Private Equity Capital Briefing - EYFILE/ey-private-equity-capital-briefing-june-2016.pdfPE Capital Briefingprovides perspectives on both recent developments and the longer-term outlook

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Private Equity Capital Briefing

June 2016

Has fundraising peaked? Fundraising declines modestly in 2016 as firms shift focus to deployment.

Monthly insights and intelligence on PE trends

The PE Capital Briefing has been designed to help you remain current on capital market trends. It captures key insights from subject-matter professionals across EY, and distils this intelligence into a succinct and user-friendly publication. PE Capital Briefing provides perspectives on both recent developments and the longer-term outlook for PE fundraising, acquisitions, and exits, as well as trends in global M&A, cross-border deal flows, IPOs, and the debt and bond markets.Please feel free to reach out to any of the subject-matter contacts listed on the reverse of this document if you wish to discuss any of the topics covered.

ContentsSection 1 Private equity: fundraising 4

Private equity: acquisitions 5Private equity: exits 6

Section 2 M&A 7Section 3 IPOs 9Section 4 Loans 10Section 5 Bonds 11

AppendicesAppendix A PE activity by geography 13Appendix B M&A activity monthly flash 22Appendix C M&A multiples and bid premium 23Appendix D Capital Confidence Barometer 24

1.i. Private equity: fundraising

Executive summary • Buyout fundraising in May fell 20% from a year ago, as PE firms begin to shift focus from fundraising to deployment. • Buyout dry powder exceeds the half-billion dollar mark and ended May up 7% to US$509.7b from a year earlier. • The Security and Exchange Commission (SEC) plans to increase enforcement efforts vs PE fund managers for allegedly

breaking agency’s rules.

Current stateFundraising• Buyout fundraising in May fell from a year earlier, as PE firms begin to

shift their focus from fundraising to deployment. The latest tally fell 20% to US$19.7b from a year earlier, on 50% fewer closes. YTD followed the same trend and is down 7% from last year’s face. Despite the drop-off, fundraising should remain strong through 2016, aided by record distributions to investors over the last two years.

• The largest PE fund closed in May was by TPG Capital. The firm held the final close of TPG Partners VII, at US$10.5b. Fund VII is the firm’s first buyout fund since the 2008 financial crisis. TPG has diversified its model to include credit, growth-equity and real estate. Fund VII will be used for deals in Europe, the US and Canada. It has invested US$2.1b in 6 companies including real estate firm Cushman & Wakefield and educational software company Ellucian.

Dry powder• PE continues to hold high levels of cash for investments. The total

exceeded the half-billion dollar mark, rising 7% to US$509.7b at the end of May from US475.4b a year earlier. PE firms have remained active on the fundraising front, which is adding to the dry powder tally. Dry powder may continue to rise in the near term if the industry’s pace of investment doesn’t increase.

Environment and horizon• The SEC is stepping up efforts to bring more cases against PE fund

managers on allegations that they are breaking the agency’s rules. Speaking in mid-May at the Securities Enforcement Forum West in San Francisco, SEC Division of Enforcement director Andrew Ceresney said the enforcement actions can be grouped into three categories: advisors who receive undisclosed fees and expenses, advisors who misallocate expenses or shift them without permission, and advisors who fail to adequately disclose conflicts of interest.

• The PE industry is also facing new pressures on the fees issue from California, where the state’s legislature introduced Assembly Bill 2833, which will require public retirement systems to ask each alternative investment vehicle it invests in to make disclosures regarding fees and expenses. One potential problem, however, is that the bill does not offer a specific methodology. Both Los Angeles City Employees’ Retirement System and Los Angeles Fire and Police Pension oppose the bill because they see it as damaging their ability to generate strong returns.

• The Private Equity Growth Capital Council (PEGCC) changed its name to the American Investment Council (AIC). The Washington, DC-based organization plans to cast a wider net to increase its membership and seeks to include more firms that will be affected by efforts to increase regulatory oversight of the industry. The AIC is expanding its mission and said it seeks to “advance access to capital, job creation, retirement security, innovation, and economic growth in the United States by promoting responsible long-term investment.”

• PE firms will look to opportunities in China as they seek to raise new funds to invest in Asia. However, fundraising will also benefit from the fast-growing consumer markets of Southeast Asia. Indonesia, Myanmar, the Philippines and Vietnam are emerging as economic hot spots in the region despite concerns related to commodity prices, forex and export demands. Investment opportunities in these areas can help drive successful fundraising for the region.

Global PE fundraising by month (in US$b)

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Commitments (US$b) Number of funds

Top five funds closed in May 2016 (US$m)

Fund name TypeGeographic focus

Target (US$m) Close

(US$m)

TPG Buyout US 8,968 10,500

Bridgepoint Development Capital

Buyout Europe 730.03 869.69

Industrial Growth Partners Buyout US 800.00 800.00

Paramount Group Real estate US NA 775.00

Lime Rock Partners Natural resources

US 850.00 754.00

Global PE dry powder by region (in US$b)

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100

200

300

400

500

600

03 04 05 06 07 08 09 10 11 12 13 14 15 YTD16

Source: Preqin. YTD through May 31, 2016.

North America Europe Asia and ROW

Source: Preqin

Source: Preqin

1.ii. Private equity: acquisitions

Executive summary• PE acquisitions in May rose 24% from a year earlier, aided by improved activity in the Americas. Overall PE investment year-

to-date is down 9% vs. last year.• PE acquisitions in May in the Americas climbed 230% from a year ago and made up for decreases in Asia Pacific and EMEA. • The technology sector has received 28% of PE investment so far in 2016, as well as nearly 21% of PE deal volume.

Current state• There was a pickup in PE investment in May, but market volatility

has kept PE investments muted YTD, with the industry showing patience before putting its capital to work. PE acquisitions for May rose 24%, to US$23.8b from US$19.1b a year earlier, aided by activities in the Americas. PE acquisitions in the region climbed 230%, more than compensating for decreases in both Asia Pacific and EMEA. However, the overall tally on a year-to-date basis is behind last year’s pace. It fell 9% to US$92.3b from a year ago on 19% fewer transactions.

• The largest announced PE investment in May was in the health care space. Hellman & Friedman LLC agreed to acquire a majority stake in MultiPlan Inc. for US$7.5b from Partners Group Holding AG and Starr Investment Holdings LLC, which will retain a minority stake in the provider of health care cost management after the deal closes. May 2016 had fewer large PE investments, but the scale of the top two exceeded the combined deal value of the six US$1b+ transactions in the comparable period a year ago.

• Technology continues to remain a destination of PE investments so far this year. The segment accounted for more than a quarter of total PE dollars invested so far this year. Tech represents 28% of total dollar invested and nearly 21% of announced deals. Software publishers were 2 of the top 10 PE transactions during May. Health care represented 13% of announced deal value through the end of May, and Utilities accounted for 10%.

Environment and horizon• The Department of Housing and Urban Development (HUD) will issue

new rules governing the sale of mortgages formerly guaranteed by the government. The regulations are designed to answer the criticism from housing advocates that the current loan sale program, has benefited private equity firms and hedge funds at the expense of strapped borrowers. The Blackstone Group’s Bayview Asset Management affiliate and Lone Star Funds are two of the largest buyers of distressed mortgages.

• Brazil’s infrastructure sector represents an appealing investment opportunity for PE and others. Jose Guilherme Souza, head of Vinci Partners Investimentos’ infrastructure team, said, “Investors are going to gain access to very high-quality infrastructure assets, and at a time when demand for new infrastructure in the country is very high.” He was speaking to Bloomberg News, which reported on May 24, that a widespread pay-to-play corruption scandal has brought many traditional builders and concession-operators to their knees in Brazil.

• In the US, PE interest in addiction-treatment centers is being fueled by health care reforms that require insurers to cover mental-health and substance-abuse disorders in the same way they cover medical disorders. In recent years, laws have been passed to ensure no distinction is made between how insurers cover the treatment of mental and physical health concerns. These changes were codified with the Mental Health Parity and Addiction Equity Act of 2008 and The Affordable Care Act, also known as Obamacare. The former broke the distinction, while the latter extended coverage. We are now seeing increased enforcement that is bringing more funds into the system and making treatment centers more attractive to PE, among other investor groups.

• Distressed debt investing has and should continue to capture more attention from the PE industry. Economic growth has been modest so far this year and there may be opportunities to purchase non-performing loans at a discount. Apollo Global Management LLC’s Leon Black said in May at the Milken Institute Global Conference in California, “The more severe regulatory environment that came out of the financial crisis really pushed a lot of the traditional providers of credit to have to shrink their balance sheets and meet various leverage ratios.” Some firms have been positioning themselves recently for the opportunities they are anticipating in this new distressed cycle.

PE acquisitions by month (in US$b)

Top five announced acquisitions in May 2016

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Value (US$b) Volume

Sector 2016 Value Industry share (%) 2016 Volume Industry

share (%)

Technology $25.76 27.8% 133 20.6%

Health care $11.70 12.6% 62 9.6%

Utilities $8.83 9.5% 13 2.0%Real estate $8.22 8.9% 20 3.1%Consumer goods $8.08 8.7% 80 12.4%

Financials $6.87 7.4% 45 7.0%Consumer services $6.41 6.9% 94 14.5%Materials $5.51 5.9% 97 15.0%

Industrials $4.98 5.4% 44 6.8%

Oil and gas $3.97 4.3% 16 2.5%Retail $1.91 2.1% 27 4.2%Telecom $0.47 0.5% 16 2.5%

PE acquisitions by sector, YTD 2016 (US$b)

Annouc-ment Date

Company Acquirer Value (US$b)

Sector

5-May-16 MultiPlan Inc. Hellman & Friedman LLC/ Leonard Green & Partners LP/GIC Pte. Ltd.

7.50 Health care

23-May-16 American Capital Ltd.

Ares Capital Corp. 3.43 Financials

31-May-16 Marketo Inc. Vista Equity Partners LLC 1.79 Technology

2-May-16 Setefi SpA/Intesa Sanpaolo Card Ltd.

Advent International Corp./ Clessidra Sgr SpA/Bain Capital LLC

1.18 Financials

30-May-16 Sisal Group SpA CVC Capital Partners Ltd. 1.11 Consumer goods

Source: Dealogic

Source: Dealogic

Source: Dealogic

1.iii. Private equity: exits

Executive summary• PE M&A exit value for May fell 30%, to US$21.9b from a year ago period which included more large transactions. • PE-backed IPO activity in May fell 43% to US$2.8b from a year earlier, partly reflects fewer offerings in the latest period. (11

versus 15) • PE firms and other IPO watchers will be interested in June’s IPO activities, which could indicate the market’s state for the rest

of the year.

Current state• PE firms took advantage of a seller’s market in 2015, which makes year-

over-year comparison tough to match this year. M&A deal value for May 2016 fell 30%, to US$21.9b from a year earlier. Each region reported lower deal value from PE M&A exits for May. Year-to-date, overall deal value for M&A exits involving companies with financial sponsors fell 33% to US$94.6b on 9% fewer transactions. (348 versus 381.)

• There were a couple of PE-backed M&A exits with deal values north of US$7b in the year earlier period compared with one in the comparable period this year. Partners Group Holding AG and Starr Investment Holdings LLC’s proposed US$7.5b sale of MultiPlan Inc. to Hellman & Friedman LLC was the latest period’s largest announced exit involving a company with a financial sponsor. The next largest for May 2016 involves KKR & Co LP’s proposed exit of SEB SA - Groupe SEB, a French small electrical appliance manufacturer, to WMF Wuerttembergische Metallwarenfabrik AG for US$1.9b.

• Market volatility swings and valuation concerns for technology and other companies have contributed to the slowdown in PE-backed IPO activity. In May, deal value of IPOs for companies with financial sponsors fell 43% to US$2.8b from a year earlier. The decrease partly reflects fewer offerings in the latest period, 11 versus 15 last year. Year-to-date, deal value for PE-backed IPOs fell 60% to US$8.8b on 52% fewer offerings.

• The largest IPO involving a financial sponsor in May is KKR & Co. LP and Clayton Dubilier & Rice LLC’s US Food Holdings Corp. The food distribution raised about US$1.2b and its shares now trades on the NYSE under the symbol, USFD. Neither KKR or Clayton Dubilier sold shares in the offering. However, the IPO offers both a path to sell their shares in US Food. Last year, the Federal Trade Commission blocked their attempt to sell the business to peer Sysco Corp. for US$8.2b including debt.

Environment and horizon• There are reasons to expect improved PE-backed IPO activity in the

coming quarters, despite weakness in the YTD tally. Fears of a global economic slowdown, high market valuations due to loose monetary policy, and volatility in capital market conditions contributed to a muted start so far this year. However, there are reasons to remain optimistic that the market will turn around. The Federal Reserve is expected to increase interest rates, and the European Central Bank plans more stimulus to support economic growth. China has also eased monetary policy and oil prices have shown signs of stability, albeit at lower levels. These developments, coupled with the IPO pipeline for companies with financial sponsors, are indicators that we may see more PE-backed offerings soon.

• The U.S. Presidential elections could prove a drag on IPOs, so a strong June will be important to shore up confidence in 2H16. PE firms will likely be watching IPO activities in June closely to looking for signs of life and trying to gauge the IPO market’s health. June is typically one of the busiest months for IPOs, according to Dealogic data, and several offering are on tap - including some with financial sponsors. A good turnout for the month would bode well for the rest of the year. “A healthy June would absolutely be a harbinger for a healthy IPO market,” Marc Jaffe commented to the Wall Street Journal. Jaffe is co-chair of Latham & Watkins LLP’s global capital markets practices.

PE M&A exits by month (US$b)

PE IPOs by month (in US$b)

6Executive briefing

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$0$5

$10$15$20$25$30$35$40$45$50

May 15 Jun 15 Jul 15 Aug 15 Sept15

Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16

Value (US$b) Volume

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Value (US$b) Volume

Top 5 announced M&A exits In May 2016

Date Company Sponsor Value (US$m) Sector

5-May-16 MultiPlan Inc. Leonard Green & Partners LP/Hellman & Friedman LLC/ Partners Group Holding AG /Starr Investment Holdings LLC

7,500.00 Health care

23-May-16 WMF Wuerttem-bergische Metall-warenfabrik AG

KKR & Co. LP 1,919.08 Consumer goods

19-May-16 LifeStorage LP TPG Capital LP 1,264.27 Industrials

30-May-16 Sisal Group SpA CVC Capital Partners Ltd./Permira Ltd./ Clessidra Sgr SpA/ Apax Partners LLP

1,111.42 Consumer goods

30-May-16 Atos Medical AB EQT Partners AB 944.71 Health care

6-May-16 Ethypharm SA Astorg Partners SA 858.66 Health care

Source: Dealogic

Source: Dealogic

Source: Dealogic

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

0% 20% 40%

Current state

• May saw a rebound in global M&A, with over US$300b of deals announced, the highest monthly value seen in the year to date (YTD)16, including three megadeals (US$10b+) and five deals in the US$5b-US$10b range.

• There were 44 deals valued between US$1b and US$10b, worth a combined US$121b, a key indicator of the underlying health of the M&A market. This is up from the same period in 2015 (39 deals totalingUS$110b) and in line with the median monthly value and volume since the deal market accelerated in 2014.

• This year has witnessed the largest number of busted deals since the financial crisis. As regulators put more pressure on M&A, deal worth over US$450b have been cut short, the highest since 2007. The period has already seen two of the top five withdrawn deals in history, including Honeywell’s failed bid for United Technologies for US$90b and Pfizer’s withdrawal of its US$160b pursuit of Allergan.

• The Americas was the most targeted area in May, attracting deals valued at US$181b (60% of the global total), followed by Asia-Pacific at US$69b (23%) and EMEA at US$50b (17%).

• In the largest deal of the month, Bayer AG of Germany has made an initial approach for US-based Monsanto, valued at US$62b. As of now, Monsanto has rejected Bayer AG’s takeover offer, finding it too low. However, Monsanto is open to further talks. There are concerns that, if the merger goes through, it would create the largest seed and pesticide company in a rapidly consolidating sector. This could have regulatory concerns, such as limiting farmer choice and bargaining power, and increasing seed prices.

• In another significant deal of the month, Chinese home appliance maker Midea Group launched a US$5b-plus bid to buy German robotics specialist Kuka AG, in the latest instance of global Chinese dealmakingand a move targeting technology that is crucial for the country’s ambitions to become a high-end manufacturing powerhouse.

Environment and horizon• Have we passed "peak M&A" in the current cycle? With headline

comparisons seeming to show a cooling-off after a record 2015 for dealmaking, some analysts are querying whether we have now passed this boom’s zenith, or if it is just a temporary blip. Investor concerns about global economic growth continue to underpin high levels of volatility in equity, currency and commodity markets. Against this backdrop, however, continuing C-suite confidence in the number and quality of acquisition opportunities and long-term optimism, we anticipate global M&A to remain robust through the coming months.

• Growth prospects for the US economy remain positive. Economic signals in the world’s largest M&A market strengthen, indicating a potential improvement in business sentiment. A more optimistic economic environment, coupled with large cash reserves and the desire by US companies to expand both their customer base and geographic reach, could lead to high levels of dealmaking in the second half of 2016.

• Spin-offs look set to be a major driver for M&A in 2016. This year is expected to see a surge in companies spinning off non-core or underperforming business units, driven by the need to generate higher returns for shareholders. The recent announcements involving Hewlett-Packard Inc. and CSC, Dell Inc. and NTT Data Corp are examples of companies looking to focus on higher-margin operations.

• The M&A market in the Asia-Pacific region looks set to remain healthy in the coming months. As the slowdown in China’s growth rate has softened demand domestically, a number of cash-rich Chinese companies are looking to diversify their business outside of China, which may lead to even more outbound deals in 2016. This, along with the Chinese Government’s efforts to restructure state-owned companies and a positive outlook for India, should all add to a strong deal flow.

• Hostile and unsolicited bids are an emerging theme this year, with the number of unsolicited attempts increasing during YTD16. A fiercely competitive M&A landscape is expected to lead to more such bids in the near term.

Deal environment: by area (year on year (YOY) % change)Last 12 months (LTM) to May 2016 versus LTM to May 2015Source: Dealogic and EY analysis

Deal environment: by target sector and target area (% share of global value)LTM to May 2016Source: Dealogic and EY analysis; excludes real estate asset transactions.Note: because of rounding, percentages may not add up to total.

Top 10 announced deals by value, May 2016Source: Dealogic

M&A analysis as at 1 June 2016.Note: data is continually updated and therefore subject to change.

7

Executive summary• Global M&A rebounded in May, with over US$300b of deals announced – the highest monthly value in 2016.• Core M&A drives uptick, with a strong performance in the US$1b–US$10b value band.• Strategic deals, including spin-offs, could drive the next wave of M&A.• China continues its overseas buying spree, recording the highest number of outbound deals ever recorded in a year.• Low economic growth, disruptive technology, sector convergence and changing consumer behavior will be key deal drivers in 2016.

2. M&A

Target Sector Country Acquiror Value (US$m)

Monsanto Co. Consumer products and retail

US Bayer AG 62,032

IMS Health Holdings Inc.

Technology US Quintiles Transnational Holdings Inc.

12,888

Westar Energy Inc. Power and utilities US Great Plains Energy Inc. 12,154

Enterprise Services segment of Hewlett Packard Enterprise Co.

Technology US CSC -Computer Sciences Corp.

8,243

MultiPlan Inc. Insurance US Hellman & Friedman LLC;Leonard Green & Partners LP; GIC Pte Ltd.

7,500

Technip SA Oil and gas France FMC Technologies Inc. 6,794

SF Holdings (Group) Co. Ltd.

Automotive and transportation

China Maanshan Dingtai Rare Earth & New Materials Co Ltd.

6,613

AnacorPharmaceuticals Inc.

Life sciences US Pfizer Inc. 5,205

KUKA AG (89.78%) Diversified industrial products

Germany Midea Group Co. Ltd. 4,500

FEI Co. Diversified industrial products

US Thermo Fisher Scientific Inc.

4,486

Value

Vol

ume

Americas

EMEA

Global

Asia-Pacific

Americas Asia-Pacific EMEA Total

Technology 10% 5% 2% 17%Consumer products and retail 6% 3% 5% 14%Life sciences 7% 1% 1% 9%Diversified industrial products 4% 2% 3% 9%Banking and capital markets 3% 2% 2% 8%Oil and gas 6% 1% 1% 8%Automotive and transportation 1% 3% 1% 5%Insurance 4% 1% 0% 5%Power and utilities 3% 1% 1% 5%Others 8% 7% 5% 20%

All sectors 53% 25% 23% 100%

Capital Briefing

2.i. M&A: cross-border deal flow

Key cross-border M&A deal flow(LTM to May 2016)(Total = US$1.3t)

N America to:W Europe – $85b

UK&I – $70bOceania – $24b

Japan to:N America – $34bW Europe – $13b

UK&I - $7b

UK&I to:N America – $75bW Europe – $22bL America – $3b

L America to:W Europe – $10bN America – $2b

UK&I – $2b

Greater China andMongolia to:

W Europe – $85bN America – $47b

SE Asia – $12bW Europe to:N America – $187b

UK&I – $145bJapan – $15b

Cross-border M&A deal flow (LTM to May 2016)(US$m)

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

# Acquiror refers to acquiror ultimate holding company.$ Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan.M&A analysis as at 1 June 2016. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

Key >US$100b >US$50b >US$10b

Intra-area cross-border deals

Target Acquiror# Africa SE Asia (including Korea)

Greater China and Mongolia$

Russia, CIS and CSE

W Europe (excluding UK&I)

India Japan Latin America

Middle East

North America

Oceania UK&I Inboundtotal

% versus PTM

Africa 916 316 3,252 53 1,912 28 447 - 536 4,394 126 1,800 13,781 22%

SE Asia (including Korea)

5 6,319 12,254 - 7,224 23 5,226 360 1,688 2,586 2,912 448 39,046 12%

Greater China andMongolia $

- 2,101 29,530

313 1,273 - 363 - 1,193 10,687 249 127 45,836 -12%

Russia, CIS and CSE 2,327 2,097 7,853 2,589 5,621 2,397 212 466 4,707 2,511 59 2,582 33,421 25%

W Europe (excluding UK&I)

2,928 969 84,807 7,028 61,991 860 12,853 10,321 3,532 85,438 1,564 22,411 294,702 13%

India 240 4,369 1,118 - 1,787 - 2,373 - 567 6,503 216 637 17,812 115%

Japan - 153 9,136 - 14,539 293 - - - 8,285 2 693 33,102 277%

Latin America 30 1,219 7,137 502 9,525 11 968 6,199 2,498 14,959 659 3,083 46,790 -20%

Middle East 2,186 92 1,690 78 1,891 99 256 140 1,579 2,804 56 336 11,207 43%

North America 466 4,751 47,063 1,219 186,844 2,365 34,450 2,445 44,610 112,943 3,389 75,215 515,761 58%

Oceania 33 900 6,860 1 5,277 128 2,515 51 162 23,833 1,864 576 42,202 30%

UK&I 1,331 2,045 7,360 143 145,151 301 7,466 1,559 1,335 69,855 2,777 7,175 246,498 12%

Outbound total 10,462 25,331 218,060 11,926 443,035 6,507 67,128 21,542 62,408 344,800 13,873 115,085 1,340,157 28%

% versus previous 12 months (PTM)

3% -12% 108% 13% 29% 212% -3% 33% 71% 8% -39% 39% 28%

8 Capital Briefing

3. IPOs

Executive summary• Global IPO activity in May 2016 was subdued, registering a YOY decline of 46% and 43% in deal value and volume respectively.• In May, the US registered the strongest IPO activity so far in a single month in 2016.• While volatility levels have dissipated, the probable Federal Reserve (Fed) rate hike and the UK referendum on European Union (EU)

membership pose downside risks to the IPO markets globally.• With IPO activity beginning to spread across mainland Europe, the outlook in the region looks promising.

9

Current state• Global IPO activity was relatively subdued in May, registering a decline of

46% and 43% in deal value and volume respectively against a highly active May 2015. However, this month’s activity was more uniform across regions due to a rise in activity in EMEA and the Americas, and a slight decline in the Asia-Pacific region compared with the first four months of 2016.

• May was the strongest month for US IPOs in 2016 so far, accounting for 15 deals raising US$2.7b, propelled by the US$1.2b listing of US Foods Holding Corp. This was the first time since the end of 2014 that US exchanges saw US$1b+ deals for two consecutive months. However, IPO activity was down 47% and 29% in terms of deal value and volume respectively compared with May 2015.

• Asia-Pacific led global IPO activity in terms of deal volume for May 2016, accounting for a 49% share. However, when compared with May 2015, activity in the region was down by 51% and 47% in terms of deal value and volume respectively. The month saw the US$470m deal of Manulife US Real Estate Investment Trust, the biggest listing on the Singapore Exchange since July 2014.

• This month, EMEA led global IPO activity in terms of deal value, accounting for 39% of global proceeds. This was mainly due to the MONETA Money Bank A.S. and Philips Lighting N.V. IPOs raising US$849m and US$839m respectively. The region recorded three of the top five deals this month.

• May 2016 marked the second month in a row with higher levels of financial sponsor-backed (PE and/or VC backed) IPO activity, with 15 exits raising US$3.1b. This was indicative of renewed optimism regarding the health of equity capital markets. The US accounted for more than half of sponsor-backed IPO activity during the month.

Environment and horizon• The outlook for global IPO activity is mixed. Major economies have started

to perform better, with a notable reduction in volatility levels and improved investor confidence; however, we are seeing potential drag from a possible Fed rate hike in the US, the UK referendum on EU membership, upcoming US elections and any further slowdown in China’s growth rate.

• Despite these risks, US IPO activity should increase going forward, backed by a robust pipeline, an uptick in economic growth and dissipating volatility levels, leading to an increase in investor demand and confidence.

• Europe is likely to see steady IPO activity in the coming months. Economic and financial conditions are increasingly favorable, and we are likely to see a gradual rebound in investment levels. Moreover, outside of the UK and France hot spots, we are currently seeing healthy IPO activity beginning to spread out to other European exchanges, such as Denmark and the Netherlands-with several planned big deals, including Dong Energy and ASR Nederland.

• The outlook for MENA is expected to remain subdued as regional conflicts and the economic slowdowns in member countries of the Gulf Cooperation Council (GCC) continue to impact IPO activity. However, we are seeing greater political stability, new economic reforms and stabilizing oil prices, which may improve the situation as we move toward 2017.

• Asia-Pacific is expected to remain the major source of global IPO activity:• Greater China will continue to contribute most to the region’s IPO

pipeline, which continues to build across a variety of sectors, despite concerns over growth prospects.

• In addition, the Hong Kong Stock Exchange aims to create a benchmark index that provides traders with a barometer of the yuan’s strength by measuring it against a basket of several major currencies. This is expected to help manage risks around China’s currency.

• Australia should see a rise in IPO activity as equity capital markets are rebounding, with the S&P ASX 200 hitting a 10-month high and investor sentiment strengthening.

• IPO activity in India should begin to grow with the passing of capital market reforms, such as IPO listing requirements for real estate investment trusts (REITs) and bright growth prospects supported by strong private consumption.

IPO activity by area (YOY % change)(LTM to May 2016 versus LTM to May 2015)Source: Dealogic; regional classification on the basis of issuer nationality.

Top 10 IPOs by proceeds, May 2016Source: DealogicIssuer name Issuer

locationSector Exchange Proceeds

(US$m)

US Foods Holding Corp. US Consumer products and retail NYSE 1,176

MONETA Money Bank, a.s. Czech Republic

Banking and capital markets Prague (PSE) 849

Philips Lighting N.V. Netherlands Diversified industrial products

Euronext (Amsterdam) 839

Manulife US Real Estate Investment Trust Singapore Real estate Singapore (SGX) 470

Maisons du Monde S.A. France Consumer products and retail Euronext (Paris) 369

First Capital Securities Co. Ltd. China Banking and capital

markets Shenzhen 359

Grupo Supervielle S.A. Argentina Banking and capital markets NYSE 323

COIMA RES SpA Italy Real estate Borsa Italiana 245

SiteOne Landscape Supply Inc. US Diversified industrial

products NYSE 242

Cotiviti Holdings Inc. US Technology NYSE 238

IPO activity by sector and area (% share of global proceeds)LTM to May 2016Source: Dealogic; regional classification on the basis of issuer nationality.Note: because of rounding, percentages may not add up to total.

Americas Asia-Pacific EMEA Total

Banking and capital markets 1% 15% 6% 22%

Technology 4% 3% 4% 11%

Real estate 2% 5% 5% 11%

Consumer products and retail 3% 5% 2% 10%

Diversified industrial products 1% 3% 4% 8%

Life sciences 3% 2% 1% 7%

Government and Public Sector 0% 4% 2% 6%

Automotive and transportation 1% 2% 2% 4%

Power and utilities 2% 2% 0% 4%

Others 2% 8% 6% 16%

All sectors 17% 50% 33% 100%

-60%

-40%

-20%

0%

20%

-60% -40% -20% 0%

Value

Vol

ume

US

Americas(including US)

EMEA

Global

Asia-Pacific

Capital Briefing

4. Loans

Executive summary

Current state• In May, US$42.4b of loans were issued in the US and €5.6b in Europe,

taking the YTD global issuance to US$189b, down 14% from the same period in 2015. The jump in the loan market of new issuances in Europe was significantly boosted by four major deals that crossed the €500m, mark even though volume fell by 17% YTD over the same period in 2015.

• After a light three months, May accounted for 85% of loan deals coming in from M&A activities. As in 2015, 63% of loan issuances in the US and 72% in Europe was for M&A in May 2016. Repricings were also back in vogue after a six-month absence, with arrangers launching some US$17.4b of deals in the US that reduced coupons last month.

• Conditions in the US loan market became increasingly issuer friendly in May, building on momentum from the prior two months. The supply/demand imbalance opened up the floodgates for a wave of opportunistic business, helping push the volume.

• As the referendum on Britain’s membership of the EU nears, the pace of European M&A activity has slowed, and sponsors are using local bank appetite for leveraged loan assets top construct clubs or top-heavy bank-dominated syndicates on smaller deals. These banks’ appetites have increased due to a low interest rate and the default rate environment in Europe.

• May 2016 saw a series of borrowers tighten pricing during syndicationas the average clearing yield for single-B rated TLBs tightened in the US to 5.83% (on a rolling three-month basis) from 6.36% the previous month. In Europe, it tightened to 6.10% from 6.19%. Also, the euro and sterling tranches of cross-border deals offered a slightly lower yield than the dollar tranches in the three months to May 2016. Dollars cleared at 5.49%, compared with euros and sterling at 5.41% — a differential of eight bps.

Environment and horizon• Conditions are improving from 1Q16, which only saw upward price

revisions. So far in 2Q16, there have been three downward flexes and only one upward price revision. Investors pushed back dramatically in 1Q16 as lower oil prices and volatility in broader markets affected the loan market, but they have become more aggressive this quarter as sentiment has turned more positive.

• Repricings and dividends are being pitched again after a no risk mentality seen in 1Q16. Both European and US markets are demanding an increase in unitranches as the structure, which has typically been used for smaller deals, gains wider appeal due to challenging market conditions for second lien loans in the US and heightened competition in Europe.

• Nordic names have been returning to market recently to refinance deals made in 2011 and 2012, taking advantage of competition between banks to get better conditions and pricing on their loans. Loan refinancing and M&A financing activity in the Nordic loan market is expected to increase over the next 12 months.

Opportunities• Looking ahead, if the UK votes to remain in Europe, and if this is followed

by a marked pickup in M&A activity, loan demand is going to rise. If neither of these events come to pass, issuers are expected to continue to leverage strong loan demand to command more favorable covenant treatment.

Global investment-grade loans (US$b)Source: Thomson ONE

Global high-yield loans (US$b)Source: Thomson ONE

Top arrangers ranking, YTD 2016 (US$b)Source: Thomson ONE

Global loan issuance by industry, YTD 2016Source: Thomson ONE

Proceeds Issues

Bank of America Merrill Lynch 88.4 471

J.P. Morgan 72.1 394

Citigroup Inc. 68.3 270

Mitsubishi UFJ Financial Group, Inc. 59.1 536

Mizuho Financial Group, Inc. 58.9 403

All loans by region, YTD 2016 (US$b)Source: Thomson ONE

Market share Proceeds Issues

Americas 55.7% 764.1 1,468

EMEA 26.3% 360.8 539

Asia-Pacific 18.0% 246.1 1,351

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0 100 200 300

Energy and powerFinancialsIndustrials

MaterialsHigh technology

Real estateConsumer staples

Health careConsumer products and services

RetailMedia and entertainment

TelecommunicationsGovernment and agencies

Proceeds (US$b)10

• After a light February, March and April, May accounted for 85% of loan deals coming in from M&A activities.• Conditions in the US loan market became increasingly issuer friendly in May, building on momentum from the prior two months.• As the referendum on Britain’s membership of the EU nears, the pace of M&A activity has slowed, leading to an increase in bank-dominated

debt deals.• Nordic names have been returning to market recently to refinance deals made in 2011 and 2012.• Both Europe and US markets demand an increase in unitranches.

Capital Briefing

0 50 100 150

Energy and powerIndustrials

Consumer staplesReal estateHealth care

High technologyTelecommunications

MaterialsRetail

Consumer products and servicesMedia and entertainment

Proceeds (US$b)

Executive summary

Current state• Global high-yield activity rose in May after high-yield issuance in the US hit

US$29.3b and, in Europe, it hit €7.4b, continuing the growth started in March. In the European market, double-B issuers continued to pile into the market. Telecom Italia, Heidelberg Cement, Rexel and many others took advantage of the ECB-fueled bid to print cheap paper, taking the YTD total global issuance to US$119.5b, down 43% from last year.

• The European high-yield primary market is stabilizing with the announcement of the ECB’s launch of a new asset purchasing program. This decision has created expectations of increased stability and should also lead to accelerated purchases by other financial market participants. The yield spread between European high-yield and government bonds has narrowed by almost 2% since the tumultuous period in February, when the gap was at its widest.

• High-yield issuance M&A activity was only 31% of the US high-yield issuance, or US$20.4b, a 43% YOY decrease. In Europe, it was 21% of high-yield issuance, or €4b, a 64% decline from last year.

• So far this year, European high-yield returns are less than 4%, while for US, the figure is close to 8%. Lately, however, the European market rallied, with prices in general up a point, and this is expected to continue as accounts bid up paper while trying to lock in some performance. Primary is likely to continue with more double-B issuance, with a smattering of single-Bs.

• Currently, markets are focusing on Brexit and debt in the Chinese economy, alongside the scenario of mediocre global growth combined with rising US inflation.

Environment and horizon• The global bond market is currently influenced by broader economic

events, including the ECB’s decision on interest rates and stimulus efforts.• Improving market conditions have ensured refinancings dominated

proceedings of late, and there is potentially plenty more to be done.• This quarter, the economic situation has improved. Commodity prices

have recovered, and global consumers are still in a good mood. Many assets have rebounded strongly from the worst market turbulence in February since 2009.

• European high-yield bonds market is expected to be quiet in June, due to the “Brexit” referendum, and no one is expected to be brave enough to test the markets at this time. However, bankers suggest there are more than a handful of deals due for completion by 17 June.

Opportunities• If UK remains to vote means issuers are happier to launch new deals.

Unsurprisingly, much will be double-B rated, but there are a couple of single-Bs to come.

• The global debt market continues to foresee a low-growth, low-inflation environment where central banks are expected to continue providing support in problematic situations.

• Credit investors believe that the expected rate hike by the Fed that everyone is anticipating in June or July will be delayed even further.

Euro bond issuancesSource: Thomson ONE

US bond issuancesSource: Thomson ONE

Top 10 corporate bond issuers, YTD 2016 (US$b)Source: Thomson ONE

Global bond issuance by industry, YTD 2016Source: Thomson ONE

Issuer Nation Industry Proceeds

Apple Inc. US High technology 15.5

Anheuser-Busch InBevSA/NV Belgium Consumer staples 14.9

Johnson & Johnson US Health care 12.1

Daimler AG Germany Industrials 11.0

AT&T Inc. US Telecommunications 10.0

Shell International Finance BV Netherlands Energy and power 9.2

Berkshire Hathaway Inc. US Industrials 8.5

Southern Company US Energy and power 8.5

Newell Brands US Materials 8.0

Petróleos Mexicanos Mexico Energy and power 7.9

0

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Jul15

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Proceeds (US$b) (LHS) Number of issues (RHS)

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Proceeds (US$b) (LHS) Number of issues (RHS)

5. Bonds

• Global high-yield activity rose in May and improved YTD numbers.• The European high-yield primary market is stabilizing with the announcement of the European Central Bank’s (ECB) launch of a new asset

purchasing program. With better market conditions, the yield spread between European high-yield and government bonds has narrowed.• The economic situation has improved this quarter. Commodity prices have recovered, and global consumers are still in a good mood.• The market continues to foresee a low-growth, low-inflation environment where central banks are expected to continue providing support in

problematic situations.

Capital Briefing

Appendices

Dry powder — buyout funds — by region

Global PE fund-raising (in US$b)

Appendix AGlobal PE fundraising activity

Source: Preqin

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Commitments (US$b) No. of funds

0%

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12%

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16%

$0.0

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

North America Europe Asia and rest of world Asia-Pac and ROW as percentage of total

Executive Briefing13

Source: Preqin

Source: Dealogic

Global PE value and volume — quarterly trend (US$b)

PE acquisitions by year (in US$b)

Appendix AGlobal PE acquisition activity

Source: Dealogic

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Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216

Value No. of deals


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

Value Number of deals

15

Americas PE acquisitions — top 10 in May 2016

Appendix AGlobal PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

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Value No. of deals

Executive Briefing

Source: Dealogic

Announcementdate

Completiondate Company Sector Value

(US$m) Acquiror

2-May-16 Setefi SpA/Intesa Sanpaolo Card Ltd

Financials 1,184.96 Advent International Corp./Clessidra Sgr SpA/Bain Capital LLC

30-May-16 Sisal Group SpA Consumer goods 1,111.42 CVC Capital Partners Ltd.16-May-16 RCS MediaGroup SpA (77.41%) Consumer services 921.16 Mediobanca - Banca di Credito Finanziario

SpA/Private Investor/Finsoe SpA/InvestIndustrial LP/China National Chemical Corp.

30-May-16 CHORUS Clean Energy AG Utilities 599.92 Capital Stage AG

31-May-16 Schlemmer GmbH (Stake%) Industrials 202.33 3i Group plc/Existing Management

18-May-16 Sandaya SAS Consumer products 192.47 Apax Partners SA/Societe Financiere de Val d'Isere SoFiVal/Societe Generale Capital Partenaires SAS/Bpifrance Investissement SAS/Arkea Capital Investissement

26-May-16 Clal Insurance Enterprises Holdings Ltd. (25%)

Financials 185.01 Undisclosed Acquiror

4-May-16 4-May-16 Farfetch.com Ltd. (Minority %) Retail 110.00 Temasek Holdings (Pte.) Ltd./Eurazeo SA/IDG Capital Partners/Vitruvian Partners LLP

4-May-16 27-May-16 Sigma Precision Components Ltd.

Consumer services 95.18 Silverfleet Capital Ltd./Existing Management

31-May-16 Bet Shemesh Engines Ltd. (40.42%)

Industrials 32.56 First Israel Mezzanine Investors Ltd.

Source: Dealogic

EMEA PE acquisitions — top 10 in May 2016

Appendix AGlobal PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Source: Dealogic

16Executive Briefing

Announcement date

Completion date Company Sector Value

(US$m) Acquiror

11-May-16 AWE Ltd. Oil and gas 454.07 Lone Star Global Acquisitions Ltd.

9-May-16 Clifford Gardens, Forest Hill Chase and Brimbank shopping centers

Real Estate 451.84 Blackstone Group LP

25-May-16 Carver Korea Co. Ltd. (80%)

Consumer goods 437.45 Bain Capital LLC

13-May-16 Crompton Greaves Consumer Electricals Ltd. (26%)

Consumer goods 254.26 Advent International Corp.

30-May-16 Patties Foods Ltd. Consumer goods 221.51 Pacific Equity Partners Pty. Ltd.

25-May-16 Property portfolio: Sime Darby Centre; Sime Darby Enterprise Centre and Sime Darby Business Centre.


18-May-16 KOLON Water & Energy Co. Ltd. (62.6%)

Utilities 75.41 Standard Chartered Private Equity Ltd.

11-May-16 11-May-16 CHIC Fresh (Stake%) Consumer goods 30.00 Clearvue Partners

19-May-16 19-May-16 Berkeley Energia Ltd. (5.696%)

Materials 5.09 Resource Capital Funds

24-May-16 24-May-16 Inca Minerals Ltd. (6.7545%)


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Value No. of deals

Source: Dealogic

Asia-Pacific PE acquisitions — top 10 in May 2016

Appendix AGlobal PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Source: Dealogic

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Value No. of deals

17 Executive Briefing

Announcement date

Completion date Company Sector Value

(US$m) Acquiror

11-May-16 AWE Ltd. Oil and gas 454.07 Lone Star Global Acquisitions Ltd.

9-May-16 Clifford Gardens, Forest Hill Chase and Brimbank shopping centers


25-May-16 Carver Korea Co. Ltd. (80%)

Consumer goods 437.45 Bain Capital LLC

13-May-16 Crompton Greaves Consumer Electricals Ltd. (26%)

Consumer goods 254.26 Advent International Corp.

30-May-16 Patties Foods Ltd. Consumer goods 221.51 Pacific Equity Partners Pty. Ltd.

25-May-16 Property portfolio: Sime Darby Centre; Sime Darby Enterprise Centre and Sime Darby Business Centre.


18-May-16 KOLON Water & Energy Co. Ltd. (62.6%)

Utilities 75.41 Standard Chartered Private Equity Ltd.

11-May-16 11-May-16 CHIC Fresh (Stake%) Consumer goods 30.00 Clearvue Partners

19-May-16 19-May-16 Berkeley Energia Ltd. (5.696%)


24-May-16 24-May-16 Inca Minerals Ltd. (6.7545%)


Source: Dealogic

Source: Dealogic

Global PE-backed IPOs — value and volume — quarterly trend (US$b)

Appendix AGlobal PE exit activity

Global PE-backed exits by M&A — value and volume — quarterly trend (US$b)

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Value No. of deals

18 Executive Briefing

Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — Americas

Americas PE exits — top 10 in May 2016

Americas PE exits (in US$b)

Announcementor filing date

Completion or priced date

Company Sector Value (US$m)

Sponsor Type

4/11/2016 AssetMark Inc. Technology $780.00 GenStar Capital LLC/Aquiline Capital Partners LLC

M&A Exit

4/26/2016 4/26/2016 Red Rock Resorts Inc. Real Estate $531.38 Oaktree Capital Group LLC IPO

4/19/2016 WKI Holding Co. Inc. Consumer Goods $508.50 W Capital Partners/Oaktree Capital Group LLC

M&A Exit

4/8/2016 4/8/2016 Tower Development Corp..

Telecommunications $461.00 Berkshire Partners LLC M&A Exit

4/19/2016 CSIdentity Corp Technology $360.00 Investcorp Bank BSC M&A Exit

4/14/2016 4/14/2016 BATS Global Markets Inc. Financials $290.61 Spectrum Equity Investors LP/TA Associates Management LP

IPO

4/4/2016 Evanta Inc. Consumer Services $275.00 Leeds Equity Partners LLC M&A Exit

4/25/2016 Cannery Casino Resorts LLC (Cannery Casino & Eastside Cannery Casino/Hotel, NV, US)

Consumer Products $230.00 Oaktree Capital Group LLC M&A Exit

4/25/2016 4/25/2016 Oil & Gas Assets (Gulf of Mexico Assets & Stake in Delta House, US)

Oil & Gas $225.00 ArcLight Capital Partners LLC M&A Exit

4/11/2016 4/11/2016 Shopping Centers (Oakwood Plaza Shopping Center, FL, US)

Real Estate $215.00 Canada Pension Plan Investment Board

M&A Exit

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M&A value IPO value M&A volume IPO volume

19Executive Briefing

Source: Dealogic

Source: Dealogic

Appendix AGlobal PE exit activity — EMEA

EMEA PE exits — top 10 deals in May 2016

EMEA PE exits (in US$b)

Announcementor filing date

Completion orpriced date Company Sector Value (US$m) Sponsor Type

23-May-16 WMF Wuerttembergische Metallwarenfabrik AG

Consumer goods 1,919.08 KKR & Co. LP M&A Exit

30-May-16 Sisal Group SpA Consumer goods 1,111.42 CVC Capital Partners Ltd./Permira Ltd./Clessidra Sgr SpA/Apax Partners LLP

M&A Exit

30-May-16 Atos Medical AB Health care 944.71 EQT Partners AB M&A Exit

6-May-16 Ethypharm SA Health care 858.66 Astorg Partners SA M&A Exit

10-May-16 SGD SA Consumer goods 797.63 Oaktree Capital Group LLC M&A Exit

26-May-16 26-May-16 Maisons du Monde SA Consumer goods 369.02 Bain Capital LLC IPO

5-May-16 Prime European Therapeuticals SpA -Euticals

Materials 358.00 Clessidra Sgr SpA/Mandarin Capital Partners SA

M&A Exit

31-May-16 Elis Services SA (10%) Consumer services 214.62 Eurazeo SA M&A Exit

31-May-16 Schlemmer GmbH (Stake%)

Industrials 202.33 HANNOVER Finanz GmbH/3i Group plc

M&A Exit

18-May-16 Sandaya SAS Consumer goods 192.47 Pragma Capital SA/Apax Partners SA/Bpifrance Investissement SAS

M&A Exit

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Source: Dealogic


Source: Dealogic

Appendix AGlobal PE exit activity — Asia-Pacific

Announcement or filing date

Completion orpriced date Company Sector Value (US$m) Sponsor Type

19-May-16 Canberra Data Centres Pty. Ltd. (48%)

Technology 277.36 Quadrant Private Equity Pty. Ltd. M&A Exit

13-May-16 Tri-Wall Ltd. Materials 221.75 CITIC Capital Holdings Ltd. M&A Exit

3-May-16 3-May-16 Tegel Group Holdings Ltd.

Consumer goods

208.53 Intermediate Capital Group plc/Affinity Equity Partners (HK) Ltd.

IPO

13-May-16 13-May-16 Parag Milk Foods Ltd. Consumer goods

110.55 IDFC Private Equity Co. Ltd./Motilal Oswal Private Equity Advisors Pvt. Ltd.

IPO

19-May-16 Tapex Inc. Materials 105.56 Carlyle Group LP/SkyLake Incuvest & Co.

M&A Exit

20-May-16 Actions Semiconductor Co. Ltd.(65.37%)

Technology 88.84 RimAsia Capital Partners M&A Exit

23-May-16 Asian Oilfield Services Ltd. (56.32%)

Oil & Gas 4.45 Samara Capital Management Ltd. M&A Exit

23-May-16 Asian Oilfield Services Ltd. (26%)

Oil & Gas 2.79 Samara Capital Management Ltd. M&A Exit

16-May-16 Gland Pharma Ltd. (96%)

Health care KKR & Co. LP M&A Exit

Asia-Pacific PE exits — the 9 deals in May 2016

Asia-Pacific PE exits (in US$b)

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Executive Briefing

Source: Dealogic

Appendix BM&A activity monthly flash

Volume Value Volume Value

Calendar YTD

YTD % ∆ Calendar YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2016(to May 16)

vs. 2015(to May 15)

2016(to May 16)

vs. 2015(to May 15)

LTM (to May 16)

vs. PTM(to May 5

LTM (to May 16)

vs. PTM(to May 15)

M&A activity by areas and regions

Global 14,585 -10% 1,200,960 -20% 36,551 -7% 4,005,902 15%

Americas 5,585 -9% 657,189 -21% 14,257 -4% 2,337,439 16%

Canada 1,129 13% 96,643 32% 2,638 18% 223,616 20%

MeCAR 87 -19% 10,354 1% 254 -18% 28,767 -11%

SA region 356 -23% 30,327 95% 1,018 -15% 76,718 -1%

US 4,424 -12% 578,566 -25% 11,410 -6% 2,139,683 18%

EMEA 5,316 -13% 406,722 -10% 12,738 -16% 1,266,500 15%

Africa 267 2% 15,502 37% 651 3% 35,451 -19%

BeNe 296 -31% 14,098 -87% 811 -19% 200,128 44%

CIS 431 -30% 13,813 53% 879 -55% 51,815 72%

CSE 458 -12% 15,728 2% 1,070 -14% 44,635 6%

FraLux 1,022 -3% 64,267 -14% 2,255 -9% 165,416 5%

GSA 839 -16% 170,586 352% 2,217 -13% 297,997 63%

Israel 109 8% 6,882 -39% 270 8% 57,956 195%

Mediterranean 553 -26% 52,007 -24% 1,371 -23% 160,441 -17%

MENA 142 2% 3,319 -84% 354 3% 24,015 -40%

Nordics 565 -16% 25,849 -17% 1,226 -25% 57,590 -26%

UK&I 1,361 0% 74,984 -61% 3,411 6% 420,079 7%

Asia-Pacific 5,296 -6% 451,470 -6% 13,674 3% 1,234,531 26%

ASEAN 710 -1% 36,153 65% 1,696 -12% 78,908 23%

Greater China 2,063 -7% 305,653 4% 5,572 10% 823,440 35%

India 523 -9% 16,755 -30% 1,294 6% 44,644 -6%

Japan 1,162 -13% 59,729 -3% 2,906 -5% 181,768 54%

Korea 549 17% 26,450 -54% 1,361 18% 69,048 -30%

Oceania 612 -2% 31,032 -36% 1,664 0% 88,212 -8%

M&A activity by sectorsAerospace and defense 135 -23% 9,684 12% 356 -17% 35,432 30%

Automotive and transportation 958 -14% 111,907 9% 2,464 -9% 295,634 40%

Banking and capital markets 972 -14% 113,009 -2% 2,435 -12% 413,663 42%

Consumer products and retail 2,205 -11% 192,858 -9% 5,522 -8% 637,330 36%

Diversified industrial products 1,913 -12% 166,427 9% 4,856 -9% 457,555 20%

Government and public sector 261 -25% 10,638 -33% 663 -17% 27,903 -2%

Insurance 418 -11% 40,100 -36% 1,100 1% 288,607 114%

Life sciences 966 -8% 221,343 19% 2,454 2% 485,024 2%

Media and entertainment 980 -10% 60,059 -61% 2,495 -9% 207,767 -16%

Mining and metals 895 6% 49,875 10% 2,153 4% 142,972 36%

Oil and gas 552 -3% 80,454 -43% 1,413 -16% 332,462 -27%

Other sectors 1,679 -16% 60,760 55% 4,312 -14% 157,078 37%

Power and utilities 526 -13% 90,930 93% 1,399 -14% 231,933 38%

Provider care 455 -9% 13,990 -48% 1,174 0% 52,736 -5%

Real estate 1,320 -15% 73,292 -50% 3,245 -16% 207,316 -33%

Technology 3,881 -4% 226,946 -14% 9,520 4% 742,274 61%

Telecommunications 274 -29% 39,224 -60% 757 -19% 148,424 -33%

Wealth and asset management 412 -9% 19,355 -82% 1,019 -5% 42,204 -68%

22

Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region. Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped.M&A analysis as at 1 June 2016. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

Capital Briefing

2015 2016

J F M A M J J A S O N D J F M A M J J A S O N D

2014 2015 2016

M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N

Appendix CM&A multiples and bid premium

Deal multiples greater than 30x and bid premium greater than 100% have been excluded from calculation of median.M&A analysis as at 1 June 2016. Source: Dealogic. All Rights Reserved. Note: data is continually updated and therefore subject to change.

23

Median deal multiple — EV / EBITDA

Global Americas Asia-Pacific EMEALTM

(to May 16)PTM

(to May 15)LTM

(to May 16)PTM

(to May 15)LTM

(to May 16)PTM

(to May 15)LTM

(to May 16)PTM

(to May 15)Aerospace and defense 10.3x 11.3x 10.1x 16.6x 14.1x 11.5x 10.9x 10.6x

Automotive and transportation 8.9x 10.3x 9.8x 9.2x 9.9x 10.2x 8.2x 10.6x

Consumer products and retail 10.9x 11.3x 10.4x 14.7x 12.0x 11.0x 10.0x 9.6x

Diversified industrial products 9.8x 10.5x 10.8x 10.7x 11.0x 11.7x 9.1x 9.2x

Government and public sector 10.2x 15.0x 4.6x 15.6x 21.8x 5.5x 10.2x 25.4x

Life sciences 11.0x 17.2x 12.4x 19.2x 11.4x 18.3x 10.8x 12.5x

Media and entertainment 12.0x 12.4x 8.8x 10.8x 15.2x 13.8x 10.7x 11.9x

Mining and metals 8.8x 9.1x 7.8x 12.7x 10.4x 8.5x 9.4x 8.5x

Oil and gas 8.0x 7.4x 8.0x 6.6x 6.5x 9.7x 9.3x 7.7x

Other sectors 9.2x 9.5x 10.6x 8.6x 10.5x 11.6x 7.8x 8.6x

Power and utilities 11.9x 11.6x 11.5x 11.7x 18.0x 8.8x 10.2x 10.1x

Provider care 11.9x 11.1x 10.2x 11.6x 10.4x 9.1x 12.6x 12.7x

Real estate 10.0x 10.4x 10.4x 10.3x 10.5x 10.1x 8.7x 10.6x

Technology 11.2x 10.7x 13.6x 17.1x 11.3x 9.4x 10.2x 10.6x

Telecommunications 7.3x 10.5x 6.9x 10.1x 8.2x 11.6x 7.3x 9.6x

Total 10.3x 10.7x 10.4x 11.7x 11.1x 10.8x 9.5x 10.0x

Median bid premium to four-week stock price

Global Americas Asia-Pacific EMEALTM

(to May 16)PTM

(to May 15)LTM

(to May 16)PTM

(to May 15)LTM

(to May 16)PTM

(to May 15)LTM

(to May 16)PTM

(to May 15)Aerospace and defense 15% 26% 14% NA 31% 32% 14% 13%

Automotive and transportation 14% 17% 21% 7% 13% 17% 9% 18%

Consumer products and retail 23% 17% 32% 24% 16% 16% 27% 9%

Diversified industrial products 19% 14% 24% 24% 17% 12% 24% 27%

Government and public sector 22% 20% 44% 23% 21% 12% 16% 14%

Life sciences 27% 22% 43% 31% 17% 16% 17% 23%

Media and entertainment 17% 20% 34% 34% 11% 20% 14% 18%

Mining and metals 23% 24% 28% 29% 18% 20% 36% 12%

Oil and gas 27% 18% 34% 17% 24% 18% 14% 30%

Other sectors 19% 25% 28% 27% 16% 17% 18% 31%

Power and utilities 17% 11% 27% 17% 10% 7% 17% 8%

Provider care 23% 12% 34% 21% 18% 13% 5% 3%

Real estate 14% 21% 13% 30% 15% 18% 3% 11%

Technology 22% 25% 34% 28% 15% 21% 23% 20%

Telecommunications 25% 14% 28% 12% 27% 13% 16% 17%

Total 21% 20% 30% 26% 16% 17% 18% 19%

Capital Briefing

Appendix DCapital Confidence Barometer (April 2016): by area

Respondents who expect their company to pursue acquisitions in the next 12 months

31%

40%

56% 59%

50%

0%

25%

50%

75%

100%

Apr 14 Oct 14 Apr 15 Oct 15 Apr 16

28%34%

57%

67%

54%

0%

25%

50%

75%

100%


32% 33%

49% 48% 47%

0%

25%

50%

75%

100%


Global Americas EMEA

26%

57%

45% 44%38%

0%

25%

50%

75%

100%


Asia-Pacific China Germany

23%28%

51%56%

50%

0%

25%

50%

75%

100%


Japan UK US

26%

16%

58%52%

59%

0%

25%

50%

75%

100%


29%33%

61%

74%

57%

0%

25%

50%

75%

100%


24 Capital Briefing

33%

56%

43% 40% 43%

0%

25%

50%

75%

100%


16%

68%

51%

43%

35%

0%

25%

50%

75%

100%


Notes

25 Capital Briefing

Notes

26 Capital Briefing

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