Private Equity 20134 Year End Review

2013 Year end reviewPrivate equity

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01.21.14 www.bloombergbriefs.com Bloomberg Brief | Private Equity 2013 Global Review 2

“We’re selling everything that is not nailed down,” Apollo Global Management’s Leon Black said at a conference in April, neatly summarizing the story line of the year for the buyout industry. Every firm was selling or taking public its companies — not to mention dividend recaps — few were mak-ing new investments, and the deals that did get done were rich.

While explanations varied, the on-again, off-again end of quantitative easing and a sense that interest rate risk is coming to dominate everything else clearly had something to do with it. As rates go up, companies being acquired at multiples of 12 to 14 times Ebitda today may well sell for around only 10 times in three to four years, Bela Szigethy, co-chief executive officer of Riverside Co., said at a press lunch in November, reiterating Black’s “everything-must-go” sentiment.

Meantime, fund-raising probably reached new heights in 2013, as the flood of exits meant lots of cash was returned to limited

partners, who had to find places to redeploy it. It was a good example of “careful what you wish for,” since in a low-yield world, they struggled to put that money back out.

Why the emphasis on the word “probably” above? It’s not like it was easy to collect data in private equity, and it’s getting harder, with more LP money going into secretive pockets of the industry — separate ac-counts, co-investments alongside individual deals. One telling example: In the two years to September 2013, California Public Employees’ Retirement System commit-ted $2.1 billion to customized investment accounts — 44 percent of the $4.7 billion it allocated to funds. Another $600 million was set aside for co-investments.

Combined, all these trends likely mean that a new capital overhang is building in private equity that, without great care, may turn into a new bubble.

Perhaps these dynamics on the buyout side explain the view of one panel of tech investors we heard last year. On the panel

were a venture, a growth, a buyout and a public tech investor. They all agreed, remarkably, that now is venture’s time. Unspoken here was that same prospect of rising interest rates, to which venture is less exposed.

Even amid the fund-raising boom, fallout from the financial crisis continued. The industry, like global society, displays a widening wealth gap between the haves and have-nots. Many of the have-not firms continue to hang on with fund extensions, structured secondaries, or spinouts into new firms, and the industry has yet to shrink much.

And finally, one story line that has yet to materialize: private equity firms figuring out how to tap defined contribution plans. We were convinced this would happen in 2013, but a number of barriers have proved too high to hurdle so far: daily liquidity and valu-ation requirements, too-high fees and pen-sion plans’ herd mentality. Will private equity finally tap this market in 2014? Stay tuned.

From the editor Commentary by Jennifer rossa

2013: year of the Buyout exit, the Soaring vC valuation and the Separate account

the BiG PiCtureTimeline, fundraising totals, the exit picture. Pages 3-4

vieWPoiNtSIndustry participants pick their story of 2013 and make predictions for 2014. Pages 7, 12, 15, 18, 23

FuNdSCharting just how we got to such a big fund-raising year, plus the biggest funds of the year and funds expected out in 2014. Pages 5-10

iNveStorSHow LPs invested in 2013, plus what kinds of funds interest them in 2014, how much money they have for them, and a meeting calendar. Pages 11-14

Buyout dealS & exitSSouthern Europe showed signs of life in 2013. Plus the biggest buyouts and exits via M&A and IPO. Pages 16-19

veNture dealS & exitSMapping New York’s venture boom. Also, just how many $100 million plus rounds were there in 2013? And, the biggest IPOs of the year, and how they’ve performed. Pages 20-22

NeWS treNdSThe most talked about private equity executive in 2013 was... Page 24

CoNteNtS

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July 10: The SEC votes to allow private equity firms to advertise they are raising money.

July 24: A circuit court rules that two Sun Capital Partners funds that owned a bankrupt company with pension fund obligations could be responsible for that company’s withdrawal liability.

April 12: KPS Capital Partners closes on a $3.5 billion special situations fund. The fund drew more than $9 billion of interest, according to one LP, showing how easily GPs with strong performance are raising money.

May 23: Alaska Permanent Fund Corp. authorizes up to $450 million for private equity co-investments in fiscal 2014, joining others like University of California Regents and New Mexico Educational Retirement Board in expressing more interest in the low-fee strategy.

2013 timeliNe

FEB.

April 18: Silver Lake Management garners $10.3 billion for its latest fund, the largest ever pool dedicated to technology buyouts.

June 19: Riverstone Holdings raises $7.7 billion for a new fund, more than its $6 billion target, as interest in energy deals rises.

APR.

MAy JuN. JuLy

DEC.

JAN.

Jan. 17: SurveyMonkey.com raises the largest venture round of the year with early investors selling about $444 million in equity. The recap valued the company at $1.35 billion, an early example of a trend of soaring valuations for online companies in 2013.

September: Pantheon Ventures begins pitching a private equity fund to defined contribution sponsors.

Jan. 23: NewGlobe Capital launches, intending to buy interests in end-of-life funds.

Feb. 14: Berkshire Hathaway and 3G Capital’s $27.4 billion purchase of HJ Heinz, the largest buyout of the year, is announced.

July 22: CVC Capital Partners amassed 10.5 billion euros for a fund, the largest raised by a European firm since the financial crisis.

Nov. 1: Energy Future pays off about $270 million in interest on its debt, delaying the restructuring and likely bankruptcy of the largest leveraged buyout of all time.

Nov. 6: Twitter goes public at $26 a share, giving backers including Union Square Ventures and Spark Capital paper returns in excess of $1 billion. Bloomberg calculates that at least 10 U.S. VC firms generated more than $1 billion in returns from IPOs and acquisitions in 2013.

Dec. 3: Oregon Investment Council’s Jay Fewel, a pioneer in investing in private equity, says he will step down after 24 years.

Dec. 11: Blackstone’s Hilton IPO prices at $20, giving Blackstone a paper profit of $8.5 billion. That ranks with Apollo Global Management’s profit from LyondellBasell Industries as one of the two biggest of all time.

Nov. 16: Former Treasury secretary Timothy Geithner says he’ll join Warburg Pincus as president. Other former Washingtonians joining private equity in 2013: former CIA director David Petraeus and former NATO Supreme Allied Commander in Europe Wesley Clark.

QuoTE oF ThE yEAR

“It’s like going into a haunted house, and every

time you go around a corner some ghost pops

up, and then a witch flies down on a broom,

and then you go into another room and some

devil tries to stab you with a pitchfork.”

— Jimmy Lee, the chief of investment banking

at JPMorgan, describing Michael Dell’s

encounter with Wall Street in an interview with

Bloomberg News. Dell’s sale to its founder and

Silver Lake was completed on oct. 29.

QuoTE oF ThE yEAR

“In our business, the biggest driver of returns is

the multiple of cash flow we can sell the business

at five years from now. I think that has more risk

today than it’s had at any moment since 2007.”

— Joe Baratta, Blackstone’s global head of

private equity, speaking at the Bloomberg Link

Dealmakers Summit in London.

MAR.

AuG. SEP. oCT. NoV.

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Fundraising Soars on interest in Buyout, real assets, debt, real estate Funds

aNy aSia PaCiFiC develoPed

aSia PaCiFiC emerGiNG

eaSterN euroPe

latiN ameriCa aNd

CariBBeaN

middle eaSt aNd aFriCa

North ameriCa

WeSterN euroPe

GraNd total

Buyout 60,539 3,275 10,230 8,507 1,396 1,918 72,266 47,352 205,483Debt 31,346 52 13 170 21,961 8,335 61,877Fund of Funds 6,430 160 2,087 513 9,190Growth 6,893 1,921 268 673 901 6,686 2,903 20,245Real Assets 24,741 989 100 780 50 11,135 5,491 43,287Real Estate 24,875 178 3,356 497 221 14,874 7,393 51,394Secondary 12,488 161 1,414 462 14,526Venture 5,231 123 987 132 195 421 13,784 1,822 22,696GraNd total 172,544 3,628 17,496 9,167 3,542 3,842 144,208 74,271 428,698

Source: Bloomberg. Amounts represent capital closed in 2013. Non-dollar amounts have been converted.

the BiG PiCture

Fundraising rose by more than one-third from last year’s $315 billion. Real asset funds more than doubled their year-ago totals. Buyout, the largest category, rose by more than 50 percent, and debt, real estate and growth also gained. Venture fell by 10 percent, and funds of funds and secondary funds both saw big declines.

exits dominated in 2013 as Federal reserve taper talk took Center Stage

May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 0

10000

20000

30000

40000

50000

60000 Deal Volume IPO Offer Volume M&A Exit Volume

Source: Bloomberg $M

Many firms focused on returning capital to investors and paring down portfolios ahead of an eventual rise in interest rates. As the chart shows, the total value of M&A sales and IPOs of PE-backed companies topped PE dealmaking in five of the last seven months of 2013.

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FuNdraiSiNG iN ChartS Compiled by Jennifer rossa, inessa Collier and adam Kruithof

In 2013, 1,034 funds raised about $429 billion globally, up from around $315 billion in 2012. The average size of a buyout fund holding a final close in 2013 was about $1.5 billion, up from about $700 million in 2012, as more very large funds held final closes. The average size VC fund was $152 million, more or less flat with 2012’s $154 million.

Western Europe captured more market share by volume in 2013, likely on the region’s better macroeconomy. We reclassed funds targeting both Asia Pacific Developed and Asia Pacific Emerging to “Multiple” this year.

1% 4%

34%

1% 1% 40%

2%

17%

2% 8%

47%

3% 4%

23%

1% 12%

Asia Pacific Developed

Asia Pacific Emerging

North America

Latin America and Caribbean

Middle East and Africa

Multiple

Eastern Europe

Western Europe

Source: Bloomberg

# of Funds

Volume

2013 Fundraising by Region

While fund managers in Africa and some parts of Latin America say they saw more investor interest in 2013, that has yet to translate into those areas capturing a larger percentage of commitments.

2% 3% 3%

32%

1% 1% 46%

1%

11%

2%

6% 2%

48%

3% 2%

23%

2% 12%

Asia Pacific Developed

Asia Pacific Emerging

Asia Pacific Emerging &DevelopedNorth America

Latin America and Caribbean

Middle East and Africa

Multiple

Eastern Europe

Western EuropeSource: Bloomberg

# of Funds

Volume

2012 Fundraising by Region

As the popups show, large-cap funds increased their share of the buyout pool to 40 percent from 21 percent. In the venture category, early-stage funds took share from multi-stage ones in 2013 relative to 2012.

43%

12% 4% 6%

6%

13%

8% 8% 27%

10%

9% 11%

4%

14%

3%

22%

Buyout

Debt

Fund of Funds

Growth

Other

Real Assets

Real Estate

Secondary

Venture

Source: Bloomberg

# of Funds

Volume

2012 Fundraising by Type

Buyout and real assets increased their shares of a bigger pie, driven by interest in energy funds and more large funds in the market. Funds of funds still face tough times as direct access to firms has gotten easier.

48%

15% 2%

5%

10%

12% 3% 5% 26%

11%

6% 11% 7%

12%

3%

24%

Buyout

Debt

Fund of Funds

Growth

Real Assets

Real Estate

Secondary

Venture

Source: Bloomberg

# of Funds

Volume

2013 Fundraising By Type

EXPLORE THE WORLD OF PRIVATE EQUITY PEM <G

O>

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0 20 40 60 80 100 120

Fund of Funds

Secondary

Real Assets

Growth

Debt

Real Estate

Venture

Buyout

Exceeded Target Met Target Missed TargetNumber of Funds Closing in 2013

Source: Bloomberg

Number of Firms That Beat, Met, Missed Target

26%

8%

4%

11% 9%

8%

3%

31%

Fund Launches

Buyout

Debt

Fund of Funds

Growth

Real Assets

Real Estate

Secondary

Venture

Source: Bloomberg

Distribution of Fund Launches by Type

0 30 60 90 120 150 180 210

Less than $50M

$50M to <$100M

$100M to <$500M

$500M to <$1B

$1B to <$2B

$2B < $5B

$5B to <$10B

$10B or more

Buyout Venture Real Estate DebtGrowth Fund of Funds Real Assets Secondary

Source: Bloomberg

Number of Funds With 2013 Closes (by Size)

Distribution of Funds by Size of Final CloseThe $100 million to $500 million range was by far the most popular size for funds of all types holding final closes in 2013. The sub-$50 million category was also popular among venture funds, largely due to small seed funds holding closes. The sector break-down of funds raising $1 billion or more is as follows: 35 buyout, three venture, 18 real estate, 14 debt, three growth, one fund of funds, 10 real asset funds, and four secondary funds.

Data compiled by Bloomberg shows that 31 percent of funds that launched in 2013 and have yet to hold a close were in the venture category. In contrast, among funds holding closes, only 24 per-cent were VC, as shown on page 5.

Secondary funds exceeded their targets 74 percent of the time in 2013, data compiled by Bloomberg shows. Buyout funds exceed-ed target 64 percent of the time. At the other end of the spectrum venture funds and funds of funds beat stated targets only 30 percent of the time.

Sweet Spot for Funds is $100 million-$500 million; lots of vC Fund launches

FuNdraiSiNG iN ChartS Compiled by Jennifer rossa and sCott Johnson

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vieWS: aSia/emerGiNG marketS

Steven Cowan, managing director at 57 StarsStory: Appetite for emerging markets equities experienced a cyclical decline in investor sentiment as a result of renewed confidence in the U.S. As a result of this shift, but also the return to market of many U.S. and European private equity firms, emerging markets private equity witnessed a drop in capital-raising activity. We expect this evolution could be quite positive with respect to the investment environment over the next few years.one thing I’d have done differently: In retrospect, I would have made fewer New Years’ resolutions. And, I’d have kept more of them.Worry: We continue to keep our eyes on the Federal Reserve and the impact it may have on global markets.Surprise: The potential for returning investor interest in India if there is strong equity market performance, elec-tion results which are perceived to be positive, and rupee appreciation.

Veronica John, senior adviser at Diamond Dragon Advisers in SingaporeStory: Investors have started giving more attention again to Southeast Asia, to more developed Asian markets like Japan and just having an overall re-think of what their portfolio allocation is going to look like in the next three years, given that they don’t want to concentrate so heavily on India and China. They want diversification.Worry: Investors continue to maintain a herd mentality. You don’t go into private-equity markets when they’re hot. You go into them when they’re not so hot. We still have significant challenges in convincing prospective LPs to commit to high-quality GPs in markets that are out of favor, such as India.Surprise: The situation in China is a little more troubling than people are predicting. There’s going to be an upswing in social unrest; growth may slow considerably more than predicted; Bank NPLs will be higher than expected and more difficult to work out. Also, India may make the necessary policy changes to come back.

haide Lui, principal at harbourVest in hong KongStory: Unexpectedly large number of home run deals and liquidity events across Asia, particularly from VC.one thing I’d have done differently: I wish I had spent more time on solid ground rather than on planes.Worry: Negative impact on valuation and ultimately on performance if the larger firms choose to deploy dry pow-der quickly rather than be selective and deploy at a slower pace.Surprise: Despite slowing economic growth in China, a sustained stream of liquidity and strong exits.

Davinder Sikand, Partner & head of Sub-Saharan Africa Business, The Abraaj GroupBiggest 2014 investment-related worry: There is nothing that is particularly worrying for us. Although there are more players entering our markets, we see this as healthy competition.Surprise of the year in 2014: If there isn’t an increase in transactions like Fan Milk, given the attractive opportu-nities that exist for deal-making and growth on the continent. Sub-Saharan Africa has the youngest population in the world, and will continue adding to its workforce, thereby growing its middle and consumer classes.

Christopher Meyn, senior partner and head of private equity at Gavea InvestimentosStory of 2013: 2013 was a markedly slower year for Brazilian PE. Despite solid long-term fundamentals in Brazil, a slowdown in the economy and concerns around a somewhat heavy-handed federal government appear to have reduced the appetite for PE investing and fundraising. Additionally, extremely selective local equity capital markets and more cautious strategic buyers limited realization opportunities in 2013. one thing I’d have done differently: We could have built a stronger cash war chest at portfolio companies dur-ing the first half when interest rates were lower and lenders had strong appetite for putting money to work. The significant tightening of local credit markets occurred earlier than expected.Worry: October elections and, to some extent a potentially “dead” June with Brazil hosting the World Cup, will likely create uncertainty and volatility. Caution is the key word for 2014.Surprise: I believe we could very well see a re-opening of local capital markets particularly in the beginning and at the end of the year. I also think we could see some positive surprises with presidential elections. The markets seem to be pricing in “more of the same” whereas Gávea thinks there is upside in either a regime change or simply with a better, more focused existing party re-election.

india’s underdog Status; election Concerns in Brazil; african Growth Bloomberg Brief: Private Equity asked a number of fund managers and investors what the story of 2013 was, one thing they would have done differently, and their biggest worry and surprise prediction for 2014. Here’s what they had to say:

COMPILED BY SUSANNAH BIRKWOOD, ARI LEVY, JENNIFER ROSSA AND SABRINA WILLMER

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Return of the Generalist Mega Funds

FuNd Name StrateGy reGioN SeCtor total ($m) NoteS

1 Apollo Investment Fund VIII LP Buyout North America Generalist 17,500 Largest fund since financial crisis2 CVC Capital Partners VI LP Buyout Western Europe Generalist 13,831 Took seven months to raise3 Carlyle Partners VI LP Buyout North America Generalist 13,000 Includes $1B from the firm and employees4 Warburg Pincus Private Equity XI LP Buyout Any Generalist 11,2005 Silver Lake Partners IV LP Buyout Any Technology 10,300 Cut fees for big clients6 KKR North America Fund XI LP Buyout North America Generalist 8,3007 Riverstone Global Energy & Power Fund V LP Buyout Any Energy 7,700 Its first fund raised without partner Carlyle8 Apax Europe VIII LP Buyout Western Europe Generalist 7,586 Offered dollar option on concerns over euro9 Fifth Cinven Fund LP Buyout Western Europe Generalist 7,083 Offered fee discounts for early LPs

10 Brookfield Infrastructure Fund II LP Real Assets Any Infrastructure 7,000 The second largest infrastructure fund11 Lone Star Real Estate Fund III LP Real Estate Any Real Estate 6,600 Biggest fund for global property deals12 EIG Energy Fund XVI LP Real Assets Any Energy 6,00012 KKR Asia Fund II LP Buyout Asia Pac Developed Generalist 6,00014 Lone Star Fund VIII LP Debt North America Real Estate 5,08515 Highbridge Principal Strat - Mezz Partners II LP Debt Any Generalist 5,00015 Blackstone/GSO Capital Solutions Fund II Debt Any Generalist 5,000 Offered fee discount for first close15 Providence Equity Partners VII LP Buyout Any Communications 5,000 Less than half the size of predecessor15 EnCap Energy Capital Fund IX LP Real Assets North America Energy 5,00019 Nordic Capital Fund VIII LP Buyout Western Europe Generalist 4,790 Cut fund target by 25%20 Brookfield Strategic RE Partners LP Real Estate Any Real Estate 4,40021 Triton Fund IV LP Buyout Western Europe Generalist 4,245 Took eight months to raise22 Starwood Distressed Opp Fund IX Global Real Estate Any Real Estate 4,20023 AXA LBO Fund V LP Buyout Western Europe Generalist 3,78724 Platinum Equity Capital Partners III LP Buyout Any Generalist 3,75025 Macquarie European Infrastructure Fund 4 Real Assets Western Europe Infrastructure 3,60726 Dover Street VIII LP Secondary Any Generalist 3,60027 KPS Special Situations Fund IV LP Debt Any Generalist 3,500 Saw more than $9B of interest27 Blackstone RE Debt Strategies II LP Debt Any Real Estate 3,50027 TowerBrook Investors IV LP Buyout Any Generalist 3,500 Raised in four months30 Crescent Mezzanine Partners VI LP Debt Any Generalist 3,40031 ICG Europe Fund V Debt Western Europe Generalist 3,36232 HgCapital 7 LP Buyout Western Europe Generalist 3,04833 Highbridge Principal Strat - Spec Loan Fund III LP Debt North America Generalist 3,00034 Wayzata Opportunities Fund III LP Debt North America Generalist 2,70034 MBK Partners III Inc Buyout Asia Pac Emerging Generalist 2,70036 Cerberus Institutional Partners V LP Buyout Any Generalist 2,61037 InSight Venture Partners VIII LP Growth North America Technology 2,570 Carry rises to 25% on net IRR of 25%+38 Oaktree Real Estate Opportunities Fund VI LP Real Estate Any Real Estate 2,30039 Trilantic Capital Partners V LP Buyout North America Generalist 2,187 Formerly Lehman Brothers’ merchant bank40 Blackstone Real Estate Partners Europe IV LP Real Estate Western Europe Financials 2,07641 Equistone Partners Europe Fund IV LP Buyout Western Europe Generalist 2,017 First solo fund from Barclays’ spinout42 Crown Global Secondaries III PLC Secondary Any Any 2,00042 NB Secondary Opportunities Fund III LP Secondary Any Any 2,000

Source: Bloomberg. Non-dollar figures have been converted.

larGeSt FuNdS

In 2013, 81 funds held final closes on more than $1 billion, up from 49 in 2012. Funds of $2 billion or more are shown here. The year’s largest fund, Apollo Investment Fund VIII, raised $17.5 billion. The largest 2012 fund: Blackstone’s $13.3 billion Real Estate Partners VII.

Firms Find Bigger is Better in 2013

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North America Buyout/Energy/Distressed

Future FuNdS: likely iN market iN 2014 COMPILED BY SABRINA WILLMER

Firm Name FuNd # PreviouS FuNd SizeABRY Partners Fund VIII $1.6 billionAmerican Industrial Partners Fund VI $700 million

American Securities Fund VII $3.6 billionArcLight Capital Holdings Fund VI $3.3 billionBertram Capital Fund III $500 millionBison Capital Fund V $218 million Blackstreet Capital Fund III $91 millionBlackstone Energy Partners Fund II $2.5 billion

Castanea Partners Fund IV $575 millionCenterbridge Partners Fund III $4.4 billionCharlesbank Capital Partners Fund VIII $1.5 billion

CI Capital Partners Fund III $620 millionCressey & Company Fund V $385 million EnCap Flatrock Fund III $1.75 billionEnergy Investors Funds Fund V $1.71 billionEnergy Spectrum Capital Fund VII $999 millionFrancisco Partners Fund IV $2 billionFreeman Spogli & Co. Fund VII $735 millionThe Gores Group Fund IV $2 billionJ.F. Lehman & Company Fund IV $575.5 millionJLL Partners Fund VII More than $800 millionJMI Equity Fund VIII $875 millionKayne Anderson Capital Advisors (growth equity) Fund III $100 million

Kelso & Company Fund IX $5.1 billionKinderhook Industries Fund IV $300 millionLightyear Capital Fund IV $954 millionLincolnshire Management Fund V $835 millionLinden LLC Fund III $375 millionLittlejohn Fund V $1.34 billion Madison Dearborn Partners Fund VII $4.1 billion

Mason Wells Fund IV $525 millionMerit Energy Company Fund IX $912 millionMonomoy Capital Partners Fund III $400 millionNatural Gas Partners Fund X $3.6 billionPfingsten Partners Fund V $525 millionPrairie Capital Fund VI $300 millionProphet Equity Fund II $275 millionQuantum Energy Partners Fund VI $2.5 billionResilience Capital Partners Fund IV $225 million

Seidler Equity Partners Fund V $260 millionSheridan Production Partners Fund III $1.8 billion

Silver Lake Sumeru Fund II $1.1 billionSpectrum Equity Fund VII $680 million

u.S. VentureFirm Name FuNd # PreviouS FuNd SizeAccel Partners Fund XII $475 millionFounders Fund Fund V $625 millionFlagship Ventures Fund V $270 millionGGV Capital Fund V $625 millionLightspeed Venture Partners Fund X $675 million

Oak Investment Partners Fund XIII $2.56 billion

European FundsFirm Name FuNd # PreviouS FuNd SizeAdamant Ventures Fund I N/AAltor Equity Partners Fund IV EUR2 billionAnaCap Financial Partners Fund III EUR575 millions

Bridgepoint Fund V EUR4.8 billionCapiton Fund V EUR350 millionCharterhouse Capital Partners Fund X EUR4 billion

ECI Partners Fund X GBP437 millionExponent Private Equity Fund III GBP800 millionGilde Equity Management Fund III EUR200 millionHitecVision Fund VIII $1.5 billionInflexion Private Equity GBP375 millionKKR Europe Fund IV $5.9 billionLife Sciences Partners Fund V $100 millionParagon Partners Fund II EUR220 millionPhoenix Equity Partners 2014 Fund GBP450 millionProA Capital Fund II EUR250 millionSegulah Fund V SEK 5 billionSilverfleet Capital Fund II EUR670 millionSovereign Capital Fund IV GBP250 millioStirling Square Capital Partners Fund III EUR375 million

Waterland Fund VI EUR1.1 billionXenon Private Equity Fund VI EUR150 million

Firm Name FuNd # PreviouS FuNd SizeSycamore Partners Fund II More than $1 billionSymmetric Capital Fund II $202 millionTA Associates Fund XII $4 billionThoma Bravo Fund XI $1.275 billionThomas H. Lee Partners Fund VII $8 billionTPG Capital Fund VII $19.8 billionVista Equity Partners Fund V $3.5 billionWaud Capital Partners Fund IV $463 millionWelsh, Carson, Anderson & Stowe Fund XII $3.7 billion

Wynnchurch Capital Fund IV $603 million

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24


Mezzanine FundsFirm Name FuNd # PreviouS FuNd SizeAccel-KKR Structured Capital Fund II $180 million

Audax Private Equity Fund IV $1 billionCaltius Capital Management Fund V $500 millionKayne Anderson Senior Credit Fund II $350 million

Summit Partners Fund V (subordinated debt fund) $840 million

Asian FundsFirm Name FuNd # PreviouS FuNd SizeCapital Today Fund III $400 millionCITIC Private Equity Fund II $990 millionHahn & Company Fund II $750 millionHao Capital Fund III $400 millionLegend Capital Fund VI $500 millionLunar Capital Fund IV $200 million Northstar Group Fund IV $820 millionSAIF Partners Fund V $1.25 billion Unitas Capital Fund IV $1.2 billion

SecondariesFirm Name FuNd # PreviouS FuNd SizeColler Capital Ltd. Fund VII $5.5 billionPantheon Fund V $3 billion

Fund of FundsFirm Name FuNd # PreviouS FuNd SizePrivate Advisors Fund VI $340 million Siguler Guff Distressed Fund V $1.3 billion

Future Funds Continued...

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iNveStorS

lP Name 2014 Pe/altS PlaN alloCatioN StrateGy For 2014 2013 CommitmeNtS aum*

Adveq Management Expects to keep the same pace as 2013

Primary/secondary and co-invests in U.S./Europe turnaround, small/mid-sized buyouts; U.S./Asia VC and growth; global real assets

More than $500M to about 40 managers $5B

Arkansas Teacher Retirement System $230M Funds focused on buyouts, debt, distressed debt, turnaround, growth,

venture capital and international strategies $200M $13.7B

ATP Private Equity Partners EUR350M 70% to U.S./30% to Europe. Mostly small/mid-market buyout funds EUR350M EUR5.5BCalifornia Public Employ-ees' Retirement System

As much as $6B dur-ing FY13-14

60% to buyouts, 15% to credit-related strategies, 15% to growth equity and 10% to opportunistic About $3B for the fiscal year so far $260.9B as

of Aug. 31Danske Private Equity EUR300M Lower mid-market buyouts in Europe and the U.S. EUR200M EUR3BEmployees' Retirement System, State of Hawaii $200M Mostly U.S. small and mid-market buyout funds. Also, looking at sec-

ondaries and mezzanine finance strategies Targeting $200M $12.3B as of June 30

Fort Worth Employees' Retirement Fund $30Mto $50M Looking for a broad range of funds, mostly in developed markets About $45M About $2B

HarbourVest Partners Similar to 2013 U.S., Europe, Asia, EM across primary, secondary, and direct co-investments, private equity (venture, growth, buyout), private debt. About $3B More than

$35BIllinois State Board of Investment

About $125M to 5 PE funds Mostly mid-market buyout funds of $500 million to $1 billion in size Expect to commit $96M $13.5B

Kansas Public Employees Retirement System $350M Targeting investments across multiple sectors $275M $15.3B as

of Oct. 31Kentucky Retirement Systems About $300M Build out international program, invest in smaller mid-market buyout

funds in the U.S. and structured equity-focused managers About $350M by year-end $15B

L.A. County Employees Retirement Association $1.8B "Emphasis will be on small buyouts, international investments, venture

capital and special situations."$952M to 11 funds, $100M emerging managers, $300M coinvestments

$42.3B as of June 30

Los Angeles Fire & Police $300M-$350M 50% to buyouts, 30% to special situations and 20% to VC $280M $17.3B as of Nov. 19

Munich Private Equity Partners $250M Balanced approach focusing on Europe, North America, Asia and

secondaries. Final allocation of funding is client led $280M $2.3B

Nebraska Investment Council

About $150M to 5 managers Mostly small to mid-market buyout funds in North America $135M $18.8B as

of JuneNew Hampshire Retire-ment System

$200M-250M to 5 to 7 PE/debt funds No specific strategies $240M $6.6B as of

Sept. 30PKA Alternative Investment Partners

$600M to PE funds, $200M to energy/infra

PE focus is on buyout funds of $500 million to $2 billion in North America, Europe and Latin America

About $320M to PE and $330M to infra/energy EUR25B

Portfolio Advisors $3B 50% to buyouts, 30% to special situations and 20% to VC. More private credit for clients, opportunistic co-investments and secondaries $3B $32B

RCP Advisors $250M-$300M North American small buyout funds $250M $3BRhode Island State Invest-ment Commission

$100M-$120M to 5-8 PE partnerships NA NA $8B as of

Nov. 30SD County Employees Retirement Association Similar to 2013 Continuation of previous strategies in the U.S., Europe and Asia, includ-

ing distress and intellectual property $250M plus into private assets $9.5B plus

SF City and County Employees' Retirement System

Commit up to $400M for 9 months from Dec.

Alternative strategy deferred until new consultants for the program are able to participate and the strategic review has been completed. NA ~$18B

School Employees Retire-ment System of Ohio

$150M-$250M to PE funds during fiscal 2014

Mostly buyout. Will explore non-U.S./special situations funds (energy, secondary, distressed, co-invests, emerging markets)

$50M each to 2 PE funds during FY13

$11.4B as of Aug. 31

State Universities Retirement System, Illinois $250M to PE funds NA About $300M in FY13 $16B

Teachers Retirement System of Louisiana For FY14,up to $1.25B

$350M-$450M to buyout funds, up to $50M to VC, $125M-$175M to real estate, $275M-$350M to mezz/distressed debt funds, up to $50M to infra funds, $125M-$175M to commodities. Mostly U.S.-focused funds.

About $860M in private markets in FY13

$15.3B as of Sept. 30

Tennessee Consolidated Retirement System $300M-$500M Mostly looking at U.S. buyout funds expect to commit $874M $37.5B as

of June 30Texas Employees Retirement System

$1.25B to 6 to 10 funds and coinvestments Mostly buyout funds globally Roughly $600M in FY2013 $24.5B as

of OctoberWest Virginia Investment Management Board $250M-$275M $25M to a VC FoF, $25M to an int’l FoF, $40M each to 5-6 managers; 60-

80% in N. America, up to 20% W. Europe, up to 10% other regions. Estimated $250 million by year-end $15B

Source: Compiled by Sabrina Willmer with assistance from Susannah Birkwood *AUM represent most recent available.

LP Commitment Plans in 2014

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vieWS: North ameriCaN iNveStorS

liquidity; hot housing markets; learning JapaneseBloomberg Brief: Private Equity asked a number of fund managers and investors what the story of 2013 was, one thing they would have done differently, and their biggest worry and surprise prediction for 2014. Here’s what they had to say:


Steven Costabile, a managing director and global head of private funds group at PineBridge InvestmentsStory: The continued story starting in 2012 of very good liquidity coming off legacy portfolios. one thing I’d have done differently: I would have done more of the things that we had been doing. Worry: Some aspects of developed market private equity valuations and leverage have reached pre-2008 levels. Surprise: That we actually make it through 2014 without getting any surprises!

Vijoy Chattergy, chief investment officer of the Employees’ Retirement System of the State of hawaiiStory: The move by PE firms into the U.S. housing market. The buying of defaulted residential properties, led by firms like Blackstone, seemed to move to a new level as they began to IPO some restructured properties. The impact is well beyond just private real estate investing.one thing I’d have done differently in 2013: Held a smaller allocation to TIPS, and been less fearful of inflation in general.Worry: Continued bickering in DC and focus on curbing deficits instead of stimulating growth and employment.Surprise: U.S. growth prospects are less tied to the Federal Reserve balance sheet than is widely perceived; Eu-rope’s growth prospects are much worse than widely perceived.

Jim herrington, private and public equity investment officer, West Virginia Investment Management Boardone thing I’d have done differently: Worked more proactively and creatively to find allocation in over-sub-scribed funds.Worry: A rise in interest rates that is too fast.Surprise: Resurgence of venture capital, and tanking in some emerging markets.

yegin Chen, investment officer, acting as head of private equity, at San Diego County Employees Retire-ment AssociationStory: Greater awareness of economic and political risks in several previously-hot developing markets.one thing I’d have done differently: Learned more Japanese. Worry: Increasing political & economic stresses in some developing markets.Surprise: Developments (of a positive sort) involving China.

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iNveStorS iN ChartS Compiled by Jennifer rossa and sCott Johnson

For the first time, we took the limited partner commitment data we compile throughout the year and analyzed it to find out where inves-tors are putting money to work. The data is compiled primarily from public pension meeting minutes and development bank disclosures, and is by no means comprehensive, but does show trends such as development banks’ support of Middle Eastern and African funds and public pensions’ interest in diversifying their commitments beyond the mega buyout funds.

Pensions desire Smaller Funds; development Banks Play Big role in emerging markets

Development banks play a bigger role in promoting emerging managers and smaller funds. Still, the data backs up pension plan claims of being more interested in committing to mid-market funds than they used to be.

1% 16%

22%

45%

8% 8%

2% 6%

14%

49%

13%

16%

As Much as $100 Million $100 Million to $500 Million$500 Million to $1 Billion $1 Billion to $5 Billion$5 Billion to $10 Billion More Than $10 Billion

Commitments by Fund Target

Source: Bloomberg

Corporates, Endowments, FoF, Insurance, Pension, SWFs

#of Commitments

Value of Commitments

26%

57%

3% 14%

12%

49% 1%

38%

Development Banks

Public Pensions Diversify Beyond Mega Funds

Fittingly, the two largest funds raised last year, Apollo VIII and CVC VI, collected the largest number of publicly disclosed commitments. KPS and Vista Foundation Fund also appear to have diverse investor bases.

0 5 10 15 20Source: Bloomberg

Top Funds by Commitments

Apollo Investment Fund VIII CVC Capital Partners VI

Levine Leichtman Capital Partners V

Vista Foundation Fund II KPS Special Situations Fund IV

Riverside Capital Appreciation Fund VI Triton Fund IV LP

DCPF VI Oil and Gas Coinvestment Fund

EnCap Energy Capital Fund IX Olympus Growth Fund VI

Largest Funds of 2013 Leave No Stones unturned

Public pensions continue to struggle to figure out how to access emerg-ing markets. By number of commitments, development banks were most involved in the Middle East and Africa in 2013.

37%

5% 9%

48% 43%

12% 10%

35%

Any Asia Europe Latin America MENA North America


Source: Bloomberg

#of Commitments

Value of Commitments

Commitments by Region of Focus

Development Banks

MENA = <1% LatAm = 0%

13%

18%

21% 11%

31%

6% 20%

26%

25%

11%

16% 2%

Development Banks Support MENA Funds

Public pensions, which dominate the pie chart on the left, are most inter-ested in buyout funds, where they can put the largest amounts of money to work. Development banks’ key role in promoting growth is apparent.

42%

17%

11%

7% 6%

4% 4%

4% 3% 1% 1%

Buyout Real Estate DebtVenture Real Assets SecondaryCoinvestment Fund of Funds GrowthSeparate account Distressed, Special Opp.

Source: Bloomberg

Number of Commitments by Fund Strategy


Development Banks

5% 3% 10%

17%

17% 1% 2%

45%

Public Pensions Like Buyout, Real Estate

EXPLORE THE WORLD OF PRIVATE EQUITY PEM <G

O>

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2014 lP meetiNG CaleNdar COMPILED BY JINGYA GAO click on calendar entries for expanded lists

JANuARy PeNSioN FuNd

21 Massachusetts PRIM - Investment Committee

22 New Jersey State Investment Council

22 Pennsylvania State Employees' Retirement System

23 New York City Teachers' Retirement System -Board Meetings

23 Pennsylvania Public School Employ-ees' Retirement System

29 New York State Teachers' Retirement System -Board Meetings

29 Oregon Investment Council

30 New Mexico Public Employees Retire-ment Association -Board Meetings

APRIL PeNSioN FuNd

1 Massachusetts PRIM - Board Meeting

2 California State Teachers' Retirement System

3 Washington State Investment Board -Private Market Committee

9 Los Angeles County Employees' Retire-ment Association Investment Board

9 MERS of Michigan

14 California Public Employees' Retire-ment System

14 Illinois Teachers Retirement System


24 Alaska Retirement Management Board


FEBRuARy PeNSioN FuNd






12 MERS of Michigan

17 Florida SBA Investment Advisory Committee



19 North Carolina Investment Advisory Committee

MARCh PeNSioN FuNd






13 MERS of Michigan





MAy PeNSioN FuNd




8 MERS of Michigan




21 Alaska Permanent Fund Corp.



JuNE PeNSioN FuNd



11 MERS of Michigan








JuLy PeNSioN FuNd





15 Nebraska Investment Council

16 MERS of Michigan





AuGuST PeNSioN FuNd




13 MERS of Michigan

13 Wisconsin Investment Board


19 Texas Employees' Retirement System

22 Arizona State Retirement System


27 Rhode Island State Investment Commission

SEPTEMBER PeNSioN FuNd



11 Texas County & District Retirement System








oCToBER PeNSioN FuNd





8 MERS of Michigan


17 Texas Teacher Retirement System - Board Meeting

22 Rhode Island State Investment Commission



NoVEMBER PeNSioN FuNd




13 MERS of Michigan





20 Texas Teacher Retirement System - Board Meeting

20 University of Michigan Regents - Board

DECEMBER PeNSioN FuNd





5 Illinois State Board of Investment - Investment Committee



10 Alaska Permanent Fund Corp.



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vieWS: euroPe

Bifurcation in Fundraising; large european GPs’ SuccessBloomberg Brief: Private Equity asked a number of fund managers and investors what the story of 2013 was, one thing they would have done differently, and their biggest worry and surprise prediction for 2014. Here’s what they had to say:


Klaus Ruhne, partner at ATP Private Equity PartnersStory: That we are back before Lehman in terms of pricing of deals and debt.one thing I’d have done differently: Run a marathon.Worry: No growth.Surprise: Fed and ECB increase key interest rates.

John Morrison, a managing director at Munich Private Equity PartnersStory: Bifurcation in the fundraising market – an increased spread between funds in demand and those that struggle to raise capital.one thing I’d have done differently: More active management of legacy portfolio stakes.Worry: Short termism amongst investors – private equity is a long term asset class and has to be recognized as such.

Jim Strang, a managing director at hamilton LaneStory: The notable success of some of the larger European GPs in fundraising. There were more one-time closes amongst this group that I think anyone would have figured at the start of the year.one thing I’d have done differently: Pushing GPs harder in investment period extension conversations, of which there were quite a few.Worry: The big worry is the economy in mainland Europe. Clearly there’s been somewhat of a recovery over the last few months but it’s hard to see a sustained recovery with the challenges remaining in the banking system and indeed the labor markets.Surprise: Scotland votes for independence, signaling a breakup of the U.K.

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Private Equity Firms Do $223 Billion of Deals Globally

Firms Exit Companies Worth About $134 Billion via M&A

Buyout dealS & exitS

There were about $223 billion of buyouts globally in 2013, up from $181 billion in 2012. A $3 billion offer for Commonwealth Property Office Fund boosted Australia’s total. The biggest buyout in China was the $913 million purchase of Giant Interactive Group by Baring Private Equity, much smaller than 2012’s biggest deal in the country, the $3.5 billion takeover of Focus Media. Southern Europe showed some signs of recovery, with the $873 million buyout of Club Mediterranee in France and CVC Capital’s $1.5 billion secondary deal for Cerved Group in Italy. German volume topped $10 billion thanks to two $4 billion deals, for Springer Science and ista International.

—Jennifer Rossa

Globally, private equity firms sold compa-nies worth about $134 billion in 2013, up from about $125 billion in 2012, according to data compiled by Bloomberg. Southern Europe showed some strength on the exit front as well, with the $1.6 billion sale of Mivisa Envases in Spain by Blackstone Group and others, the $850 million sale by L Capital and others of Groupe SMCP to KKR in France, and Finmeccanica and First Reserve’s $1 billion exit of Ansaldo Energia in Italy in addition to the Cerved secondary.

—Jennifer Rossa

FIND ETFs THAT TRADE AT A 52 WEEK HIGH EQS <

GO

>

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dealS & exitS

* tarGet Name aCquirer Seller value ($m)

2/14 HJ Heinz Co Berkshire Hathaway, 3G Capital 27,403.30

2/5 Dell Inc MSD Capital, Silver Lake Management 16,435.60

4/12 DE Master Blenders 1753 NV Joh A Benckiser SE 9,614.90

4/27 RPI portfolio asset Credit Suisse Group, Lone Star Funds

Royal Park Investments 8,730.10

5/6 BMC Software IncGIC, Insight Venture Partner, Bain Capital Partners, Golden Gate Capital

6,735.72

9/9 Neiman Marcus CPPIB, Ares Management Warburg Pincus, TPG 6,000.00

6/19 Springer Science+Business BC Partners Holdings GIC Special Invest-

ments, EQT Partners 4,422.66

8/5 HUB International Hellman & Friedman Apax Partners 4,400.00

4/18 ista International CVC Capital Partners Charterhouse Capital Partners 4,054.80

3/8 Gardner Denver KKR 3,850.19

7/18 Apache Gulf of Mexico wells

Riverstone Holdings (Field-wood Energy) Apache Corp. 3,750.00

1/10 New AlbertsonsCerberus Capital Manage-ment, Kimco Realty, Klaff Realty, Lubert-Adler Partners

Supervalu 3,300.00

10/11 Commonwealth Property Office

CPPIB, Dexus Property Group 3,203.78

3/5 Portfolio of consumer loans

Newcastle Investment, AGF Holding, Blackstone Group HSBC Holdings 3,200.00

5/31Banco Santander (half of asset mgmt division)

General Atlantic, Warburg Pincus 2,612.20

7/26 Activision BlizzardDavis Advisors, Leonard Green & Partners, Tencent Holdings

Vivendi 2,340.00

11/21 Scout24 Hellman & Friedman Deutsche Telekom 2,018.856/16 CeramTec Cinven Ltd Rockwood Holdings 1,984.68

4/1 Terminal Investment

Global Infrastructure Partners

Mediterranean Shipping Co SA 1,929.00

11/26 Applied Systems JMI Equity Fund, Hellman & Friedman Bain Capital Partners 1,800.00

11/18 Unit4 Advent International 1,698.23

9/27 Panasonic Healthcare KKR & Co LP Panasonic Corp 1,677.34

9/16 7 shopping centers/U.S Starwood Capital Group Westfield Group 1,640.00

7/9 ING Life Insurance Korea MBK Partners ING Groep NV 1,610.64

11/11 Brickman Group KKR Leonard Green & Partners 1,600.00

1/2 Cerved Group CVC Capital Partners Clessidra, Bain Capital Partners 1,488.10

6/10 Vue Entertainment Alberta Investment Management, OMERS PE Doughty Hanson 1,455.05

5/7 AirPort GmbH Public Sector Pension Investment Hochtief 1,439.24

5/15 Coinmach Service, AIR-Serv Group

Pamplona Capital Management LLP Babcock & Brown 1,400.00

3/25 CSM's Bakery Supplies business Rhone Capital Corbion NV 1,352.19

* tarGet Name aCquirer Seller value ($m)

5/27 Bausch & Lomb Valeant Pharmaceuticals Warburg Pincus, Welsh Carson Anderson & Stowe

8,700.00

9/9 Neiman Marcus CPPIB, Ares Management Warburg Pincus, TPG 6,000.00

9/6 MIP Tower Holdings American Tower Macquarie Infrastruc-

ture Partners, PGGM NV 4,800.00

6/19 Springer Sci-ence +Business BC Partners Holdings GIC Special Invest-

ments, EQT Partners 4,422.66

8/5 HUB International Hellman & Friedman Apax Partners 4,400.00

4/18 ista International CVC Capital Partners Charterhouse Capital Partners 4,054.80

9/26 Grohe Group LIXIL Group Corp, Devel-opment Bank of Japan

Credit Suisse Asset Management LLC, TPG 3,954.33

9/3 Yankee Candle Jarden Corp Madison Dearborn Partners 2,740.02

7/1 19 TV Stations Tribune Co. Oak Hill Capital Partners 2,725.00

3/19 Charter Com-munications Liberty Media Corp

Apollo Global Manage-ment, Crestview Part-ners, Oaktree Capital

2,637.88

6/4 Softlayer Tech-nologies

International Business Machine GI Partners 2,000.00

2/14 AssuraMed Holding Cardinal Health

Goldman Sachs Capital Partners, Clayton Dubilier & Rice

1,940.00

11/26 Applied Systems JMI Equity Fund, Hellman & Friedman Bain Capital Partners 1,800.00

12/2 Digital Insight NCR Corp Thoma Bravo 1,650.00

10/31 Mivisa Envases SAU Crown Holdings Blackstone Group, N+1

Private Equity 1,631.88

11/11 Brickman Group KKR Leonard Green & Partners 1,600.00

1/2 Cerved Group CVC Capital Partners Clessidra, Bain Capital Partners 1,488.10

6/10 Vue Entertainment

Alberta Investment Man-agement, OMERS PE Doughty Hanson 1,455.05

5/15Coinmach Ser-vice, AIR-Serv Group

Pamplona Capital Management Babcock & Brown 1,400.00

8/11 ARINC Rockwell Collins Inc The Carlyle Group 1,390.00

5/3 Allflex Holdings BC Partners Holdings Intermediate Capital Group, Electra Partners 1,350.00

10/7 Chemlogics Group Solvay One Equity Partners 1,345.00

6/24 PRA International KKR Genstar Capital 1,300.00

6/1 650 Madison Avenue

Highgate Holdings, Crown Acquisitions The Carlyle Group 1,300.00

4/29 R&R Ice Cream PAI Partners Private Investor, Oak-tree Capital 1,211.67

8/19 Edwards Group Atlas Copco CCMP Capital Advisors LLC, Unitas 1,200.00

9/5 Mitchell International KKR Norwest Equity Partners,

Aurora Capital Group 1,100.00

2/5 NuCO2 Praxair Aurora Capital Group 1,100.00

8/2 Carmel Capital II Sarl

Royal Bank of Scotland Pension Fund

Terra Firma Capital Partners 1,069.67

5/15 30 shopping centers DDR Corp Blackstone Group 1,062.00

Largest PE Firm Acquisitions Largest PE Firm Sales

Source: Bloomberg * Date announced CliCk the table headlineS for further detailS

four of the top 10 buyout deals — and 14 of the 33 deals worth $1 billion or more — were also exits, showing the continued importance of secondary deals.

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vieWS: North ameriCaN Buyout/GroWth

return to Normalcy; Falling Purchase Price multiples; Bitcoin’s lureBloomberg Brief: Private Equity asked a number of fund managers and investors what the story of 2013 was, one thing they would have done differently, and their biggest worry and surprise prediction for 2014. Here’s what they had to say:


Jeff Drazen, managing partner at Bertram Capitalone thing I’d have done differently: Moved more aggressively to make mobile a more integrated component of our go-to-market strategy even where it is not obvious.Worry: We have been overly conservative in our new platform selection and have focused on existing platform development through acquisitions. This may result in a more concentrated portfolio than we originally planned for, which could have its own attendant strengths and weaknesses.Surprise: Valuation inflation beyond our wildest expectations, fueled by aggressive lending practices.

Ned Fleming, founder and managing partner of SunTx Capital PartnersStory: The strength of the high-yield market has turned it into a tremendous resource for smaller companies that are looking to reinvest capital, without sacrificing financial and operational flexibility. To illustrate this point, one of our portfolio companies, Carolina Beverage Group, a supplier of numerous domestic and international bever-age brands, recently closed on a $130 million bond offering that was quite in demand. It created liquidity for LPs coupled with growth capital.one thing I’d have done differently: Researched and better understood the possibilities of the Bitcoin.Worry: An increase in unnecessary regulation rooted in ideology, which often does not improve the business environment, but rather stunts growth particularly for small businesses. Surprise: There will be increased fundraising. Republicans and Democrats will show they can work together. The price of oil will go down 25 percent.

Stewart Kohl and Béla Szigethy, co-CEos, Riverside CompanyStory: The beginnings of a return to normalcy in the PE world. The tremendous disruptions of 2008 and 2009 are now firmly in the rear view mirror. Soon sellers won’t even need to show the plummet in sales and earnings on their five-year performance charts. 2012 was impacted by the tax law changes bringing forward M&A volume from 2013 as sellers took advantage of the lower rates. As a result, the first half of 2013 was deathly quiet. We bought almost all of the 17 companies in our class of 2013 in the second half of the year and enter 2014 with a much stronger pipeline than 12 months ago. Fundraising also began its return to normalcy as LPs everywhere recognized their need to maintain exposure to PE.one thing I’d have done differently: Sell even more companies in North America and Northern Europe – we sold a lot (11) but it is the best time to sell in the 25-year history of Riverside. Our investors – including our own folks in the GP – simply love the distributions.Worry: Falling purchase price multiples. We plan to sell another 15 companies next year and should have that many or more ready to exit in 2015. So my greatest fear is the end of the Great Seller’s Market that began in 2010 – likely due to a contraction in the record setting expansionist monetary policies by central banks leading to higher interest rates followed by lower purchase price multiples. Of course, as an eager buyer of quality compa-nies this would also be a delight leading to a busier year on the buy side.

Blair Thomas, chairman and chief executive officer of EIG Global Energy PartnersStory: The unraveling of Eike Batista’s energy and resources empire in Brazil, particularly because the Brazil-ian government stood aside and is letting the market and the court system sort out the situation. Chaos like this sometimes creates opportunity. We were able to step in and purchase control of LLX, Batista’s energy-focused “super-port” at what we believe is a very attractive valuation.one thing I’d have done differently: We should have accelerated our plans to establish a captive MLP to drop-down several mature assets from our existing energy portfolios. The MLP market, like most every yield-oriented investment product, has been very receptive to new issues in 2013.Worry: Our industry is cyclical and vintage year returns are usually inversely related to the amount of capital flowing into new funds. We’re not yet back to 2008 levels overall but the amount of capital being committed to funds targeting North American upstream and midstream energy specifically is certainly at an all-time high. The challenge will be sourcing and exercising pricing discipline in a crowded market.Surprise: In the domestic energy space, natural gas prices will recover more quickly than people expect as the era of drilling uneconomic wells comes to an end.

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Pe-BaCked iPoS {iPo <Go>} COMPILED BY SCOTT JOHNSON AND JENNIFER ROSSA

Two of Top Three PE-Backed IPos Are Energy Companies Hover mouse over chart for a larger image

PriCe date

ComPaNy Name SeleCt BaCkerS value

($m)

iPo Shr

PriCe

PerFormaNCe SiNCe iPo iNduStry CouNtry NoteS

10/15Plains GP Holdings LP

Occidental Petroleum Corp, Energy & Minerals Group, Kayne Anderson

$2,912 22 EnergyUnited States

15-month lockup.

12/11Hilton Worldwide Holdings Inc

Blackstone Group $2,706 20Consumer, Cyclical

United States

Blackstone sold no shares at the IPO. It owns 752.5 million shares, valued at $16.7 billion at the Dec. 31 price of $22.25. It invested around $6.5 billion, giv-ing it a paper profit of more than $10 billion. It's subject to lockups that begin to expire 6 months after the IPO and fully expire 18 months after.

10/9Antero Re-sources Corp

Yorktown Partners, Warburg Pincus, Trilan-tic Capital Partners

$1,802 44 EnergyUnited States

An entity controled by the PE backers sold 3.4 million shares at the IPO for proceeds of about $150 million.

11/8Merlin Entertain-ments PLC

Kirkbi A/S, Blackstone Group, CVC Capital Partners

$1,700 315Consumer, Cyclical

BritainBlackstone and CVC were granted an overallotment option of 30.4 million shares.

1/31LEG Immobilien AG

Perry Capital, Whitehall Funds

$1,527 44 Financial Germany

6/12 Coty IncBerkshire Partners, Rhone Capital

$1,140 17.5Consumer, Non-cyclical

United States

The PE firm owners sold all 57.1 million shares in the offering, making $965 million.

6/19 bpost SA CVC Capital Partners $1,120 14.5 Industrial Belgium CVC invested around EUR523 million and got back around EUR2.1 billion.

8/13Envision Health-care Holdings

Clayton Dubilier & Rice $1,111 23Consumer, Non-cyclical

United States

CD&R and others contributed equity of $915 million to the 2011 buyout. The firm sold no shares at IPO. Its stake was valued at almost $5B billion as of Dec. 31.

6/26HD Supply Holdings Inc

Carlyle Group, Bain Capital Partners, Clay-ton Dubilier & Rice

$1,101 18Consumer, Cyclical

United States

Shares priced below range. Investors in the buyout paid an average of $19.99 a share for their stake.

5/8Quintiles Trans-national Holdin

TPG Capital, Bain Capi-tal Partners, 3i Group, Aisling Capital LLC

$1,089 40Consumer, Non-cyclical

United States

TPG, Bain, 3i Group and Temasek sold 10.6 million of the shares in the IPO for about $400 million in proceeds. The company previously paid dividends to its shareholders of at least $920 million.

12/11 Moncler SpAEurazeo, Ruffini Parteci-pazioni, Carlyle Group

$1,064 10.2Consumer, Cyclical

ItalyPE owners raised about EUR784 million in the IPO. Eurazeo invested EUR305 million to buy some of Carlyle's stake in 2011.

3/22 esure Group PLC Tosca Penta Invest-ments LP

$1,052 290 Financial Britain

11/8Numericable Group

Carlyle Group, Altice Finco, Cinven

$1,012 24.8Communica-tions

FranceCinven said in November its third fund generated gains of EUR1.4 billion or 4 times capital from Numericable, including its remaining shares.

Source: Bloomberg

-5%0%5%

10%15%20%25%

Jan May Sep Jan

PAGP US Equity

0%

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15%

Jan May Sep Jan

HLT US Equity

0%

10%

20%

30%

40%

50%

Jan May Sep Jan

AR US Equity

-2%0%2%4%6%8%

10%

Jan May Sep Jan

MERL LN Equity

-15%

-10%

-5%

0%

5%

Jan May Sep Jan

LEG GR Equity

-20%

-15%

-10%

-5%

0%

5%

Jan May Sep Jan

COTY US Equity

-10%

-5%

0%

5%

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15%

Jan May Sep Jan

BPOST BB Equity

0%

20%

40%

60%

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New york’s up-and-Coming venture Scene is Big 2013 Story

vC By State Compiled by Jennifer rossa and shiKha Verma

Tumblr’s sale to Yahoo! generated a windfall for East Coast investors union Square Ventures and Spark Capital and boosted the New York City venture scene. New York and California are the two states where VC funding took the biggest jump in 2013, as the map shows. New York’s increased by about $850 million, or 47 percent, while California’s rose by more than $1 billion, or 8 percent.

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Twitter Tops List of Biggest VC-Backed IPos of 2013 Hover mouse over chart for a larger image

PriCe date

ComPaNy Name SeleCt BaCkerS value

($m)

iPo Shr

PriCe

PerFormaNCe SiNCe iPo iNduStry CouNtry NoteS

11/6 Twitter IncRizvi Traverse Management LLC, JPMorgan Chase & Co, Spark Capital, Benchmark Capital, DST Global Solutions Ltd, Union Square Ventures

$2,093 26Communica-tions

United States

Twitter's IPO gave several of its backers paper profits of more than $1 billion.

9/19 FireEye IncSequoia Capital Operations LLC, Norwest Venture Partners, DAG Ventures LLC, Jafco Co Ltd, SVB Capital Partners

$349 20Communica-tions

United States

Pre-IPO backers invested $125.5 million at an average price of $1.23 a share. Sequoia and Norwest's stakes were both valued at more than $900 million at the Dec. 31 share price.

10/15Veeva Systems Inc

Emergence Capital Partners $300 20 TechnologyUnited States

At IPO, Emergence Capital's $4 million invest-ment was valued at $1.2 billion.

5/16Tableau Software Inc

New Enterprise Associates Inc,Meritech Capital Partners

$292 31 TechnologyUnited States

NEA invested $29.2 million and has so far sold shares worth about $480 million.

11/14 zulily Inc August Capital,Maveron LLC, Andreessen Horowitz $291 22Communica-tions

United States

Maveron sold about $54 million of shares at IPO and holds a stake valued at more than $1 billion at Dec. 31.

10/30 Criteo SAIndex Ventures, Idinvest Partners, Elaia Partners, Bessemer Venture Partners, Softbank Capital


FranceFred Destin of Atlas Venture tweeted that the IPO looks like a "fund returner" for Elaia.

7/18 RetailMeNot Inc

Austin Ventures LLC, Norwest Venture Partners, Institutional Venture Partners, King Holdings Pty Ltd ACN, Adams Street Partners LLC, Google Ventures, JPMorgan Chase & Co


United States

Shareholders including Austin Ventures and Norwest sold $106 million of shares in December and $88 million at IPO. The company raised $313 million at an average of $6.86 a share pre-IPO.

10/30 58.com Inc SAIF Partners Ltd, DCM $215 17Communica-tions

ChinaDCM held 16.4% voting power at IPO and was planning to buy more shares.

12/12Nimble Storage Inc

Accel Partners,Sequoia Capital Operations LLC, LightSpeed Venture Partners

$193 21 TechnologyUnited States

Accel and Sequoia each own stakes valued at more than $500 million as of Dec. 31. Investors put in $108.9 million pre-IPO at an average of $1.75 a share.

9/24 Ophthotech Corp SV Life Sciences Advisers Inc $192 22Consumer, Non-cyclical

United States

SV Life's 6 million shares were worth about $194 million at year-end.

11/1Qunar Cayman Islands Ltd

GSR Ventures, Baidu, GGV Capital $192 15Consumer, Cyclical

China

11/12 Chegg IncInsight Venture Partners LP,Gabriel Ventures LLC, KPCB

$188 12.5Communica-tions

United States

Chegg's shares have dived since the IPO. IVP, the biggest VC backer, holds shares valued at $73.8 million as of Dec. 31. The company has raised $195 million in VC.

5/27 Just Dial Ltd Sequoia Capital India Investments III, Tiger Global $167 530Communica-tions

India

Source: Bloomberg

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JUST IN Equity

vC-BaCked iPoS {iPo <Go>} COMPILED BY SCOTT JOHNSON AND JENNIFER ROSSA

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half of the 10 Biggest VC Rounds Are for Non-u.S. Companies

aNNC* tarGet Name iNveStorS value ($m) PoSt-moNey valuatioN ($m)

1/17 SurveyMonkey.com LLC Google, Laurel Crown Capital, Social+Capital Partnership, Tiger Global Management, ICONIQ Capital 444.00 1,3507/7 Mobileye NV Blackrock, Fidelity Management, Wellington Management, Sailing Capital, Enterprise Rent-a-Car 400.00 1,5002/16 360buy Jingdong Inc Ontario Teachers' Pension Plan Board, Kingdom Holding Co 399.978/23 Uber Technologies Inc TPG Capital, Benchmark Capital, Google Ventures 361.20 3,50011/22 Spotify Ltd Technology Crossover Ventures 250.00 4,00012/9 Lazada Tesco PLC, Access Industries, Investment AB Kinnevik, Verlinvest 250.00

10/23 Pinterest Inc Fidelity National Financial, Valiant Capital Management, Deer Management, Andreessen Horowitz, FirstMark Capital 225.00 3,800

10/11 ShopRunner Inc American Express, Alibaba Group, Kynetic 206.00 6007/10 Flipkart Online Services Pvt Ltd Naspers, Tiger Global Management, Accel Partners, ICONIQ Capital 200.002/24 Airwatch LLC Insight Venture Partners 200.002/20 Pinterest Inc Valiant Capital Management, Deer Management, Andreessen Horowitz, FirstMark Capital 200.00 2,5009/29 Palantir Technologies Inc Founders Fund Management 196.50 6,00012/24 Palantir Technologies Inc NA 177.51

6/8 Fanatics Inc Temasek Holdings, Alibaba Group 170.00 3,1008/2 ConforMIS Inc NA 167.70

6/19 Fab.com Inc Tencent Holdings, DoCoMo Capital, Itochu Technology Ventures, Andreessen Horowitz, Menlo Ventures, RTP Ventures, Pinnacle Ventures LLC, Atomico 165.00 1,000

10/9 Flipkart Online Services Pvt L Sofina, Morgan Stanley Investment Management, Vulcan Capital, Tiger Global Management, Dragoneer Investment Group 160.00

8/1 Hootsuite Media Inc OMERS Ventures, Accel Partners, Insight Venture Partners 159.5010/14 Xero Ltd Matrix Capital Management, Valar Ventures Management 150.57

10/4 MongoDB Inc T Rowe Price, Red Hat, NEA, Salesforce.com, Intel Capital, Sequoia Capital, Altimeter Capital Management 150.00 1,200

8/29 Pure Storage Inc T Rowe Price, Fidelity Investments, Samsung Ventures America, Greylock Partners, Tiger Global Management, Index Ventures, Redpoint Ventures, Sutter Hill Ventures 150.00

5/2 Intrexon Corp Third Security LLC 150.001/15 SevOne Inc Bain Capital Venture Partners 150.005/12 Bloom Energy Corp Credit Suisse Group AG, E.ON SE 130.004/18 Supercell Oy Index Ventures, Institutional Venture Partners, Atomico 130.00 7706/11 Lamoda/Russia Access Industries, Tengelmann Ventures, Summit Partners 130.00

6/25 Skyonic Corp BP, ConocoPhillips, PVS Chemicals, Berg & Berg Enterprises, Cenovus Energy, Toyo-Thai, Zachry Corp, Energy Technology Ventures, Northwater Capital Management 128.00

12/13 Freedom Financial Network LLC Vulcan Capital 125.005/2 LendingClub Corp Google, Foundation Capital 125.00 1,55012/4 Juno Therapeutics Inc Arch Venture Partners, Alaska Permanent Fund 120.002/1 Truphone Ltd Roman Abramovich 117.97

12/6 Box Inc Macnica, Mail.ru Group, Mitsui & Co Global Investment, Itochu Technology Ventures, Telefonica Ventures 112.00 2,000

12/4 Zalora Access Industries LLC, Scopia Capital Management LLC 112.0011/20 Moderna Therapeutics Inc Flagship Ventures 110.002/20 LivingSocial Inc NA 110.00 1,50010/28 eRecycling Group Inc Silver Lake Management LLC, Kleiner Perkins Caufield & Byers 105.001/16 Lynda.Com Inc Spectrum Equity Investors, Accel Partners 103.00

12/12 Shopify Inc OMERS Administration, Deer Management, Insight Venture Partners, Georgian Partners, Felicis Ventures, FirstMark Capital 100.00 1,000

9/30 Evolent Health Inc UPMC Health Plan Inc, The Advisory Board Co, TPG Capital 100.00 2009/4 CommonBond Inc Tribeca Venture Partners, Social+Capital Partnership 100.00

6/20 Lazada Investment AB Kinnevik, Tengelmann Warenhandelsgesellschaft KG, Holtzbrinck Ventures GmbH, Verlinvest SA, Summit Partners LP 100.00

5/22 Zalora Investment AB Kinnevik, Tengelmann Warenhandelsgesellschaft KG, Verlinvest SA, Summit Partners LP 100.00Source: Bloomberg, NVCA * Date announced CliCk the interaCtive button for further detailS

Start-ups raised $39.8 billion globally in 2013, up from $35 billion in 2012, according to data compiled by Bloomberg. There were 42 rounds of $100 million or more, up from 28 in 2012.

BiGGeSt veNture rouNdS Compiled by Jennifer rossa and shiKha Verma

a year of Big rounds and Bigger valuations in 2013

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Mike Volpi, partner at Index VenturesStory: The return of the enterprise. In 2013 the enterprise technology sector found its stride again with next-gen-eration companies like Workday, ServiceNow, FireEye, Splunk and many others being welcomed into the public markets.one thing I’d have done differently: We’ve all been buying some Bitcoin personally for a couple years, but missed an opportunity as a firm in the Bitcoin economy We’re very excited about the prospects for Bitcoin — especially outside the U.S. — and we hope to invest in this economy in 2014.Worry: Silicon Valley has experienced a lot of success in the last couple years and deservedly so. However, there is a growing concern around the onset of hubris in our culture — both toward the rest of the world and even amongst ourselves. There is a fine line between confidence and overconfidence. Surprise: Bill Gates will return to the helm of Microsoft.

Byron Deeter, partner at Bessemer Venture PartnersStory: Despite the high profile IPO of Twitter and the rebound of Facebook’s stock price, the real story of the year was the coming of age of the cloud computing sector. Boring is the new sexy! Ten new pure play cloud computing companies went public this year and 21 total since the start of 2012, bringing the total to 38 publicly traded pure play cloud computing companies.one thing I’d have done differently: I certainly wish I had conviction earlier on Veeva Systems, we pushed harder to get into Twitter, I’d anticipated the decline of the rupee and the explosive appreciation of Bitcoin.Worry: From a short term investment perspective, I worry most that the technology markets may pull back or get hit by exogenous factors. We also continue to witness high amounts of domestic and international volatility, which at some point could adversely impact even the very best businesses.Surprise: It’s quite possible that LinkedIn may pass Salesforce.com in 2014 to become the world’s most valuable cloud computing company. Most people think of LinkedIn for its powerful consumer internet brand, but at the core of the LinkedIn business model is one of the most powerful SaaS businesses in the industry.

Andrew Chung, Partner, Khosla Venturesone thing I’d have done differently: If I had more bandwidth outside of assisting existing portfolio companies, I would have placed even more bets in the sustainability and “future tech” areas than we did. On the cleantech side, I see the quieting of the field as an opportunity to cherry-pick technologies outside our portfolio and take significant stakes at attractive valuations across stages. On the “future tech” side, we continue to look at disloca-tions that can topple industries or create new ones, in particular, around how advances in computing, big data, sensors, and robotics can impact/transform commerce, education, health care and agriculture.Worry: With cleantech under pressure, my two top worries are that fewer entrepreneurs are innovating and that U.S. investment in the sector is not sufficient to commercialize the technology on the home front. Entrepreneurs and investors from other countries — particularly China — are willing to take a progressive, long-term view of cultivating these technologies, and the U.S. risks falling behind.Surprise: Two surprises: Chinese companies make some big announcements to help fund early commercializa-tion of clean technologies for their country’s survival; U.S. financial investors and policy-makers reawaken to the need to support and protect clean technologies domestically. For China, it’s no secret that the demand for clean-tech is survival-driven. China recently surpassed the U.S. as the leader in deployment of renewables, and the country is pledging some $80 billion a year of investment into the sector. Companies outside of our portfolio have seen the other edge of the sword, as many Chinese companies have also eyed distressed cleantech companies and bought up their IP and assets. If U.S. investors and policy-makers don’t surprise us in 2014 with a move, then we risk more valuable cleantech IP leaving the U.S.

Mike Maples Jr., managing partner of FloodgateStory: Twitter IPOone thing I’d have done differently: Invested in airbnb when I had the chance in 2008.Worry: Missing out on the next Thunderlizard.Surprise: A mobile-first app in a whole new category takes off as fast as Uber and Lyft.

vieWS: North ameriCaN veNture

the Bitcoin economy; Cloud Computing’s rise; u.S. Cleantech Wake-up CallBloomberg Brief: Private Equity asked a number of fund managers and investors what the story of 2013 was, one thing they would have done differently, and their biggest worry and surprise prediction for 2014. Here’s what they had to say:


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Apollo Global Management’s Leon Black edged out other big private equity firm head honchos for the most men-tions on the Bloomberg terminal NT <GO> search this year, at 329 to 325 for runner-up henry Kravis of KKR & Co. Black’s quote about the exit environment (see page 2) got lots of play, as did his interest in fine art and his firm’s bidding for Hostess early in the year. Blackstone Group’s Stephen Schwarzman came in last among the four, with 239 mentions. Carlyle Group’s David Rubenstein made a strong push at the end of the year, with his name appearing in stories about the Kennedy Center, which he chairs, and about an exhibit of the Magna Carta. He bought one of the four surviving copies and loaned it to the National Archives. 0

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"Leon Black" Story Count"David Rubenstein" Story Count"Stephen Schwarzman" Story Count"Henry Kravis" Story Count

Source: Bloomberg

NeWS treNdS {Nt <Go>} Jennifer rossa, bloomberg brief

leon Black is most mentioned Private equity executive of 2013

Buyout Kingpin Mentions in Stories Appearing on the Bloomberg

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