2005 Annual European Private Equity Statistics

Gemma Postlethwaite

Vice President, Thomson Financial

Confirming a new record in 2005

71.8

8.0

48.0

27.0 27.5

20.0 20.3

25.427.5

40.0

36.9

6.8

14.5

9.7

25.1

35.0

24.327.6

29.1

47.0

13.6

19.6

10.712.5

9.18.6

29.8

7.0

3.65.8

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Funds Raised

Investments

Divestments

€ billion

2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA 2

UK and US LPs have committed a much larger amount to European private equity

2.0

20.8

17.0

6.5

4.5 4.0 3.8

1.1 1.1 1.0 0.6 0.5 0.40.10.30.6

4.2

0.9 1.2

4.9 5.6

2.6 2.3

0

5

10

15

20

25

2004 Country of Origin (LP Location)

2005 Country of Origin (LP Location)

0.3

€ billion

Note: US amount of € 17bn comprises fundraising from US LPs to European funds; same reasoning for Asia with €4bn.

2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA

Buyout and venture investments are both increasing

5.68.5

14.4 15.312.1

17.920.7

26.6

3.24.1

6.0

10.7

19.7

12.2

9.88.4

10.3

12.7

3.6

34.3

0

5

10

15

20

25

30

35

40

45

50

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

€ billion

Venture Capital

Buyout and replacement capital

2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA 4

The market is growing for buyouts of all sizes

2005 European Private Equity SurveyConducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA

Legend: Small < €15 m equity

Mid-market €15m<x<€150m equity

Large €150m<x<€300m equity

Mega >€300m equity

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Small Mid- Market Large Mega

Am

ount

invest

ed

in €

mill

ion

2004 Total Invested 2005 Total Invested

5

0

500

1,000

1,500

2,000

2,500

Small Mid- Market Large Mega

No.

of

Deals

2004 No.of Deals 2005 No.of Deals

Exit prospects look healthy

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2000 2001 2002 2003 2004 2005

in €m

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Number

Rank Value# of Deals

Source: Thomson Financial and PricewaterhouseCoopers for the EVCA Survey

Divestments – Breakdown at cost by type

0

20,000

40,000

60,000

80,000

100,000

120,000

2000 2001 2002 2003 2004 2005

in €m

0

100

200

300

400

500

600

700

Number

Proceeds# of Deals

M&A Activity, Europe*

IPO Activity, Europe*

Source: Thomson Financial

*Public and private deals

9.5%11.0%

14.1% 17.5%

2.9%6.0%

3.9%

4.3%

14.5%

8.4%

15.9%

21.3%

13.1%

20.2%3.9%

3.8%

22.8%

30.0%11.6%

9.7%

7.0%

6.2%

5.3%

9.1%

2.0%

6.6%

5.6%4.8%

23.7%20.4%30.9%

33.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005

Trade Sale

IPO

Sale of Quoted Equity

Write-Off

Sale to Another VC

Repayment of Shares/Loans

Sale to Financial Institution

Other

6

0

500

1,000

1,500

2,000

2,500

3,000

2001 2002 2003 2004 2005

Syn Loan

DCM

ECM

M&A

Growth in private equity has also established the industry as a key focus for investment bankers

0

5

10

15

20

25

2001 2002 2003 2004 2005

Americas

Europe

Asia

Global

Source: Thomson Financial / Freeman & Co

Fees Paid by PE Firmsas a % of Investment Banking Fees

Investment Banking Fees Paid by PE Firms in Europe

7

$m

Methodology - Performance Survey

Performance benchmarks calculated net of all fees

Calculated directly based on cash flows and net asset values provided by GPs and LPs

Data goes back to 1979 for Europe, 1969 for the US

Covers on average over 58.1% of capital under management in the industry for each vintage year

Industry-standard benchmarks are widely used for fundraising, portfolio monitoring and asset allocation

Source: Thomson Financial8

European Private Equity FundsFormed 1980-2005Net Returns to Investors From Inception to 31 Dec 2005

Source: Thomson Financial9

Pooled IRR

Upper Quartile DPI RVPI TVPIStage

Early Stage

Development

Balanced

All Venture

Buyouts

Generalist

All Private Equity

No.

295

179

162

636

349

84

1,069

0.1

9.2

8.3

6.3

13.7

8.6

10.3

2.3

9.0

8.5

6.2

17.8

8.8

10.6

0.40

0.79

0.68

0.61

0.83

0.97

0.80

0.61

0.77

0.61

0.65

0.61

0.40

0.59

1.01

1.46

1.29

1.26

1.44

1.37

1.39

Top QuarterIRR *

13.6

18.8

23.7

17.1

31.8

10.3

22.9

*The top quarter IRR is the pooled return of funds above the upper quartile

European Private Equity FundsFormed 1980-2005Net Investment Horizon Returns as of 31 Dec 2005

Source: Thomson Financial

Returns calculated with cash flows in euros for European funds, in US$ for US funds

Stage 1 YR 3 YR 5 YR 10 YR 20 YR

Early Stage 22.5 -2.1 -7.5 -0.4 0.2

Development 91.4 5.5 1.3 10.3 9.3

Balanced 30.7 2.4 -1.8 10.0 8.5

All Venture 36.5 1.7 -3 6.4 6.4

Buyouts 31.7 9.1 6.1 14.3 13.7

Generalist 52.4 2.2 -4.3 9.6 8.6

All Private Equity 33.8 6.3 2.0 11.4 10.4

10

US Venture

US Buyouts

US All Private Equity

14.1

28.9

21.4

7.7 -6.7

16.7 5.4

23.7

9.4

13.5 1.6 12.4

16.5

13.4

14.3

Public Market Comparators

*Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cash flows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index.

Since Inception Returns to 31 Dec 2005

Stage European Private Equity

Return

Morgan Stanley Euro

Index

HSBC Small Company

index

JP Morgan

Euro Bonds

Early stage 0.1 4.2 10.0 10.6

Development 9.2 8.4 10.3 9.2

Balanced 8.3 6.3 9.9 9.6

All Venture 6.3 6.4 9.8 10.1

Buyouts 13.7 2.7 8.7 10.7

Generalist 8.6 7.4 9.7 10.4

All Private Equity

10.3 2.3 9.7 10.5

11Source: Thomson Financial

Evolution of Private Equity and Public Market Comparators10-year Rolling IRR for 2000-2005

-10

-5

0

5

10

15

20

2000 2001 2002 2003 2004 2005

IRR

%

Morgan Stanley Euro Equity

HSBC Small Company

J P Morgan Euro Bonds

European Private Equity

Source: Thomson Financial12

Summary

Fundraising more than double reaching a €72 billion record: 80% of funds expected to be allocated to buyouts

Investments reached a record at €47 billion, a 27% increase compared to 2004: Buyouts represent 68% by amount invested Venture investments + 23% over 2004 figure, representing 27% by amount and 75% by number of investments in 2005

Divestments at cost up 52% at €30 billion, a record level as well: Write-offs decrease at around 5% of total amount divested Repayment of loans became the first exit route in 2005, followed by the “classical”

trade sales

Performance confirming preliminary figures: Solid short-term returns show continuous recovery since the 2002 inflection point Increased distributions, with realisations above last valuations Strong performance compared to other asset classes, with low correlation

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Contact the Thomson Research Specialists:

Investments, divestments, fundraising: Margherita Del Bianco

margherita.delbianco@thomson.com

+44 20 7566 1934

Cashflows for performance: Cornelia Andersson cornelia.andersson@thomson.com +44 20 7014 1202

www.thomsonfinancial.com

How to contribute data?

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