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Performance Benchmarks 2007 European Private Equity

Conducted by Thomson Financial on behalf of EVCA. Performance Benchmarks 2007 European Private Equity. Methodology for Performance Benchmarks. All calculations are done at the fund level by Thomson Financial based on cash flows and NAVs reported by participating LPs and GPs

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Performance Benchmarks 2007 European Private Equity

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  1. Conducted by Thomson Financial on behalf of EVCA Performance Benchmarks 2007European Private Equity

  2. Methodology for Performance Benchmarks • All calculations are done at the fund levelby Thomson Financial based on cash flows and NAVs reported by participating LPs and GPs • Returns are net of management fees and carried interest • Returns are calculated with cash flows in Euros • Cash flow database contains altogether 1,215 European funds • Definitions: • Pooled IRR: IRR of a group of funds where their cash flows have been aggregated together before IRR calculation • Investment Horizon Return: IRR calculated with Net Asset Value as capital outflow at beginning of period, Net Asset Value at end of period, and actual cash flows in between

  3. Background • More difficult market conditions for GPs in the last 6 months • Leverage • Refinancing options • Pressure to invest • IPO market • Deal pipeline quality • Increased importance of reporting, benchmarking and analytics

  4. Investment BenchmarksDatabaseEuropean Sample Growth Source: Thomson Financial on behalf of EVCA

  5. Mid-to Long-Term Venture IRR Remains In Positive Territory European Venture 3-,5-,10-Year Rolling IRRs Source: Thomson Financial on behalf of EVCA

  6. Mid-to Long-Term IRRs Show Strong Momentum for Buyout Funds European Buyouts 3-,5-,10-Year Rolling IRRs Source: Thomson Financial on behalf of EVCA

  7. VC and BO Funds in Europe and USA5-Year Rolling IRRs Europe USA Returns calculated with cash flows in dollars Source: Thomson Financial on behalf of EVCA

  8. Net IRR Percentile 100 357.2% Avg Top quarter 23.5% 11.0% 75 2nd quarter 50 3rd quarter 25 4th quarter Top Quarter European Funds return 23.5%Funds Formed 1980-2007 Source: Thomson Financial on behalf of EVCA

  9. Indicators Show Good Average Performance for Europe European Private Equity Funds Formed 1980-2007Investment Horizon IRR (%) for period ending 31-Dec-2007 Source: Thomson Financial on behalf of EVCA

  10. European Venture Funds by Size Formed 1980-2007 Net IRRs to Investors Investment Horizon IRR (%) for period ending 31-Dec-2007 These results refer to the fund size, not the deal size Source: Thomson Financial on behalf of EVCA

  11. European Buyout Funds by Size Formed 1980-2007 Net IRRs to Investors Investment Horizon IRR (%) for period ending 31-Dec-2007 These results refer to the fund size, not the deal size Source: Thomson Financial on behalf of EVCA

  12. European Performance by Vintage Year Groups Net IRRs to Investors Grouped By Vintage Years From Inception to 31-Dec-2007 Source: Thomson Financial on behalf of EVCA

  13. Private Equity and Public Market Comparators 10-Year Rolling IRR for 2000-2007 *Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cash flows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index. Calculations based on methodology proposed by J Coller and published by A Long and C Nickles. Source: Thomson Financial on behalf of EVCA

  14. Conclusion • Long-term performance • Stays constant at around 12% net IRR, with top quarter average IRR of 23.5% • 5-year rolling average is steadily increasing for both venture and buyout funds • Shorter-term performance • 3-year IRR remains very strong for buyout at 21.9% IRR, and decreases slightly to 4.4% IRR for venture funds

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