2007 European Private Equity Activity Survey

Prof. Stefano Caselli, member of Governing Body of PEREP_Analytics™

Professor of Banking and Finance, Bocconi University Milan

Methodology

Data collected via survey questionnaires and reliable public sources (coverage rate by number of players: 60%)

Europe: for deals, it is defined either by the location of PE firm or of target as referenced in the source; for fundraising it covers funds managed from Europe or 100% targeted to Europe;

Fundraising: only formal closings included with committed amount;

Investments: only equity value captured, debt also IF provided by PE funds (bank leverage excluded);

Divestments: measured at amount at cost divested (not proceeds).

Evolution Activity Flows

27.5

74

.3

27.0

48.0

25.4

20.3

71.8

27.5

40.0

20.0

112.3

68

.3

71.2

36.9

29.127.6

24.3

35

14.5

25.1

9.7

47.1

7.05.88.6

33.1

9.112.5 10.7 13.6

29.8

19.6

23

.3

0

10

20

30

40

50

60

70

80

90

100

110

120

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Funds Raised

Investments

Divestments

Source: PEREP_AnalyticsEurope = location of PE firm

2007 Fundraising – Profile Incremental amount raised for each 2007 closing

Early-Stage

5%

Buyout87%

Expansion/ Develop-

ment8%

2007

Early-Stage

6%

Buyout82.8%

Expansion/ Develop-

ment11%

2006

Source: PEREP_Analytics

2007 Fundraising – Profile Incremental amount raised for each 2007 closing

Early- Stage5%

Small & Mid-Buyouts34.1%

Expansion/ Develop-

ment8%

2007

13 funds closing > €1bn = 53% of total

Early- Stage6%

Small & Mid-Buyouts

36%

Expansion/ Develop-

ment11%

2006

13 funds closing > €1bn =47% of total

Source: PEREP_Analytics

2007 Fundraising – Profile Full amount raised at 2007 final closings for independent funds

FUND STAGEAmount (mil

€) Nr funds Avrg Fund size

Early-stage 783 8 97.9

Development 2,940 13 226.2

Balanced 1,892 16 118.3

All Venture 5,615 37 151.8

Buyouts 53,769 57 943.3

Of which > €1 bn 40,486 11 3,680.5

Mezzanine 3,771 5 754.2

Generalist 4,091 21 194.8

Independent Funds 67,246 120 560.4

SPECIALISED FUNDS Amount (mil €) Nr funds

Energy and Environ. 595 5

ICT 1,183 9

Life sciences 1,090 6

Source: PEREP_Analytics

Typology of LPs behind the 2007 fundraising

Academic Institutions

3.6%

Capital Markets

1.2%

Other4.1%

Corporate Investors

3.7%

Private Individuals

8.9%

Fund of Funds18.2%

Insurance Companies

10.1%Pension Funds27.1%

Banks14.4%

Government Agencies

8.7%

2006

Academic Institutions

0.3%

Endowments and

Foundations2.7%

Other6.1%

Family Offices1.2%

Capital Markets

7.8%

Other Asset Managers

2.3%

Corporate Investors

1.7%

Private Individuals

5.5%

Fund of Funds13.3%

Insurance Companies

10.3%

Pension Funds25.3%

Banks16.3%

Government Agencies

7.3%

2007

Source: PEREP_Analytics

21.3%

North America26.4%

12.2%

AustralAsia

9.3%

14.3%

Location of LPs behind 2007 Fundraising

5.5%

Rest of World0.9%

5.8%

4.3%

56.2%

10.5%

6.3%

20.6%

2007 Fundraising by Country of Management

4.2%

2.2%

European investments at €68.3 Billion (Equity only from private equity funds)

8.514.4 15.3

12.117.9 20.7

26.6

34.4

53.9 56.8

4.1

6.0

10.7

19.7

12.2

9.88.4

10.3

12.7

17.3 11.6

5.60

10

20

30

40

50

60

70

80

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Prel.

€ billion

Venture Capital

Buyout

Source: PEREP_Analytics

Europe = location of PE firm

-61%

-16%

+11%

+11%

+1%

+27%

+103%

-31%

07/06

Growth Rate Amt

10,3186,160

100.0%100.0%

34.6%

35.6%

1.8%

27.9%

18.6%

7.9%

1.0%

0.5%

2007 % share

By number inv

32.5%

41.1%

3.6%

22.8%

18.4%

3.7%

0.4%

0.4%

2006 % share

67,80068,500

100.0%100.0%

10.5%4.1%

15.4%12.9%

5.2%5.7%

68.9%77.4%

6.8%6.8%

25.9%32.5%

10.2%20.4%

26.1%17.7%

2006 % share

2007% share

By amount inv

Investments by stage of financing

Total in numbers (€ mil)

Total in %

Early stage

Expansion

Replacement capital

All buyouts

Small

Mid - market buyouts

Large buyouts

Mega buyouts

INVESTMENTS BY STAGE

Source: PEREP_Analytics; Europe = location of target

50.8%

13.6%

19.9%

Investments by Country of Management

6.5%

1.5%

7.8%

European Divestments by Segment

Trade SaleRepayment of principal loansSale to another PE house

Venture Buyouts

€ 1.4 bn € 6.2 bn

€ 0.6 bn € 4.0 bn

€ 0.5 bn € 3.7 bn

364

496

65

226

278

265

# div # div

2007 Top Exit routes:

Source: PEREP_AnalyticsEurope = location of target

4.3

10.1

20.6

7.4

17.3

12.2

5.1

3.4

2.0

13.8

19.8

12.3

14.8

6.5

7.9

4.9

Main Sectors

Buyout div.

4.2

7.7

11.4

6.7

7.7

11.4

19.0

17.3

4.7

12.4

13.4

10.0

13.5

12.1

5.6

10.7

N°Am.

2007

Energy and environment

Business and industrial services

Business and industrial products

Consumer services: other

Consumer goods and retail

Communications

Computer and consumer electronics

2.6

8.2

12.6

7.8

8.8

9.0

15.1

13.7

1.1

10.3

8.5

10.4

10.9

8.2

13.3

24.8

2.9

14.3

18.9

10.6

14.2

8.0

5.9

7.0

3.6

13.5

14.2

10.8

14.9

11.0

3.8

9.1

4.8

4.9

8.2

5.1

5.0

12.8

24.5

21.6

10.5

7.1

9.5

6.0

6.2

17.4

14.6

18.4

2.52.3

13.515.3

8.516.2

--

9.715

8.713.8

24.08.8

18.710.7Life sciences

In percentages

Am. N°

2007

N°Am.

2007

N°Am.

2007

N°Am.

2007

N°Am.

2006

VC div.Buyout inv.VC inv.All Private Equity Investments

Source: PEREP_AnalyticsEurope = location of target

Conclusions

Despite record fundraising in 2006 and difficult market conditions in second half of 2007, appetite of investors towards the asset class remains undeterred as reflected by the 2007 fundraising figures;

What drives private equity deal making is mid-market buyouts by amount invested and expansion deals by number of investments;

Venture backed companies are exited mainly by trade sale, while buyout backed companies are sold mainly to other private equity firms. Main sectors divested are life sciences for venture-backed companies and business and industrial products for buyout backed companies in 2007.

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