Transcript No Slide Title

Economics and Business Exchange
Supported by Deloitte.
Future Trends in Private Equity
Jim Sloane, Deloitte
We believe that private equity’s greatest
growth is yet to come
Apax Partners, April 2006
Stimuli
Risks
Debt Market
• Interest rates
• Corporate collapse
Economies slow down
Exit values plunge
Overpriced assets
Low interest rates
We believe that private equity’s greatest
growth is yet to come
Apax Partners, April 2006
Stable regulatory
environment
Liberal policies towards
Private enterprise
Entrepreneurship
New markets
Delisting
Strong debt market
Value of Buy-outs In Europe (€m)
Country Name
2001
2002
2003
2004
2005
2006H1
47
154
303
88
28
9
1,744
517
1,448
2,270
4,257
317
500
1,391
848
260
7,089
13,010
Finland
1,047
480
1,039
977
2,044
10
France
6,387
15,568
8,767
11,489
21,309
14,306
Germany
7,229
8,147
11,908
17,915
12,459
8,511
Ireland
5,021
4,930
747
977
770
197
Italy
1,002
3,428
7,773
2,937
17,512
1,096
Netherlands
4,433
1,899
4,958
7,612
10,334
12,126
Norway
1,370
142
308
431
470
1,281
Portugal
2
26
54
8
76
70
Spain
1,528
2,069
934
2,279
9,391
1,273
Sweden
3,005
1,116
2,226
1,701
4,702
2,293
Switzerland
715
2,766
865
1,578
1,033
774
Total (CE)
34,030
42,633
42,178
50,522
91,471
55,273
UK
31,343
24,848
23,570
30,149
35,398
14,984
Total (inc UK)
65,373
67,481
65,748
80,671
126,869
70,257
Austria
Belgium
Denmark
Source: CMBOR/Barclays Private Equity/Deloitte Year 2006 figures are for first 6 months only
Sector Distribution of UK Buy-outs/Buy-ins by Value (£m)
Sector Group
2001
2002
2003
2004
2005
2006 H1
Business & Support Services
3,568
1,544
1,391
4,349
3,359
994
Financial Services
526
772
582
889
2,043
792
Food & Drink
668
849
464
741
205
334
Healthcare
558
1034
620
1,481
4,596
592
Leisure
5,629
4,683
6,162
3,582
5,178
2,954
Manufacturing
3,455
1424
1,164
3,005
2,860
1,192
149
70
911
202
200
50
2,890
813
465
1,366
469
298
Retail
627
2,822
2,292
2,449
2,629
1,117
TMT
590
483
1,545
1,175
1,525
960
Transport & Comms
212
237
421
426
199
253
Others
676
766
283
809
893
774
Paper, Print, Publishing
Property & Construction
Fund Sizes

8/9 funds in excess of $8 billion
 Blackstone - $15 billion
 Permira - $12 billion

3 or 4 year duration

No issues raising funds
We believe that private equity’s greatest
growth is yet to come
Apax Partners, April 2006
Barbarian at
the gates
Disposals
Financial Engineering
& Arbitrage
Active Ownership
(Jack Welch
Lou Gerstner
Lord Hollick
Vivek Paul
Millard Drexler)
Barbarian at
the gates
Disposals
Financial Engineering
& Arbitrage
•
•
•
•
•
•
•
•
•
Active Ownership
Public companies delisting
Ownership
Power to restructure
New management
Reward
Leverage full debt capacity
Talent flow
Increasing financial scale
FTSE 100 companies as targets
ACTIVE OWNERSHIP
Maturity of
the business
Scale
Opportunity
Strategic
Buyers
Returns from
going private
Club deals
Management
Teams
Owners as
supervisors
and managers
Strategy, Vision, Mission
V.
Opportunistic
• Growth
• Capital already invested
• Exploit new opportunities
• Agents for change
• Buy, Build, Improve, Grow
• Low hanging fruit taken
Implications

Increasingly important part of the economy

Stimulus for growth?

Private ownership delivers more?

Risk of tackling operational issues

Succession planning

Continual flow of M&A activity (all sizes)
UNITED KINGDOM
Rank
Overall environment for private enterprise
2
Financing environment
3
Market opportunities
2
Legal and policy environment
1
Entrepreneurial environment
6
The UK ranks second overall, and first in Europe, for its private equity environment. It is some way ahead of third-placed
Australia, but by the same token, lags considerably behind the US. The UK government operates with a very light touch in the
corporate arena, giving business as much freedom as possible to compete without state intervention.
Strengths: The UK has a particularly good legal and policy environment, ranking better than any other country. Among its most
significant advantages in this area are an extremely flexible labour market and a government which is very encouraging of private
equity. Alongside its favourable regulatory environment, the UK has, proportionally, the highest level of M&A activity of any
country surveyed, an indicator of excellent deal making opportunities for private equity firms.
Weaknesses: The UK is one of the few countries in the OECD where R&D expenditure as a share of GDP has fallen over the
past 20 years. Whereas the UK’s expenditure on R&D as a share of GDP, at 2.4% in 1981, was above the EU and OECD
averages, it has now fallen to 1.9% of GDP.
Source: Apax Partners, April 2006
Economics and Business Exchange
Supported by Deloitte.