from Dealogic on the continuing pace of globalbuyouts deal activity.
Carry Review: how much carry has the industry earned in recent years, and howdoes 2006 compare with 2005? Where has most wealth been generated for LPsand GPs alike?
Q3 Fundraising Update: details on the booming fundraising market ascommitments made in 2006 exceed $300 billion for the first time in the history ofthe industry
Enhanced Navigation and Speed: easier and quicker to find precisely the datayou need.
New Features: e.g. see at a glance which LP profiles on Investor Intelligencehave been updated during the past month.
New Data: Performance Analyst now includes information from Dealogic on thelatest deals done by all the leading firms.
More Funds: Performance Analyst now has returns data for over 3,000 funds.
10 Old Bailey, London EC4M 7NG. Tel: +44 (0)207 038 1650
Welcome to the latest edition of Private Equity Spotlight, the monthly newsletter fromPrivate Equity Intelligence, providing insights into private equity performance,investors and fund raising. Private Equity Spotlight combines information from ouronline products Performance Analyst, Investor Intelligence and Funds in Market.
• PERFORMANCE • INVESTORS • FUND RAISING • FUND TERMS
Already a record breaking year for the private equity industry, the summer of 2006 sawthe $32.7 billion acquisition of healthcare giant HCA become the biggest buyout ever,toppling KKR’s acquisition of RJR Nabisco for $31 billion in 1989. KKR was also partof the consortium that bid for HCA, along with Bain Capital and Merrill Lynch.
Financial sponsor activity accountsfor 21% of all M&A deals so far thisyear - up from 8% in 2001 - withbuyout volume at an astounding $465billion in announced deals.
come from deals above $1 billion. Smaller and mid-market deals
have seen growth too, but nothing like the explosion of activity
in $1 billion-plus deals.
Although consortium buyouts have grown from $31 billion in
2001 to $201 billion this year, their share of the overall buyout
volume remains virtually unchanged at 43%. In fact, evidence
shows that from 2001, the number of club deals has steadily
decreased from 26% of all buyouts in 2001 to 17% so far this
year (please see Fig. 3.) Breaking out club deals by size, as
expected, $1 billion-plus deals have typically been club deals;
however, the proportion of club deals in this category has
decreased from 67% in 2001 to 35% today. This is due to cash-
laden middle market players are buying up larger assets on their
own.
As the private equity industry matures it has also moved away
from creating value solely through financial restructuring and
capital structure changes to add value in other ways. Financial
sponsors have pursued “non-financial re-engineering”
strategies by looking to create synergies and economies of
scale through add-on acquisitions and merging portfolio
companies. Since 2001, the value of portfolio company add-on
transactions has risen from $10 billion to $35 billion in the first
three quarters of 2006.
In addition to building economies of scale and industry
operational expertise, financial sponsors are exploring other
investment methods apart from the traditional LBO and are
making innovative decisions in their investment choices. As
Blackstone’s $3.3 billion investment for 4.5% of Deutsche
Telekom illustrates, private equity’s biggest players have shown
a willingness to partner with companies as strategic investors.
Blackstone has committed to holding its shares for a minimum
of two years and will bring its experience from other telecom
deals such as TDC and CTI to work with management to
execute a long-term strategy to create shareholder value.
The dramatic increase in buyouts in recent years has prompted
intense scrutiny of the private equity industry by Wall Street’s
investment banks and non-traditional private investors. Market
watchers are wondering whether the current rise of private
equity will lead to even larger deals in the future or if the party
will come to an abrupt end. Only time will tell.
Salim Mohammed is the Director of M&A Analytics andFinancial Sponsor Analytics at Dealogic. All data and analysispresented in this month’s Spotlight feature article is fromDealogic, to whom we are grateful. For more information pleasevisit: www.dealogic.com
Selected Dealogic data is now available on PerformanceAnalyst. For more information please contact a member of ourperformance team on +44 (0)207 038 1650.
Private EquitySpotlight
Can you benefit from Private Equity Intelligence’s unique
2006 Smashes Fundraising Record - Bumper fundraising conditions continue, with an aggregate $300bnbeing raised in the first three quarters of 2006 by 426 new funds, the first time this landmark figure hasbeen achieved by the industry. With a healthy stock of funds on the road, and investor appetite remainingstrong, we are now forecasting $400bn in total commitments for 2006.
$104 billion raised during Q3 2006
125 funds achieved a final close during Q3 2006, raising anaggregate $104 billion. This represents an increase of 41%on the $74 billion raised during Q3 2005. The total capitalraised during Q3 2006 is an increase on that raised in anyprevious quarter, although the number of funds raised islower than that of any other quarter of 2006 - showing theincreasing influence of larger funds within the fundraisingmarket. With an unprecendented aggregate $343bn beingsought by a total of 821 funds still on the road, and with fundmanagers indicating that Q4 may be the busiest quarter yetfor fund closings, we are now forecasting a fundraising totalof $400bn for 2006.
Q3 2006 Fundraising by type
• 35 Buyout funds raised an aggregate $60 billion during Q3
2006, with the majority of this total coming from US focused
buyout funds, and $20 billion from European funds.
• 37 Venture funds raised an aggregate $12 billion, with $9
billion coming from venture funds focusing on the US.
• 22 Real estate funds raised an aggregate $10 billion. Of this,
$6 billion was raised from US focused funds and more than
$2 billion from Rest of World focused funds.
• 14 Fund of funds raised an aggregate $5 billion during Q3
2006.
• 3 Natural resources funds raised an aggregate $9 billion,
with First Reserve’s eleventh fund alone contributing more
than $7 billion of this total.
• 2 Distressed debt funds raised an aggregate $4 billion, with
the debut vehicle from Centerbridge achieving a final close of
$3 billion.
The data presented here is taken from The Q3 Global Fund Raising Update. The full report is available for online subscribers.
The Private Equity Real Estate Review is theworld's most comprehensive guide to privateequity real estate, with information on:
• Key Trends and Market Conditions
• Fund Raising Listings
• General Partner Profiles
• Limited Partner Profiles
Benefit from thorough and detailed analysis ofthe key trends shaping today’s real estatemarket:
• Over 25 pages of analysis on all aspects of the private equity real estate market.
• Key trends established for real estate fund raising
• Performance of real estate funds revealed
• LP investment patterns established
• Dedicated chapter detailing typical terms for real estate funds
Comprehensive Profiles and Listings:
Full Details for all funds closed since 2005, currently raisingand expected to launch, with information on fund strategy,placement agents, sector focus, sample investors and more
Profiles for 225 real estate firms, with contact details, history,firm preferences and more. Key performance metrics for over240 funds, including IRRs and multiples with benchmarksenabling easy comparison between funds.
Comprehensive profiles for nearly 300 leading real estateLPs, with contact details, investment plans, key financial dataand sample investments.
Private Equity Intelligence is a financial information business focused on the privateequity industry. We provide private equity and venture capital firms, fund-of-funds,investors and advisors with products and services within four main areas: Fund Performance, Investors, Fund Raising and Research & Consulting.
We provide performance data for 3,000 private equity funds worldwide. For each
individual fund you see the amount called, distributed, unrealised value, value
multiple and net IRR. Performance is measured on a net-to-LP basis. Fund
performance is available through our online database “Performance Analyst”
and our publication “The 2006 Private Equity Performance Monitor”.
FUND PERFORMANCE:
View profiles for 3,500 global LPs complete with information on background,
contact details including key people, program size, investment plans, investment
preferences, current portfolio and funds previously invested with. This
information is available through our online database “Investor Intelligence” and
our publication “The 2006 Limited Partner Universe”.
INVESTORS:
See information on over 800 private equity funds worldwide who are currently
raising capital. Get details of funds likely to be raising in the near future and view
funds closed over the last year including sample investors. This information is
available through our online database “Funds in Market” and our annual
publication “The Global Fund Raising Review”.
FUND RAISING
See valuable information on fees, costs and key terms for all types of funds,
based upon an exhaustive analysis of data from over 700 funds. Ensure that
negotiated terms are in line with industry best practice. This information is
available through our publication “The 2006 Fund Terms Advisor”, which also
gives access to our online service showing benchmark figures based upon key