Private Equity, Growth Capital & Venture Capital In Converging, Emerging & Frontier Economies                         Pre-...
Private Equity SpotlightWelcome to the latest editionof Private Equity Spotlight, themonthly newsletter from Preqinprovidi...
Feature                                                                           Preqin Investor Network: Challenges Faci...
Feature                                                                    Preqin Investor Network: Challenges Facing LPs ...
Feature                  Preqin Investor Network: Challenges Facing LPs                                               Down...
Quarterly           Latest Free Preqin Quarterly Report Out Now!Preqin Quarterly - Q1 Edition Out Now!All the latest stati...
Feature                 Venture Capital: Market Overview                                                                  ...
Feature                 Venture Capital: Market Overview                                                                  ...
Feature                            Venture Capital: Market Overview                                                       ...
Preqin Venture Deals Analyst                            New VC Deals DatabasePreqin is proud to announce the launch of Ven...
Feature                 Asian Private Equity Benchmarks: Far East Performance                                             ...
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
Preqin private equity_spotlight_may_2012
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Preqin private equity_spotlight_may_2012

  1. 1. Private Equity, Growth Capital & Venture Capital In Converging, Emerging & Frontier Economies Pre-conference 3-in-1 Investor Summit: 25th June, 2012 Main Conference: 26-28th June, 2012 InterContinental Hotel, Geneva http://www.informaglobalevents.com/fkr2327spot 15% Reader OfferDear Spotlight reader,We will be in Geneva for this year’s SuperReturn Emerging Markets and as I am a speaker I’m pleased to offerSpotlight readers a special 15% discount should you be planning to attend.SuperReturn Emerging Markets brings together 150 speakers, including 85 international LPs, top local andglobal GPs in a one-stop learning and networking shop, packed with interaction and high value face-to-faceopportunities with around 350 senior attendees.I will also be presenting at the conference, and hope to have an opportunity to connect with you there.Kindest regards,Mark O’HareCEOPreqinFor all bookings & enquiries, please contact the SuperReturn Emerging Markets 2012 TeamQuote VIP: FKR2327SPOT for your 15% discountTel: +44 (0) 20 7017 7200Email: info@icbi.co.ukWeb: http://www.informaglobalevents.com/fkr2327spot
  2. 2. Private Equity SpotlightWelcome to the latest editionof Private Equity Spotlight, themonthly newsletter from Preqinproviding insights into private May 2012equity performance, investors andfundraising. Private Equity Spotlightcombines information from our onlineproducts Performance Analyst,Investor Intelligence, Fund Manager Feature ArticlesProfiles, Funds in Market, SecondaryMarket Monitor, Buyout Deals Analyst Welcome to a very special edition of Private Equity Spotlight. This month’s newsletterand Venture Deals Analyst. contains three in-depth feature articles, covering some of the most important topics in the private equity industry today:May 2012 Preqin Investor Network: Challenges Facing LPsVolume 8 - Issue 5 Investors in private equity are faced with tough decisions - how can the best fund managers be sourced in such a crowded environment? How can a positive cashFEATURED PUBLICATION: flow be maintained? While LPs want more control over their private equity portfolios it is impossible to know everything, but Preqin is here to help. Page 3. The 2012 Preqin Sovereign Wealth Fund Review Venture Capital: Market Overview While there is much debate over the performance of venture capital funds, investor interest remains positive. Preqin has now launched its Venture Deals Analyst online service, and to mark the occasion we provide all the key stats. alternative assets. intelligent data. Page 7. Asian Performance BenchmarksThe 2012 Preqin Sovereign WealthFund Review Preqin is proud to introduce the private equity industry’s first ever Asian performance benchmarks. How has the industry performed in Asia? Have Asia-focused privatewww.preqin.com/swf equity funds beaten public markets? We investigate further. Page 11. Preqin Industry NewsNew York:One Grand Central Place60 E 42nd Street Each month Preqin’s analysts speak to hundreds of investors, fund managers andSuite 2544 intermediaries from around the world, uncovering vital, exclusive intelligence. ThisNew York, NY 10165 month’s Industry News features important updates regarding the venture capital industry.+1 212 350 0100 Page 14.London:Equitable House The Facts47 King William StreetLondon, EC4R 9AF Conferences - details of upcoming private equity conferences from around the world.+44 (0)20 7645 8888 Page 15.Singapore:Asia Square Tower 1#07-04 8 Marina ViewSingapore You can download all the data in this month’s Spotlight in Excel. Wherever you see this symbol, the data is available for free download on018960 Excel. Just click on the symbol and your download will begin automatically.+65 6407 1011 You are welcome to use the data in any presentations you are preparing, please cite Preqin as the source.w: www.preqin.come: info@preqin.comTwitter: www.twitter.com/preqinLinkedIn: Search for Preqin alternative assets. intelligent data.
  3. 3. Feature Preqin Investor Network: Challenges Facing LPs Download Data Preqin Investor Network: Challenges Facing LPs Alex Jones discusses some of the main issues that are facing institutional investors in private equity today. What are the main concerns for LPs looking to build a strong private equity portfolio in 2012 and how can obstacles be overcome? Last year was a significant period for the private equity industry, Can Private Equity Still Offer Outperformance? with the impact of the ongoing eurozone sovereign debt crisis and renewed fears of recession gripping markets across the world. Investors planning on building a diversified portfolio may ask the Difficult conditions have prevailed for investors and fund managers question – has private equity investment retained its edge over alike. At present a record number of private equity funds are hoping traditional investment instruments? While fund terms and conditions to attract capital and consequently investors in the asset class – including fees – have evolved to become more investor-friendly, are faced with complicated decisions regarding fund selection, there is still a financial and liquidity cost associated with getting assessing performance and ensuring that they get the best deal. access to private equity funds and consequently returns above and beyond other asset classes is required to justify this. There is certainly a degree of difficulty in building a successful private equity portfolio. With vastly divergent returns generated As shown in Fig. 1, the PrEQIn Index shows that all private equity by the best and worst performing managers and so many options strategies, with the exception of venture capital, have outperformed available, how can investors ensure that a fund manager has a Standard and Poor’s free-float capitalization-weighted index of history of being a top performer? How do investors identify areas 500 US-based large cap stocks (S&P 500) since 31st December that others are seeing as enticing? Investors in private equity are 2001. Indeed, the PrEQIn All Private Equity Index, which takes into now more sophisticated than ever, with a detailed understanding account the performance of each of the various fund types, has of the asset class and a yearning to have more control over their remained above the S&P 500 for all of the quarters shown, with the portfolios; however, access to unbiased, up-to-date, and accurate exception of 30th June 2001, 31st December 2000 and 31st March intelligence can be difficult to source. This information can be key 2002. As of the latest data available, the PrEQIn All Private Equity to ensure the building of a successful portfolio and to form long- Index stands at 198.5 and the S&P 500 at 105.1. lasting and fruitful partnerships with fund managers. Fig. 1: PrEQIn Index: All Strategies vs. S&P 500 400.0 PrEQIn All Private Equity(Rebased to 100 as of 31-Dec-2000) 350.0 PrEQIn Buyout 300.0 250.0 PrEQIn Venture Capital Index Returns 200.0 PrEQIn Real Estate 150.0 PrEQIn Fund of Funds 100.0 PrEQIn Distressed Private Equity 50.0 S&P 500 0.0 31/12/2000 30/06/2001 31/12/2001 30/06/2002 31/12/2002 30/06/2003 31/12/2003 30/06/2004 31/12/2004 30/06/2005 31/12/2005 30/06/2006 31/12/2006 30/06/2007 31/12/2007 30/06/2008 31/12/2008 30/06/2009 31/12/2009 30/06/2010 31/12/2010 30/06/2011 Source: Preqin 3 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com
  4. 4. Feature Preqin Investor Network: Challenges Facing LPs Download DataFig. 2: Breakdown of Funds Currently in Market (As at 15th May 2012) Fig. 3: All Private Equity - Median Net IRRs and Quartile Boundaries by Vintage Year500 474 30450 Top Quartile400 25 363 No. of Funds IRR Boundary350 Net IRRs since Inception (%)300 20 251250 217 213200 15 Median IRR 165 168 147150 108 Aggregate Target Size ($bn)100 94 10 58 67 62 62 42 40 50 50 24 3230 0 5 Bottom Secondaries Growth Venture Capital Other Buyout Real Estate Mezzanine Fund of Funds Infrastructure Distressed Private Quartile IRR 0 Boundary Equity 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -5 Vintage YearSource: Preqin Source: PreqinDespite this outperformance of the asset class as a whole, the managers seeking re-ups, or whether their capital is best usedreturns generated by the various private equity fund types can vary to form new relationships with one of the many GPs already onsignificantly, and therefore it is important for investors to identify the the road. Consequently, it is important for investors to be aware ofstrategies that fit their risk/return appetite. which funds are currently in market and what opportunities other investors are seeing as interesting.Of the various strategies, distressed private equity – a high risk,high return approach – demonstrates the kind of outperformance The Importance of Fund Selectionthat investors seek. The index shows a steady quarterly increase forthe fund type from Q4 2000 until Q3 2007 when distressed private Even the most discerning investor can have a difficult timeequity began to be affected by the period of financial dislocation. picking out fund managers that can offer the best possibilities ofFrom Q3 2009, the index increased sharply, and distressed generating attractive returns. Most managers claim to offer topprivate equity is currently the best performing private equity fund quartile performance, but by definition this is not possible. This istype, as managers have sought to take advantage of the relative a significant issue due to the fact that the difference in the returnsabundance of distressed investment opportunities caused by the offered by the top and bottom performing funds is considerable.economic downturn. Fig. 3 shows the gap between the top and bottom quartile boundaries by vintage year, highlighting the spread between theBuyout funds hold the largest proportion of capital in the industry very best and worst GPs. For vintage years from 2005 onwards,and have also generated attractive, market beating returns. The the bottom quartile of funds exhibits net IRRs in the red, while thePrEQIn Buyout Index shows that after a period of growth from top performers have positive net IRRs in the double digits for every2003 onwards, performance for the fund type declined in 2008 and vintage year (with the exception of 2006).reached its lowest point in Q1 2009; however since then returnshave increased each quarter, peaking in Q2 2011 at 261.3, before Clearly it is important for LPs to allocate to the best managers,declining over the most recent quarter shown. Furthermore, it can but how is this achieved? One of the most important indicatorsbe seen that the buyout index has been outperforming the PrEQIn is the performance track record of a GP. While past performanceAll Private Equity Index since Q1 2001. is no guarantee of future success, it can be a positive indicator of the approach and dedication of an investment team and canAn Overcrowded Market – Cutting Through the Fog be useful in assessing how a fund manager has performed during past periods of economic stress. In addition to this, however, it isAt present the private equity fundraising market is at its most also important for investors to assess the fundraising market. It cancrowded levels. As shown by the breakdown in Fig. 2 there are be helpful for investors to be able to identify managers that haveover 1,800 funds in market seeking over $794bn from investors defied the difficult fundraising conditions and have a vehicle onat present. Despite the high levels of interest from investors in the the road that is attracting substantial institutional interest. Gettingasset class, it is clear that there is simply not enough capital to go access to these funds before they close requires a keen eye on thearound and satisfy the requirements of all of these funds. market and is a further indicator of a potentially exciting investment opportunity.The difficulty for investors is to cut through the fog of so manyofferings and make use of the numerous new investment Preqin Investor Networkopportunities available, while also balancing the prospect ofexisting fund managers returning to the fundraising trail with new With all of these issues in mind, Preqin has now launched thevehicles. It is likely that for many investors they will have to choose Preqin Investor Network – a free online resource available towhether they will continue their strong existing relationships with accredited investors and qualified purchasers across the globe.4 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com
  5. 5. Feature Preqin Investor Network: Challenges Facing LPs Download DataThe Network provides subscribers with free access to in-depth Data Source:and up-to-date information on private equity performance andfundraising conditions. We feel that it is vital to provide investors with This article draws upon research and analysis using the new Preqin Investor Network online service.intelligence to help them navigate the crowded market environmentand identify the best options for their portfolios. The Network also Providing access to in-depth data and intelligence regardingprovides investors with free access to our fund benchmarking private equity fundraising, performance and more, this valuableresource, PrEQIn - the industry’s first quarterly private equity index resource is available to accredited investors for FREE.- and our Research Centre, which contains all the most relevantPreqin research reports to help stay on top of the latest trends and For further information on how Preqin Investor Network can helpinteresting prospects. you, or to apply for a demo of the service, please visit:Interested in finding out more? Please visit www.preqin.com/pin www.preqin.com/pinfor full details and to apply for complimentary access.5 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com
  6. 6. Quarterly Latest Free Preqin Quarterly Report Out Now!Preqin Quarterly - Q1 Edition Out Now!All the latest statistics, analysis and commentary on key industry trends will be available to download next week,covering Private Equity, Private Real Estate and Infrastructure asset classes. Download your free copy today!The latest industry trends from the alternative assetsindustry’s leading source of data and intelligence: Q1 2012 APRIL 2012 The Preqin Quarterly Infrastructure• Investors Q1 2012 APRIL 2012 Insight on the quarter from the leading provider of alternative assets data The• Fundraising Preqin Quarterly Content Includes.... TITLE 1 Real Estate Description. TITLE 2 Q1 2012 APRIL 2012• Fundraising Outlook Insight on the quarter from the leading provider of alternative assets data Description. The TITLE 3 Preqin Quarterly Content Includes.... Description.• Deals Private Equity TITLE 1 Description. TITLE 4 Description. TITLE 2 Insight on the quarter from the leading provider of alternative assets data Description.• Exits Content Includes.... TITLE 3 Description. Co-Investments: Investor TITLE 4 Appetite• Dry Powder A growing number of investors are setting aside capital for PE Description. co-investments; we surveyed LPs to gauge sentiment on this area.• Performance Preqin Private Equity Quarterly Index Using the PrEQIn Index, the first ever PE index covering the entire• Sovereign Wealth Funds industry, we look at how PE alte alternative assets. intelligent data. performance compares to other asset classes. Q2 Special Guest Contributor: David Arthur, Brookfield Asset Management Sovereign Wealth Funds• And Much More… Sovereign wealth funds represent an important source of capital for GPs; we examine the latest trends and their activity in private equity. alternative assets. intelligent data. Latest Fundraising Figures Q2 Special Guest Contributor: David Arthur, Brookfield Asset Management Q4 Special Guest Contributor: Fundraising activity remained relatively steady compared to previous quarters; we take a look at the latest developments in more detail. alternative assets. intelligent data. Q2 Special Guest Contributor: David Arthur, Brookfield Asset Management Click below to download each edition: Private Equity Private Real Estate Infrastructure www.preqin.com/quarterly6 © 2012 Preqin Ltd. www.preqin.com
  7. 7. Feature Venture Capital: Market Overview Download DataVenture Capital:Market OverviewSince the collapse of the dot-com bubble, venture capital performance has remained relatively flat, buthave VC deal and fundraising markets been affected? Jonathan Parker and Rich Stus examine the latesttrends in the venture capital space. Fig. 1: Number and Aggregate Value of Venture Capital DealsVenture capital (VC) has been at the forefront of the private equity Globally, Q1 2010 - Q2 2012 TD (As at 10th May)industry since the 1990s. Today VC still play a major role in theprivate equity ecosystem, with venture capitalists continuing to 1,200 16.0find and fund innovative companies. Despite this, however, the 1,054 1,057 1,047 14.0 996 1,000investment performance of venture capital funds has proven to be 922 922 897 946 12.0 Aggregate Deal Size ($bn)relatively poor in contrast to other strategies such as buyout and 829 800 No. of Deals 10.0distressed private equity. To investigate further, Preqin takes a lookat the VC industry from fundraising to deal execution, attempting 600 531 8.0to gain a better understanding of why this high-risk, high-reward 6.0 400potential investment strategy remains a prominent part of the 4.0private equity world. 200 2.0 0 0.0Overview of Global Venture Capital Deal Activity Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Apr - May 2012 TD No. of Deals Aggregate Deal Size ($bn)Since 2010, there have been over 9,200 venture capital dealscompleted globally, with an aggregate value of over $95bn. Fig. Source: Preqin1 looks at the number of announced venture capital financingssince 2010, excluding VC-backed add-on deals and venture debtfunding. This displays a marked increase in VC activity into 2011 Europe is the second most prominent area for venture capitalin comparison to the previous year, reaching a two-year peak in deals globally, with the UK, Germany and France in particularmid-2011. representing hubs for VC activity. Since Q1 2010, there have been on average 190 VC deals in Europe per quarter, with 200 VCWhile 2011 witnessed a 7% increase in the number of VC deals taking place in the region during Q1 2012, representing afinancings in comparison to 2010, the aggregate value of venture significant 28% increase in deal flow in the region during Q4 2010.capital commitments rose 42%, increasing from $33.7bn to $48bn However, while Europe represented 22% of all deals globally inin 2011. For this period, the number and value of venture capital 2010, this figure fell to 18% in 2011, a signal of the ever growingdeals reached a peak in Q2 2011, with 1,054 deals announced with presence of other regions in the VC sector.a value of $13.5bn globally. As the wider global economy began tofeel the effects of market turmoil in the second half of 2011, the VCindustry witnessed a marked slowdown in activity in Q4 2011, withdeal flow down 11% and 19% by number and value, respectively, Fig. 2: Number of Venture Capital Deals by Region, Q1 2010 - Q2 2012against the previous quarter. Although the difficult financial climatehas continued, the number of VC financings increased by 11% 1,200from Q4 2011 to Q1 2012, taking deal activity back to mid-2011levels. However, VC deal value has remained at subdued levels, 1,000with $9.3bn in financings in Q1 2012. In Q2 2012 TD there have 800been 531 VC deals announced globally, representing an aggregate No. of Dealsvalue of $4.3bn. 600Fig. 2 shows the number of venture financings by region between 400Q1 2010 and May 2012, unsurprisingly displaying North America 200as the dominant region for activity, with over 65% of all dealsannounced globally located in the region. In the first quarter of 2012, 0715 VC deals were completed across North America, nearing the Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Apr - May 2012 TDpeak levels for the 2010-2012 period seen in Q3 2011, representing North America Europe China India Israel Othera 7% increase in deal flow compared to Q4 2011. Source: Preqin7 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com
  8. 8. Feature Venture Capital: Market Overview Download DataFig. 3: Proportion of Number and Value of Venture Capital Deals by Fig. 4: Proportion of Number and Aggregate Value of Venture CapitalStage, 2012 YTD (As at 10th May) Deals by Industry, 2012 YTD (As at 10th May) Add-on and other 30% 27% 26% Grant 25% 32% 4% Growth Capital/Expansion Proportion of Total 7% 20% 18% 1% PIPE 18% 15% 4% Angel/ Seed 15% 14% 1% 4% 11% Series A/Round 1 10% 9% 9% 6% 7% 7% 16% Series B/Round 2 6% 5% 4% 4% Series C/Round 3 3% 3%3% 10% 2% 2% 3% 2% 2% 2% 1% 1% 1% 15% Series D/Round 4 and Later 0% Materials Industrials Other Consumer Services Telecoms & Internet Software & Other IT Health Care Clean Tech. & Electronics Food & Ag. Business Related Media Unspecified Round Disc. Semic. Venture Debt No. of Deals Aggregate Value of DealsSource: Preqin Source: PreqinOutside of the traditional hubs, China has rapidly become a key industry for venture capital investment is the healthcare sector,area. In 2011, there were 203 VC deals in China, a 6% increase with just under one-fifth of the number and aggregate value ofin deal flow in the region in comparison to the previous year. In deals falling into this industry category, which includes early-the opening months of 2012, however, deal flow in the region has stage medical technologies, medical devices and pharmaceuticalswitnessed a slow-down, with 33 deals taking place in the region companies. This is closely followed by the software industry,during Q1 2012. This is a marked decline from the average of 51 with 15% and 14% of the number and aggregate value of globalVC deals per quarter in the region during 2011, with fears over the financings, respectively. The telecoms & media industry, whichexit market in the region leading to a slowdown in new financings. includes the telecom applications, communications and digital media sectors, accounted for 11% of the total number of dealsSimilarly, India has also witnessed a surge in VC activity, with 176 globally; however, it received just 7% of the aggregate value.VC-backed deals in the region during 2011, a significant increase Clean technology and renewable energy companies saw a lowerfrom the 99 financings in India during 2010. In Q1 2012, 57 Indian proportion of the number of deals, but a higher proportion of thecompanies received VC funding, a 35% increase in deal activity aggregate value, at 6% and 9%, respectively.from the previous quarter, and more than double the number ofdeals seen in the country two years earlier in Q1 2010 - a clear Review of Venture Capital Fundraisingsignal of the growing importance of India to the VC industry. An examination of VC fundraising after the dot-com bubble showsVenture Capital Deals by Industry, Stage and Size that venture capital fundraising peaked in 2007, raising $53.2bn from 353 funds. From 2008 onwards, however, a lack of investorAs Fig. 3 shows, 16% of the total number of venture deals confidence and the fallout of the financial crisis resulted in a year-announced globally in 2012 to date have been angel/seed by-year decrease in the number of funds raised annually, as wellfinancings of very early-stage companies. Series A financings as a general decrease in aggregate capital raised. As shown in Fig.accounted for a similar proportion of commitments, with 15% of all 5, the exception to the poor fundraising trend in recent years wasventure capital deals falling into this stage, while the follow-on early 2011, when venture capital funds garnered $11.4bn more than thestage of Series B deals accounted for 10% of the total number oftransactions. As we move towards later-stage financings, we see Fig. 5: Annual Venture Capital Fundraising, 2005 - May 2012a decreasing prominence of such deals, with Series C financingsrepresenting 6% of all VC deals and just 4% of the total number 400of deals were classed as Series D or later. Around 7% of deals 353 350 336in 2012 have been add-on deals, with venture debt and growth 297 302capital deals each registering just 4% of the total number of deals 300 No. Funds Raisedrespectively. A large proportion of the VC deals announced in 2012 250 219to date were of an unspecified round, with the investment stage of 200 200 187many venture capital deals, particularly those in Europe, remaining 150undisclosed. 100 Aggregate Commitments ($bn)In 2012 to date, companies operating in the internet sector have 46.2 53.2 50.7 50 38.4 36.0 44 24.9 24.6received both the highest number and the highest aggregate value 10.4 0of financings globally. The internet sector includes such industries 2005 2006 2007 2008 2009 2010 2011 Jan - Mayas e-commerce and social networking platforms, and represented 2012just over one-quarter of all deal volume. The next most common Source: Preqin8 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com
  9. 9. Feature Venture Capital: Market Overview Download DataFig. 6: Number of Venture Capital Funds in Market and Aggregate over recent years in response to increased investor demand. As aTarget Capital, May 2007 - May 2012 result, in 2008 Asia and Rest of World-focused vehicles on the road400 surpassed Europe-focused funds in terms of aggregate capital 369 353 sought. There are currently 73% more venture capital vehicles in350 341 market that focus their investments throughout Asia and Rest of 301 294300 No. Funds Raising World than within Europe, and these funds are seeking 147% more 262250 capital.200 Conclusions150 The venture capital industry has not been immune to the fall-out100 Aggregate Target ($bn) 60.1 from the global financial crisis of 2008, with fundraising dropping 54.1 50.5 50 40.6 45.3 42.2 significantly. An increasingly overcrowded VC fundraising market 0 has persisted and as a result VC activity has entered a turbulent May 2007 May 2008 May 2009 May 2010 May 2011 May 2012 phase. Nevertheless, the venture capital industry remains anSource: Preqin attractive part of the private equity world to investors and fund managers alike. The increasing prominence of China, India andthe fact that seven venture capital funds that raised at least $1bn other emerging regions, and the lure of spectacular returns fromeach during the year. discovering an industry leader at an early stage, means that interest in the sector is set to continue at strong levels for the foreseeableThe majority of venture capital funds consider investments across future.the whole venture capital investment stage spectrum and as a resultthese funds have raised the largest proportion of capital historically. Notes on MethodologyIn 2011, 91 venture funds focusing on all investment stages raised$19.5bn, accounting for 54% of the capital raised that year. The Preqin Venture Deals Analyst data records cash-for-equitycommitments raised by stage-specific venture capital funds also investments by professional venture capital firms in companies oncontribute significantly to annual fundraising figures. Early-stage a global basis. The figures provided by Preqin are for announcedfunds and expansion/late-stage funds amassed $8.3bn and $7.3bn venture capital rounds, when the capital is committed to arespectively in 2011. company, as opposed to the different tranches in which a company will receive the committed venture capital round.Current Venture Capital Fundraising MarketAs of May 2012 there were 369 venture capital funds on the road,targeting aggregate capital commitments of $50.5bn. These figuresdemonstrate a 26% increase in the number of venture capital fundsin market and a 20% increase in the aggregate capital targetedcompared to funds on the road in May 2011. Almost 53% of the Data Source:total capital sought by VC managers is for funds that invest across This article draws upon research and analysis using the newall financing stages, while 22% is being targeted by expansion/ Preqin Venture Deals Analyst online service.late-stage vehicles, and the remainder by early stage and venturedebt funds. The database features in-depth details of over 21,000 venture capital deals from 2010 to present and comprehensive portfoliosThe number of funds on the road and the aggregate capital sought for the top 50 VC firms.in May of each year between 2007 and 2012 is shown in Fig. 6. For further information on how Venture Deals Analyst can helpThe largest amount of capital being sought across the period was you, or to apply for a demo of the service, please visit:in May 2009 in the wake of Lehman Brothers’ collapse and thedecline in investor activity that led to a glut of funds in market. www.preqin.com/vcdealsLevels fell dramatically over the subsequent two years, however,following the global financial crisis. The continued challengingfundraising environment has resulted in an overcrowded marketas of May 2012, and it is expected that many of these vehicles willnot complete a successful fundraising process, or at the very leastclose below their fundraising target.The North American marketplace still attracts the most attentionfrom fund managers and investors, with the highest proportion ofboth funds and aggregate capital targeting the region. There has,however, been a surge in Asia and Rest of World-focused funds9 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com
  10. 10. Preqin Venture Deals Analyst New VC Deals DatabasePreqin is proud to announce the launch of Venture Deals Analyst - a powerful new online service covering in-depth details forover 21,000 VC transactions. Available as part of our Private Equity Online service, or as a standalone subscription, VentureDeals Analyst is the most comprehensive resource available regarding the venture capital deals market.Whether you’re a fund manager, investor, placement agent, lawyer, consultant or advisor, this is a vital information service foryou. Venture Deals Analyst contains information for over 21,000 deals and has comprehensive portfolios for the top 50 VC firms. Profiles contain the following information: • Overview and key background information. • Investment dates and stage breakdown. • Financing data. • Exit details. Subscribers also get access to: • League Tables - constantly updated, filterable rankings of the most active VC deal makers and the largest VC deals. • Market Overview - detailed summary information, allowing quick access to an overview of the VC deal market. Venture Deals Analyst is available by annual subscription from only $1,950 / £1,150 / €1,375 For more information and to arrange a walkthrough of the service please visit: www.preqin.com/vcdeals
  11. 11. Feature Asian Private Equity Benchmarks: Far East Performance Download DataAsian Private Equity Benchmarks:Far East PerformanceAsia has rapidly developed into an important area for the private equity industry, with both investors andfund managers keen to tap into exciting opportunities. But to what extent does performance in Asia matchthe ideal? Gary Broughton presents the industry’s first Asian private equity benchmarks. Fig. 1: Asian Private Equity - Median Called-up, Distributed andAsia’s prominence and importance to the global economic markets Remaining Value Ratios by Vintage Yearis universally acknowledged; therefore it is no surprise that Asia’simportance to the private equity industry is equally relevant. Both 250%institutional investors and fund managers alike see attractive Remaining Value to Paid-inopportunities in the region, with the chance to achieve superior 200% Capital (%)returns and portfolio diversification. 150%In light of Preqin’s extensive coverage of Asian private equity, Distributed to Paid-in Capital (%)we have produced the first benchmark across Asian private 100%equity funds. Private equity professionals, from investors to fundmanagers and placement agents, can now compare returns 50% Called-up to Committed Capitalinformation against other Asia-focused private equity funds. (%) 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Using this new benchmark information, Preqin has been able toanalyze the returns of private equity funds with a main geographic Vintage Yearfocus on Asia in order to gain an insight into the performance of the Source: Preqinprivate equity industry in this region. showing a median net IRR of -3.0%. Vintage years 2004 and 2005Called-up, Distributed and Remaining Value Ratios by Vintage Year currently have the highest median net IRRs within the sample, with 14.6% and 11.2% respectively. For vintage years 2006 to 2008, theFig. 1 shows the median called-up, distributed and remaining value median figures are at a similar level to each other, ranging betweenratios by vintage year for Asian private equity funds of vintages 1997 7.0% and 7.7%.to 2011. Funds of vintage 2004 or earlier are all showing a mediandistributed figure greater than the median called-up capital, with The minimum net IRR required to be considered a top performingvintage 1999 funds having distributed 1.91x called capital. Funds Asia-focused fund is positive across all vintage years, rangingwith earlier vintages have a relatively small proportion of remaining from 9.2% for vintage 2008 to 23.6% for vintage 2004. The bottomvalue to paid-in capital as they are more advanced in their fund quartile boundary is also positive for all vintage years between 2004lives and fund managers have exited most investments. Funds with and 2008, ranging from 0.1% to 10.1%; however the boundary fallsa vintage year of 2005 or later are earlier on in the process, and into the red for vintage 2009. It should be noted that funds withhence have distributed a comparatively lower percentage of called-up capital, but have a higher percentage of value remaining in Fig. 2: Asian Private Equity - Median Net IRR and Quartile Boundariestheir portfolios. For example, vintage 2004 funds have distributed by Vintage Year101.5% (as measured against total capital paid-in), but still have 30%34.0% of paid-in capital remaining in unrealized investments. 25%Distributions and portfolio valuations as a proportion of called-up Top Quartile IRR Boundary 20%capital of funds with more recent vintages remain relatively low as Net IRR since Inceptionthese funds are still early in their fund lives – fund managers are 15%still in the process of calling capital and will be looking to add value 10%to their investments in coming years. 5% Median IRR 0%Median Net IRR and Quartile Boundaries by Vintage Year 2004 2005 2006 2007 2008 2009 -5% -10%The median net IRR and the top and bottom quartile boundaries Bottom Quartile Boundary -15%by vintage year for Asian private equity are shown in Fig. 2. Themedian net IRRs are currently in the black across all vintage years, -20% Vintage Yearwith the exception of 2009 vintage funds, which are currently Source: Preqin11 Private Equity Spotlight, May 2012 © 2012 Preqin Ltd. www.preqin.com

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