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Transcript of Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | Moderator: David M. Toll,...
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Moderator: David M. Toll, managing editor, Private Equity Analyst, LBO Wire
Experts: Wanching Ang, managing director, Allianz Private Equity
Stefan Hepp, founding partner, CEO, SCM Strategic Management AG
Philippe Poggioli, partner, Access Capital Partners
Charles Soulignac, chairman, CEO, Fondinvest
Stuart Waugh, managing director, TD Capital
Where LPs Are Placing Their Bets In Europe, Around the World
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
$0$20,000$40,000$60,000$80,000
$100,000$120,000$140,000$160,000$180,000
1993 1995 1997 1999 2001 2003 2005(E)
Other
Venture
Buyout
Source: Private Equity Analyst
Rise, Fall and Rise Again of U.S. Fund-raising ($M)$177,600
$84,700
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Buyouts/Corporate Finance $17.9B +193%
Venture Capital $4.9B +50%
Mezzanine $.921B +11%
Fund of Funds $2.5B -21%
Other Private Equity $.150B -74%
------------------------------------------------------------------------------------
Total $26.4B +90%
2005 Sees Continued Rebound in U.S. Fund-raising
Private Equity Analyst 2005 Projections: $70B LBO, $15B Venture
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Biggest Concern LPs have with GP Behavior?
1) Not sticking to investment strategy2) Raising too much money3) Lack of communication after fund-
raising is over4) Lack of transparency, consistency in
presenting return data
Audience Poll
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Public Pensions 32.1%
Funds of Funds/Advisors 12.1%
Endowments/Foundations 9.5%
Corporate Pensions 9.5%
Wealthy Investors/GPs 10.6%
Banks/Financial Svcs. 13.4%
Insurance Cos. 5.7%
Family Offices 1.2%
Union Pensions 1.3%
Corporation 0.7%
Where The Money Comes From
Public pension funds 32.1%
Funds of Funds/Advisors 12.1%Corporate Pensions 9.5%
Endows/Founds 9.5%
Banks/Financial Svs. 13.4%
Wealthy Investors/GPS 10.6%
Source: Private Equity Analyst, survey of U.S. GPs raising $28.3B ’03-’04
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Most Important Factor For LPs When Making a Commitment?
1) Team2) Track record3) Investment strategy4) Opportunity to pursue strategy5) Partnership terms and conditions
Audience Poll
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
LPs’ return target
10 points above bond returns
French institutional investors’ demand: 4% to 5% above public equity as risk premium*
* Source: BIPE/AFIC Study, October 2004
On 8/10 year holding:
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
European Buyout Funds by Size (in Euro)Formed 1980-2003
Net IRRs to Investors Investment Horizon Return as of 31 Dec 2003
12.2%12.7%9.6%All Buyouts
NA3.8%4.0%1 Billion +
21.8%25.0%25.5%500-1,000 million
17.1%22.8%22.0%250-500 million
11.5%11.0%7.9%0-250 million
20 YR10 YR5 YRFund Size (Euros)
Source: Investment Benchmark 2004 EVCA /Thomson
Attractive European mid-market segment
European Venture Funds by Size (in Euro)Formed 1980-2003
Net IRRs to Investors Investment Horizon Return as of 31 Dec 2003
7.2%8.3%2.3%All Venture
3.3%2.7%-2%250 million +
9.3%12.8%3.3%100-250 million
7.4%7.5%2.1%50-100 million
8%11.8%10.9%0-50 million
20 YR10 YR5 YRFund Size (Euros)
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Source: Thomson Venture Economics March 2005
Key to achieve superior return:
Access to the best performing funds
Deep analysis and rigorous selection process
10.3 %
15.8 %
7.4 %
4.0 %
Upper Quartile
23.1 %9.1 %All Private Equity
28.9 %11.4 %Buy-out
18.5 %8.2 %Expansion
0.3 %
Pooled IRR
14.6 %Venture / Early Stage
Top Quarter IRR
Net Investor IRR as of 12/31/2004Funds Formed 1980-2004
Manager Selection Is Critical
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Expected Allocation of Funds Raised in 2004Venture
6 % Expansion 19 %
Buy-out 73 %
Other2 %
Source : 2004 Survey of Pan-European Private Equity & Venture Capital Activity (Preliminary Data) / Thomson Venture Economics
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved | www.dowjones.com
Moderator: David M. Toll, managing editor, Private Equity Analyst, LBO Wire
Experts: Wanching Ang, managing director, Allianz Private Equity
Stefan Hepp, founding partner, CEO, SCM Strategic Management AG
Philippe Poggioli, partner, Access Capital Partners
Charles Soulignac, chairman, CEO, Fondinvest
Stuart Waugh, managing director, TD Capital
Where LPs Are Placing Their Bets In Europe, Around the World