Presentation for the Baxon Breakfast Seminar (April 28th 2016) ‘Navigating in uncertain times: An outlook on H1 Private Equity activity.' The seminar covered a number of topics around the global private equity outlook for 2016. These included general trends for the long term picture; private debt; challenges, opportunities and highlighted operational excellence & transparency as a key factor for competitive GPs and LPs. Should you require more information do not hesitate to contact us at info@baxonpe.com

2. Global Private Equity Outlook – April 2016
Navigating in Uncertain Times – Challenges and Opportunities
London, 28th April 2016

3. • The long term picture
• Q1 2016 - turbulent times
• A word about Private Debt
• Challenges and Opportunities for GPs and LPs
 Operational Excellence & Transparency

4. • Private Equity:
o Buyout, Venture, Growth, Turnaround, Secondaries,
Fund of Funds, Other ‘core’ PE
• Private Capital:
o PE + Private Debt + Private Real Estate + Infrastructure
+ Natural Resources
Definitions

5. “Follow The Money” – LPs’ PE Return Expectations
Source: Preqin 2016 H1 Investor Outlook

6. Private Capital Returns – PrEQIn Index 2000 - 2015
Source: Preqin 2016 Global PE & VC Report

7. Private Capital Returns – PrEQIn Index 2000 - 2015
Source: Preqin 2016 Global PE & VC Report
+ / - 400 BP p.a.

8. Returns by Asset Class – Pension Funds
Source: Preqin 2016 Global PE & VC Report; median returns for pension funds by asset class

9. Returns by Asset Class – Pension Funds
Source: Preqin 2016 Global PE & VC Report; median returns for pension funds by asset class
+ / - 400 BP p.a.

10. LP Satisfaction with PE Returns
Source: Preqin Investor Outlook H1 2016

11. Long Term Allocation Intentions
Source: Preqin Investor Outlook H1 2016

12. Private Capital AUM, 2000 - 2015
Source: Preqin 2016 Global PE & VC Report

13. LPs Below / On / Above Target PE Allocation
Source: Preqin 2016 Global PE & VC Report

14. Private Capital Calls & Distributions, 2000 – 2015
Source: Preqin 2016 Global PE & VC Report; 2015 is estimate based on H1 annualized

15. Private Capital – Net Cash Flows for LPs, $bn
Source: Preqin Asia PE Report November 2015; Preqin PE Online
‘Net Call’
‘Net Dist’

16. LPs’ Expected Commitments 2016 vs. 2015
Source: Preqin Investor Outlook H1 2016

17. Global Private Capital Fundraising – Final + Interim Closes Qly
Source: Preqin 2016 Global PE & VC Report

18. Global Private Equity Fundraising – Final + Interim Closes Qly
Source: Preqin 2016 Q1 PE Quarterly

19. Private Equity Funds on Road
Source: Preqin 2016 Q1 PE Quarterly

20. Global Buyout & Growth Deals, 2006 - 2016
Source: Preqin Buyout Deals Analyst

21. Global Buyout & Growth Deals, 2006 - 2016
Source: Preqin Buyout Deals Analyst

22. What Has Changed? – Market Volatility and Credit Spreads
Source: St Louis Federal Reserve - US High Yield B Option-Adjusted Spread

23. Global Buyout Deal Value vs. US Credit Spreads, 2006 – 2016Q1
Source: Preqin deals data; Fed Reserve credit spread data (BofA Merrill Lynch US
High Yield B Option-Adjusted Spread)

24. Where Are We Now?
Source: St Louis Federal Reserve - US High Yield B Option-Adjusted Spread

25. How Well-Positioned is PE to Weather A Potential Storm?

26. 1: Reasonable Discipline Post-GFC
Source: Preqin Performance Analyst database

27. 2: Performance of PE During / Post GFC
Source: Preqin Performance Analyst database

28. 2: Performance of PE During / Post GFC
Source: Preqin Performance Analyst database

29. Fundraising Outlook - 2016
Negative Factors
• Reluctance to
commit at time of
uncertainty
• Evidence of
stabilizing appetite
during 2015?
Positive Factors
• PE’s track record
• PE Relatively well-
positioned
• Commit now to
invest at lower
valuations
?

30. Fundraising Outlook - 2016
Negative Factors
• Reluctance to
commit at time of
uncertainty
• Evidence of
weakening appetite
during 2015?
Positive Factors
• PE’s track record
• PE Relatively well-
positioned
• Commit now to
invest at lower
valuations
• 2016 will probably prove to be an OK / Good vintage
• But, suspect it’s likely to be a tougher year for fundraising

31. To summarise…
 We have seen a difference in the expected LP commitments versus what has really
been happening in Q1 2016
 PE has been significantly more active in paying cash out to LPs than in the run-up to
the GFC
 And has also been significantly more cautious in calling money up for new
investments . . .
 So the aggregate portfolio is significantly more mature than at the time of the start of
the GFC
Hence we can expect it to be correspondingly more robust

32. Private Debt

33. Global Private Debt Fundraising by Year
Vintage
Year
Number of
Funds
Aggregate
Capital
Raised
(bn)
Average
Fund Size
(mn)
Q1 2016 15 $7.8 $589
2015 134 $89.5 $728
2014 137 $76.0 $608
2013 157 $81.1 $555
2012 104 $63.4 $661
2011 96 $46.2 $531
2010 89 $40.9 $499
Global Private Debt Fund Raising by Year

34. European Private Debt Fundraising by Year
Vintage
Year
Number of
Funds
Aggregate
Capital
Raised
(bn)
Average
Fund Size
(mn)
Q1 2016 4 $4.1 $1377
2015 34 $30.9 $997
2014 46 $24.5 $544
2013 39 $19.7 $548
2012 26 $18.2 $727
2011 18 $12.6 $701
2010 17 $6.0 $397
European Private Debt Fundraising by Year

35. Europe Focused Direct Lending–
Fundraising by Year
Vintage
Year
Number of
Funds
Aggregate
Capital
Raised
(bn)
Average
Fund Size
(mn)
Q1 2016 2 $1.1 -
2015 16 $18.8 $1346
2014 17 $13.2 $778
2013 15 $8.5 $610
2012 6 $3.5 $584
2011 2 $1.1 $550
2010 5 $2.9 $716
Europe Focused Direct Lending Fundraising by Year

36. Challenges & Opportunities

37. Private Equity Funds on Road
Source: Preqin 2016 Q1 PE Quarterly

38. Challenges & Opportunities for GPs
- 1: Competition
Source: Preqin LP Survey Q1 2016

39. Challenges & Opportunities for GPs
- 2: Factors of Importance to LPs1
Source: Preqin LP Survey Q1 2016
(1) “Which of the following characteristics are most important in
identifying a superior fund manager?”

40. Challenges & Opportunities for GPs
- 2: Factors of Importance to LPs1
Source: Preqin LP Survey Q1 2016
(1) “Which of the following characteristics are most important in
identifying a superior fund manager?”

41. Challenges & Opportunities for GPs
- 3: Operational Excellence
Source: Preqin LP Survey Q1 2016
(1) “Which are the most important features or areas of “operational
excellence” in a firm?”

42. Challenges & Opportunities for GPs
- 3: Operational Excellence
Source: Preqin LP Survey Q1 2016
(1) “Which are the most important features or areas of “operational
excellence” in a firm?”

43. Key Takeaways
• Long term, excellent prospects for Private Equity, Private Debt and other
Private Capital
• Turbulence / volatility means 2016 may well be tough, but funds will get
raised
• LPs increasingly demanding on:
• GP team quality
• History of strong returns
• Operational Excellence
• Alignment of interest with GPs
• What can Baxon Solutions help you with?
• Operational excellence . . . to help differentiate you in the eyes of your
current and prospective LPs
• Deliver insights on how you have added value to portfolio companies
• (And increase your control and cost-effectiveness)

44. Key Takeaways
• Long term, excellent prospects for Private Equity, Private Debt and other
Private Capital
• Turbulence / volatility means 2016 may well be tough, but funds will get
raised
• LPs increasingly demanding on:
• GP team quality
• History of strong returns
• Operational Excellence
• Alignment of interest with GPs
• What can Baxon Solutions help you with?
• Operational excellence . . . to help differentiate you in the eyes of your
current and prospective LPs
• Deliver insights on how you have added value to portfolio companies
• (And increase your control and cost-effectiveness)
Actionable

45. Baxon contribution on Operational Excellence
 Better client service:
 Faster response to LP queries
 Ability to provide data in LP preferred Excel templates with no additional effort
 Data quality:
 Portfolio information traceable support by formal sign off process
 Golden source of data across all the organization
 Compliance:
 Valuation frameworks, LP reports and ESG reporting continuously updated to meet
regulations and guidelines
 Timeliness:
 Valuation process reduced to 2 weeks
 Monitoring process in 2-3 weeks
 Risk assessment:
 Constant automatic aggregation of portfolio exposure
 Risk indicators and early warning alerts
More transparent, robust and efficient portfolio management

46. Thank You!
• Further information from Baxon Solutions
• Further information / reports available from Preqin