With Cambridge Associates and ILPA. Topics include the new ILPA Benchmark, Niche Strategies, How to Define Growth Equity and the 'Overhang'

1. Private
Equity
Performance
Vol.
II
2013
www.privcap.com

2. Based
on
Privcap’s
PE
Performance
Report,
Vol. II, 2013

3. In
this
slideshow:
• What
is
the
ILPA
Benchmark?
• Niche
Marketing
Strategies
• How
is
Growth
Equity
deNined
and
measured?
• Inside
the
Private
Equity
Overhang

4. The
benchmark
is
a
subset
of
the
overall
Cambridge
benchmark.
ILPA
asks
its
members
for
their
portfolios,
aggregates
the
list
and
passes
all
the
information
to
Cambridge,
which
then
runs
its
benchmark
on
the
institutional
fund
set.
The
ILPA
Private
Markets
Benchmark
Benchmark
Components:
• U.S.
Private
Equity
• U.S.
Venture
• Global
Distressed
• Global
Natural
Resources
• Global
PE
and
Venture
• Global
Fund
of
Funds/
Secondary
FundsMichael
Elio
of
ILPA
and
Andrea
Auerbach
of
Cambridge
Associates
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video
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full
report
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slideshow

5. How
to
Market
a
Niche
Strategy
Performance
is
a
GP’s
best
marketing
tool.
But
demonstrating
performance
isn’t
always
easy,
especially
for
managers
with
niche
strategies
that
don’t
Nit
into
neat
categories
for
benchmarking
against
peers.
Things
to
Consider:
What
other
selections
will
investors
evaluate?
“If
the
selection
will
put
you
against
a
group
executing
a
strategy
that’s
wildly
different
from
a
risk-­‐return
proNile—an
industrial
focus,
something
like
that—it
will
make
it
difNicult
to
win
the
business.”
Who
is
your
audience?
“If
you’re
in
front
of
a
person
who’s
interested
in
private
equity
strategies
with
private
equity
returns,
it’s
probably
not
a
good
idea
to
talk
about
a
niche
debt
strategy
which
has
a
private
equity
structure.”
–
Stefanie
Langer
Stefanie
Langer,
Independence
Capital
Partners
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video
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full
report
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slideshow

6. “The
groups
that
heretofore
might
have
been
doing
venture
or
buyouts
but
found
that
more
DeNining
&
Measuring
Growth
Equity
Growth
Equity
De?ined:
Source:
Cambridge
Associates
LLC
• Investor
takes
a
minority
position
(less
than
50%
ownership).
• Company
typically
has
no
prior
institutional
investors;
company
is
often
founder-­‐owned.
• Additional
rounds
of
Ninancing
are
not
expected
until
exit.
• No
(or
minimal)
leverage
is
used
at
initial
investment.
• Company
is
typically
EBITDA
positive
or
expects
to
be
within
12
to
18
months.
• Invest
at
growth
inNlection
point
where
capital
can
drive
organic
revenue
growth
in
excess
of
10%.
• Company
has
an
established
product
or
services,
existing
customers,
and
business
model.
Investment
theses
underwritten
on
deNined
plan
to
achieve
proNitability.
“The
groups
that
heretofore
might
have
been
doing
venture
or
buyouts
but
found
that
more
competitive
may
want
to
do
growth
because
it’s
allowing
them
to
deploy
more
capital.”
-­‐
Stefanie
Langer,
Independence
Capital
Partners
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video
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report
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7. “What’s
interesting
about
the
overhang,
is
that
there’s
some
amount
of
capital
that
should
overhang
the
market,
otherwise
managers
would
invest
all
their
money
and
then
constantly
be
fundraising—and
we
don’t
want
that.”
-­‐Andrea
Auerbach,
Cambridge
Associates
“I
do
think
that
the
overhang
will
continue
to
grow
but
I
think
the
components
of
the
overhang
will
change.”
-­‐Michael
Elio,
ILPA
Is
the
‘Overhang’
Overblown?
The
private
equity
overhang—the
amount
of
capital
raised
by
private
equity
funds
that
remains
uncalled
and
available
for
investment—is
down
considerably
from
its
peak.
It
dropped
from
a
high
of
$445
billion
at
the
end
of
2009
to
$325
billion
at
the
close
of
2012,
according
to
investment
adviser
Cambridge
Associates.
Stefanie
Langer,
Michael
Elio,
Andrea
Auerbach
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report
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8. For
more
private
equity
video
interviews,
special
reports
and
commentary,
visit
www.privcap.com
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