2010 EVCA Buyout Review

1. An in-depth outlook of the buyout segment in Europe October 2010 2010 EVCA Buyout Review Sponsored by

2. Impact of the Economic Environment on Deal Making

3. Improvement in economic environment helps boost buyout investments EU GDP growth and index of buyout investment activity (index by amount) Source: EVCA calculation based on Eurostat and PEREP_Analytics

4. Debt market shows signs of revival Senior loan volume - LBO transactions Source: Standard & Poor's LCD The data includes all private equity-related transactions, including refinancings and recapitalisations.

5. Institutional funding is still insignificant European pro-rata vs. institutional LBO activity Source: Standard & Poor’s LCD Pro rata loans are loans made up of revolving credit facility and an amortising term loan. Pro rata loans are syndicated to banks as opposed to institutional loans, which are term-loan facilities with a portion carved out for non-bank (institutional) investors.

6. Leveraged loan prices have not fallen Rolling 3-month weighted average spreads of all European new-issue LBOs 498 433 Source: Standard & Poor’s LCD Wtd. avg. pro rata spread (WAPR) is the average RC/TLA spread weighted by sizes of the RC and TLA tranches. Wtd. avg. institutional spread (WAIS) is the average TLB/TLC spread weighted by the sizes of the TLB and TLC tranches.

7. 80% of outstanding European leveraged loans mature 2013-2015 Maturity schedule by par outstanding as of 30 June 2010 Source: Standard & Poor’s LCDBased on all facilities in the European leveraged loan index (ELLI) universe, priced and unpriced.

8. Leverage multiples converge across deal size ranges Debt-to-EBIT ratios for buyout transactions Source: CMBOR/Barclays Private Equity/Ernst & Young This sample includes all buyouts, not only private equity-backed buyouts. However, as non-private equity-backed buyouts are typically smaller in size (mainly sub-€10m deals), the data is still representative for private equity-backed buyouts.

9. Equity Mezzanine Debt Loan note Other finance Large deals get higher equity share than smaller deals in H1 2010 Average deal structures for European private-equity-backed buyouts Source: CMBOR/Barclays Private Equity/Ernst & Young

10. Purchase multiples increase at the upper end of the market Average P/E* ratios for European private-equity-backed buyouts Source: CMBOR/Barclays Private Equity/Ernst & Young * P/E ratios are defined as deal price divided by EBIT.

11. Evolution of Buyout Activity 2007 – H1 2010

12. Fundraising improves but remains challenging Fundraising by fund stage focus (intermediate closings in the year) Source: EVCA/PEREP_Analytics * Throughout the presentation, “total fundraising” refers to funds raised by buyout, growth and mezzanine funds

13. The majority of fundraising activity is concentrated in UK & Ireland Regional fundraising (% of European total) Source: EVCA/PEREP_Analytics

14. Banks continue to be the leading source of capital Funds raised by type of investor(% of amount) Source: EVCA/PEREP_Analytics Percentages are calculated on the funds raised for which the source is known.

15. US LPs decrease in importance, with UK LPs maintaining their lead Ranking of top limited partners by location(per European fundraising year) Source: EVCA/PEREP_Analytics

16. Average fund sizes are on the rise Final closings by fund stage focus(cumulative amount raised at final closing) Source: EVCA/PEREP_Analytics

17. UK & Ireland and Benelux see more final closings than in full-year 2009 Final closings by fund region (by number of funds closed) Source: EVCA/PEREP_Analytics

18. €500-999m is the most popular fund size range inH1 2010 Final closings by fund size range By number of funds By cumulative amount raised €bn Source: EVCA/PEREP_Analytics

19. Most buyout funds are not sector specific Final closings by fund sector focus Source: EVCA/PEREP_Analytics

20. Investment levels start to recover, expected to reach 2005 levels by year-end Investments by European private equity firms- evolution Source: EVCA/PEREP_Analyticsfor 2007-H1 2010 data. For prior years’ data: EVCA/Thomson Reuters/PriceWaterhouseCoopers

21. H1 2010 investment into European companies has already reached 80% of the full-year 2009 amount Investments into European portfolio companies - evolution Source: EVCA/PEREP_Analytics

22. GP proximity to investee companies increases in importance during the crisis Investments by geographic origin Source: EVCA/PEREP_Analytics

23. Average investment size in UK & Ireland more than doubles on 2009 Average deal size by region Source: EVCA/PEREP_Analytics

24. The UK & Ireland’s domination as investment markets further increases in H1 2010 Investments by region Source: EVCA/PEREP_Analytics

25. Most capital is sourced domestically. The Nordic region has the most active intra-regional cross-border flows Regional cross-border flows for H1 2010% of amount % of number of companies Source: EVCA/PEREP_Analytics

26. Most companies attract growth capital in 2009-H1 2010 versus buyout in 2007-2008 Investments by financing stage Source: EVCA/PEREP_Analytics

27. Growth deals dominate across most regions. France and Nordic regions are the exception with buyouts as the single largest subset Investments by region and stage in H1 2010 (% of number of companies) Source: EVCA/PEREP_Analytics

28. Buyouts recover most of the lost value since 2007 in average investment size Investments by stage of financing (average amount of equity invested per company) Source: EVCA/PEREP_Analytics

29. In H1 2010, mid-market deals account for 45% of the transaction value (vs. large and mega deals being 70% of TV in 2007), nearly 90% of the companies are small buyouts (vs. 60% in 2007) Equity vs. transaction value* by deal size 2007 H1 2010 Source: EVCA/PEREP_Analytics* Transaction value includes the contributions of all co-investors in a deal and the leverage. Therefore, the difference between private equity funds’ contribution (“equity value”) and transaction value consists of two parts: the contributions of syndication partners other than private equity firms (such as LP co-investors, corporate co-investors, financial institutions) and leverage.

30. The largest source of buyout deals in H1 2010 is private equity firms (secondary buyouts) by amount, and family & private owners by number of companies financed Sources of buyouts % of amount invested % of number of companies Source: EVCA/PEREP_AnalyticsPercentages are presented for the buyout deals where the source is known.

31. Most sectors register an uplift in average investment size on 2009 Average size of investment per company - sector overview Source: EVCA/PEREP_Analytics

32. Consumer goods & retail is the most appealing sector in H1 2010 Amount invested by sector €million Source: EVCA/PEREP_Analytics

33. More new investments for PE firms in H1 2010 prove the recovery of the investment market Initial versus follow-on investments (% of number of companies) Source: EVCA/PEREP_Analytics

34. Follow-on deals are bigger than initial investments in France and the DACH region Initial versus follow-on investments by region – H1 2010 (average amount invested per company) Source: EVCA/PEREP_Analytics

35. Syndication in buyouts further decreases in H1 2010 Syndication by stage (% of amount) Source: EVCA/PEREP_Analytics

36. The average amount invested in clubbed deals is lower than in non-syndicated deals in France and Benelux Syndicated versus non-syndicated deals by region – H1 2010 (average amount invested per company) Source: EVCA/PEREP_Analytics

37. Up to 250 (SMEs) 250-1,000 Over 1,000 In 2007- H1 2010, 57% of European companies financed by buyout firms are SMEs Investments by number of employees Number of employees: Source: EVCA/PEREP_Analytics

38. The divestment market shows signs of revival with €7bn divested at cost in H1 2010 Divestments at cost from European portfolio companies - evolution Source: EVCA/PEREP_Analytics

39. 40% of the European companies divested by private equity firms are located in the DACH region Divestments by location of the portfolio company – H1 2010 Source: EVCA/PEREP_Analytics

40. Trade sales have not picked up as expected in H1 2010 Divestments by exit method (% of number of companies) Source: EVCA/PEREP_Analytics

41. Life sciences is the most divested sector in H1 2010 Divestments by sector (excluding write-offs) (% of amount at cost divested) Source: EVCA/PEREP_Analytics

42. Close to half of the H1 2010 write-offs are in consumer services Write-offs by sector (% of amount at cost divested) Source: EVCA/PEREP_Analytics

43. Buyout Performance as of December 2009

44. The long-term performance of the buyout industry remains robust Annualised net pooled IRR from inception to 31-12-2009 Source: EVCA/Thomson Reuters

45. Top-quarter and top-half returns remain strong at 30.6% and 19.7% respectively Top-quarter and upper-half net pooled IRR as of 31-12-2009 Source: EVCA/Thomson Reuters * Entry point that funds have to meet or exceed as return in order to become part of top-quarter funds. ** Entry point that funds have to meet or exceed as return in order to become part of upper-half funds.

46. The spread of returns across the four performance quarters has narrowed in 2009 Buyout performance per quarter as of 31-12-2009 Net pooled for the quarter Net IRR Percentile 100 30.6% 17.0% 75 11.3% 6.2% 50 1.6% -2.7% 25 -18.9% Source: EVCA/Thomson Reuters

47. Buyout investments during downturns generate superior performance Annualised net pooled IRR by vintage years as 31-12-2009 Source: EVCA/Thomson Reuters

48. Three-year IRRs reflect the impact of the crisis Short-, medium-, and long-term returns reflected by net horizon IRRs to 31-12-2009 Source: EVCA/Thomson Reuters

49. Buyout performance stands at 8.3% on the 5-year horizon and 8.0% on the 10-year horizon Source: EVCA/Thomson Reuters

50. Industrial/energy funds once more achieve the highest returns. Life sciences is the only sector that registers a modest improvement in performance on 2008 Performance by sector focus Source: EVCA/Thomson Reuters