torreycove’s 4thquarter 2019 market overview€¦ · © 2011 torreycove capital partners llc...

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TorreyCove’s 4th Quarter 2019Market Overview

©2020 TorreyCove Capital Partners

Your Partner For Alternative Investment Solutions



$98.7

$160.7

$190.8$207.7

$228.1$210.1

$241.6$245.1

$302.9

Special Situations Fundraising | $ Billion

Market Overview 4Q19

Fundraising ActivityNorth America

BUYOUTS

• 4Q commitments: $57.6 billion across

buyout and mezzanine firms, a 47.1%

decrease from 4Q18 ($108.8 billion), and a

21.4% decrease from 3Q19 ($73.2 billion).

(Buyouts)

• As of December 2019, funds targeting over

$5.0 billion had received 50.8% of capital,

followed by funds targeting $1.0 to $5.0

billion with 35.5%. (Buyouts)

• The total funds raised LTM 4Q19 ($302.9

billion) outpaced LTM 4Q18 ($244.5 billion),

representing an increase of 23.9%.

(Buyouts)

• According to Buyouts, Blackstone Capital

Partners VIII is the largest fund raised so far

in 2019 and is also the only fund raised this

year over $20.0 billion with $26.0 billion

raised.

• Considering only industry-focused funds,

the healthcare sector raised $48.3 billion

through 4Q19, closely followed by high

technology, with $46.1 billion raised. The

next three are industrials, energy and

power, and consumer services, respectively

with $27.3 billion, $14.3 billion, and $8.9

billion raised. (Buyouts)

Buyout + Mezzanine Fundraising | $ Billion

VENTURE CAPITAL

• 4Q commitments: $23.0 billion, a 16.1%

decrease from 3Q19 ($27.4 billion) and a

decrease of 42.5% from the year prior ($40.0

billion). (PwC)

• The number of fund-closings totaled 1,324

during 4Q19, representing a 10.6% decrease

from 3Q19 when 1,481 funds closed

fundraisings. (PwC)

• First-time funds have raised $4.0 billion

across 35 funds in 2019. (Pitchbook)

• The 2019 median fund size increased by 4.7%

year-over-year (from $75.0 million to $78.5

million). This represents the second highest

level since 2007, when median fund size was

$133.0 million. (Pitchbook)

Venture Capital Fundraising | $ Billion

Source: Pitchbook & National Venture Capital Association

SPECIAL SITUATIONS

• Distressed / Turnaround Debt: $8.6 billion, a

1,923.1% increase from 3Q19 ($0.4 billion)

and a 484.2% increase from 4Q18 ($1.5

billion). (Thomson Reuters)

• Mezzanine: $2.1 billion, an 301.8% increase

from 3Q19 ($0.5 billion) and a 62.4%

decrease from 4Q18 ($5.5 billion). (Thomson

Reuters)

• Fund-of-Funds / Secondary Funds: $5.8

billion, a 45.3% increase from 3Q19 ($4.0

billion) and a 164.3% increase from 4Q18

($2.2 billion). (Thomson Reuters)

Source: Thomson ReutersSource: Buyouts, as of December 2019

Largest Active U.S. Fundraisers through 4Q19 Fund Size

BuyoutBlackstone Capital Partners VIII $26.0 billion

Advent International Global Private Equity IX $17.6 billion

Venture CapitalTCV X $3.2 billion

Andreessen Horowitz LSV Fund I $2.0 billion

Mezzanine NB Private Debt Fund III $1.7 billion

Distressed/Turnaround GSO Capital Solutions Fund III $7.1 billion

Fund of Funds Lexington Capital Partners IX $11.7 billion

2

Source: Thomson Reuters

$23.3 $24.7

$20.4

$34.9$36.9

$41.9

$33.9

$58.0

$46.3

$0

$20

$40

$60

$80

$100

$120 Turnaround/Distressed Debt

Secondary Funds

Other PE/Special Sits

Mezzanine Stage

Fund of Funds



0x

2x

4x

6x

8x

10x

12x Sr Debt/EBITDA

Sub Debt/EBITDA

Equity/EBITDA

Others

BUYOUTS

• According to Preqin, disclosed deal value

totaled roughly $49.8 billion in 4Q19, up

2.9% compared to 3Q19, when disclosed

deal value totaled $48.4 billion.

• The largest U.S.-sponsored deal to close in

4Q19 was the $6.0 billion acquisition of Tech

Data Corporation, executed by Apollo

Investment Fund IX. (Preqin)

• According to Preqin, the most active

dealmaker of 4Q19 was Wind Point Partners,

with ten deals closed during the quarter.

Followed by Audax Group (nine deals

closed), New MainStream Capital (seven

deals closed) and Hellman & Friedman, GI

Partners, & ABRY Partners (six deals closed

each).

• Information technology led 4Q19 with 103

deals closed during the quarter. Industrials

followed with 100 deals, while consumer

discretionary rounded out the top three,

with 83 deals closed in the industry. (Preqin)

• LBO purchase price multiples were 11.5x

EBITDA by the end of 4Q19, an 8.7% increase

when compared to 10.6x EBITDA at the end

of 2018. (S&P Global)


Investment ActivityNorth America

Source: S&P M&A Stats – December 2019

VENTURE CAPITAL

• Venture capitalists invested $34.2 billion in

2,215 deals in 4Q19, up 8.3% in value

compared to 3Q19, when $31.6 billion went

into 2,724 deals. (Pitchbook)

• The software industry led all sectors during

the year, garnering $43.5 billion through

3,870 deals. Software deals were followed by

commercial services and pharma & biotech,

with $20.0 billion and $16.6 billion of capital

invested through 873 and 866 deals,

respectively. (NVCA)

U.S. LBO & VC Investment Activity | $ Billion

Source: Preqin & National Venture Capital Association –December 2019


LBO Purchase Price Multiples

3

U.S. 4Q Venture Investment by Stage

SPECIAL SITUATIONS

• Distressed / Turnaround Debt: There were

43 distressed/turnaround investments

during 4Q19 for a total value of $3.8 billion,

representing an increase of 22.9% in deal

count and a decrease of 68.2% in value

compared to 3Q19 (35 deals for $11.8


• Mezzanine: There were 57 mezzanine

investments during 4Q19 for a total value of

$0.7 billion, representing an increase of 7.6%

in deal count and a decrease of 77.0% in

value compared to 3Q19 (53 deals for $3.0


• Fund-of-Funds / Secondary Funds: There

were 39 fund-of-funds and secondary fund

investments during 4Q19 for a total value of

$0.5 billion, representing a decrease of 7.1%

in deal count compared to 3Q19 (42 deals).

(Thomson Reuters)

$140.6

$165.9

$199.0$191.9

$278.5

$202.4

$202.1

$281.4

$215.1

45.7 41.3 47.7

72.283.8 77.6

86.8

140.2 136.5

LBO Deal Value (Disclosed)

Venture

0

100

200

300

400

500

600

0

10

20

30

40

50

60 Sum of Deal Value

No. of Deals

3.6%

19.2%

41.2%

29.6%

6.3%

Seed Early Expansion Later Other

115 deals

315 deals202 deals

356 deals

$23.0 billion

336deals

1,324 deals

Special Situations Investment Activity | $ Billion




Investment Activity + ExitsNorth America

• According to Preqin, there was one

buyout-backed IPO in the U.S during

4Q19 totaling $0.1 billion in value.

• There were 150 buyout-backed M&A

exits in 4Q19 with a total valuation of

approximately $12.7 billion. Of the 23

deals with disclosed value, EnCap’s exit

of Felix Energy Holdings II was the largest

at $2.5 billion. (Preqin)

• Consumer & retail, materials, and energy

& utilities accounted for four buyout-

backed M&A exits each during 4Q19,

which each represents 17.4% of the total

exits. Information technology was the

fourth largest by deal count with three

deals. (Preqin)

Number of U.S.-based IPOs

Source: Preqin, Pitchbook & National Venture Capital Association

Number of U.S.-based M&A

• There was a decrease of 27.8% in deal

count and a decrease of 55.7% in deal

value during 4Q19 compared to 3Q19.

(Preqin)

• According to Pitchbook, U.S. venture-

backed M&A exits totaled 174 during

4Q19 with total disclosed value of $18.8

billion. This represents a decrease in

value and deal count when compared

with 3Q19 (223 deals, $42.6 billion).

• There were 80 U.S. venture-backed IPOs

during 2019 valued at $198.7 billion,

representing a 9.1% decrease in count

and 204.4% increase in value from 2018

where 88 IPOs were valued at $65.3

billion. (Pitchbook)

Source: Preqin, Pitchbook & National Venture Capital Association

DRY POWDER

• According to Preqin, SoftBank Investment Advisors

currently has the largest amount of dry powder at

$45.9 billion, followed by the Carlyle Group with

$38.5 billion and KKR with $28.7 billion.

• 17 of the top 25 fund managers by dry powder are

based in the U.S. (Preqin)

Source: Thomson Reuters, Preqin

SECONDARY BUYOUTS

• 42 secondary buyout transactions were

completed during 4Q19 for an aggregate deal

value of $8.2 billion.

Largest U.S. Liquidity Events in 4Q19Sponsors Company Value

PE-backed IPO (Multiple Sponsors)Brigham Minerals

(NYSE:MNRL)$0.1 billion

VC-backed IPO (Multiple Sponsors)Bill.com

(NYSE: BILL) $0.2 billion

PE-backed M&A EnCap Investments Felix Energy Holdings II $2.5 billion

VC-backed M&A (Multiple Sponsors) AveXis $8.7 billion

4

Global Dry Powder by Strategy | $ Billion

EXITS

980.0918.2

1,165.21,166.5

1,300.2

1,443.3

1,755.2

2,047.0

2,159.2

2011 2012 2013 2014 2015 2016 2017 2018 2019

Buyout Distressed PE

Growth Mezzanine

Other Real Estate

Venture

23.5

28.7

22.5

31.4 29.9

36.6

18.120.1

32.1

136

175

141

203 200

158

202

171 186

Deal Value ($B) No. of Deals

694 812 818

957 949 864 868

927 802

811

943 947

1,108 1,050

1,021 1,029

1,113

836

Venture-backed Buyout-backed

46

59

87

124

81

42

60

88

80

33 41

60 66 42

26

41

29

12

Venture-backed Buyout-backed

Source: Preqin


© 2020 TorreyCove Capital Partners │ Confidential Information Source: Thomson Reuters

5.6

1.9

14.4

28.9

20.0

7.4

5.2 4.8 5.4

$0

$5

$10

$15

$20

$25

$30

$35



Europe

FUNDRAISING

• 4Q19 commitments: $27.9 billion,

representing a (79.5%) decrease from

3Q19 ($135.8 billion) and a 6.5% increase

from 4Q18 ($26.2 billion). (Thomson

Reuters)

• According to Thomson Reuters, the U.K.

accounted for 59.3% of funds raised in

Europe during 4Q19, followed by

Germany (12.8%), and France (10.1%).

• The decrease in funds raised during the

quarter stems from a substantial

decrease in fundraising in the U.K., $16.5

billion compared to $127.2 billion raised

in 3Q19.

• Additionally, Channel Islands, Italy and

Poland saw no fundraising activity,

despite raising $0.1 billion, $0.5 billion,

and $0.01 billion respectively, in the

quarter before. (Thomson Reuters)

• The largest fund to achieve a final closing

during the quarter was Permira VII ($12.1

billion), a London-based PE fund,

followed by Cinven VII ($11.2 billion).

(Preqin)

EXITS

• There were five PE-backed IPOs in 4Q19

compared with two during 3Q19 and three

during 4Q18. (Thomson Reuters)

• European IPO markets decreased €14.6

billion (40.0%) compared to the previous

year (2018), in which IPO volumes were

€36.7 billion. Despite Brexit, U.S. China trade

relations and U.S. Iran tensions, PwC is

cautiously optimistic on the European IPO

market in 2020. (PwC)

Europe Fundraising Activity | $ Billion

INVESTING

• Disclosed deal value totaled $42.4 billion

across 547 deals in 4Q19, up 71.4% in

deal value ($24.7 billion) and down

25.9% in deal count (738) from 3Q19.

(Thomson Reuters)

• The U.K. accounted for 40.3% of deal

value in Europe during 4Q19, followed by

France and the Netherlands with 5.8%

and 3.1%, respectively. (Thomson

Reuters)

• According to Thomson Reuters, the

largest PE deal disclosed in Europe was

Nestlé Skin Health, which produces and

distributes cosmetics worldwide, which

was acquired by Investor Group and an

undisclosed buyer ($10.2 billion).

• Another notable transaction includes

Merlin Entertainment Group Limited, a

U.K. based company focused on creating

attractions and family-oriented resorts

worldwide, acquired by Australian Alpine

Enterprises ($0.1 billion). (Thomson

Reuters)

• The business service industry garnered

$9.9 billion of new investment in 4Q19,

followed by the consumer related

industry with $6.1 billion. (Thomson

Reuters)

Europe Investment Activity | $ Billion

Source: Preqin

5

79.5

105.4

144.4 161.7

146.0

178.1

217.8

317.5

206.3

$0

$50

$100

$150

$200

$250

$300

$350

65.9 59.0

68.8 67.8

102.1

49.9

69.2

115.9

98.0

$0

$20

$40

$60

$80

$100

$120

$140

Europe IPO Exits | $ Billion

Europe | PE-Backed IPOs as % of Total IPOs

0%

10%

20%

30%

40%

50%

60%

Volume % Value %

Source: PwC




Asia

FUNDRAISING

• 4Q19 commitments: $29.0 billion. An18.3% decease from 4Q18 ($35.5 billion)and a 48.1% decrease from 3Q19 ($55.8billion).

• China accounted for 75.5% of funds

raised in Asia during 4Q19, followed by

Singapore (10.4%) and Japan (6.9%).

• The decrease in funds raised this quarter

was largely due to China, which closed

on $21.9 billion of commitments in 4Q19

compared to the $43.5 billion from 3Q19.

• The largest PE fund to reach a final

closing was Baring Asia Private Equity

Fund VII, L.P. ($6.5 billion), a Hong Kong

based buyout fund, followed by

Primavera Capital Fund III ($3.4 billion),

and SSG Capital Partners V ($1.9 billion).

• In 4Q19, buyouts was the most popular

strategy, by amount raised, in Asia

accounting for 45.0% of the total,

followed by special situations (12.9%)

and venture capital (9.7%).

Source: Preqin

EXITS

• In Asia, there were three PE-backed IPOs

reported through Preqin in 4Q19 valued at

$0.9 billion, down 53.6% in value and down

50.0% in count from 3Q19, respectively.

• There were 29 disclosed Asian PE M&A (ex-

IPO) exits in 4Q19 valued at $2.1 billion,

down 55.3% in value and unchanged in

count from 3Q19. Japan had the largest

number of exits in the market with 44.8% of

the total 29 exits.

Asia Fundraising Activity | $ Billion

INVESTING

• Disclosed, and completed, deal value of

Asian buyout funds totaled $2.8 billion

across 28 deals in 4Q19, up 17.9% in deal

value and down 28.2% in deal count

compared to 3Q19, respectively.

• China accounted for 73.0% of the total

investments in Asia during 4Q19,

followed by Japan and South Korea with

18.7% and 5.8%, respectively.

• One of the largest disclosed PE deals in

Asia was the $0.8 billion deal involving

CITIC Dicastal Wheel Manufacturing,

automobile parts manufacturer based

out of China. Another major deal was the

sale of China’s Shijiazhuang Junlebao

Dairy for $0.6 billion.

• The pharmaceuticals industry generated

$1.2 billion of disclosed deals in 4Q19,

followed by logistics at $0.8 billion.

Asia Investment Activity | $ Billion

Asia IPO Exits | $ Billion

Asia M&A Exits | $ Billion

86

7367

121

177

197

212

116

133

$-

$50

$100

$150

$200

$250

15

20

26

45

2321

42

37

$-

$10

$20

$30

$40

$50

3

2

910

5

10

12

5

$-

$2

$4

$6

$8

$10

$12

$14

22 22

38

44

26

67

3027

$-

$10

$20

$30

$40

$50

$60

$70

$80

6




Emerging Markets: United Arab Emirates

FUNDRAISING

• Investors remained cautious of the Middle East

in 2019, ranking the region eighth out of ten on

EMPEA’s list of the most attractive emerging

markets for GP investments in 2019. One reason

for the poor ranking is political risk, which was

cited as a likely deterrent to investment in the

next two years by 70.0% of LPs.

• As reported by Preqin, nine funds with a focus

on the Middle East held final closes in 2019;

seven of such disclosed final fund sizes totaling

$1.8 billion. Two of these funds have specific

focuses on the UAE and account for 58.4% of

disclosed final commitments ($1.1 billion).

• According to Thomson Reuters, three funds

located in the UAE raised a total of $0.3 billion

in 2019. Fundraising in 2019 declined by 56.3%

YoY, with three funds raising $0.6 billion in

2018. The Mubadala MENA Tech Investment

Fund of Funds accounted for 59.7% of all

commitments raised in 2019 by UAE-based

funds.

EXITS

• According to Preqin, there were six buyout

exits and two VC exits disclosed in 2019,

resulting in two fewer exits compared to the

total exits disclosed in 2018.

• One of the most notable exits in 2019 was

the April IPO of Network International LLC

(NETW:LN), a UAE-based payment processing

service company. The company’s debut on

the London Stock Exchange resulted in the

sale of $1.4 billion worth of shares. General

Atlantic, Warburg Pincus and Emirates Bank

were among the largest shareholders that

partially exited their positions during the

offering. (Bloomberg)

• IPO activity of UAE companies in 2019 was

concentrated on the London Stock Exchange,

with three listings raising $2.4 billion (EY).

The only new listing on UAE’s domestic

exchanges was a rights issue for Emirates

NBD Bank PJSC, which raised $1.8 billion

(Bloomberg).

INVESTING

• 62 VC deals were disclosed in 2019, resulting

in a 31.9% increase compared to 47 deals in

2018. 2019 buyout deal volume decreased

12.5% from eight deals in 2018 to seven

deals in 2019. (Preqin)

• Based on data provided by Preqin, the largest

disclosed deal in 2019 was CVC Capital

Partners’ $1.0 billion buyout investment in

GEMS MENASA Cayman Limited, a provider

of K-12 education in the Middle East. The

largest disclosed VC deal in 2019 was a $0.1

billion investment in Yellow Door Energy, a

clean energy and energy efficiency solutions

provider.

• As reported by Thomson Reuters, disclosed

2019 deal value for UAE-based funds with

domestic and international investment

strategies totaled $6.1 billion from 69 deals,

resulting in a YoY increase in deal value of

16.3%.

Fundraising Activity | $ Million Investment Activity | # of Deals Exit Activity | % of Exit Type

Source: Thomson Reuters Source: Preqin Source: Preqin

SPOTLIGHT: The Abraaj Group & the UAE’s Pr ivate Equity Market

7

18% 13%17%

9%17%9%

13%

9%17%9%

13%

9%100%

33%

27%63%

17%9%

0%

20%

40%

60%

80%

100%

IPO Merger

Private Placement Restructuring

Sale to GP Sale to Management

Trade Sale Unspecified Exit

10 7 8 7

29

47 47

62

0

10

20

30

40

50

60

70

Buyout Deals VC Deals

In 2018, Dubai’s largest private equity firm, the Abraaj Group, came under fire from investors and financial regulators for misappropriating funds andmisleading investors. In July 2019, the firm was hit with a record $0.3 billion fine by the Dubai Financial Services Authority (Bloomberg). The future ofprivate equity in the UAE has remained unclear following the Abraaj Group’s demise and those familiar with the matter have speculated that investorswill avoid funds operating in the country (Bloomberg). Capital raised in 2019 by UAE-based funds was down 56.3% YoY (Thomson Reuters); however, asillustrated in the fundraising graph above, fundraising by UAE-based funds has been volatile for the past ten years making it difficult to associate thisdecrease with the Abraaj Group. The trend in deal volume has also made for an ambiguous future in the UAE’s PE market, with the overall number ofdeals in 2019 increasing 25.5% YoY (Preqin). Venture capital appears to be on an upward trend, exhibiting YoY deal volume growth of 31.9% and a three-year CAGR of 28.8% (Preqin). In a 2019 Pitchbook article, recent growth in venture capital in the region has been largely attributed to governmentinitiatives to reduce reliance on oil revenues. According to Bloomberg, IPOs and rights issues on the country’s exchanges saw a significant drop in 2019;from five rights issues in 2018 to one in 2019. Despite the drop in volume, actual proceeds raised in 2019 were 75.9% higher than in 2018 and 8.2%higher than the five-year average. The scope of the Abraaj Group’s impact on the future of the UAE’s PE market has yet to be discovered.

$706.2

$375.5

$51.8

$634.0

$865.5

$30.0$1.3

$250.0

$575.2

$251.4

0

1

2

3

4

5

6

7

8

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Amount Raised Number of Funds




Sector in Focus: Industrials

SECTOR OUTLOOK

MARKET ANALYSIS

• Commercial Airlines

▪ The commercial airline industry has had a

wide impact on global economic

development. This is seen through an influx

of 70.4 million estimated supply chain

related jobs in 2019, falling transport costs,

and boosted trade flows, particularly with

cross border trade.

▪ Despite steep challenges related to the

ongoing groundings of the Boeing 737 MAX

fleet worldwide, U.S. airlines with exposure

to the aircraft have regrouped to post

strong annual earnings, with American

Airlines showing net profit up 5.0% over

2018.

▪ With GDP growth expected to average 2.8%

globally over the next 20 years, an increase

in airline traffic is on the horizon. According

to Boeing forecasts, air traffic will outpace

GDP by 4.7% a year. Valued at more than

$800.0 billion in 2019, the commercial air

transport fleet has seen continued growth

in the aircraft leasing sector to meet

heightened demand, with 45.0% of the

current commercial airline fleet operating

on lease from air lessors.

▪ Similar to prior years, North American

airlines have been the leader in the

commercial aviation sector, generating

estimated net profits of $16.9 billion in

2019.

SECTOR OVERVIEW

• The industrials sector of the S&P 500

increased during 4Q19 5.0% over the prior

quarter with the sector reaching its highest

on November 2019. 4Q19 has seen the

industrials sector experience an increase

when compared to 4Q18, posting a 26.8%

increase YoY. This is largely due to global

market stability and robust economic

conditions through April 2019, during which

the sector regained all output originally lost

in the Great Recession. (S&P, MAPI

Foundation)

• The industrials sector accounted for 42 out of

353 IPOs during 4Q19, which ranked fourth

across all sectors. (EY)

• Globally for the year, much of the total IPO

activity was centered in the technology and

health care sectors, responsible for 263 and

174 IPOs, respectively. Industrials accounted

for 147 IPOs and generated $12.0 billion in

proceeds. Geographically, the U.S. continues

to be a top player in the IPO market, with

$50.0 billion in total proceeds across 165 IPOs

on the NASDAQ and NYSE combined. (EY)

• According to PwC, there were 578 industrial

manufacturing M&A deals during the quarter

totaling $19.1 billion, which represented an

4.0% decrease in volume and 3.0% increase

in deal value compared to 3Q19.

• Of the 578 industrial manufacturing M&A

deals during 4Q19, only one deal this quarter

has been categorized as a “megadeal”; the

partial acquisition of Gree Electric Appliances,

by Hillhouse Capital backed Zhuhai Mingjun

Investment L.P., a transaction closing at $5.9

billion. (PwC, Bloomberg)

8

Source: S&P Global

Source: International Air Transport Association (IATA),Alton Aviation Consultancy

• Across the sector, transportation and logistics,

continue to be key drivers of relatively strong

performance for industrials amidst

heightened U.S.-China trade tensions, a late-

year economic slowdown, and a looming

Brexit decision in Europe. (PwC)

• According to PwC, deal volume for the year in

the transportation and logistics sector rose

12.0% while deal value rose 19.0% over 2018,

despite a slowing of growth in the European

market.

• Unlike the progress made in the

transportation and logistics vertical,

manufacturing is expected to see an increase

in headwinds into 2020. A tight, and

continually slowing job market in the industry,

as well the current threat of an increase in

tariffs has given a relatively mixed outlook on

the sector going forward. (Deloitte)

• Deloitte predicts that a relatively modest

annual manufacturing GDP growth level of

1.3% for 2020, 0.7% below original

projections.

4Q19 Global IPO Activity

Sector Performance | TTM Quarterly Returns

Global Commercial Airline EBIT Margin, % Revenue

Source: EY

Source: IATA

0 20 40 60

Information Technology

Healthcare

Materials

Industrials

Consumer Discretionary

Real Estate

Financials

Consumer Staples

Energy

Communication Services

0.0%

4.0%

8.0%

12.0%

16.0%

Global North America Europe

Asia-Pac Latin America Africa

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%S&P 500 Industrials




Performance**Performance data may lag current quarter due to the complex process of data collection.

Source: Preqin, Cambridge Associates, Bloomberg; Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes.

MARKET RETURNS

Buyout Returns Venture Capital Returns

Source: Cambridge Associates Pooled IRR: All Private Equity Funds excluding Real Estate, Fund-of-Funds, Infrastructure, and Secondaries as of September 2019

Source: Cambridge Associates as of September 2019 Source: Cambridge Associates as of September 2019 Source: Bloomberg

Private Equity Returns by Asset Class 5 Year 10 Year 15 Year 20 Year

Venture Capital 14.4% 14.8% 11.4% 11.0%

Growth Equity 12.8% 14.0% 13.4% 13.1%

Buyout 12.8% 14.6% 13.7% 12.0%

Subordinated Capital 10.0% 10.8% 10.6% 8.6%

Control-Oriented Distressed 7.8% 11.2% 10.5% 10.6%

Private Equity Energy -1.5% 4.6% 7.1% 7.7%

Total 11.4% 13.6% 12.7% 11.7%

Index

4Q18 1Q19 2Q19 3Q19 4Q19

S&P 500 -13.5% 13.6% 4.3% 1.7% 9.1%

Russell 3000 -14.3% 14.0% 4.1% 1.2% 9.1%

FTSE -9.6% 9.5% 3.3% 0.9% 27%

CAC -13.6% 13.4% 6.2% 2.7% 5.5%

DAX -13.8% 9.2% 7.6% 0.2% 6.6%

MSCI ACWI -12.7% 12.3% 3.8% 0.1% 9.1%

-1.1%

14.0%

15.8%

15.9%

11.5%

1.3%

17.1%

12.1%

14.4%

12.3%

0.5%

9.6%

12.5%

13.2%

11.0%

-5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

3 Months

1 Year

5 Years

10 Years

15 Years

Seed/Early Stage Late/Expansion Stage

Multi-Stage

0.2%

5.8%

9.7%

14.3%

18.3%

1.8%

10.8%

11.3%

12.3%

15.5%

0.5%

7.7%

12.3%

14.3%

14.6%

1.9%

9.1%

13.7%

15.4%

12.4%

0.0% 5.0% 10.0% 15.0% 20.0%

3 Months

1 Year

5 Years

10 Years

15 Years

Small Buyouts Medium Buyouts

Large Buyouts Mega Buyouts

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

4Q18 1Q19 2Q19 3Q19 4Q19

S&P 500 Index

Russell 3000

FTSE

CAC

DAX

MSCI ACWI

-

100

200

300

400

500

600

700

800

Dec

-00

Mar

-01

Jun

-01

Sep

-01

Dec

-01

Mar

-02

Jun

-02

Sep

-02

Dec

-02

Mar

-03

Jun

-03

Sep

-03

Dec

-03

Mar

-04

Jun

-04

Sep

-04

Dec

-04

Mar

-05

Jun

-05

Sep

-05

Dec

-05

Mar

-06

Jun

-06

Sep

-06

Dec

-06

Mar

-07

Jun

-07

Sep

-07

Dec

-07

Mar

-08

Jun

-08

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Preqin INDEX vs S&P 500 INDEXBuyout

All Private Equity

Venture

Real Estate

Fund of Funds

Distressed Private Equity

S&P 500 Index

9



Firm Update 4Q19

Industry Events & Media Coverage

CONFERENCES

Media Coverage

October

• 10/8 Nic DiLoretta mentioned by CIO in “Chief Investment Officer’s Eighth Annual List of the World’s Most Influential Investment Consultants.”

• 10/9 TorreyCove mentioned by PEI in “LACERS Increases Investment Pacing as it Looks to Trim GP Relationships.”

• 10/11 TorreyCove mentioned by Law360 in “A Look Inside The Largest PE Funds That Closed In Q3.”

• 10/16 David Fann quoted by The Deal in “PE Stake Sales Trickle into Middle Market: Private Briefing.”

• 10/28 David Fann quoted by P&I in “Problem Portfolio Companies are an Issue for Investors.”

November

• 11/10 TorreyCove mentioned by WSJ in “Six Women Who Keep Watch on Both Sides of Private-Equity Fundraising.”

December

• 12/2 TorreyCove mentioned by WSJ in “Investors Worry PE Portfolios Not Prepared for Downturn, Survey Shows.”

• 12/11 TorreyCove mentioned by PEI in “How to Manage Forex Risk in Your Portfolio.”

Speaking Engagements

October

• 10/8 Fall i3 Roundtable, Nic DiLoretta, Senior Vice President, Attendee.

• 10/16 Institutional Investor Roundtable for Consultants & Institutional Investors Conference David Fann, President + CEO, “Moderator—Benchmarking Real Assets.”

• 10/21 SuperReturn Private Credit US, Mike Krems, Managing Director, “Specialist & Un-Correlated Strategies.”

• 10/23 NAIC Annual Private Equity & Hedge Fund Conference, Heidi Poon, Senior Vice President, "Change is a Constant: How Consultants Are Fueling Engagement with Diverse and Emerging Managers.“

• 10/29 RFK Compass 2019 Regional Investor Conference, David Fann, President + CEO, “Navigating the Climate Crisis – Perspectives from Investors and Fund Managers.”

November

• 11/23 NASP-NY 23rd Annual Symposium, David Fann, President + CEO, “Ensuring Investors Get Access to Women & Minority-Owned Investment Firms.”

TorreyCove is a specialist advisor focusing exclusively on private equity, private credit, and real assets, and offers a full suite of advisory services

including program design and policy creation, portfolio construction, investment selection, negotiation, and post-transaction risk management.

This TorreyCove Newsletter has been prepared by TorreyCove Capital Partners LLC for informational purposes only. It does not constitute legal, securities, tax or investment advice or an opinion

regarding whether investment is appropriate. Readers should not act upon this information without first seeking advice from professional advisers.

W W W. T O R R E Y C O V E . C O M

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