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Private Equity

Industry Investment Report2015-Q4

Table of Contents

Page

Executive Summary 3

Business Products & Services 5

Consumer Products & Services 7

Information Technology 9

Financial Services 11

Healthcare 13

Materials & Resources 15

Energy 17

2

Executive Summary

In 2015, Business Products & Services (B2B) and Consumer Products & Services (B2C) received over half of U.S. private equity investment with B2C outpacing B2B by over $20 billion. Financial Services and Information Technology finished the year in third and fourth places, respectively. In Q4, investment in four industries fell (Business Products & Services, Consumer Products & Services, Information Technology, and Healthcare), while investment in Financial Services increased.

Business Products & Services (B2B) fell for the second consecutive quarter to $31 billion in investment and ended the year with less investment in 2015 than in 2014. The deal count also fell from 338 in Q3 to 290 in Q4. Consumer Products & Services (B2C) suffered the most significant decrease, falling by $61 billion from last quarter’s extraordinary peak. Despite this quarterly drop in investment, B2C still closed the year with over $40 billion more investment than in 2014. Consumer spending is shifting, with younger generations valuing an online shopping experience that requires B2C investment in technology.

The Financial Services industry was a bright spot in Q4 with an increase of $17 billion. However, the number of deals dropped from 79 in Q3 to 72 in Q4 indicating that private equity investment in the financial services space is focusing on larger investments in fewer companies.

Information Technology (IT) and Healthcare both saw decreases in investment in Q4. IT experienced a slight decrease from $23 billion in Q3 to $21 billion in Q4. The number of IT deals held at 133. The Healthcare sector fell by $7 billion to $15 billion. No Healthcare deals surpassed the $1 billion mark.

Finally, private equity investment in Materials & Resources and Energy leveled in Q4. Materials & Resources investment held at $5 billion and investments remain small in comparison to other industries. Investment volume in Energy, still suffering from volatility in the energy markets, was stuck at $8 billion while the number of private equity investments shrank to 41 in Q4. After an extremely strong first three quarters, private equity fundraising in energy in Q4 sank to $240 million, yet 2015 closed with record energy fundraising levels.

3

2015 Industry Investment Totals

4

Business Products & Services (B2B) Deals

5

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

Ironshore 11/23/15 $2.1 Fosun International

AlliedBarton Security Services 12/2/15 $1.7 Wendel Investissement

Vectra (formerly OM Group) 10/28/15 $1.6Apollo Global Management, Platform Specialty Products

Business Products & Services TVPI

6

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2013 and 2015 medians are derived from samples with less than 20 deals. TVPI is as of June 20, 2015.

Consumer Products & Services (B2C) Deals

7

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

Strategic Hotels & Resorts 12/11/15 $6.0 The Blackstone Group

Belk 12/10/15 $3.0 Sycamore Partners Management

Truck-Lite Company 12/11/15 $1.0 BDT Capital Partners, Koch Industries

Consumer Products & Services TVPI

8

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. TVPI is as of June 20, 2015.

Information Technology Deals

9

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

ExteNet Systems 11/17/15 $1.4Delta-v Capital, Digital Bridge Holdings, Stonepeak Infrastructure Partners, The Goldman Sachs Group

Premiere Global Services 12/8/15 $1.0 Siris Capital

HelpSystems 10/8/15 $0.7 H.I.G. Capital, Split Rock Partners

Information Technology TVPI

10

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. TVPI is as of June 20, 2015.

Financial Services Deals

11

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

Salim Group 12/11/15 $1.0 Northstar Group, TPG Capital

RDM Financial Group 12/17/15 $0.7DLB Capital, Envest Private Equity, Hall Capital Partners, HighTower Advisors

Genworth Financial (lifestyle protection unit)

12/2/15 $0.5 AXA Group

Financial Services TVPI

12

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes

distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2009, 2011, 2012, 2013,

2014, and 2015 medians are based on samples with less than 20 deals. TVPI is as of June 20, 2015.

Healthcare Deals

13

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

Affordable Care 10/22/15 $0.8 Berkshire Partners

DuPage Medical Group 12/29/15 $0.3 Summit Partners

Equian 12/18/15 $0.2 New Mountain Capital

Healthcare TVPI

14

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes

distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2009, 2013, and 2014

medians are based on samples with less than 20 deals. TVPI is as of June 20, 2015.

Materials & Resources Deals

15

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

KODA Distribution Group 12/21/15 $0.63i Group, Apax Partners, Azelis, IGI, PM & Partners

Universal Fiber Systems 10/5/15 $0.3 H.I.G. Capital

Schur (US Ice Business) 10/13/15 $0.04 Centerbridge Partners, Reddy Ice

Materials & Resources TVPI

16

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes

distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2008, 2010, 2011, 2012,

2013, and 2014 medians are based on samples with less than 20 deals. 2015 data is insufficient to calculate a median TVPI. TVPI is as of June 20, 2015.

Energy Deals

17

Source: PitchBook

Top Deals 2015-Q4

Company Date Investment Value (Bil) Financial Sponsor

Gulf Oil 12/29/15 $1.2 ArcLight Capital Partners

WPX Energy (San Juan Basin Gathering System)

12/31/15 $0.3 I Squared Capital

Sunnova 10/22/15 $0.3Franklin Square Capital Partners, Triangle Peak Partners

Energy TVPI

18

Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes

distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. The 2002 median is

based on a sample with less than 20 deals. 2015 data is insufficient to calculate a median TVPI. TVPI is as of June 20, 2015.

Energy Fundraising

19

Source: PitchBook