Enrico Silva – EY Private Equity Leader Mediterranean area

May 2017

EY

PEM presentationPRIVATE EQUITY MARKET TRENDS

How fund raising and dry powderare boosting investments and prices

Page 2 ……May 2017

Data analytics for Private Equity

PE Monitor

Company Financial Data

EY project outputsSocial Media

External data

EY Credential

Macroeconomics

EY services

Stock mkt & commodity data

Page 3 ……May 2017

Data analytics for Private Equity – how are we doing this?

What are we doing?

► We have launched a pilot project with a leading Italian PE house and one of its portfolio companies

► We are connecting our data analytics technology to all of the company’s systems housing key data (fin, HR, ops, etc.) in addition to public data (market, social media, etc.) in order to enable a single, real-time data analytics financial and operational dashboard for the entire business and its markets

Value for client

► Better day-by-day management of portfolio companies and more informed decision-making

► Quick delivery of Vendor Due Diligence reports prior to exit

Financial HR Operational

Social Media Sector M&A

Internal data sources

External data sources

Single data analytics platform (Spotfire)

Page 4 ……May 2017

In 2016 fund-raising is close to historical pre-crisis maximum. USD appreciation against Euro makes Europe more attractive for USD based funds

Source: Preqin

Notes: Fund types included: Balanced, Buyout, Co-investment, Co-Investment Multi-Manager, Direct Secondaries, Distressed Debt, Early Stage, Early Stage: Seed, Early Stage: Start-up, Expansion / Late Stage, Fund of Funds, Growth, Hybrid, Hybrid Fund Of Funds, Infrastructure, Infrastructure Fund of Funds, Infrastructure Secondaries, Mezzanine, Natural Resources, Real Estate, Real Estate Co-Investment, Real Estate Fund of Funds, Real Estate Secondaries, Secondaries, Special Situations, Timber, Turnaround, Venture (General), Venture Debt

Fund-raising in USD and EUR

(bln $- €)

418.6

461.6

686.1

2007

491.2

2016

594.0

653.5

2015

546.0

603.5

20142010

232.8

308.0

2009

677.2

2006

430.0 419.3

2011

272.1

375.3

542.0

2005

293.5

362.4

235.4

326.5

2008

555.6

4m17

196.3209.2

2012

326.9

437.5

577.1

2013

Aggregate Capital Raised (€)Aggregate Capital Raised (USD)

Page 5 ……May 2017

2009

686.1

2008

677.2

2007

78.7(25.6%)

2006

542.0

308.0

2005

362.4

2011

375.3

141.0(38.9%)

419.3

100.5(24.0%)

197.2(35.5%)

86.5(23.1%)

181.6(31.5%)

159.7(26.5%)

212.9(32.6%)

84.7(40.5%)

115.0(35.2%)

226.4(33.0%)

249.6(36.9%)

225.1(41.5%)

55.1(17.9%)

79.2(21.9%)

107.1(19.3%)

79.4(18.9%)

77.0(20.5%)

113.1(19.6%)

126.5(21.0%)

120.2(18.4%)

24.3(11.6%)

54.4(16.7%)

142.6(20.8%)

138.7(20.5%)104.6

(19.3%)

326.5

2010 2014

555.6

603.5

2012 2013

577.1

653.5

2015

209.2

2016 4m17

BuyoutGrowthFund of FundsOthers Venture & Early StageInfrastructureDistressed & Turnaround Real Estate

Buyout funds maintain the leadership in fund raising even if real estate, venture capital and infrastructure funds are increasing their relevance

Source: Preqin

Notes: (1) Fund types included: Balanced, Buyout, Co-investment, Co-Investment Multi-Manager, Direct Secondaries, Distressed Debt, Early Stage, Early Stage: Seed, Early Stage: Start-up, Expansion / Late Stage, Fund of Funds, Growth, Hybrid, Hybrid Fund Of Funds, Infrastructure, Infrastructure Fund of Funds, Infrastructure Secondaries, Mezzanine, Natural Resources, Real Estate, Real Estate Co-Investment, Real Estate Fund of Funds, Real Estate Secondaries, Secondaries, Special Situations, Timber, Turnaround, Venture (General), Venture Debt

(2) Others include: Natural Resources, Secondaries, Mezzanine, Balanced, Expansion/Late Stage, Co-Investment, Hybrid, Direct Secondaries, PIPE

Fund-raising by type of fund

(bln $)

Page 6 ……May 2017

In the recent years several new international funds have included Italy in their investment strategy

12.5

2012

7.0

2011

11.2

2008

20.9

2007

8.4

2014

17.6

2013

23.1

2006

7.9

2005

6.3

2010

7.9

2009 4m17

13.6

21.4

2015

+32.1%

2016

0.4

Italy focus

Source: Preqin

Notes: Fund types included: Balanced, Buyout, Co-investment, Co-Investment Multi-Manager, Direct Secondaries, Distressed Debt, Early Stage, Early Stage: Seed, Early Stage: Start-up, Expansion / Late Stage, Fund of Funds, Growth, Hybrid, Hybrid Fund Of Funds, Infrastructure, Infrastructure Fund of Funds, Infrastructure Secondaries, Mezzanine, Natural Resources, Real Estate, Real Estate Co-Investment, Real Estate Fund of Funds, Real Estate Secondaries, Secondaries, Special Situations, Timber, Turnaround, Venture (General), Venture Debt

Fund-raising of funds with investment focus in Italy

(bln $, CAGR%)

Page 7 ……May 2017

Following high level of fund-raising, global M&A activity peaked in 2015 but retreated in 2016, with investors struggling in finding opportunities

3,000

2,500

2,000

1,500

1,000

500

3,500

4,000

0

927.3

1,035.6

657.4

560.2

447.1

2012

2,311.6

964.1

566.8

2013

2,236.8

572.1

760.1

2014

3,212.1

822.9

858.3

757.1

523.3

565.6

465.7

3,276.7

2015

886.3

754.1

622.9

3,925.9

1,013.31,202.9

4m17

678.5

2016

+9.1%

3Q2Q1Q 4Q

0

400

250

450

300

350

200

150

100

50

4m17

422.8

2014

362.7

2013

+5.1%

313.1

2012

278.4

74.0

2016

339.3

2015

Source: Monthly M&A Insider – MergerMarket Source: Preqin

Notes: Deal status: Announced and Completes – includes add-on

Global M&A Trend Global Private Equity buyout Trend

(bln $, CAGR%) (bln $, CAGR%)

Page 8 ……May 2017

The difficulty in allocating funds raised and the fierce competition forced GPs to broaden their geographical investment criteria, including Italy

0

100

150

50

200

250

300

350

400

450

4m17

74.0

2016

339.3

20152013

313.1

2012

278.4

422.8

2014

362.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

7.0

6.0

7.5

6.5

4m17

1.4

2016

7.2

2015

3.5

2012

0.9

6.2

2014

2.4

2013

Source: Preqin

Notes: Deal status: Announced and Completes

Source: Preqin

Notes: Deal status: Announced and Completes – includes add-on

Global Private Equity M&A Trend

(bln $)

Italy Private Equity Trend

(bln $)

Page 9 ……May 2017

As a consequence of strong fund raising and investments difficulties, the dry powder of Funds increased

924982965983

785

549

4m17

1.472

2016

1.411

2015

1.323

2005 2014

1.179

2013

1.173

2012201120102009

1.041

2008

1.047

20072006

338347303303286

222234238267263242

194143

201620132012 4m172005 2009200820072006 2015201420112010

Global dry powder Europe Dry powder

(bln $) (bln $)

Source: Preqin Source: Preqin

Page 10 ……May 2017

Italy 2016 PE investment value is aligned to last year and slightly below pre-crisis level

2006

1,978.7

40.0% 23.8%52.8%

31.1%

1,354.1

2005 2016

24.1%

2,783.8

2015

29.8%

2,936.9

2014

36.1%

30.3%

3,116.7

34.7%

2013

3,000.2

60.9%

2012

1,582.6

2011

1,692.0

2010

1,228.1

37.0%

2009

705.3

2008

4,059.1

30.0%

2007

2,312.4

ICT

Cleantech

Consumer goods

Other professional and social servicesRetail and wholesale trade

Media and communication

Food & Beverage Industrial productsTransportation

Leisure

Financial services

Utilities

Construction

Pharmaceutical and biopharmaceutical industry

Health care and social services

Source: PEM

Italy investment value

(mln €)

Page 11 ……May 2017

DIP remains the most attractive sector for private equity investments followed by consumer goods and food & beverage

109.0

29.0(26.6%)

2014

90.0

39.0(43.3%)

2013

21.0(24.7%)

2010

71.0

14.0(19.7%)

2009

53.0

14.0(26.4%)

2008

68.0

22.0(32.4%)

2012

82.0

24.0(29.3%)

2011

85.0

2016

100.0

27.0(27.0%)

128.0

49.0(38.3%)

2007

116.0

30.0(25.9%)

2006

123.0

33.0(26.8%)

20152005

93.0

29.0(31.2%)

14.0(14.0%)

22.0(24.4%)

13.0(19.1%)

7.0(13.2%)

30.0(25.9%)

15.0(21.1%)

15.0(18.3%)

29.0(22.7%)

23.0(24.7%)

32.0(26.0%) 19.0

(17.4%)15.0(17.6%)

Health care and social services

Construction

Transportation

Utilities

Leisure

Industrial products

Consumer goods

Other professional and social services

Financial services

Food & Beverage

Media and communication

Retail and wholesale trade

ICT

Cleantech

Pharmaceutical and biopharmaceutical industry

Italy investment number

(Unit)

Source: PEM

Page 12 ……May 2017

Most of the sectors shows substantial increase in EV/Ebitda multiple value

Source: PEM

Multiple trend in Italy by sectors

(EV/EBITDA)

EV

/ E

BIT

DA

# o

f tr

an

sact

ion

s