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Christopher Elvin Head of Private Equity Products Private Capital in 2017 Key Findings from the 2017 Preqin Global AlternaAves Reports
ChristopherElvinHeadofPrivateEquityProducts
PrivateCapitalin2017KeyFindingsfromthe2017PreqinGlobalAlternaAvesReports
2016Round-Up
www.preqin.com
PrivateCapitalhasevolved
www.preqin.com
InvestorPor<oliosBecomingEverMoreDiversified
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
PrivateCapitalAUMataRecordHigh-$4.5tn
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16
NaturalResources
Infrastructure
RealEstate
PrivateDebt
PrivateEquity
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
PrivateCapitalFundraisingClosetoPre-GFCLevels
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
AggregateCapitalRaised($bn
)AnnualAggregatePrivateCapitalRaisedbyAssetClass,2004-2016
NaturalResources
Infrastructure
PrivateDebt
RealEstate
PrivateEquity
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
ButCapitalBecomingMoreConcentrated
0
200
400
600
800
1000
1200
1400
1600
1800
2010 2011 2012 2013 2014 2015 2016
GlobalAnnualPrivateCapitalFundraising,2010to2016
No.ofFundsClosed AggregateCapitalRaised($bn)
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
RecordLevelsofCapitaltoInvest
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16
DryPo
wde
r($b
n)
PrivateCapitalDryPowderoverTimebyAssetClass,2005-2016
NaturalResources
Infrastructure
RealEstate
PrivateDebt
PrivateEquity
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
RecordNumberofBuyoutDealsbutValueDrops
0
50
100
150
200
250
300
350
400
450
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2012 2013 2014 2015 2016
DealValue
($bn
)
No.ofD
eals
PE-BackedBuyoutDeals,2012-2016
No.ofDeals AggregateDealValue($bn)
0
100
200
300
400
500
600
0
500
1000
1500
2000
2500
2012 2013 2014 2015 2016
ExitVa
lue($bn
)
No.ofE
xits
PE-BackedBuyoutExits,2012-2016
No.ofExits AggregateExitValue($bn)
Source:PrivateEquityOnline
www.preqin.com
VentureCapitalDealAcRvity>$100bnfor2ndYear
-
20
40
60
80
100
120
140
160
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2012 2013 2014 2015 2016
DealValue
($bn
)
No.ofD
eals
VentureCapitalDeals,2012-2016
No.ofDeals AggregateDealValue($bn)
-
20
40
60
80
100
120
140
0
200
400
600
800
1000
1200
1400
1600
2012 2013 2014 2015 2016
No.ofE
xits
VentureCapitalExits,2012-2016
No.ofExits AggregateExitValue($bn)
Source:PrivateEquityOnline
www.preqin.com
RealEstateExitAcRvityHitsNewHighs
-
50
100
150
200
250
300
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012 2013 2014 2015 2016
DealValue
($bn
)
No.ofD
eals
PE-RealEstateDeals,2012-2016
No.ofDeals AggregateDealValue($bn)
0
50
100
150
200
250
0
500
1000
1500
2000
2500
2012 2013 2014 2015 2016
ExitVa
lue($bn
)
No.ofE
xits
PE-RealEstateExits,2012-2016
No.ofExits AggregateExitValue($bn)
Source:RealEstateOnline
www.preqin.com
Morethan7,900LimitedPartners
49%
28%
15%
8%
PrivateCapitalLimitedPartnerUniversebyLocaAon
NorthAmerica
Europe
AsiaPacific
RestofWorld
www.preqin.com
LimitedPartnerEvoluRon
ChallengesToday
www.preqin.com
KeyChallenges/IssuesforPrivateCapitalFundManagersin2017
Source:2017PreqinGlobalAlternaAvesReports
PrivateEquity PrivateDebt RealEstate Infrastructure NaturalResources
Valuations Valuations Valuations ValuationsOngoingVolatility/UncertaintyinGlobalMarkets
ExitEnvironment FundraisingOngoingVolatility/UncertaintyinGlobalMarkets
DealFlow Fundraising
OngoingVolatility/Uncertaintyin
GlobalMarketsDealFlow Fundraising
OngoingVolatility/UncertaintyinGlobalMarkets
PublicPerceptionofIndustry
www.preqin.com
PrivateCapital:NotImmunefromLowerReturnEnvironment
-5%
0%
5%
10%
15%
20%
25%
30%
1YeartoJun-13
1YeartoDec-13
1YeartoJun-14
1YeartoDec-14
1YeartoJun-15
1YeartoDec-15
1YeartoJun-16
Med
ianAn
nualize
dRe
turn
RollingOneYearPrivateCapitalHorizonIRRs
RealEstate
Buyout
VentureCapital
MezzaninePrivateEquity
DistressedPrivateEquity
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
PrivateCapitalOutperformedintheLongTerm
0
50
100
150
200
250
300
350
Inde
xRe
turns(Re
basedto100)
PrEQInPrivateCapitalQuarterlyIndexvs.S&P500
PrivateCapital
S&P500Index
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
DryPowderatRecordLevelsbutCapitalOverhangisDecreasing
4.64.4
3.4 3.5
4.1
3.5
2.3
2.7
3.6
2.42.1
2.52.8
2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
RaAo
RaRoofYear-endPrivateCapitalDryPowdertoPriorYearTotalCapitalCalled
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
FundraisingMoreCompeRRveThanEver&InvestorsareFindingSourcingFundsMoreChallenging
0% 20% 40% 60% 80% 100%
Infrastructure
RealEstate
HedgeFunds
PrivateEquity
LPsViewsonCurrentFundraisingClimateTodayvs.12MonthsAgo
MoreChallenging NoChange LessChallenging
Source:2017PreqinGlobalAlternaAvesReports
Outlookfor2017
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Nearly3,000PrivateCapitalFundsinMarket
www.preqin.com
DistribuRonsConRnuingtoOutstripCall-Ups
0
100
200
300
400
500
600
700
800
900
1000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H12016
PrivateCapital:CapitalCalledUpandDistributed,2000-2016
CapitalCalledUp($bn)
CapitalDistributed($bn)
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
InsRtuRonalPlansfor2017
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
AndfortheLongerTerm
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
FundManagersConfidentinFindingValue
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Infrastructure
RealEstate
PrivateEquity
FundManagersExpectedInvestmentsin2017vs2016
MoreCapital
SameAmountofCapital
LessCapital
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
InvestorPerformanceExpectaRons
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
RealEstate
Infrastructure
PrivateEquity
PrivateDebt
HedgeFunds
NaturalResources
InsAtuAonalInvestors'ReturnExpectaAonsforAlternaAveAssetsin2017Comparedwith2016
WillPerformBeier
WillPerformAbouttheSame
WillPerformWorse
Source:2017PreqinGlobalAlternaAvesReports
www.preqin.com
KeyTakeaways• PrivateCapitalinrobusthealth–excellentlong-termreturnsdrivenrapidAUMgrowth
• ClearcurrentconcernsovervaluaAons;LPsandGPsalikecauAousaboutforward-lookingprospects
Ø ButcommiiedtofurtherincreasingallocaAons–risk/rewardairacAveasever
• FundraisinghighlycompeAAveandcapitalbecomingincreasinglyconcentratedbutdistribuAonsandLPsaAsfacAonconAnuingtodrive
• Deal/ExitacAvity-SAllaseller’smarketbutwiderpoliAcal/financialinstabilitymaycauseshiningofthescales
www.preqin.com
DataSources
• Freereportsavailablefromwww.preqin.com/research
• Preqin’sonlineservices:www.preqin.com/services
