2017
PREQIN GLOBALPRIVATE EQUITY &VENTURE CAPITALREPORT
SAMPLE PAGES

ISBN: 978-1-907012-97-6$175 / £125 / €150
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alternative assets. intelligent data.

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESCONTENTS
CEO’s Foreword - Mark O’Hare

4

1: 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE
CAPITAL REPORT
Keynote Address - Joseph Bae, KKR
Keynote Address - Capturing Megatrends Growth throughMinority Stakes - Stanislas Cuny, Amundi

68

2: OVERVIEW OF THE PRIVATE EQUITY INDUSTRY
Private Equity in Context
Private Equity: 2016 in Numbers
Private Equity in 2017 - Christopher Elvin, Preqin
Private Equity and Public Image- Bronwyn Bailey, American Investment Council
Brexit and the UK’s Private Equity & Venture CapitalIndustry - Gurpreet Manku, BVCA
Emerging Markets in a Trump Administration- Robert W. van Zwieten, EMPEA
Addressing LP Concerns- Peter Freire, Institutional Limited Partners Association (ILPA)

12
16
17
18

44
46
49
50
52
54
56
58

6: ALTERNATIVE STRUCTURES
Co-Investments
Investor and Fund Manager Use of Separate Accounts

60
63

7: PERFORMANCE
21
22

24

4: FUNDRAISING
Marketing Your Fund II - Clay Deniger, Capstone Partners
2016 Fundraising Market
Funds in Market
In Focus: Regional Fundraising
North American Fundraising
SMid Cap: Focus and Growth - Eric Bismuth, Montefiore
Investment
European Fundraising
Asian Fundraising
Rest of World Fundraising

A Fast-Evolving Landscape - Moose Guen, MVision
Fund Manager Outlook for 2017
Fund Manager Views on Investor Appetite
The Case for First-Time Funds- Michael Murphy, Credit Suisse Private Fund GroupFirst-Time Fund Managers
Largest Fund Managers
Compensation and Employment
Women in Private Equity

20

3: ASSETS UNDER MANAGEMENT AND DRY POWDER
Assets under Management and Dry Powder

5: FUND MANAGERS

28
30
33
36
37
38
39
40
41

Chasing Yield - “Heading into The Unknown”- Leon Sinclair, IHS Markit
Building the Infrastructure for Repeatable Value Creation- Niclas Thelander, Outsized
Performance Overview
PrEQIn Private Equity Quarterly Index
Horizon Returns
Private Equity Returns for Public Pension Funds
Private Equity Performance Benchmarks
Consistent Performing Managers

66
67
69
72
73
74
75
77

8: INVESTORSThe LP Perspective: Accessing Private Equity Funds- Maurice Gordon, Guardian Life Insurance
Evolution of the Investor Universe
Investors in Recently Closed Funds
Investor Appetite for Private Equity in 2017
Sample Investors to Watch in 2017
How Investors Source and Select Funds

80
81
83
85
88
90

PRIVATE EQUITY ONLINE
Private Equity Online is Preqin’s flagship online private equity information resource and encompasses all of Preqin’s private
equity and venture capital databases, with unrivalled data and intelligence on all aspects of the asset class, including fundterms and conditions, fundraising, fund managers, institutional investors, fund performance, deals and exits and more.
Constantly updated by our teams of dedicated researchers strategically located in industry centres around the globe, Private
Equity Online represents the most comprehensive source of industry intelligence available today.
www.preqin.com/privateequity

2

For more information about the 2017 Preqin Global Private Equity &Venture Capital Report, please visit: www.preqin.com/gper© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES

Largest Investors by Region
Largest Investors by Type91
92

9: INVESTMENT CONSULTANTS
Investment Consultant Outlook for 2017

94

98
100
102

11: BUYOUT
Private Equity in Australia- Shannon Wolfers, Pacific Equity Partners
Buyout Fundraising
Buyout Fund Managers
Buyout Performance Benchmarks
Private Equity-Backed Buyout Deals
Deal Flow by Type, Value and Industry
Global Buyout Exit Overview
Industry Focus: Industrials
Industry Focus: Information Technology
Industry Focus: Consumer & Retail
Most Active Private Equity Firms, Debt Providers and Deal
Advisors
Largest Buyout Deals and Exits

130
131
132
133
134

13: GROWTH

10: FUND TERMS AND CONDITIONSFund Terms and Conditions Overview
Investor Attitudes towards Fund Terms and Conditions
Leading Law Firms

Global Venture Capital Exit Overview
Industry Focus: Internet
Industry Focus: Software & Gaming
Industry Focus: Healthcare
Most Active Firms, Largest Deals and Notable Exits

Growth Fundraising
Growth Fund Managers
Growth Performance Benchmarks
Growth Deals

138
139
140
141

14: FUNDS OF FUNDS
104
106
107
108
110
112
114
116
117
118
119

Fund of Funds Fundraising
Fund of Funds Managers
Fund of Funds Performance Benchmarks

144
145
146

15: SECONDARY MARKET
Public Equity & Political Uncertainty Drive 2016 Volume- Ian Charles & John Stott, Landmark Partners
Overview of the Secondary Market
Secondaries Fundraising
Secondary Fund of Funds Managers
Direct Secondaries
Intermediaries

148
149
152
154
155
156

120
16: TURNAROUND

12: VENTURE CAPITAL
Venture Capital Fundraising
Venture Capital Fund Managers
Venture Capital Performance Benchmarks
Venture Capital Deals
Deal Flow by Stage and Industry

158

Turnaround Overview

122
123
124
126
128

17: SERVICE PROVIDERS
160
163
164

Placement Agents
Fund Administrators
Fund Auditors

DATA PACK FOR 2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORTThe data behind all of the charts featured in the Report is available to purchase in Excel format.
Ready-made charts are also included that can be used for presentations, marketing materials andcompany reports.
To purchase the data pack, please visit:www.preqin.com/gper3

For more information about the 2017 Preqin Global Private Equity &Venture Capital Report, please visit: www.preqin.com/gper© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESCHASING YIELD - “HEADING INTO
THE UNKNOWN”- Leon Sinclair, IHS MarkitW

ith dry powder at all-time highs,
new managers entering the market
are facing intense competition. As aresult, borrowers are finding themselvesmore able to negotiate favourable rates
at the expense of institutional investors’returns.
The challenges in valuing alternative
assets are well known to practitioners andare highly dependent on development
stage and local market conditions. The
more lifecycle risks and political, country
and legal risks are understood, the morecompetitively a deal tends to be funded.
Recent competitiveness has been largely
driven by funds looking for specific deal
types while targeting a narrow part of themarket, not least because institutional
investors have certain yield necessities.
The reduction in cost of capital is driving
premium hunters deeper into newmarkets and new geographies. Rather
than a simple race to the “IRR floor”,
many firms first look to covenant-loose
deals and then commonly continue theirjourney down the capital structure andfurther afield into emerging and frontiermarkets.
Analysis for investments in developed
markets such as the US, Western Europe,
Australia and Canada typically focuses
on financial strength, sponsor strength,
credit enhancements and transaction
characteristics. It also includes an analysis
of operating risk and supply risk. Finally,
political, country and legal environment
risks are considered. However, these risks
often only receive light coverage as these
are challenging areas for most investors
to monitor.
Let us now turn to the challenges faced
by investors in portfolio companies who
demand a higher risk premium and/or
operate in emerging and frontier markets.
Investor concerns typically fall into thefollowing categories: damage to assets,business interruption, death or detentionof personnel, and resource mobilisation.

4

The occurrence of political risk andviolent risk can cause potential shocks toprojected revenues. This type of analysis
may be available at the point of funding,but information flow often worsens soonafter a deal closes which hampers aninvestor’s ability to continue to monitor
in a structured, continuous, informationdriven framework and adjust for changes
in the environment.
There are a number of common pitfalls
when considering violent risk in ongoingvaluation and risk management:■ Investment firms look to traditional
capital markets rating agencies
which are primarily focused on
countries with mature debt markets
and so do not always cover the
specific risks of a given exposure.
■ It is important to factor in likely
timeframes for unrest and associateddisruption and adjust revenue
assumptions appropriately.
■ A focus on background geopolitics
rather than the potential impact ofinter-state and intra-state conflict
can lead to an underestimation ofrisk.
Common pitfalls when considering
political risk in ongoing valuation and risk
management include:■ Political commentary instead ofcommercially focused political
forecasting, e.g. forecasting election
outcomes without assessing theimplications for regulatory policy.
■ Failing to differentiate risk between
sectors, assets, nationalities, e.g. in a
cash-poor state expropriation risks
are higher for cash-rich retail sectors
than to other sectors.
■ Economic analysis without a clear
country risk perspective, e.g.
reporting on a new budget without
providing a sector-specific view ofchanging regulatory or contract risks.
■ Not analyzing indicators, e.g.
assuming a government is stablebecause it has been in power for along time.

For more information about the 2017 Preqin Global Private Equity &Venture Capital Report, please visit: www.preqin.com/gper

In conclusion, if you are looking forinvestment opportunities in emerging or
frontier markets, bear in mind that you
will need to adapt your current approachaccordingly. Do not continue to apply
the same lenses to valuation and risk
factors, and execute in an environmentthat delivers intelligence-led insightspecific to your investments. Cultivate
local resources that provide relevant
input to your internal control regime and,most importantly, update your analysis
of violent, political and economic risks
regularly, and use this analysis to revise
your forecast assumptions.
As managers look to emerging andfrontier markets for investment
opportunities, it is important to realizethat it’s not just doing more of the same.
As the balance of risks change, theneed to proactively seek adjustments
and protection must be managed in atransparent manner that provides thegovernance required when working in an
AIFMD-compliant environment.

IHS MARKITIHS Markit is a leading global
diversified provider of financial
information services. We help
customers reduce risk, improve
operational efficiency and benefit
from enhanced transparency. Markit’s
Private Equity service provides
valuations for a range of hard-tovalue asset classes. IHS Markit
provides country risk profiles for
211 countries across 22 risk factors
using an extensive network of local
contributors.
Contact the author of this article atleon.sinclair@ihsmarkit.com
www.markit.com/PrivateEquity© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESPRIVATE EQUITY:
2016 IN NUMBERS
THE INDUSTRY IS LARGER THAN EVER

ANOTHER ROBUST YEAR FOR FUNDRAISING$2.49tn$820bn$347bn$10.8bn

Private equity assets undermanagement as of June 2016,
an all-time high.

Dry powder held by private
equity funds as of December
2016, up from $755bn at theend of 2015.

Aggregate capital raised by
830 private equity funds
closed in 2016.

Ardian raised the largest
secondaries fund ever closed,
Ardian Secondary Fund VII.

CAPITAL IS INCREASINGLY CONCENTRATED$471mn26%

Average size of private equity
funds closed in 2016, an alltime high.

of aggregate capital raised
was secured by the 10 largest
funds closed in 2016, up from
19% in 2014.

HIGH VALUATIONS ARE A CONCERN

70%

38%

of investors considerof fund managers believe thatvaluations to be one of the key pricing for portfolio companies
issues facing the private equity is higher than 12 months ago,industry.
compared to 19% that believe
pricing is lower.

STRONG RETURNS AND DISTRIBUTIONSLP APPETITE REMAINS HEALTHY

95%$257bn84%

48%

of investors believe that theirprivate equity portfolios havemet or exceeded performance
expectations over the past
12 months, up from 81% in
December 2011.

Total capital distributions in
H1 2016, following the record$472bn distributed in 2015.

of investors have a positive
perception of private equity,
the greatest proportion
among alternative asset
classes.

of investors plan to increase
their allocation to private
equity over the long term,compared with only 6% thatplan to decrease exposure.

5

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2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESPRIVATE EQUITY IN 2017
- Christopher Elvin, Preqin
2016 was another stellar year for private
equity and the total AUM for the industry
now stands at $2.49tn as of June 2016 (thelatest data available), an all-time high. The
question on many people’s minds is ‘howmuch longer will it continue?’ While thereality is that only time will tell, private
equity is well positioned for anotherstrong year in 2017, despite continuing
economic concerns and wider politicalvolatility.
PRIVATE EQUITY CONTINUES TO
DELIVER FOR INVESTORSIn the three years to June 2016, private
equity investors have seen annualized
returns of 16.4%, the highest among
private capital strategies. As a resultof this strong performance, investors
have continued to see distributions
significantly surpass capital calls: $257bn
was distributed in the first half of 2016
compared with $129bn in capital calls – soa net cash flow of $128bn back to LPs. The
trend of capital distributions surpassing
capital calls is now in its sixth year, and itis the third year in which net cash flows
to investors have been well in excess of$100bn.
Fifty-seven percent of institutional
investors now have an allocation to
private equity, and as a result of highdistribution levels, investor satisfaction
is at an all-time high – 95% of investors
recently surveyed (see pages 85-87) statedthat private equity had met or exceeded
their expectations in the past year; 48%
of respondents plan to increase their
allocations to private equity over the longterm, while a further 46% will maintaintheir allocations. Similarly, 49% of LPs
are looking to invest the same amountof capital and 40% are looking to invest
more capital in private equity in the next
12 months than they did during 2016.
A THRIVING FUNDRAISINGENVIRONMENT
Driven by LP demand and liquidity, 2016
was the fourth consecutive year in which

6

private equity fundraising surpassed$300bn. However, there is a clear trend
towards greater concentration of capital
among fewer funds – 12% fewer funds
closed in 2016 than in 2015, resulting
in the average fund size increasing to$471mn, an all-time high. Private equity
accounted for 57% of all private capitalraised in 2016, up from 52% the previous
year.
Perhaps the greatest indication of theliquidity LPs currently have, as a resultof the wave of distributions they havereceived over the past few years, is thefact that 76% of private equity funds
closed in 2016 met or exceeded theirtarget size. This represents the largest
proportion of funds meeting or exceeding
their target size in any year over theperiod 2009-2016, with the proportion
failing to meet their target decreasingfrom 63% in 2009 to 25% in 2016.
STILL A SELLER’S MARKET
While the volume of private equity backed
buyouts in 2016 (3,986) is expected tosurpass the record number of transactions
seen in 2014 (4,006) as more data
becomes available, aggregate deal value($319bn) was 25% lower than in 2015
and reached the lowest level seen since2013 ($313bn). Venture capital deal flowin 2016 saw the opposite trend: 9,719
deals were recorded during the year,
the lowest number since 2013, but theaggregate value of deals reached $134bn,
just behind the record amount achievedin 2015 ($140bn).
Fund managers are clearly finding it
tough going due to the current high entry
prices for assets. They are also clearly
seeing more competition for assets:
Preqin’s latest survey found that 42% offund managers feel that there is currently
more competition for transactions, and
38% of respondents feel that pricing for
portfolio companies is higher than it was
12 months ago.

For more information about the 2017 Preqin Global Private Equity &Venture Capital Report, please visit: www.preqin.com/gper

Despite 2016 being the second
consecutive year in which both buyout
and venture capital exit activity has fallen(see pages 114 and 130), it is still verymuch a seller’s market, and exit activity ishigher than all years prior to 2013. Thirty
percent of fund managers expect exit
activity to increase in 2017, and a further
46% expect it to remain at current levels.
OUTLOOK FOR 2017
The private equity model is working andin a low interest rate environment theasset class will continue to appeal toinvestors looking for high absolute returns
and portfolio diversification.
A record number of private equity funds
are currently in market: 1,829 funds areseeking an aggregate $620bn. This willbring challenges, particularly for firsttime and emerging markets managers, incompeting for investor capital as well as inmeeting the demands of an increasingly
sophisticated investor community.
However, with the majority of LPs sitting
very liquid as a result of continuing
distributions and looking to maintain, if
not increase, their exposure to the asset
class, fundraising has rarely looked so
appealing.
A significant proportion of assets invested
prior to the Global Financial Crisis (GFC)
are yet to be realized, so should market
conditions remain favourable it is likelythat the fervent exit activity will continue
in 2017. While pricing remains a very realconcern, fund managers have record
levels of capital available to them andour survey results indicate that many arelooking to increase the amount of capital
they deploy over the next 12 months.

© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES

2016 FUNDRAISING MARKETA

n aggregate $347bn was raised by
830 private equity funds closed in2016, marking the fourth consecutive
year in which fundraising has surpassed$300bn (Fig. 4.1). This figure is likely toincrease as more data becomes available,
and the fundraising total for 2016 is
expected to exceed the level seen in2014 ($348bn), therefore representing
the largest amount of capital raised since
the GFC. Private equity accounted for
57% of all private capital raised in 2016,
up from 52% the previous year. The
increased demand has been supported
by continued high net distributions(see page 26), which have caused LPs toreinvest capital back into private equity inorder to maintain their allocations.

Fig. 4.1: Annual Global Private Equity Fundraising, 1996 - 2016

Alongside the large sums of capitalbeing invested through traditional fundstructures, a substantial amount of capitalis being invested via alternative structures
such as co-investments and separate
account mandates. Among LPs profiled
on Preqin’s Private Equity Online, 42%
actively make co-investments and afurther 12% are considering doing so; 30%
make use of separate accounts, with 9%
considering this route.

shows the capital raised each quarter via
interim and final closes, highlighting thestrong fundraising in recent quarters. The
methodology to calculate this involves
analyzing the capital raised for eachclose that takes place in each quarter;
only fresh capital is counted, with capitalthat has been raised via previous closes
held in an earlier quarter excluded. The
second quarter of 2016 was a particularly
successful period, with $117bn secured,
the largest sum of capital raised in a single
quarter since Q2 2008, when $137bn was
raised.

1,200

516

500

135 101

74

2001

2003

31

107 135

208 173310

348 329 347

2016

2015

2012

2010

2008

2007

2006

2005

2004

2002

2000

1999

1998

1997

1996

0

Year of Final Close
No. of Funds Closed

Aggregate Capital Raised ($bn)
Source: Preqin Private Equity Online

Fig. 4.2: Quarterly Global Private Equity Fundraising (Includes
Final and Interim Closes), Q1 2010 - Q4 2016

CAPITAL CONCENTRATION
The trend towards greater concentrationof capital among fewer funds continued
in 2016: 12% fewer funds closed than in
2015, resulting in the average fund size
increasing to $471mn, an all-time high.
LPs appear to be investing more capitalwith a smaller number of proven andwell-known GPs, with the largest funds
accounting for a greater proportion of
overall fundraising. The 10 largest private
equity funds closed in 2014 accounted for
19% of overall fundraising for that year;
in 2016, the figure is 26%. Similarly, theproportion of capital accounted for by

Fig. 4.3: Proportion of Aggregate Capital Raised by Largest
Funds Closed, 2014 - 2016
45%

117

120
100 103

100

83
80

73
62

60

76

73
65

65

82

69 72 72

92 96

88

100
94
83

79

70

61

54

49

40 34 32 36
20

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

0
2010

2011

2012

2013

2014

2015

Proportion of Aggregate Capital Raised

140

40%

38%
34%

35%
30%

30%

2014

26%
24%

25%

2015
20%

19%
2016

15%
10%
5%
0%

2016

Source: Preqin Private Equity Online

7137

213 225

2014

248

207
70

413 408

2013

350

2011

418

410

209

830

2009

350

400

851 862706 742

618

603

600

QUARTERLY FUNDRAISINGThe flow of capital into private equity
funds is presented in Fig. 4.2, which

Aggregate Capital Raised ($bn)

765

750

800

200

1,019
945
939

1,009 1,001
908

1,000

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10 Largest Funds Closed

20 Largest Funds Closed
Source: Preqin Private Equity Online© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES

private equity assets over 2016 (Fig. 5.4).
Furthermore, GPs were asked about thelevel of competition in distinct parts of themarket:■ Venture Capital: an average of 37%
of surveyed GPs saw an increasein competition across all stages ofventure capital investment over 2016,
although the largest proportions
across every stage had seen nochange. Larger proportions of GPs
are seeing less competition in earlier
stages (seed: 25%; early stage: 22%), a
reflection of the large pool of start-up
companies these firms look to target.
■ Growth: more GPs have observed
increased competition for growthinvestments than for venture capital,
making growth one of the mostcompetitive markets in private equity;
while 45% of respondents saw nochange in competition over 2016,
43% witnessed more, behind only
mid-market (51%) and large (44%)
buyouts.
■ Buyout: as expected, GPs face themost competition for mid-market
opportunities, where surveyed
investors see the best opportunities
at present (see page 87). More thanhalf of respondents active in thearea saw an increase in competition
for mid-market assets over 2016.
Significant levels of capital securedby the largest private equity firms at
the higher end of the market meanthat competition for large buyouttransactions has intensified.

Fig. 5.3: Fund Manager Views on the Number of Opportunities Reviewed per
Investment Compared to 12 Months Ago

The low interest rate environment has
reduced the cost of borrowing for GPs:
85% of firms surveyed have seen theterms of debt financing for private equity
investments remain the same or improveover 2016. Combined with greater levels ofcapital raised annually and record levels ofdry powder available for investment (seepages 24-26), this has pushed valuations
up: 38% of surveyed GPs have seen
an increase in pricing over the past 12
months, with only 19% witnessing lower
entry prices. This puts pressure on GPs thatusually have three- to five-year investment
periods before exiting investments.
However, respondents are confident in
the exit opportunities available in theyear ahead: while the largest proportion

believe exit activity will remain the sameover 2017, more respondents predict exit
activity will increase than decrease. Thirtyfive percent of fund managers surveyed
believe there will be greater activity inthe venture capital exit market over 2017,
compared with 24% that believe there willbe less; for exits in the rest of the private
equity market, 30% believe there will be
more activity in the year ahead compared
to 23% that believe there will be less.

8

100%
90%

Proportion of Respondents

80%

42%

45%

Reviewing More
Opportunities

70%
60%

No Change

50%
40%
30%

41%

47%

14%

11%

Reviewing Fewer
Opportunities

20%
10%
0%
Nov-15

Nov-16
Source: Preqin Fund Manager Survey, November 2015 - November 2016

42%

37%

38%

38%

40%

48%

34%

39%

43%

35%
51%

44%

45%

45%

50%

37%

Venture Capital

Less Competition
19%
Large

5%
Mid-Market

12%

15%
Small

12%

Growth

Early Stage9%

16%
Late Stage

22%

Expansion

25%

More Competition

No Change
54%

43%

Seed

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Private Equity

Proportion of Respondents

Fig. 5.4: Fund Manager Views on the Level of Competition for Transactions Comparedto 12 Months Ago

BuyoutSource: Preqin Fund Manager Survey, November 2016

MORE INVESTMENT IN THE YEAR AHEAD
Despite more than half of GPs statingthat there has been no change in thelevel of difficulty in finding attractive
opportunities over 2016, the majorityof surveyed managers across all regions

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FUND MANAGER VIEWS ON PRICINGFOR PORTFOLIO COMPANIESCOMPARED TO 12 MONTHS AGO

38% Pricing higher
19% Pricing lower
expect to increase the amount of capital
they deploy in private equity assets overthe next 12 months (Fig. 5.5). This includes
more than a quarter of respondents basedin each of North America and Europe,© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESFIRST-TIME FUND
MANAGERST

he private equity industry continues
to grow as new entrants emerge andmarket their funds to investors. Strong
investor appetite for the asset class aswell as recent high distributions haveencouraged LPs to invest large sums ofcapital back into the industry in order tomeet their target allocations. Despite thisdemand, there are signs that the market
is bifurcating, making it more difficultfor emerging managers launching theirfirst fund as many investors seek out
established managers with a proven trackrecord. Only 195 first-time funds closed
in 2016, the lowest number of emerging
funds closed since 2010, raising $25bn inaggregate capital (Fig. 5.11).
FUNDRAISING
The recent lower levels of first-time funds
reaching a final close reflect a broader
trend in which fundraising by emerging
managers as a proportion of the total
private equity industry has decreased.
Where first-time funds made up 27% offunds closed in 2009, they represented
23% in 2016 (Fig. 5.12). Although theproportion of capital raised by emerging
managers has varied, it has generally
followed the same trend, with the 2016
proportion (7%) lower than that of 2009(12%) and significantly below the recent
peak of 20% in 2011.

Furthermore, there is a widening division
between the average size of funds
raised by first-time and establishedfund managers. Although historicallyexperienced fund managers have on
average been able to raise greater sumsof capital than first-time managers, thedifference has increased in recent years.
The average size of a first-time fund closed
in 2010 was $114mn, compared with
$313mn for non-first-time funds; for funds
closed in 2016 the first-time average has
increased to $149mn, whereas the average
size for established managers has jumped
to $564mn.

AVERAGE FUND SIZE ($mn):
2010 vs. 2016

There are other advantages to coming tomarket from an experienced position, as
can be seen in the proportion of funds
exceeding their target size. In 2016, 54%
of closed non-first-time funds exceeded
their target size, with 23% coming inunder target; by comparison, only 35% offirst-time funds exceeded their target sizeand 30% fell short. Additionally, the needto persuade investors of the benefits of afirst-time fund and conduct the necessary
due diligence means that first-time funds
typically spend longer in market before
reaching a final close: first-time funds
closed in 2016 had spent an average of 15
months raising capital, compared to 14
months for their established peers.

PERFORMANCE
Although emerging manager funds havegenerally found it more difficult to attract
investor capital, they have tended todeliver better returns to investors. Fig. 5.13
shows that first-time funds have higher
median net IRRs across most vintages
since 2000, with a significant difference(of at least three percentage points) for
2000-2003 vintage and 2010-2012 vintage
funds. The outperformance can be seen
particularly in terms of quartile rankings:
when compared to similar funds, 31% offirst-time funds fall in the top quartile, witha further 23% in the second.

Fig. 5.11: Annual First-Time Private Equity Fundraising,2009 - 2016

30%
243
193

210

222

195

189

100
43
25

18

2009

2010

25

21

20

21

25

2012

2013

2014

2015

2016

0

25%

2016

First-Time Fund Managers
All Other Fund Managers

26%
24%

24%

24%

23%

23%

20%

20%
15%
12%

11%

10%

10%
7%

6%

6%

7%

2014

2015

2016

5%
0%

2011

Year of Final Close

No. of Funds Closed

9

2010

218

150

50

149

114

Fund selection remains important,however, as there are considerable

27%

25%
Proportion of Total

200

223

313

Fig. 5.12: First-Time Fundraising as a Proportion of All Private
Equity Fundraising, 2009 - 2016

300
250

564

Aggregate Capital Raised ($bn)
Source: Preqin Private Equity Online

For more information about the 2017 Preqin Global Private Equity &Venture Capital Report, please visit: www.preqin.com/gper

2009

2010

2011

2012

2013

Year of Final Close
No. of Funds Closed
Aggregate Capital Raised
Source: Preqin Private Equity Online© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESPRIVATE EQUITYPERFORMANCE BENCHMARKS
FUND STRATEGY: All Private Equity
VintageNo. ofFunds

Called(%)

GEOGRAPHIC FOCUS: All Regions

Median FundDist (%)Value
DPI(%) RVPIAS AT: 30 June 2016

Net Multiple Quartiles (X)Net IRR Quartiles (%)

Net IRR Max/Min (%)

Q1

MedianQ3

Q1Median

Q3

Max

Min

2016

74

9.1

0.0

92.8

1.00

0.93

0.84

n/m

n/m

n/m

n/m

n/m

2015

150

21.0

0.0

96.0

1.07

0.97

0.87

n/m

n/m

n/m

n/m

n/m

2014

154

40.9

0.0

98.7

1.20

1.04

0.95

n/m

n/m

n/m

n/m

n/m

2013

155

59.7

5.2

103.0

1.27

1.16

1.02

20.8

12.6

6.3

74.8

-38.2

2012

148

76.8

11.1

101.3

1.44

1.24

1.05

22.4

12.7

6.2

284.9

-33.6

2011

156

84.0

22.7

104.0

1.60

1.31

1.18

19.2

13.2

8.4

90.1

-32.4

2010

100

93.5

50.0

97.3

1.76

1.49

1.28

20.0

13.5

9.6

80.3

-27.1

2009

81

94.3

55.4

80.4

1.74

1.45

1.24

19.7

13.0

7.3

55.7

-14.4

2008

189

95.0

79.5

71.1

1.82

1.51

1.28

19.1

11.4

8.0

52.1

-31.2

2007

198

96.3

88.6

57.5

1.85

1.55

1.31

14.7

10.3

6.6

53.7

-34.0

2006

213

96.0

106.6

46.0

1.85

1.56

1.28

12.6

8.5

5.0

41.0

-25.1

2005

179

98.1

110.3

29.0

1.81

1.48

1.17

14.1

8.3

4.4

105.5

-22.9

2004

100

98.0

122.1

15.0

2.01

1.56

1.18

18.3

8.5

3.3

89.2

-79.2

2003

89

100.0

139.9

4.0

2.12

1.56

1.08

21.0

11.5

1.6

239.8

-49.9

2002

81

97.7

151.7

0.2

1.97

1.68

1.27

21.4

12.1

5.7

93.0

-47.2

2001

126

100.0

152.5

1.3

2.17

1.66

1.20

23.4

12.0

4.6

64.4

-25.1

2000

184

99.0

141.9

0.0

2.07

1.46

0.94

20.7

10.2

0.4

52.9

-96.0

1999

144

100.0

127.7

0.0

1.81

1.29

0.66

14.5

6.3

-3.9

154.7

-43.4

1998

152

100.0

137.7

0.0

1.84

1.39

0.90

15.1

7.4

-1.0

514.3

-100.0

1997

143

100.0

153.3

0.0

2.36

1.54

1.15

32.1

12.2

3.7

267.8

-30.0

1996

89

100.0

183.2

0.0

2.51

1.87

1.13

36.5

15.7

5.1

188.4

-33.3

1995

86

100.0

190.1

0.0

2.75

1.90

1.21

35.0

17.6

5.3

447.4

-22.0

1994

90

100.0

198.8

0.0

3.23

1.99

1.49

40.2

23.6

10.9

318.0

-22.6

1993

74

100.0

247.4

0.0

3.52

2.48

1.59

44.8

27.3

12.9

105.7

-29.1

1992

65

100.0

197.8

0.0

3.17

1.98

1.35

38.5

21.0

8.7

110.4

-49.9

Source: Preqin Private Equity Online

Fig. 7.16: All Private Equity - All Regions: Median Net IRRs andQuartile Boundaries by Vintage Year (As at June 2016)

Fig. 7.17: All Private Equity - All Regions: Median Net Multiples
by Vintage Year (As at June 2016)
1.8

50%

1.66 1.68
1.56 1.56

1.6

30%

Top Quartile Net
IRR Boundary

20%

Median Net IRR

10%

Bottom Quartile
Net IRR BoundaryMedian Net Multiple (X)Net IRR since Inception

40%

1.48

1.56 1.55 1.51

1.45 1.49

1.4

1.31

1.24

1.2

1.16
1.04

1.0

0.97 0.93

0.8
0.6
0.4

0%
0.2

Source: Preqin Private Equity Online

10

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2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

Vintage Year

2001

0.0

-10%

Vintage Year
Source: Preqin Private Equity Online© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES

fallen short of expectations over the past
year, while only 16% feel that they haveexceeded expectations.

compared to the end of 2015, from 40%
to 33% in 2016, possibly due to strong
returns over the past year.

There are signs that the continued strong
performance of private equity funds may
be making investors more ambitious in
their return targets: the proportion of
investors targeting returns of 4.1% ormore above public markets has increased
to 49%, up from 37% two years ago (Fig.
8.12). However, the figure remains downfrom the 63% of investors that targeted
returns of this level in December 2011.

Although there has been a long-runningdebate between investors and fundmanagers over the appropriate level andway to charge fund fees, these issues haveattracted particular attention recently,
with the SEC launching high-profile

KEY ISSUES FACING INVESTORS
Going into 2017, valuations remain thegreatest concern among institutional
investors, cited by 70% of respondents(Fig. 8.13). With high company valuations,record levels of dry powder and stiffcompetition for assets, investors are
increasingly concerned about the impact
high pricing will have on returns in
the future. The proportion of investors
concerned about the exit environment isalso significant and has jumped from 24%
of investors at the end of 2015 to 51% in2016.
Investors are also concerned about thepipeline of available portfolio companies:
41% see deal flow as a concern, up
from 34% at the end of 2015. This may
be related to investors’ concerns about
valuations, as it is becoming harderfor GPs to find assets at attractive
prices. Nevertheless, the degree towhich investors are concerned about
performance has lessened slightly

months, compared with only 11% thatplan to invest less. When asked about theirnext commitment to the asset class, 76%
stated that they plan to make their next
commitment in Q1 2017, while a further
18% will do so later in the year; only 6%plan to wait until 2018 or later for theirnext commitment (Fig. 8.14).
Almost half (48%) of respondents plan toincrease their allocations to private equity
over the longer term, while a further 46%
will maintain their allocations – theseare some of the highest levels seen overthe past six years (Fig. 8.15). With net
distributions of capital from GPs to LPs
over the past year, investors will need toreinvest considerable sums of capital backinto the asset class in order to meet thesetargets. Finding a home for this capital
may prove to be a challenge, as the mostin-demand managers often find theirfunds oversubscribed: 45% of investors
reported that it is harder to identify
attractive investment opportunities inprivate equity compared to a year ago,
while only 5% believe it is easier.

Forty percent ofinvestors surveyed
by Preqin intend to invest
more capital in private
equity over the next 12months than in the last
12 months
investigations of GPs that are believed
to have given insufficient disclosure toinvestors about the fees they charge. This
has resulted in many LPs now paying
closer attention to their fee arrangements:
the proportion of investors citing fees as
one of the major issues facing the private
equity industry has more than doubled
from 19% in 2015 to 39%.

RE-UPS AND NEW RELATIONSHIPS
Although there has been some discussionof larger investors looking to reduce thenumber of managers in their portfolios inrecent years, the significant sums of capitalbeing allocated to private equity meanthat a much larger proportion of investors
are looking to increase the number offund managers they work with. Forty-one
percent of investors expect the numberof fund managers in their portfolios toincrease over the next two years,

INVESTORS’ INTENTIONS FOR THEIRPRIVATE EQUITY ALLOCATIONS
Despite these concerns, investors remain
attracted to private equity and continue
to plan further investment. Forty percent
of investors surveyed by Preqin intend toinvest more capital in private equity overthe next 12 months than in the past 12

Fig. 8.14: Timeframe for Investors’ Next Intended Commitment
to a Private Equity FundFig. 8.15: Investors’ Intentions for Their Private Equity
Allocations over the Long Term, 2011 - 2016
100%
90%

6%

8%

Q1 2017
Q2 20177%

Q3 2017
Q4 20172018 or Later76%

Proportion of Respondents

3%

27%

80%

33%

39%

36%
52%

70%

48%

Increase
Allocation

60%
Maintain
Allocation

50%
40%

61%

48%

49%
53%

30%

43%

46%

6%

6%

Decrease
Allocation

20%
10%
0%

12%

19%
8%

16%

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Source: Preqin Investor Interviews, December 201611

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Source: Preqin Investor Interviews, December 2011 - December 2016

© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGESLARGEST BUYOUT DEALSAND EXITS
Fig. 11.41: 10 Largest Private Equity-Backed Buyout Deals in 2016
Portfolio Company

Investment
Type

Deal
Date

Deal Size(mn)

Deal Status

Investor(s)Bought from/
Exiting Company

Location

Industry

Merger

Feb-1615,000 USD

Completed

Apollo Global Management, Koch Equity
Development LLC, Protection 1 / ASG
Security**-

US

Electronics

Softbank Capital

FinlandGamingADT Security
Services, Inc.

Supercell Oy

BuyoutJun-168,600 USD

Announced

AVIC Capital, CITIC Capital, Pagoda
Investment, Shanghai Pudong
Development Bank, Sino-Rock Investment
Management, Tencent**, Zheng Hong
CapitalMultiPlan, Inc.

BuyoutMay-167,500 USD

Completed

GIC, Hellman & Friedman, Leonard Green& Partners

Ardian, Partners
Group, Starr
Investment Holdings

US

Healthcare IT

Team Health
Holdings, Inc

Public-toPrivate

Oct-16

6,100 USD

Announced

Blackstone Group-

US

Healthcare

Cabela's Inc

Add-onOct-165,500 USD

Announced

Bass Pro Shops**, Goldman Sachs MerchantBanking Division, Pamplona CapitalManagement-

US

RetailPlaytika Ltd

BuyoutJul-164,400 USD

Announced

CDH Investments, China Minsheng Trust,
China Oceanwide Holdings Group, GiantInteractive Group, Hony Capital, YF Capital

Caesars
Entertainment
Corporation

IsraelGamingRackspace Hosting,Inc.

Public-toPrivate

Aug-164,300 USD

Completed

Apollo Global Management**, Searchlight
Capital Partners

-

US

IT

Ultimate Fighting
Championship Ltd

BuyoutJul-164,000 USD

Announced

KKR, MSD Capital, Silver Lake, William
Morris Endeavor Entertainment, LLC**

-

US

Media

Vertiv

BuyoutAug-164,000 USD

Completed

Platinum Equity**

EmersonUS

IT
Infrastructure

Air Products'
Performance
Materials Operations

Add-onMay-163,800 USD

Announced

CVC Capital Partners, Evonik IndustriesAG**

Air Products &Chemicals

US

Chemicals

Source: Preqin Private Equity Online

Fig. 11.42: 10 Largest Private Equity-Backed Buyout Exits in 2016
Portfolio
Company

Investment
Date

Investment
Type

Deal Size(mn)

Investor(s)

Exit
Date

Exit Type

Exit Value(mn)

Acquiror (Exit)

Location

Industry

MultiPlan,
Inc.*

Feb-14

Buyout4,400 USD

Ardian, Partners
Group**, Starr
Investment Holdings**

May-16

Sale to GP

7,500 USD

GIC, Hellman &Friedman, Leonard
Green & Partners

US

Healthcare IT

HiltonWorldwide*

Jul-07

Public-toPrivate

26,000 USD

Blackstone Group**

Oct-16

Trade Sale

6,500 USDHNA Group**

US

LeisureQuirónsalud

Jan-11

Buyout900 EUR

CVC Capital Partners**

Sep-16

Trade Sale

5,760 EUR

Fresenius Medical
Care AG**

Spain

Healthcare

CapsugelApr-11

Buyout2,375 USD

KKR**

Dec-16

Trade Sale

5,500 USD

Lonza Group Ltd**US

Pharmaceuticals

Blue Coat
Systems, Inc.

Mar-15

Buyout2,400 USD

Bain Capital**

Jun-16

Trade Sale

4,650 USD

Symantec Corp**US

IT Security

The Sun
Products
Corporation

Jul-08

Buyout2,600 USD

Vestar Capital Partners

Jun-16

Trade Sale

3,600 USD

Henkel AG**US

Consumer
Products

EpicorSoftwareApr-11

Public-toPrivate

976 USD

Apax Partners**

Jul-16

Sale to GP

3,300 USD

KKR**

US

SoftwareMetaldyne
PerformanceGroup Inc.

Aug-14Merger-American Securities,
Grede Holdings LLC**,
Hephaestus Holdings
Inc.**, Metaldyne**

Nov-16Merger3,300 USD

American Axle &Manufacturing**

US

Manufacturing

Vogue
International

Jan-14

Buyout-Carlyle Group**

Jun-16

Trade Sale

3,300 USD

Johnson &Johnson**US

Manufacturing

BATS Global
Markets, Inc.

Aug-13

Buyout-Spectrum Equity, TA
Associates

Sep-16

Trade Sale

3,200 USDCBOE Holdings,
Inc.**

US

Financial
Services*Denotes a partial exit.
**Indicates lead investor(s)/acquiror(s).

12

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Source: Preqin Private Equity Online© Preqin Ltd. 2017 / www.preqin.com

2017 PREQIN GLOBAL PRIVATE EQUITY & VENTURE CAPITAL REPORT - SAMPLE PAGES

VENTURE CAPITAL DEALS

2016 IN CONTEXT
2016 saw a 13% drop in the numberof financings from 2015, reversing the
upward trend of the previous six years.
However, it is important to note that2015 was a record year for venture capitaldeal activity with 11,115 financings, andaggregate deal value was only 6% lower in2016 than in 2015.

3,500

50
45

3,000

40
2,500

35

2,000

30
25

1,500

20

1,000

15
10

500

5

0

0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

Key Findings:■ The rise in value was driven by ahigh number of $1bn+ transactions,
including six of the top 10 largest
deals in the period 2007-2016.
■ High valuations have seen averagedeal size rise nearly 2.5x since 2013
for transactions at Series B and laterstages (see pages 128-129).
■ Q2 2016 had the second highest
aggregate deal value of any single
quarter at $42bn, trailing only Q32015 ($43bn).

Fig. 12.13: Number and Aggregate Value of Venture Capital Deals* Globally,
Q1 2007 - Q4 2016

Aggregate Deal Value ($bn)

n 2016, 9,719 venture capital deals wereannounced globally, valued at a total of$134bn (Fig. 12.13). While this represents
the lowest number of deals in any year
since 2013, 2016 saw the second highest
aggregate deal value on record.

No. of Deals

I

2007

2008

2009

2010

No. of Deals

2011

2012

2013

2014

2015

2016

Aggregate Deal Value ($bn)
Source: Preqin Private Equity Online

CHINA’S EMERGENCE AND REGIONALSHIFTS2016 saw a continuation of the shift
in venture capital activity from North
America to Greater China, as shown in Figs.
12.14-12.18:■ The number of financings inNorth America in 2016 (3,793) was
substantially lower than the previous
year (5,013), causing the region’s
market share to decline by six
percentage points over the period

Fig. 12.14: Number of Venture Capital Deals* by Region,
2007 - 2016■■

to 39%, substantially off its historical
62% average (2007-2014).
While there were fewer financings inGreater China in 2016 than in 2015
(2,047 vs. 2,202 respectively), its shareof the market increased for the fourthconsecutive year to represent 21% oftransactions, well above the historical
average (8%, 2007-2014).
Venture capital-backed financings inNorth America amounted to $61bn in2016 (down 15% from 2015),

Fig. 12.15: Proportion of Number of Venture Capital Deals* by
Region, 2007 - 2016

12,000100%
90%

10,000
Proportion of Deals

80%

No. of Deals

8,000
6,000
4,000

70%
60%
50%
40%
30%
20%

2,000

10%
0

0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
North America

EuropeGreater China

India

IsraelOther

Source: Preqin Private Equity Online

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
North America

EuropeGreater China

India

IsraelOther

Source: Preqin Private Equity Online*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.

13

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