A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

INDUSTRY OVERVIEW

Market overview

1.3

The international private equity markets have developed, matured and extended their reach to newer markets over the past twenty years. Outside the United States, highly developed private equity markets are found in Canada, Australia, and in many European countries, led by the United Kingdom. Private equity has also begun to take root in less developed markets, especially in the BRIC countries (Brazil, Russia, India, China). At the end of Q3 2009, the worldwide private equity market consisted of 1,571 funds, with an aggregate target of $735 billion. The private equity industry took a considerable hit during the recent economic crisis and significantly, the aggregate target of funds in the market was down 21% from its peak of $934.2 billion, recorded one year earlier in Q3 2008 19 . Figure 12 gives details of funds in market by strategy at the end of Q3 2009: • In terms of number of funds worldwide, venture capital funds and private equity real estate funds were far ahead with more than 400 funds each, followed by buyout funds. • In terms of aggregate target value, private equity real estate, buyout and infrastructure funds made up the largest segment, accounting for nearly 64% of the market.

1.3

Figure 12: Number and value of funds in the market by strategy as at Q3 2009

500 450 400 350 300 250 200 150 100 50 0

500 450 400 350 300 250 200 150 100 50 0

441

403

235

191

168

165

119

Number of funds

111

83

Aggregate target value in $bn

53 51 50 41

56

28

25 18 10 19

8 1

9 15 5

Other

Buyout

Venture

Balanced

Distressed

Mezzanine

Real Estate

Secondaries

Fund of funds

Infrastructure

Co-investment

Natural Resources

Number of funds Aggregate Target Value

Source: Preqin Ltd, 2009

We can distinguish 3 big markets worldwide, detailed in the following sections: • North America-focused funds traditionally constitute the most numerous funds in market with a 48.1% market share and also the largest aggregate target value with a 54.4% market share. The US market is by far the most mature and developed, with a private equity invest- ment as percentage of GDP rate over 1% in 2008. • Asia- and Rest of the world-focused funds account for 27.8% of the total private equity market in terms of number of funds and 22.8% of the global aggregate target value. The Asia and Rest of the world market is seen as a high-potential market, especially emerging markets which, despite rapid growth, remain under-penetrated. • Western Europe has a 24.1% market share in terms of number of funds and a 22.8% market share in terms of aggregate target value. This market, taken globally, is by far less mature

19 Source: Preqin Ltd, “Private equity spotlight”, October 2009

A thorough understanding of PE | page 27