PresentationGlobal private equity trends

Alex ScottPartnerPantheon Ventures

Global Private Equity TrendsAlex ScottJuly 2018

Hitting the headlines

IPOS ARE DWINDLING, SO IS THE NUMBER OF

PUBLIC COMPANIES

25

FLOOD OF CASH TRIGGERS

BUYOUT BUBBLE FEARS

Private markets AUM is in excess of $5 trillion

Source: Preqin May 2018, other private assets include private debt, real estate, natural resources and infrastructure. There is no guarantee that these market conditions will continue.

$ billion

26

577 590 593 657 708 881 1,1541,468 1,421 1,574 1,722 1,794 1,938 2,180 2,229 2,370 2,568

2,973

124 147 158 195 236333

517

766 835880

1,0361,241

1,341

1,611 1,6881,857

1,985

2,133

701 737 751 852 9431,214

1,671

2,234 2,2562,454

2,7583,035

3,279

3,791 3,9174,228

4,553

5,106

0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Private Equity AUM Other Private Assets AUM

Private Equity3.4%

Commodities &

Real Goods 0.4%

Real Estate 7.0%

PE remains relatively small versus other asset classes globally

Source: Strategic Asset Allocation Over The Long Term, “Calculating the Global Market Portfolio”, October 1, 2016.

Emerging Markets

Public Equity 7.1%

Developed Markets

Public Equity 38.2%

27

Debt Markets 43.1%

PE remains relatively small as a % of GDP

Source: Invest Europe – 2017 European Private Equity Activity; EMPEA Industry Statistics Year-end 2017, CVCA VC & PE Canadian Market Overview, Bloomberg; market caps based on latest available on 25 May 2018. GDP based on World Bank, Bloomberg or central bank/government data. There is no guarantee that these market conditions will continue.

Private equity as % of GDP

Public market cap as % of GDP

28

1.7%

1.3%

0.8% 0.8%0.6%

0.4% 0.4% 0.3% 0.2% 0.2% 0.1%

United States Canada Israel UK France Germany Korea India Italy Japan Brazil

127%

92%71% 63%

36% 30% 24%

S&P 500 (US) FTSE 100 (UK) Nikkei 225 (Japan) CAC 40 (France) Shanghai Comp. (China) DAX 30 (Germany) Nifty 50 (India)

Source: Preqin, as of May 2018. Labels for Other includes balanced, special situations and turnaround funds.There is no guarantee that these market conditions will continue.

Global fundraising back to record levels, driven by large buyouts

$ billion

29

69 83 92 7441 46 52 53 60 77 73 81 87

74

140155

157

7434 37 47

125 111 96142

197

15

1228

28

1933

45 33

3181

60

65

61

35

45

45 54

2732

48 46

33

57

64

81

59

18

10

20 33

105

15 17

31

2127

2821

0

50

100

150

200

250

300

350

400

450

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

< $2 billion buyout > $2 billion buyout Growth Venture Other

Dry powder continues to grow, dominated by large/mega funds

Source: Preqin, as of May 2018. There is no guarantee that these market conditions will continue.

2012

2017

5-ye

ar

grow

th

5-ye

ar

CAG

R

Mega & large buyout 220 408 86% 13%

Mid & small buyout 138 221 60% 10%

Venture 101 178 76% 12%

Distressed PE & Mezz 106 156 46% 8%

Growth 71 125 77% 12%

Total 635 1,087 71% 11%

$ billion

30

0

50

100

150

200

250

300

350

400

450

Dec-

00

Dec-

01

Dec-

02

Dec-

03

Dec-

04

Dec-

05

Dec-

06

Dec-

07

Dec-

08

Dec-

09

Dec-

10

Dec-

11

Dec-

12

Dec-

13

Dec-

14

Dec-

15

Dec-

16

Dec-

17

Mega & large Mid & small

Venture Distressed PE & mezzanine

Growth

Investment activity is robust

Source: Preqin Private Equity online, downloaded March 15, 2018, Buyout includes growth capital. There is no guarantee that these market conditions will continue.

696

212116

239 279 279 311 361438

341 358

45

50

37

4662 58

58

101

149

146184

740

262

153

285341 337

369

462

588

488542

0

100

200

300

400

500

600

700

800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Buyout Venture

$ billion

31

Source: Pitchbook, U.S. PE Breakdown Q4 2017, European PE Breakdown 2017 4Q. There is no guarantee that these market conditions will continue.

U.S. buyout

Exits have come off the peak of 2015

# of exits

Europe buyout

# of exits

32

375 298 388501 476 533 564

734625

482

2211

45

33 2048

94

77

60

63292

192

283

406349

469488

558

544

549

0

200

400

600

800

1,000

1,200

1,400

1,600

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate Acquisition IPO Secondary Buyout

382255

455 502 590 533664 692 616

505

18

27

4742

4766

74 4434

44237

143

324360

487445

568 624588

548

0

200

400

600

800

1,000

1,200

1,400

1,600

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate Acquisition IPO Secondary Buyout

PE industry has been net cash flow positive for seven years

Source: Preqin, as of May 2018. 2017 data includes only to September 2017. Past performance is not indicative of future results. Future returns are not guaranteed and a loss of principal may occur.

$ billion

33

-200

-100

0

100

200

300

400

500

600

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 2017

Called ($bn) Distributed ($bn) Net cashflows ($bn)

Source: S&P Capital IQ, M&A Stats, December 2017. Past performance is not indicative of future results. Future returns are not guaranteed and a loss of principal may occur.

Valuations are being pushed up

U.S. purchase price multiples European purchase price multiples

34

5.0x3.8x

4.6x 4.9x 5.1x 5.3x 5.7x 5.6x 5.4x 5.8x

4.2x

3.9x3.9x 3.9x 3.6x 3.5x

3.9x 4.7x 4.6x4.9x

9.1x

7.7x

8.5x 8.8x 8.7x 8.8x

9.7x10.3x 10.0x

10.7x

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Debt/EBITDA Equity/EBITDA Valuation/EBITDA

4.5x 4.5x 4.3x 4.2x 4.5x3.5x

4.3x 4.2x5.4x 4.8x

5.6x

3.9x 4.2x 4.7x 4.2x4.8x

5.7x 5.7x

5.5x 6.2x

10.1x

8.4x 8.5x 8.8x 8.8x8.3x

10.1x 10.0x

10.9x 11.1x

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Debt / EBITDA Equity / EBITDA Valuation / EBITDA

How are Managers mitigating the current market environment?

35

Pantheon opinion

Expanding the opportunity

set

Greater focus on industry sectors

and strategy

Creating more value through operational

improvement

Growing operating teams

Source: Manager materials. Examples for illustrative purposes. Execution Origination Operating

Execution = 14Origination = 2Operating = 0

Execution = 16Origination = 3Operating = 5

2009

2018

U.K. mid-market manager

36

Execution = 23Operating = 10

Execution = 44Operating = 25

U.S. growth manager

2007

2017

Greater manager specialization

37

Pantheon opinion. Please refer to slide 17 for case study disclosure on regarding deals completed by Pantheon.

Shift from generalist to sector-focused teams Sector-focused funds Operating specialists

Managers have a number of levers to pull

Pantheon opinion

38

Tech enablement

Digitalization

Use of AI and big data

E-commerce penetration

Enabling growth

Investing in R&D for new product innovation

Expanding outside core markets

Strategic M&A to add new products or geographies

Increasing team bandwidth

Strengthening finance and operational functions

Talent management

Management

Sales optimization

Supply chain and procurement

Working capital improvement

Operational Value add

Private versus public performance by quartile & vintage year

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Past performance is not indicative of future results. Future returns are not guaranteed and a loss of principal may occur.Source: Thomson One and Bloomberg. All data to March, 2017. Thomson Quartile data relates to all Private Equity across all regions from the Thomson One database.

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Lower Quartile Median Upper Quartile MSCI World PME

By IRR

i) large dispersion of returns; ii) median performance outperforms PME in most years; iii) top quartile funds significantly outperform median fund performance

Conclusion

Investors are allocating more

capital to private equity in search of

growth, diversification and

higher returns

1Private equity

continues to grow, evolve and seek

out new investment

opportunities

2Managers are increasingly

sophisticated, using a range of

tools and resources to boost growth and value

in companies

33

Remaining highly selective and

accessing high quality managers

is key

4

Pantheon opinion

40

Disclosure 1 – case studies

These case studies are examples of specific private transactions made by Pantheon funds / clients and are designed to assist prospective investors / clients to understand Pantheon’s investment management style / strategy. It should NOT be regarded as a recommendation. Pantheon makes no representation or forecast about the performance, profitability or success of such transaction. Information concerning the performance of portfolio investments is available upon request, subject to confidentiality requirements. You should not assume that future recommendations will be profitable or will equal the performance of past recommendations. The statements above reflect the views and opinions of Pantheon as of the date of the investment analysis.

Please also note that all performance numbers quoted in these case studies are net of underlying fund fees, carry and expenses and gross of Pantheon fund fees, carry and expenses. Pantheon does not calculate performance net of Pantheon fund fees, carry and expenses at the underlying fund investment level. Past Performance is not indicative of future results. Future results are not guaranteed, and a loss of principal may occur.

A list of all investments are available upon request.

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Non-U.S. Disclosure

This document and the information contained herein has been prepared and distributed by Pantheon and is the proprietary information of Pantheon; it may not be reproduced, provided or disclosed to others, without the prior written permission of Pantheon. This document is distributed by Pantheon which is comprised of operating entities principally based in San Francisco, New York, London and Hong Kong. Pantheon Ventures Inc. and Pantheon Ventures (US) LP are registered as investment advisers with the U.S. Securities and Exchange Commission (“SEC”) and Pantheon Securities LLC, is registered as a limited purpose broker-dealer with the SEC and is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Pantheon Ventures (UK) LLP is authorised and regulated by the Financial Conduct Authority (FCA) in the United Kingdom. Pantheon Ventures (HK) LLP is regulated by the Securities and Futures Commission (“SFC”) in Hong Kong. In Hong Kong, this document is distributed by a licensed representative of Affiliated Managers Group (Hong Kong) Limited, a corporation licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activity, on the basis that you are a Professional Investor as defined in the Securities and Futures Ordinance. By accepting this document you acknowledge and agree that this material is provided for your use only and that you will not distribute or otherwise make this material available to a person who is not a Professional Investor as defined in the Ordinance. The registrations and memberships described above in no way imply that the SEC, FINRA, SIPC, FCA of the SFC have endorsed any of the referenced entities, their products or services, or this material. This information is intended only for distribution in Australia to persons who wholesale clients under section 761G of the Corporations Act 2001 (Cth) ("Wholesale Clients"). By receiving this document you represent and warrant that you are a Wholesale Client. Pantheon Ventures (UK) LLP is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) in relation to any financial services provided in Australia to Wholesale Clients under ASIC Class Order 03/1099. Pantheon Ventures (UK) LLP is regulated by the FCA under the laws of England and Wales, which differ from Australian laws. Pantheon Ventures (UK) LLP relies on the Australian Corporations (Repeal and Transitional Instrument) 2016/396 which grants transitional continuance relief to foreign financial services providers relying on Australian Class Order 03/1099 in order to provide financial services to Wholesale Clients in Australia. By accepting this document you acknowledge and agree that this material is provided for your use only and that you will not distribute or otherwise make this material available to a person who is not a Professional Investor as defined in the Ordinance.This document is a marketing communication, and has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nothing in this document constitutes an offer or solicitation to invest in a fund managed or advised by Pantheon or recommendation to purchase any security or service. The information contained in this document has been provided as a general market commentary only and does not constitute any form of legal, tax, securities or investment advice. It does not take into account the financial objectives, situation or needs of any persons, which are necessary considerations before making any investment decision. Unless stated otherwise all views expressed herein represent Pantheon’s opinion. The general opinions and information contained in this publication should not be acted or relied upon by any person without obtaining specific and relevant legal, tax, securities or investment advice. The research data included in this publication is based upon information derived from public sources that are believed by Pantheon to be reliable, but Pantheon does not guarantee their accuracy or completeness. Pantheon does not undertake to update this document, and the information and views discussed may change without notice. Legal, accounting and tax restrictions, transaction costs and changes to any assumptions may significantly affect the economics and results of any transaction or investment. In general, alternative investments such as private equity or infrastructure involve a high degree of risk, including potential loss of principal invested. These investments can be highly illiquid, charge higher fees than other investments, and typically do not grow at an even rate of return and may decline in value. These investments are not subject to the same regulatory requirements as registered investment products.

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Non-U.S. Disclosure

In addition, past performance is not indicative of future results. Future performance is not guaranteed and a loss of principal may occur. Market and exchange rate movements may cause the capital value of investments, and the income from them, to go down as well as up and the investor may not get back the amount originally invested This presentation may include “forward-looking statements”. All projections, forecasts or related statements or expressions of opinion are forward-looking statements. Although Pantheon believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct, and such forward-looking statements should not be regarded as a guarantee, prediction or definitive statement of fact or probability. Pantheon has taken reasonable care to ensure that the information contained in this document is accurate at the date of publication. However, no warranty or guarantee (express or implied) is given by Pantheon as to the accuracy of the information in this document, and to the extent permitted by applicable law, Pantheon specifically disclaims any liability for errors, inaccuracies or omissions in this document and for any loss or damage resulting from its use.In Australia, this document and the information contained herein is intended only for wholesale clients under section 761G of the Corporations Act 2001 (Cth) ("Wholesale Clients"). By receiving this document you represent and warrant that you are a Wholesale Client. Pantheon Ventures (UK) LLP is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) in relation to the provision of any financial product advice regarding the financial products which are referred to in this document under ASIC Class Order 03/1099 and is regulated by the FCA under UK laws, which differ from Australian laws.This document and the information contained herein is directed only at: (i) persons outside the United Kingdom and (ii) persons in the United Kingdom and who are “investment professionals” as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, persons falling within any of the categories of persons described in Article 49(2)(a) to (d) of that Order or other persons to whom it may lawfully be communicated in accordance with that Order. No other person in the United Kingdom should access this document and the information it contains, or act or rely upon by it. In all jurisdictions other than the United Kingdom, this document is intended only for institutional investors to whom this document can be lawfully distributed without any prior regulatory approval or action.Any reference to the title of “Partner” in these materials refers to such person’s capacity as a partner of Pantheon Ventures (UK) LLP. In addition, any reference to the title of “Partner” for persons located in the United States refers to such person’s capacity as a limited partner of Pantheon Ventures (US) LP. Copyright © Pantheon 2018. All rights reserved.

PVL 10031

43

PresentationGlobal private equity trends

Alex ScottPartnerPantheon Ventures