SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 95 - May 17, 2013: - IPO Pipeline Pops in Q12013 - Water Utility Buyout Attracts Bids - The Buyout Bubble’s Exit Bottleneck: Preqin - LPs Spend on PE Funds Targeting Oil, Gas, and Natural Resources; Preqin - Families Vie With PE in Consumer Deals - Quote of the Week: Hitting a BRIC Wall

1. DIGEST 95SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 95
May 17, 2013
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IPO Pipeline Pops in Q12013
Water Utility Buyout Attracts Bids
The Buyout Bubble’s Exit Bottleneck: Preqin
LPs Spend on PE Funds Targeting
Oil, Gas, and Natural Resources; Preqin
Families Vie With PE in Consumer Deals
Quote of the Week: Hitting a BRIC Wall
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2. 1
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IPO PIPELINE POPS IN Q2013
US companies are raising the largest amount
of money through IPOs since before the
financial crisis, reports The Deal Pipeline. A
greater willingness for risk among investors is
pushing the US stock market to new highs.
Activity has picked up recently as investors
search for higher-yielding assets. But the
trend has mainly benefited dividend-paying
companies such as real estate investment
trusts. The article says that smaller growth-
industry companies are less attractive
Image source: PWC IPO Watch 2013
WATER UTILITY BUYOUT ATTRACTS BIDS
This week’s deal of the week is a potential USD 8.11 million takeover bid by a consortium of funds for
Severn Trent, a UK water utility. The WSJ says the deal is potentially the largest takeover of a UK-based
water company since the industry was privatized in 1989. The utility said it had received bids from
institutional investors including Borealis, which invests on behalf of, the Ontario Municipal Employees
Retirement System. Other bidders are Kuwait Investment Office and Universities Superannuation
Scheme. These are typically the kind of investors that invest in GP funds but as has been reported in
earlier newsletters, they are doing more direct deals these days.

3. 2
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THE BUYOUT BUBBLE’S EXIT
BOTTLENECK: PREQUIN
Fund managers are struggling to realize investments made in the Buyout Boom, according to Preqin.
They are finding the exit but it takes longer than it used to. The average holding for PE portfolio
companies that were sold in 2012 reached five years, years, compared to 3.9 years in 2008.
Megadeals (over USD 1bn) exited so far in 2013 had an average holding period of 6.2 years, up from
just 2.1 years in 2008.
Other findings
• A significant 63% of portfolio companies purchased in 2006 and 73% purchased in 2007 have yet to
be sold, as fund managers have struggled to exit companies purchased during the buyout boom.
• The average holding period for deals exited so far in 2013 has dropped slightly to 4.9 years.
• European portfolio companies have the longest average holding period at 5.2 years for deals exited
so far in 2013, compared to 4.8 years for North American portfolio companies.
• The aggregate value of exits dropped to just $5.2bn in Q1 2009, but has been on an upward trend
since, reaching a high of $126bn in Q2 2011.
• Investors continue to favor buyout funds. 51% of LPs looking to make new commitments in 2013
plan to target small to mid-market buyout funds and 23% expect to commit to large or mega
buyout vehicles.
The first quarter of 2013 saw an aggregate USD 9.7
billion raised by six natural resources funds,
according to Preqin. It was the highest quarterly
amount since the peak of USD 16.6 billion seen in
Q2 2009. Last year was a particularly successful
fundraising year for natural resources funds as 22
natural resources funds secured an about USD
22.5bn, which is similar to the peak levels of capital
funds that closed in 2006 and 2009, raised USD
24.0bn and USD 23.6bn respectively.
Image source: PEI
LPS SPEND ON PE FUNDS TARGETING
OIL, GAS, AND NATURAL RESOURCES;
PREQUIN
North America-based GPs led the fundraising trail for this type of investment last year, due to a
favorable regulatory environment for oil and gas investments.

4. 3
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All six natural resources funds that held a final close in Q1 2013 met or exceeded their target size, said
Preqin. Currently, 30 natural resources funds are currently in market, seeking to raise USD 26.8bn.
FAMILIES VIE WITH PE IN CONSUMER
DEALS
Reuters is reporting that family-run investment firms are making waves in the consumer deals market,
squeezing out private-equity players. It is believed that families are willing to wait longer for returns, giving
them the edge over private-equity funds looking for a quick turnaround. One of the reasons PE firms are not
competing head on with family funds is that multiples on some valuations are too high to make the returns
work. Family-funded investments in the sector are expected to grow. Food and beverage continues to be a
very attractive industry.
QUOTE OF THE WEEK: HITTING A BRIC
WALL
“Korea is a remarkable economic success story along with Taiwan.
It's the only economy in the world to have grown at 5 percent or
more for five decades in a row… The other countries where I think
that expectations can be surpassed versus what the consensus are
Indonesia, Turkey, Philippines. I think even Thailand has a chance
of doing so. Then a bunch of frontier markets such as Nigeria, Sri
Lanka. I think all these countries have a chance of surpassing
expectations.”
Who said it: Ruchir Sharma, Morgan Stanley, Head of Emerging Markets
In Context: In an interview with an editor of Harvard Business Review, Marc Andreessen talks about the
complex challenges in current technology investments, the hazards of missing a good investment, and
how large tech companies sometimes initiate takeover talks just to “screw up” the business of a startup
company for 18 months. The tech entrepreneur turned venture capitalist at Andreessen Horowitz, a
Menlo Park venture capital fund, has lots more to say on preparing for IPOs, handling compliance, lean
startups, cloud computing, and how software is changing almost industries far beyond what was
foreseen as recently as a decade ago. (Image Source: Forbes Video Wochit Tech)
Where we found it: CNN Transcripts
Image source: Foreign Affairs Focus on Youtube

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