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October 2013 Marc St John, Partner Global Private Equity – Europe and Beyond.

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Presentation on theme: "October 2013 Marc St John, Partner Global Private Equity – Europe and Beyond."— Presentation transcript:

1 October 2013 Marc St John, Partner Global Private Equity – Europe and Beyond

2 2 This presentation is provided for information purposes only solely as a basis for discussion and is not intended to form the basis of any investment decision and may not be used for and does not constitute an offer to sell, or a solicitation of any offer, or an invitation, or a general solicitation to subscribe for or purchase, or to make any commitments for or in respect of any securities or other interests or to engage in any other transaction. Nothing contained herein shall be deemed to be binding against, or to create any obligations or commitment on the part of CVC Capital Partners SICAV-FIS S.A. (“CVC”) or any of its subsidiaries or affiliates (together with CVC, the “CVC Group”). Neither CVC nor any member of the CVC Group undertakes to provide the recipient with access to any additional information or to update this presentation or to correct any inaccuracies herein which may become apparent. This presentation may contain information that has been provided by a number of sources and which may not have been separately verified. This presentation is intended as general market commentary and is not to be construed as investment, legal or tax advice and none of the CVC Group nor any of their respective directors, officers, employees, partners, members, shareholders, advisers, agents or affiliates (together the "CVC Parties") make any representation or warranty, express or implied as to the fairness, correctness, accuracy or completeness of this presentation, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance or otherwise. Any forward looking statements in this presentation are based upon current assumptions, may be simplified and will be depend upon events outside the CVC Group’s control. Other events, which were not taken into account, may occur and may significantly affect the analysis in this presentation. To the maximum extent permitted by law, none of the CVC Parties shall be liable (including in negligence) for any direct, indirect or consequential losses, damages, costs or expenses arising out of or in connection with the use of or reliance on this presentation. Recipients of this presentation should inform themselves about and observe all relevant legal and regulatory requirements. None of the information contained herein has been filed with the U.S. Securities and Exchange Commission, any securities administrator under any securities laws of any U.S. or non-U.S. jurisdiction or any other U.S. or non-U.S. governmental or self-regulatory authority. No such governmental or self-regulatory authority will pass on the merits of the offering of any CVC fund or the adequacy of the information contained herein. Any representation to the contrary is unlawful. Disclaimer

3 3 Agenda CVC Fund VI Raise: Strategy, Tactics, Results & Lessons Learned Europe as an Investment Opportunity Managing a Global Private Equity Business The Case for Private Equity

4 CVC Fund VI Raise: Strategy, Tactics, Results & Lessons Learned

5 5 CVC Fund VI Raise – Strategy De-risk the PE Business as Quickly as Possible Create Momentum Supply / Demand Cover Drive Terms Sell Europe

6 6 CVC Fund VI Raise – Tactics Keep the Ball in the Others’ Court as Much as Possible Numbers / Documents in the Data Room Full Firm Involvement Core Messages Internalised Consistent Messaging

7 7 6 CVC Fund VI Raise – Results Months from Launch to Closing

8 8 CVC Fund VI Raise – Results 33 Countries Visited During the Fund Raise

9 9 CVC Fund VI Raise – Results 891 Number of Individual Investor Meetings

10 10 CVC Fund VI Raise – Results 1,504 Number of Times DD Pack Downloaded

11 11 CVC Fund VI Raise – Results 117,012 Miles Travelled during March by MSJ

12 12 CVC Fund VI Raise – Results $1,000,000,000 Largest Commitment

13 13 CVC Fund VI Raise – Results c.$8,000,000,000 Commitments Processed Between 28 June and 5 July

14 14 CVC Fund VI Raise – Results 166 Unique Side Letters Negotiated

15 15 CVC Fund VI Raise – Results $18,200,000,000 Demand for $13,650,000,000 Available

16 16 Keys to Success: –Preparation –Right Counsel –Quality of Relationship –Momentum Bifurcation in the Market CVC Fund VI Raise – Lessons Learned

17 Europe as an Investment Opportunity

18 18 Europe – Macro to Micro Macro The Euro and the Banking System The Economies The Companies Midi Micro

19 19 Macro – European Union EU: a Poorly-Constructed Currency Union Formed just Before an Unprecedented Credit Boom Capital Flowed from North to South

20 20 Macro – Though there are some Headwinds… “The Eurozone: Tale of a Bad Marriage”, Presentation to CVC by Martin Wolf (12 Sep 2013) Associate Editor & Chief Economics Commentator, Financial Times Happy Honeymoon – in the first decade, members had a honeymoon, in which everybody, alas, got what they wanted, laying the ground for an acute crisis: –Countries with historically low credibility and high interest rates enjoyed low interest rates, surging capital inflows and booming economies: they spent on their partners’ credit –Countries with an historic attachment to export surpluses got improved competitiveness and apparently good investment opportunities for their surplus funds Bad Marriage – a number of very different economies and polities decided to share a single money, but they did not agree to share a fiscal system or a banking system

21 21 Macro – Though there are some Headwinds… Why it is Hard to Save the Marriage – challenges to be met include: –Debt write-offs –Financing –Structural Reforms and Divergent Inflation –Reforms in relation to Banking, Fiscal and Political Union Obstacles to action are Economic, Ideological and Political Good marriage Unlikely; Divorce remains a Possibility; Bad Marriage most likely Outcome –Will take a lot of Reform, both Economic and Political –Will take at least a Decade

22 Ranking Country Ranking 1Switzerland1 2Singapore2 3Finland4 4Sweden3 5Netherlands7 6Germany6 7United States5 8United Kingdom10 9Hong Kong11 10Japan9 11Qatar14 12Denmark8 13Taiwan13 14Canada12 15Norway16 Austria19 17Belgium15 18Saudi Arabia17 19Korea Rep.24 20Australia20 Source: The Global Competitiveness Report, World Economic Forum. Midi – The Global Competitiveness of European Economies Global Competitiveness Index ( )Metrics Institutions Infrastructure Macroeconomic Environment Health and Primary Education Higher Education and Training Goods Market Efficiency Labour Market Efficiency Financial Market Development Technological Readiness Market Size Business Sophistication Innovation

23 23 USA366 Japan220 China68 Europe1,933 Source: “Hidden Champions”, Professor Hermann Simon. Micro – The Hidden Champions of Europe What Is a “Hidden Champion”?Number of Hidden Champions Leader in its market Less than $7 billion in sales Low public visibility

24 Managing a Global Private Equity Business

25 25 CVC Capital Partners Our Approach Small Locally-Rooted Teams with Embedded Senior Oversight Compensation Aligned with Performance Over-Resourcing

26 26 Small Locally-Rooted Teams 20 Offices Globally London Paris Madrid Amsterdam Brussels Zurich Luxembourg Milan Frankfurt JerseyCopenhagen Stockholm New York OperationsFIG TMTOperations Financing Bangkok Hong Kong Singapore Beijing Shanghai Tokyo SeoulFinancing OperationsFIG Operations

27 27 Aligned Compensation Same Principles as We Apply to Our Portfolio Company Managers Compensation Tied to Investment Performance Performance Measured at Level of Investment Own Money at Stake

28 28 Over-Resourcing Current Deal LeadersNumber Number of Investments Led or Co-Led Number of Deals / Capacity Per Annum Total Actual10 – 12

29 The Case for Private Equity

30 30 Private Equity performance vs. Listed Equity – Net to LPs PE-backed Investments Outperform Listed Companies over Time Source: Cambridge Associates, Q Notes: (1) Global Private Equity Only Fund Index Summary: End-to-End Pooled Return, net of fees, expenses and carried interest

31 31 How does PE do it? PE Investors Bring a Unique Business Model and an Effective Toolkit to do the Job Single Shareholder Alignment of Interest This is All We Do / Simple Fixes Access to Expertise Leverage Exit Options


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