Post on 24-Jun-2020
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.
0
100
200
300
400
500
600
700
800
$0
$50
$100
$150
$200
$250
$300
$350
$400
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$47b, up 42% from last year.
• Fund managers are increasingly pursuing opportunities in large multibillion-dollar deals. A recent survey conducted by Mergermarket found that more than 76% of the respondents anticipated that there will be 5-10 more PE megadeals in 2018 than last year.
Environment and horizon
PE continues to lure large institutional investors, which increased capital allocation in a bid to increase returns.
• The California Public Employees’ Retirement System (CalPERS) reported an investment gain of 8.6% during the fiscal year ended June 2018, higher than its long-term annual target but trailing last year’s performance. Private equity was a key contributor to the fund’s overall performance, generating a 16.1% return, versus a preliminary net return of 11.5% for public equities, which comprise more than half the portfolio. Real assets, primarily real estate, generated a return of 8% and fixed income increased by 0.4%.
• Add-on deals by PE investors are increasing. Amid the current high-valuation environment, PE firms are increasingly adapting the “buy-and-build” model as a key value creation strategy. Pitchbook’s data suggests add-ons represent nearly 65% of all buyouts until 1H18.
• The American Investment Council (AIC) recently named Drew Maloney as its President and CEO. Maloney joins the AIC from the US Department Treasury, where he served as Assistant Secretary for Legislative Affairs.
PE acquisition values and volumes by half year (US$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 $4.9
Private Equity Capital Briefing
PE deal activity by value (US$b), 1H17 vs.. 1H18Source: Dealogic.
0
200
400
600
800
1,000
1,200
1,400
$0
$50
$100
$150
$200
$250
$300
Deal value (US$b) Number of deals
$0
$50
$100
$150
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$160b, with declines evident across the Americas and EMEA regions; activity by value was down 21% in the Americas, and down 12% in EMEA. Asia-Pacific, however, witnessed a notable increase, with deal value up 46% from last year.
• PE-backed IPOs proceeds were down 22% from the first half of 2017. The number of PE-backed IPO deals declined 20%, from 64 deals in 1H17, to 51 deals in 1H18.
Environment and horizon
Secondary buyout deals have gained popularity recently.
• A recent Pitchbook report stated that amid the decline in overall PE exit activity, there are several reasons pushing secondary deals up:
• Record levels of dry powder, and a hypercompetitive dealmaking environment in which sourcing proprietary dealflow is increasingly challenging.
• The existence of an aging cohort of PE assets that need to be divested, in many cases at attractive prices.
• Perhaps most importantly, the continued development of the expansion of the PE ecosystem in recent years has driven many such sales. Smaller and middle market firms are able to provide very different value-adds from larger firms; however, each can be indispensable for companies at the appropriate stage of their growth.
PE M&A exits by half year (US$b)Source: Dealogic.
Largest PE exit deals so far this yearSource: Dealogic.
7
PE-backed IPOs by half year (US$b)Source: Dealogic.
Private Equity Capital Briefing
0
100
200
300
400
500
600
700
$0
$50
$100
$150
$200
$250
Deal value Number of deals
Target Industry Value (US$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
0
20
40
60
80
100
120
140
$0
$10
$20
$30
$40
$50
$60
Deal value Number of deals
0
100
200
300
400
500
$0
$20
$40
$60
$80
$100
Deal value Number of deals
PE secondary buyout deals (US$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$151b in 1H18, down 21% from a year ago. It was the quietest six-month period since 2015.
Environment and horizon
• Panelists at the recent IFC/Emerging Markets Private Equity Association annual conference discussed the impact and the potential of “disruptive infrastructure”: technology-enabled infrastructure assets that have very different profiles from traditional deals. As the risks of obsolescence increase, investors have to be increasingly careful about viewing infrastructure as a long-term asset class; emergent technologies can leapfrog over constraints very quickly. As a result, many are predicting that the infrastructure as a service model will become increasingly important, and that firms need to be increasingly flexible in their approach to developing and extracting value from assets. One example – electrified roads are being developed that can charge electric vehicles as they drive, something that could create significant opportunities for investors in roadways and change the model, from charging tolls to selling electricity. Many of these emergent opportunities are likely to be less regulated with fewer incumbents.
8
Private Equity Capital Briefing
Top infrastructure funds raised YTD 2018Source: Preqin.
Infrastructure fundraising (US$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.
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
0
10
20
30
40
50
60
70
80
$0
$10
$20
$30
$40
$50
$60
Commitments Number of funds closed
02004006008001,0001,2001,4001,6001,800
$0
$50
$100
$150
$200
$250
$300
Commitments Number of funds closed
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.
Environment and horizon
• 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$184b from investors, who continue to clamor for exposure to the space.
• Pitchbook reported that private debt funds outperformed Bloomberg Barclays US Corporate High Yield Index in 10 of the 15 vintages between 2001-2015. Private debt funds were able to return capital faster to their investors as their historical median distribution-to-paid-in (DPI) reached 1.0x in its sixth year, compared with the eighth year for PE. The primary reason for the speedier return of capital is its strategy to rely on interest payments, rather than principal appreciation.
9
Private Equity Capital Briefing
Top credit funds raised YTD 2018Source: Preqin.
Private credit fundraising (US$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.
0
20
40
60
80
100
120
$0
$20
$40
$60
$80
Commitments Number of funds closed
Private credit fundraising by region in YTD 2018 (US$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.
Environment and horizon
• 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.
10
100
300
500
700
900
1,100
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.
Note: data is continually updated and therefore subject to change.
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.
0
500
1,000
1,500
2,000
0
500
1,000
1,500
2,000
2,500
2013 2014 2015 2016 2017 2018
Value (LHS) Volume* (RHS)
*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.
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
% 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.
Environment and horizon
• 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
Commitments Number of funds closed
$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.
Private Equity Capital Briefing13
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
Deal value Number of deals
0
100
200
300
400
500
600
700
$0
$20
$40
$60
$80
$100
$120
$140
$160
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Americas PE acquisitions — the top deals with disclosed financial terms 1H18
Appendix AGlobal PE acquisition activity by region — Americas
Americas PE acquisitions — value and volume — quarterly trend (US$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.
Private Equity Capital Briefing14
0
50
100
150
200
250
300
350
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Appendix AGlobal PE acquisition activity by region — EMEA
EMEA PE acquisitions – value and volume — quarterly trend (US$b)
Source: Dealogic
Source: Dealogic.
EMEA PE acquisitions — the top deals with disclosed financial terms 1H18
Private Equity Capital Briefing15
0
50
100
150
200
250
300
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Announcementdate
Completion date
Company SectorValue (US$b)
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
Private Equity Capital Briefing16
0
20
40
60
80
100
120
140
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Announcementdate
Completion date
Company SectorValue (US$b)
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.
Private Equity Capital Briefing17
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
Deal value Number of deals
0
10
20
30
40
50
60
70
80
90
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Source: Dealogic
Appendix AGlobal PE exit activity — Americas
Americas PE exits — top exits with disclosed values 1H18
Americas PE exits — value and volume — quarterly trend (US$b)
Announcementor filing date
Completion orpriced date
Company SectorValue (US$b)
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.
Private Equity Capital Briefing18
0
20
40
60
80
100
120
140
160
180
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Source: Dealogic
Appendix AGlobal PE exit activity — EMEA
EMEA PE exits — top exits with disclosed values 1H18
EMEA PE exits — value and volume — quarterly trend (US$b)
Announcementor filing date
Completion orpriced date
Company SectorValue (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.
Private Equity Capital Briefing18
0
20
40
60
80
100
120
140
160
180
$0
$10
$20
$30
$40
$50
$60
$70
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Source: Dealogic
Appendix AGlobal PE exit activity — Asia-Pacific
Asia-Pacific PE exits — top exits with disclosed values 1H18
EMEA PE exits — value and volume — quarterly trend (US$b)
24
Source: Dealogic.
Private Equity Capital Briefing18
0
10
20
30
40
50
60
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Q22012
Q32012
Q4201
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Deal value Number of deals
Announcementor filing date
Completion orpriced date
Company SectorValue (US$b)
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
27 Private Equity Capital Briefing
Notes
28 Private Equity Capital Briefing
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