Preqin Private Equity Spotlight January 2013

16th Annual Private Equity & Venture Capital Summit
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Dear Spotlight reader

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Private Equity Spotlight
January 2013
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FEATURED PUBLICATION:

The 2013 Private Equity Fund of
Funds Review
www.preqin.com/pefof
Preqin Industry News
This months industry news looks at the key highlights of 2012, including the largest
funds to close, signicant buyout and venture capital deals and exits, and notable
investor commitments.
Page 8.
Private Equity Fundraising - The latest data on fundraising in 2012. Page 13.
2012 Buyout Deals - Key stats on buyout deals completed in 2012. Page 14.
2012 Venture Capital Deals - Data on venture capital deals from the last year. Page 15.
Performance Update - An update on key performance gures for funds of funds. Page 17.
Conferences - Details of upcoming private equity conferences. Page 18.
The Facts
The 2013
Preqin Private Equity Fund of Funds Review

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January 2013
Volume 9 - Issue 1
Feature Article
Private Equity in 2012: Fundraising and Investor Attitudes
What were the key fundraising features of the past 12 months? How long on average
did funds spend on the road? What are investors attitudes towards different fund
types? What can we expect going forward?
Page 3.
Welcome to the latest edition
of Private Equity Spotlight, the
monthly newsletter from Preqin
providing insights into private equity
performance, investors, deals and
fundraising. Private Equity Spotlight
combines information from our online
products Performance Analyst,
Investor Intelligence, Fund Manager
Proles, Funds in Market, Secondary
Market Monitor, Buyout Deals Analyst
and Venture Deals Analyst.
Lead Article
Private Equity Fund of Funds Review
How prominent are funds of funds in the current private equity market? Why do investors
invest in funds of funds? What is the latest performance of funds of funds?
Page 9.
Click here to sign up to receive your free edition of Private Equity Spotlight every month!
www.preqin.com/spotlight
Free Subscription:

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2013 Preqin Ltd. www.preqin.com 3
Feature Article
Private Equity in 2012:
Fundraising, Deals and Investor Attitudes
Antonia Lee takes a look back over the key features of the 2012 private equity fundraising market, to examine
the trends in fundraising, investor appetite and, deal activity, and looks at what we can expect from the private
equity market in 2013.
The fundraising environment in 2012 has continued to be testing
for fund managers, with the number of funds reaching a nal close
over the course of the year standing at 698 compared to 910 in
2011. The aggregate capital raised by the funds that closed in
2012, however, has seen a small improvement on 2011 levels, with
funds closed having raised an aggregate $315.4bn over the course
of the year, slightly more than the aggregate $311.7bn raised by
funds that closed in 2011. Preqins December 2012 private equity
investor study also revealed that the majority of LPs remain active
in the asset class, continuing to seek investment opportunities in
the future.
Are Investors Still Satisfied With Their Private Equity Investments?
Investors remain positive about the performance of their private
equity investments, with an increasing proportion of investors
stating that their private equity investments have exceeded their
expectations. Eleven percent of investors interviewed by Preqin
in December 2012 felt that their private equity investments had
exceeded their expectations, almost double the proportion that
gave this response in 2011. In addition, 74% of LPs interviewed
felt that their expectations have been met, similar to the 75% of
investors that gave this response in December 2011. At the same
time, the proportion of investors interviewed that felt dissatised
with their private equity investments has shown a decrease of
three percentage points, from 19% in December 2011 to 16%
in December 2012, suggesting that LPs currently have a more
positive view of the asset class than they did at the same time last
year.
Private equity investments require long-term commitments from
investors, but also have the potential to provide superior returns to
public markets, even amid global economic uncertainty; investors
expect a premium on performance to compensate for the lack of
liquidity. Examining horizon IRRs for the asset class, which provide
a snapshot of the performance of the private equity industry over
a set period of time, reveals that over one and three years to 30
J une 2012 the performance of private equity as a whole is similar
to that of the S&P 500. However, since investing in private equity
is generally a long-term commitment, it is also important to view
performance over longer term horizons. Over the ve and ten years
to 30 J une 2011, private equity has demonstrated outperformance
over the S&P 500. The 10-year horizon return to 30 J une 2012
for the private equity industry as a whole is 12.3%, highlighting
that over the long term, private equity can offer attractive returns
to investors.
Investors are also continuing to make new commitments to
the asset class, with 60% of investors interviewed in December
2012 having made new commitments to private equity funds in
2012, indicating that the majority of investors remain active in the
asset class. However, this gure is slightly below the two-thirds
of investors in a similar survey in December 2011 that reported
making new fund commitments in 2011 (Fig. 2).
Are Fundraising and Investment Conditions Beginning to Improve?
Investor condence in their private equity investments has helped
the private equity fundraising market stabilize in recent years,
despite global economic uncertainty. While the fundraising market
was very competitive in 2012, and the proportion of investors
making commitments decreased slightly compared to 2011, the
year ended with slightly more capital collected by closed funds
Private Equity in 2012
Private Equity Spotlight, January 2013
60%
58%
66%
60%
40%
42%
34%
40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012
Did Not Make New Fund
Commitments
Made New
Commitments to Funds
Fig. 2: Proportion of Investors that Made New Commitments to Funds,
2009 - 2012
Source: Preqin Investor Surveys, December 2012 and 2011
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19%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-09 Dec-10 Dec-11 Dec-12
Fallen Short of
Expectations
Met Expectations
Exceeded
Expectations
Fig. 1: Proportion of Investors that Feel Their Private Equity Fund
Investments Have Lived up to Expectations
Source: Preqin Investor Survey, December 2012, 2011, 2010 and 2009
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than in 2011. Since 2008, the average amount of capital raised
globally has stabilized at approximately $300bn each year, with
2012 showing a slight improvement at $315.4bn. Additionally, a
high proportion of funds managed to close at or above their targets
in 2012, demonstrating that there is still demand among LPs for
funds which can present attractive investment opportunities. In
2012, 20% of funds closed on target, a decrease on the 22% of
funds reached their target exactly in 2011. However, a greater
proportion of funds in 2012 exceeded their fundraising targets. In
2011, 36% of funds that held a nal close raised more than 100%
of targeted capital, but this increased to 40% in 2012.
However, as demonstrated in Fig. 3, the amount of time taken to
raise a fund has increased over the past year, from an average
of 16.2 months for funds that achieved a nal close in 2011 to 17
months for funds closed in 2012. Nonetheless, this represents
an improvement on the length of time taken to secure capital
commitments by funds that closed in 2010, when the average fund
took 19.1 months to raise capital from investors and hold a nal
close.
Deals and Exits
Deal ow and exit ow have also both shown improvement over
2012, meaning investors saw slight increases in capital call-ups
and the level of distributions from their investments. While there
was a difcult opening to the year due to continued turbulent
market conditions, 2012 has seen buyout deal ow approach the
post-Lehman high level of deal ow for 2011 in deal number and
aggregate value. In particular, North America recorded a post-
2008 high of 1,590 buyout deals valued at an aggregate $152.3bn.
In contrast, European deal levels have fallen from 951 in 2011
to 813 in 2012. Venture capital deal ow also saw an increase,
with 5,117 deals valued at $39.1bn announced globally in 2012,
a 13% increase in the number of venture capital deals globally in
comparison to 2011.
Although buyout exit ow in 2012 has witnessed a decrease in
comparison to the previous year, the $275.2bn in exits during the
year represents the second strongest year for buyout-backed exits
since 2006, as private equity rms continue to exit some of their
investments made during the buyout boom era of 2005-2007 and
Feature Article
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valuable feedback.
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make sure that the data Preqin is displaying for your firm or your fund is as accurate and representative as
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Email: feedback@preqin.com
Get in contact to view and update your rm or fund proles:
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11.5
12.1
15.0
17.0
19.1
16.2
17.0
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012
Year of Final Close
Fig. 3: Average Time Taken for Funds to Achieve a Final Close by Year
of Fund Close
Source: Preqin Funds in Market
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distribute their returns to their investors. This includes major exits
in 2012, such as the $6.6bn sale of Cequel Communications to
BC Partners and CPP investment Board by a group of investors
including Goldman Sachs, Merchant Banking Division, Quadrangle
Group, Oaktree Capital Management and others, which acquired
the rm in 2006, and the $3bn sale of a majority stake in AOT
Bedding Super Holdings by Ares Management and Teachers
Private Capital to Advent International.
Investor Strategies for the Next 12 Months
Fundraising levels will likely continue to be impacted by investor
condence in the asset class. Encouragingly, many LPs are looking
to make new investments in the future, with the majority of investors
expecting to maintain the level of their private equity allocations
over the next 12 months. Fifty-nine percent of investors expect to
maintain their allocations to private equity in 2013 and 48% expect
to maintain their allocation into the longer term. In addition, the
percentage of investors that plan to increase their private equity
allocations in the longer term has increased by ve percentage
points from 28% in December 2011 to 33% in December 2012.
However, 19% of investors plan to decrease their private equity
allocations in the longer term, an increase of seven percentage
points compared to December 2011. Competition in the fundraising
market remains intense, with 1,940 private equity funds in market
targeting an aggregate $795bn as of J anuary 2013, an increase
from the 1,814 funds that were on the road at the same time last
year. As a result, it is essential for fund managers to know where
investors wish to allocate their capital. In our December 2012
investor study, we asked LPs which fund types they think are
currently presenting the best opportunities in the current market
and which funds they will be looking to target over the next 12
months.
As illustrated in Fig. 4, small to mid-market buyout funds continue to
be the fund type that investors view as offering the best investment
opportunities. Thirty-nine percent of investors believe these funds
are presenting the most attractive opportunities, while 51% of LPs
told us they plan to invest in funds of this type in 2013. This is
promising for fund managers, as buyout funds are seeking the
greatest proportion of the aggregate capital sought by funds on the
road of any strategy at the beginning of 2013; 270 buyout funds
are targeting a collective $229.8bn from investors. Distressed
private equity also remains highly attractive to many LPs, as 26%
of investors believe they are presenting the best opportunities
and 23% are seeking to invest in distressed private equity funds
in 2013, which is encouraging for the 70 distressed private equity
funds targeting an aggregate $49.8bn from investors.
Investors were also asked which regions they feel are currently
presenting the best opportunities in the current nancial climate.
North America was the region named by the highest proportion of
investors we interviewed, with 44% of investors viewing the region
as offering attractive investment opportunities at present. This is
encouraging news for managers as funds primarily focused on
North America are the most numerous, with 873 vehicles targeting
$406.8bn in aggregate commitments (Fig. 5). Despite recent
Feature Article
873
456
388
223
406.8
195.9
128.3
64.0
0
100
200
300
400
500
600
700
800
900
1000
North America Europe Asia Rest of World
No. of Funds Raising
Aggregate Target
Capital ($bn)
Fig. 5: Breakdown of Funds Currently on the Road by Primary
Geographic Focus
0%
16%
5%
7%
14%
11%
23%
28%
23%
23%
51%
0%
16%
6%
9%
14%
16%
17%
17%
19%
26%
39%
0% 10% 20% 30% 40% 50% 60%
None
Other
Natural Resources
Mezzanine
Growth
Funds of Funds
Secondaries Funds
Venture Capital
Large to Mega Buyout
Distressed Private Equity
Small to Mid-Market Buyout
Areas of the Market
Investors View as
Presenting the Best
Opportunities
Areas of the Market
Investors Are
Seeking to Invest in
Over 2013
Proportion of Respondents
Fig. 4: Investor Attitudes Towards Different Fund Types at Present
Source: Preqin Investor Survey, December 2012
10%
9%
15%
52%
8%
6%
Did Not Invest in 2012 but
Investing in 2013
Significantly More Capital in 2013
than in 2012
Slightly More Capital in 2013 than
in 2012
Same Amount of Capital in 2013
as in 2012
Slightly Less Capital in 2013 than
in 2012
Significantly Less Capital in 2013
than in 2012
Fig. 6: Amount of Capital Investors Plan to Commit to Private Equity
Funds in 2013 Compared to 2012
Source: Preqin Investor Survey, December 2012
Subscriber Quicklink:
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volatility in Europe, 40% of investors feel that Europe remains an
attractive region to invest in and there are currently 456 Europe-
focused funds on the road seeking an aggregate $195.9bn in
capital commitments. Forty-one percent of investors named Asia
and Rest of World as presenting the best opportunities.
Expectations for 2013 and Beyond
Despite continuing uncertainty in nancial markets, LPs maintain
an appetite for investing in the private equity asset class, with over
three-quarters of LPs (76%) expecting to commit more or the same
amount of capital to private equity funds in 2013 as in 2012. Fifteen
percent of LPs expect to commit slightly more in 2013 than they
did in 2012, six percentage points lower than the number of LPs
that gave the same answer in December 2011. Additionally, 10%
of investors which did not invest in 2012 are planning to make
new commitments to private equity funds in 2013, showing that
there are investors returning to the asset class despite nancial
uncertainty.
Due to record numbers of funds on the road, the fundraising
market will remain crowded in the coming year. Fund managers
will have to continue to work hard to secure capital from investors,
particularly as many investors remain cautious and are looking to
make new commitments on a very selective basis going forward.
Nevertheless, with a signicant proportion of investors looking
to commit more capital to the private equity asset class over the
coming year, demonstrating condence in the asset class, the
fundraising outlook for 2013 is relatively positive. Fund managers
raising small to mid-market buyout funds and distressed private
equity funds are likely to see encouraging levels of interest from
investors, with North America continuing to be seen as the most
attractive region for investment.
Feature Article
Private Equity Spotlight, December 2012
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The Preqin Difference
Fund Coverage: Funds
13,508 Private Equity* Funds
4,011 PE Real
Estate Funds
645 Infrastructure
Funds

28,225
Firm Coverage: Firms
6,718 PE Firms
1,685 PERE
Firms
366 Infra. Firms

13,811
Deals Coverage: Deals Covered; All New Deals Tracked
28,090 Buyout Deals** 36,710 Venture Capital Deals***
2,416 Infra. Deals

67,216
As of 16 January 2013
Investor Coverage: Institutional Investors Monitored,
Including 7,274 Verified Active**** in Alternatives and 75,783 LP Commitments to Partnerships
4,687 Active PE LPs 3,891 Active Hedge Fund Investors 3,533 Active RE LPs

10,194
1,897 Active
Infra. LPS
Alternative Investment Consultant Coverage: Consultants Tracked
439
*Private Equity includes buyout, venture capital, distressed, growth, natural resources and mezzanine funds.
**Buyout deals: Preqin tracks private equity-backed buyout deals globally, including LBOs, growth capital, public-to-private deals, and recapitalizations. Our coverage does not include private debt and mezzanine deals.
***Venture capital deals: Preqin tracks cash-for-equity investments by professional venture capital frms in companies globally across all venture capital stages, from seed to expansion phase. The deals fgures provided by Preqin are based on
announced venture capital rounds when the capital is committed to a company.
****Preqin contacts investors directly to ensure their alternatives programs are active. We emphasize active investors, but clients can also view profles for investors no longer investing or with programs on hold.
Best Contacts: Carefully Selected from Our Database of over Active Contacts
225,630
Fund Terms Coverage: Analysis Based on Data for Around Funds
6,500
Fundraising Coverage: Funds Open for Investment/Launching Soon
Including 1,917 Closed-Ended Funds in Market and 473 Announced or Expected Funds
1,638 PE Funds
926 PERE
Funds
242 Infra. Funds

11,292
Performance Coverage: Funds (IRR Data for 4,899 Funds and Cash Flow Data for 2,234 Funds)
10,167
4,990 PE Funds
1,019 PERE
Funds
126 Infra. Funds
10,061 Hedge Funds
5,082 Hedge Fund Firms
4,032 Hedge Funds
8,486 Hedge Funds
Download Data
8 2013 Preqin Ltd. www.preqin.com
Preqin Industry News:
2012 Round-Up
News
Olivia Harmsworth looks at the notable private equity fund closures, investor commitments, deals and exits in 2012.
Preqin Industry News
2012 remained challenging for fund managers attempting to raise
capital for their funds. However, as the chart of the month shows,
a signicant proportion of fund managers met or exceeded their
target size for their funds in 2012. Sixty percent of all private equity
funds to close in 2012 met or exceeded their target, a marginal
increase from the 58% of funds closed in 2011 which had a
successful fundraising period. Funds which achieved between
101% and 124% of their target were most common, accounting for
26% of the funds closed. The number of funds which closed exactly
on target has decreased slightly from 2011 by two percentage
points to 20% in 2012.
The difcult fundraising conditions in Europe were highlighted at
the start of 2012, when the experienced mid-market European
fund manager, Duke Street, abandoned its latest fundraising
efforts for the buyout vehicle Duke Street Capital VII, which was
targeting 850mn. However, despite the continuing prevalence
of a challenging fundraising climate, 2012 witnessed a number
of high-value fund closures and deals. Signicant among these
is rst-time fund manager Sycamore Partners, which successfully
raised its debut fund, Sycamore Partners 1, $250mn above target
on $1bn in Q3 2012; this is particularly notable given the recent
challenges faced by rst-time fund managers in raising capital.
Another notable fund to reach a nal close in 2012 is distressed
debt vehicle Centerbridge Special Credit Partners II, which closed
in under two months, having achieved its $2bn target.
The second quarter of 2012 saw the global-focused AXA Secondary
Fund V reach a nal close on $7.1bn, $3.6bn above target; the
buyout vehicle Green Equity Investors VI also succesfully raised
$6.25bn, and Fortress Credit Opportunities Fund III raised $4.3bn.
These three funds alone raised 20% of the aggregate capital for the
quarter. The nal quarter of the year was also notable, with Advent
Global Private Equity VII raising 8.5bn, 1.5bn over target; this
represents the largest private equity fund close since the economic
downturn (excluding real estate and infrastructure).
On the buyout deals side, 2012 saw the $7.15bn acquisition of El
Paso Corporations oil and natural gas exploration and production
assets by a consortium led by Apollo Global Management, which
also included Riverstone Holdings, Korea National Oil Corporation,
and Access Industries. Cequel Communications was the second
largest private equity-backed transaction of 2012. The company
was acquired by BC Partners and CPP Investment Board for
$6.6bn in a secondary buyout. It was previously owned by a
group of investors including Quadrangle Group, Oaktree Capital
Management, and Goldman Sachs Merchant Banking Division.
The $6.6bn exit for these rms was the largest private equity-
backed exit of 2012.
A number of high-value venture capital deals were also completed
during the year, including a $392mn nancing of Fisker Automotive,
Inc. by Kleiner Perkins Caueld & Byers and New Enterprise
Associates. 2012 also saw Xiaomi, a Chinese company focused
on developing smartphone products and software, receive $216mn
in Series C nancing in J une 2012, from a consortium of investors
that included DST Global. Signicant venture capital exits include
the high prole $16bn IPO of Facebook; this is the largest venture
capital-backed exit in the period 2008-present.
The year also saw a number of institutional investors commit
signicant amounts of capital to GPs. In Q2 2012, the $240bn
public pension fund California Public Employees Retirement
System (CalPERS) committed $500mn to Blackstone Group, via
a separate account vehicle which will focus on opportunities on
a global scale. New York State Teachers Retirement (NYSTRS)
System also made a $200mn fund commitment in 2012 to Silver
Lake Partners IV, which will focus on buyout opportunities in the
US technology sector and has a target size of $7.5bn.
3%
6%
14%
16%
20%
26%
10%
4%
0%
5%
10%
15%
20%
25%
30%
0-24% 25-49% 50-74% 75-99% 100% 101-124% 125-149% 150% or more
Proportion of Target Size Achieved
Chart of the Month: Breakdown of Private Equity Funds Closed in 2012
by Proportion of Target Size Achieved
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Lead Article
What is the role played by funds of funds in the current private equity market? Patrick Adefuye examines the
latest fundraising statistics for these managers, including a look at their use of separate accounts and key
performance information.
Funds of funds have traditionally played a key role in the private
equity industry. When considering an allocation to private equity,
many smaller, less experienced investors turn to fund of funds
managers to help them access the asset class. Funds of funds
allow LPs to benet from the expertise and resources of fund of
funds managers while requiring smaller commitment sizes and
providing exposure to a variety of strategies and geographies.
They also provide an important access point for investors looking
to invest in strategies or geographies where they may not have
previous experience, or where access to top fund managers may
be challenging.
However, fundraising conditions for funds of funds have remained
extremely challenging throughout 2012. In addition, as the private
equity asset class continues to grow and mature, investors are
becoming increasingly sophisticated, with many looking to invest
directly in funds to avoid the double layer of fees associated with
funds of funds. Direct investment also allows LPs to concentrate
their private equity portfolios on the strategies and geographies
they feel will provide them with the best returns. This desire among
LPs for more control over their investments has led an increasing
number of fund of funds managers to operate separate accounts
and those that offer these services have invested more from
separate accounts this year compared to last.
In this article, we explore the changing shape of the fund of funds
industry, investor appetite for the sector and how managers are
adapting to LP requirements.
Fundraising Market
The global nancial crisis has created a tough fundraising market
for fund of funds managers. Investors have become more cautious,
particularly those that are new to the asset class and most likely to
invest with fund of funds managers. Others may not have capital
available to make new commitments as a result of the slow exit
environment and lower levels of distributions. In 2009, fund of funds
vehicles accounted for 11% of the aggregate capital raised in the
private equity market, as shown in Fig. 1. Since then, the proportion
of capital they accounted for has decreased year on year; in 2012
fund of funds vehicles accounted for only 4% of the capital raised
for private equity funds. Buyout vehicles, which saw a decrease
in the capital committed to them after the nancial crisis, also saw
a decrease in the proportion of total capital committed to private
equity that they account for, from 35% in 2011 to 28% in 2012.
Throughout 2012, 72 fund of funds vehicles have reached a nal
close, raising $13.9bn, representing a decrease on the 82 funds of
funds that closed on an aggregate $16.3bn in 2011. With 162 funds
currently in market targeting an aggregate $40bn, fund of funds
managers face a challenging fundraising climate in the coming
months.
Investor Appetite for Funds of Funds
Despite a challenging fundraising environment, many investors in
funds of funds remain committed to them, according to a survey
of 100 investors in funds of funds conducted by Preqin in October
2012. Of those surveyed, 81% are either planning to make or
considering making new fund of funds commitments over the
next three years. This is a small increase compared to the 78%
of investors in funds of funds which expressed similar intentions
in October 2011. As shown in Fig. 2, the main motivation for LPs
investing in funds of funds in the private equity asset class is to
achieve diversication, with 63% of investors interviewed stating
this as a factor (it should be noted that the majority of the investors
surveyed, 62%, are relatively inexperienced investors which have
made between one and ten fund investments in total). Notable
proportions also cited manager expertise (37%) and access to
specic markets (34%) as important motivations for investing in
funds of funds.
63%
37%
34%
32%
26%
16%
13%
14%
0%
10%
20%
30%
40%
50%
60%
70%
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Fig. 2: Motivations for Investors Utilizing Funds of Funds
Source: 2013 Preqin Private Equity Fund of Funds Review
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47%
44%
38%
35%
28%
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34%
34% 42% 42%
59%
10% 11%
8% 7%
4%
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30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012
Fund of Funds
Other
Venture Capital
Buyout
Year of Final Close
Fig. 1: Private Equity Market Share by Fund Type (Aggregate
Capital Raised)
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Continued investor interest in diversication, manager expertise and
access to specic markets means that fund of funds investments
will likely remain an important part of many investors private equity
portfolios, as well as an important route to market for investors
seeking to make their maiden investments in the asset class.
Growing Importance of Separate Accounts
As those investors investing in funds of funds grow increasingly
sophisticated, many are seeking a greater level of control over their
fund of funds investments and are looking for customized access
to the asset class. Fund of funds managers have sought to meet
this demand, with separate account vehicles awarded by individual
investors providing an important source of additional capital. A
number of fund of funds managers include this tailored service
as part of their offering to their investors, while some managers,
such as Grove Street Advisors and BAML Capital Access Funds,
invest solely through customized separate accounts. An example
of a separate account is New J ersey Asia Investors Fund II (NJ AI
Fund II), New J ersey State Investment Councils mandate to fund
of funds manager Asia Alternatives Management to invest in Asia
on its behalf. The mandate, which was awarded in May 2011, is
worth $200mn, and will target multiple countries and regions in
Asia, including Greater China, J apan, South Korea, India, South-
East Asia and Australia.
Separate accounts allow investors to tailor their investments to
specic investment strategies or themes. CalSTRS/BAML Capital
Access Fund IV, for example, invests with managers that target
underserved markets in the US, or companies that employ or
are managed by ethnic minorities and women. As well as more
control over their investments, separate accounts also often
come with more favourable fees and terms than their commingled
counterparts. These vehicles are becoming a more important part
of the investment activity of funds of funds; Fig. 3 shows that of
the 81 private equity fund of funds managers surveyed in October
2012 by Preqin, 32% indicated that they have invested more
from separate account vehicles in the past 12 months than in the
previous 12 months.
Performance of Funds of Funds
Investors are increasingly cautious about which managers they
choose to commit to, with manager track record taking on even
more importance in the recent economic climate. Although past
performance is not a guarantee of future performance, looking
at the relationship between a fund managers predecessor and
successor funds of funds demonstrate that the past performance
of funds can give an indication of future fund performance.
Fig. 4 shows that 31% of top quartile fund of funds managers go
on to produce a top quartile follow-on fund of funds, while only
17% of bottom quartile managers go on to produce a vehicle in the
top quartile. Conversely, of the managers running a bottom quartile
vehicle, 33% go on to manage a follow-on fund in the bottom
quartile. This demonstrates how important it is for investors to build
relationships with the top performing fund of funds managers, as
they can be more likely to continue to perform well and provide
investors with higher returns.
When looking at the overall performance of private equity, horizon
IRRs provide a good indication of how the industry is performing
over a dened period. They are calculated by treating the beginning
net asset value as an outow at the start of the period; further
contributions made during the period are also treated as outows,
while any distributions and the nal net asset value are treated as
inows.
The performance of funds of funds over a one-year, three-year,
ve-year and ten-year period to March 2012 is positive, with horizon
IRRs of 7.3%, 11.0%, 5.9% and 6.3% respectively. However, these
horizon IRRs lag behind the private equity industry as a whole over
one year, three years and 10 years (the 5.9% IRR for the ve-year
period to March 2012 is the same as for the industry as a whole). It
is important to bear in mind that, compared to other private equity
fund types, the performance data for funds of funds generally lag
by one quarter due to the reporting of the underlying funds.
Fund of Funds Manager Consolidation
Consolidation among fund of funds managers has become a feature
of the fund of funds industry, driven by the struggle to raise a vehicle
in the current fundraising market as well as regulatory pressures
faced by nancial institutions active in alternatives. Consolidation
has continued in the past year, with some prominent fund of funds
managers adding to their expertise by acquiring other managers.
Recent examples include BlackRock Private Equity Partners
acquisition of Swiss Re Private Equity Partners, FLAG Capital
Managements acquisition of Squadron Capital and StepStone
Groups acquisition of Parish Capital. AXA and Credit Suisse are
Lead Article
Lead Article
32%
25%
43%
Investing More
from Separate
Accounts
Not Investing More
from Separate
Accounts
Not Investing from
Separate
Accounts
Fig. 3: Proportion of Fund of Funds Managers Investing More from
Separate Accounts in the Last 12 Months
31%
29%
22%
13%
35%
32%
32%
18%
17%
24%
29%
36%
17%
15%
17%
33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Top Quartile
Successor Fund
Second Quartile
Successor Fund
Third Quartile
Successor Fund
Bottom Quartile
Successor Fund
Bottom Quartile
Predecessor
Quartile
Third Quartile
Predecessor
Quartile
Second Quartile
Predecessor
Quartile
Top Quartile
Predecessor
Quartile
Fig. 4: Fund of Funds - Relationship between Predecessor and
Successor Fund Quartiles
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Download Data

2013 Preqin Private Equity
Fund of Funds Review
The 2013 Preqin Private Equity Fund of Funds Review provides a comprehensive overview of the fund of funds sector, helping
you to make better-informed decisions and maintain your knowledge of the sector. The 2013 Review is essential reading for all
fund of funds managers, private equity frms seeking capital, investment consultants, institutional investors, placement agents,
law frms and other private equity professional.
Key content includes:
Manager Profles: Detailed profles for 238 fund of funds managers.
Fund Profles: Vehicle-specifc details for each managers recent and forthcoming funds.
Sample Investments & Fund Preferences: On both a fund- and frm-specifc basis.
Performance: Key fund performance metrics for over 700 individual funds of funds.
Listed Vehicles: Analysis and historic share price listings on 21 listed funds of funds.
LP Investors: Detailed profles for 155 LP investors currently investing in funds of funds and key
investors to watch in 2013.
Fundraising: In-depth listings of all funds of funds closed during 2011 and 2012 and funds
currently raising capital.
Analysis: Detailed analysis on all aspects of funds of funds.
The 2013
Preqin Private Equity Fund of Funds Review

www.preqin.com/fofr

For more information or to purchase your copy, visit www.preqin.com/fofr
seeking to sell their fund of funds arms, AXA Private Equity and
Credit Suisse Customized Fund Investment Group, evidence that
consolidation is likely to continue as nancial institutions adapt to
new regulations and a slow fundraising environment.
What Does the Future Hold For the Fund of Funds Market?
In spite of the difcult fundraising market, funds of funds still have a
signicant part to play in the private equity industry, as they provide
newer, inexperienced investors with diversied exposure to the
asset class. Even more experienced investors seek to benet from
the expertise specic fund of funds managers have in emerging
markets and niche strategies. Separate account services offered
by fund of funds managers provide an element of customization
for more sophisticated investors and are an important additional
source of capital for managers; they are increasingly attractive to
LPs that want to tailor their investments to specic needs and at the
same time avoid higher fees and less favourable terms.
With investors more cautious about which managers they choose
to back, the worst performing managers may struggle to raise new
capital and become susceptible to losing key staff or to complete
acquisition by other fund managers. Regulatory pressures may
also add to consolidation in the fund of funds manager space;
nonetheless, these vehicles are likely to remain an important
aspect of many LPs portfolios.
Subscribers can click here to see detailed profiles for 159 fund of
funds managers currently in market.
This article draws upon information from the 2013 Preqin Private
Equity Fund of Funds Review. The Review features detailed
information on 238 fund managers, 21 listed funds of funds, 155
investors, and data and analysis on all aspects of the industry.
To find out more, or to purchase your copy, please visit:
www.preqin.com/pefof
Lead Article Private Equity Fund of Funds Review
Download Data
Private Equity Fundraising
The Facts
Louise Maddy provides a breakdown of the 10 largest funds closed in 2012, and the 10 largest funds in
market at the start of 2013, as well as a breakdown by fund type of funds closed in 2012.
Private Equity Fundraising
Subscribers can click here to see details of the 716 funds closed in
2012 on Preqins Funds in Market database.
Not yet a subscriber? To see how Funds in Market can help you,
please visit:
www.preqin.com/fim
Fig. 1: Top 10 Funds Closed in 2012 by Size
Fund Firm Fund Type Size (bn) Location Focus
Blackstone Real Estate Partners VII Blackstone Group Real Estate 13.3 USD Global
Advent Global Private Equity VII Advent International Buyout 8.5 EUR
North America, West
Europe
BC European Cap IX BC Partners Buyout 6.5 EUR Europe
Global Infrastructure Partners II Global Infrastructure Partners Infrastructure 8.3 USD Global
AXA Secondary Fund V AXA Private Equity Secondaries 7.1 USD Global
Green Equity Investors VI Leonard Green & Partners Buyout 6.3 USD US
Coller International Partners VI Coller Capital Secondaries 5.5 USD Global
Oaktree Opportunities Fund IX Oaktree Capital Management Distressed Debt 5.0 USD North America, Europe
Ares Corporate Opportunities Fund IV Ares Management Buyout 4.7 USD North America
Fortress Credit Opportunities Fund III Fortress Investment Group Distressed Debt 4.3 USD Global
Fig. 2: Top 10 Funds in Market by Target Size
Fund Firm Fund Type Target Size (bn) Location Focus
Apollo Investment Fund VIII Apollo Global Management Buyout 12.0 USD North America
Warburg Pincus Private Equity XI Warburg Pincus Balanced 12.0 USD Global
Apax VIII Apax Partners Buyout 9.0 EUR Global
Carlyle Partners VI Carlyle Group Buyout 10.0 USD North America
KKR North American XI Fund Kohlberg Kravis Roberts Buyout 10.0 USD North America
Permira V Permira Buyout 6.5 EUR Global
Silver Lake Partners IV Silver Lake Buyout 7.5 USD North America
Cinven V Cinven Buyout 5.0 EUR Europe
Bain Capital Fund XI Bain Capital Buyout 6.0 USD Global
First Reserve Fund XIII First Reserve Corporation Natural Resources 6.0 USD Global
105
142
168
27
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No. of Funds Aggregate Capital Raised ($bn)
Fig. 3: Private Equity Fundraising in 2012 by Fund Type
2013 Preqin Global Alternatives Reports
Available in February in hard copy and digital formats
The 2013 Preqin Global Alternatives Reports are the most comprehensive reviews of the alternatives investment industry
ever undertaken, and are a must have for anyone seeking to understand the latest developments in the private equity,
real estate, infrastructure and now hedge fund asset classes.
Key content includes:
Interviews and articles from the most important people in the industry today.
Detailed analysis on every aspect of the industry with a review of 2012, and predictions
for the coming year.
Comprehensive statistics - including fundraising, performance, investors, fund managers,
deals, GPs, fund terms, secondaries, placement agents, consultants and law rms.
Reference guides for different aspects of the industry, answering questions including -
For more information or to register your interest, please visit: www.preqin.com/reports

Who is investing?

Where are the centres of activity?
How much has been raised?

Where is the capital going?
What is the outlook for the industry?

What are the biggest deals?
Private Equity Hedge Funds Real Estate Infrastructure
Download Data
2012 Buyout Deals:
A Year in Review
The Facts
Anna Strumillo looks back at the key statistics for private equity-backed buyout deals in 2012.
Subscribers to Buyout Deals Analyst can click here to see details
of the 2,866 buyout deals completed globally in 2012.
Buyout Deals Analyst can help you, please visit:
www.preqin.com/deals
2012 Buyout Deals
0
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20
30
40
50
60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009 2010 2011 2012
North America Europe Asia Rest of World
Fig. 2: Quarterly Aggregate Value of Private Equity-Backed Buyout
Deals by Region, Q1 2008 - Q4 2012
Source: Preqin Buyout Deals Analyst
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2006 2007 2008 2009 2010 2011 2012
No. of Deals Aggregate Deal Value ($bn)
Fig. 1: Quarterly Number and Aggregate Value of Private Equity-
Backed Buyout Deals Globally, Q1 2006 - Q4 2012
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2006 2007 2008 2009 2010 2011 2012
IPO Restructuring Sale to GP Trade Sale Aggregate Exit Value ($bn)
Fig. 4: Global Number and Aggregate Exit Value of Private Equity-
Backed Exits by Type, Q1 2006 - Q4 2012
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Fig. 3: Breakdown of Number and Aggregate Value of Private Equity-
Backed Buyout Deals in 2012 by Industry
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Despite a difcult opening to the year, due to continued turbulent
market conditions, 2012 has seen the buyout market near the post-
Lehman peak witnessed during 2011. In particular, North America
has witnessed a strong 2012, recording a post-2008 high for the
year with $152.3bn from 1,590 deals. Conversely, Europe suffered
a difcult 2012 as a result of the European sovereign debt crisis.
However, the $24.5bn of European deals announced during Q4
2012 is a 76% increase from the previous quarter, an encouraging
indicator for 2013.
There were 1,192 exits announced globally in 2012, valued
at $275.2bn, representing a slight increase in exit volume in
comparison to the previous year, when 1,145 exits were achieved,
and an 11% drop in exit value, with 2011 witnessing $310bn in exits.
Download Data
News
2012 Venture Capital Deals
2012 Venture Capital Deals:
A Year in Review
Anna Strumillo examines Preqins data on venture capital deals for 2012, including deal breakdowns by region,
stage and industry.
Subscribers to Venture Deals Analyst can click here to see details
of the 5,117 venture capital deals completed in 2012.
Venture Deals Analyst can help you, please visit:
www.preqin.com/vcdeals
0
200
400
600
800
1000
1200
1400
1600
2008 2009 2010 2011 2012
North America Europe China India Israel Other
Fig. 2: Number of Venture Capital Deals by Region, Q1 2008 - Q4 2012
Source: Preqin Venture Deals Analyst
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2008 2009 2010 2011 2012
No. of Deals Aggregate Deal Value ($bn)
Fig. 1: Number and Aggregate Value of Venture Capital Deals
Globally, Q1 2008 - Q4 2012
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No. of Deals Aggregate Deal Value
Fig. 4: Proportion of Number and Aggregate Value of Venture Capital
Deals by Industry in 2012
7%
1%
3%
1%
21%
14%
9%
5%
4%
31%
4%
Add-on and Other
Grant
Growth Capital/Expansion
PIPE
Angel/Seed
Series A/Round 1
Series B/Round 2
Series C/Round 3
Series D/Round 4 and later
Unspecified Round
Venture Debt
Fig. 3: Proportion of Number of Venture Capital Deals by Stage in
2012
There were 5,117 venture capital deals announced globally during
2012, with an aggregate value of $39.1bn; although this represents
a 13% increase in the number of deals in comparison to 2011,
the aggregate value of deals decreased by 21% in comparison to
the $50bn from 4,516 nancings in 2011. 2012 witnessed a lower
average deal value within the global venture capital industry, as
fund managers increased investments in seed and angel stage
nancings, which witnessed a signicant surge in activity during
2012, doubling in comparison to the previous year. The average
venture capital deal size in 2012 was $9.4mn, down from $13.2mn
in 2011 and $10.0mn in 2010.
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Discussing and Addressing the Issues and
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Expert Speakers from the Following Organisations
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Performance Update
Hayley Wong explores the latest performance data, including a look at the benchmarks for private equity fund
of funds.
Performance Update
The Facts
0%
5%
10%
15%
20%
25%
1 Year to Jun-12 3 Years to Jun-12 5 Years to Jun-12 10 Years to Jun-12
All
Buyout
Venture Capital
Fund of Funds
Fig. 1: Private Equity Horizon IRRs by Fund Type as of 30 June 2012
Source: Preqin Performance Analyst
H
o
r
i
z
o
n

I
R
R
0
50
100
150
200
250
300
350
400
3
1
/
1
2
/
2
0
0
0
3
0
/
0
6
/
2
0
0
1
3
1
/
1
2
/
2
0
0
1
3
0
/
0
6
/
2
0
0
2
3
1
/
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2
/
2
0
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2
3
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/
0
6
/
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3
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5
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/
0
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/
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7
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8
3
1
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8
3
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/
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6
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0
9
3
1
/
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9
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0
/
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/
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1
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6
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1
1
3
1
/
1
2
/
2
0
1
1
3
0
/
0
6
/
2
0
1
2
PrEQIn All Private Equity
Index
PrEQIn Buyout Index
PrEQIn Venture Capital
Index
PrEQIn Real Estate
Index
PrEQIn Fund of Funds
Index
PrEQIn Distressed
Private Equity Index
S&P 500
Fig. 2: PrEQIn - Private Equity Quarterly Index: All Strategies
I
n
d
e
x

R
e
t
u
r
n
s

(
R
e
b
a
s
e
d

t
o

1
0
0

a
s

o
f

3
1

D
e
c
e
m
b
e
r

2
0
0
0
)
All the data used in this analysis is available on Preqins Performance Analyst database, which contains full metrics for over 6,000 named
vehicles, including over 750 funds of funds. For more information on how Performance Analyst can help you, please visit:
www.preqin.com/pa
Data Source:
Vintage No.
Funds
Median Fund Multiple IRR IRR Max/Min (%)
Called
(%)
Dist (%)
DPI
Value (%)
RVPI
Q1 Median Q3 Q1 Median Q3 Max Min
2012 10 5.3 0.0 84.8 0.99 0.85 0.61 n/m n/m n/m n/m n/m
2011 40 15.5 0.0 94.9 1.02 0.96 0.85 n/m n/m n/m n/m n/m
2010 17 25.0 0.0 99.7 1.11 1.03 0.99 n/m n/m n/m n/m n/m
2009 15 44.0 6.4 100.0 1.23 1.10 1.00 16.0 7.2 2.0 19.8 -1.4
2008 60 56.9 9.2 98.9 1.22 1.11 1.04 11.5 8.1 3.0 22.4 -9.5
2007 73 74.2 14.7 97.8 1.23 1.14 1.07 8.7 5.5 3.3 14.3 -9.6
2006 58 84.1 19.1 95.8 1.29 1.18 1.10 8.4 5.8 3.5 10.8 -5.2
2005 39 88.5 27.9 92.4 1.29 1.22 1.17 7.5 5.3 3.5 14.2 -1.3
2004 34 92.1 45.4 81.7 1.39 1.29 1.20 8.7 6.6 5.3 21.8 -21.0
2003 17 92.0 70.0 70.2 1.58 1.39 1.29 13.6 9.8 6.5 20.6 -2.8
2002 19 97.1 80.0 70.9 1.65 1.56 1.36 11.9 9.4 7.7 21.6 -1.6
2001 22 95.5 114.4 49.3 1.71 1.58 1.39 14.2 11.4 8.0 23.7 -6.1
2000 24 96.0 101.9 35.0 1.70 1.34 1.11 13.9 7.9 1.9 18.8 -9.3
1999 13 98.0 134.5 19.2 1.68 1.48 1.20 10.5 5.7 3.1 12.2 -2.8
1998 8 97.5 112.1 15.5 1.45 1.24 1.17 7.4 4.5 2.9 11.6 1.2
1997 7 96.5 130.3 4.0 n/a 1.36 n/a n/a 6.0 n/a 14.6 2.6
Fig. 3: Fund of Funds Private Equity Benchmarks as at 30 June 2012
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advice rather than information then he should seek an independent nancial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from
making following its use of Private Equity Spotlight.
While reasonable efforts have been made to obtain information fromsources that are believed to be accurate, and to conrmthe accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty
that the information or opinions contained in Private Equity Spotlight are accurate, reliable, up-to-date or complete.
Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Private Equity Spotlight or for any expense or other loss alleged to
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Conferences Spotlight
Conference Dates Location Organizer
SuperInvestor Asia 28-30 J anuary 2013 Singapore ICBI
Private Equity Real Estate Forum 30-31 J anuary 2013 London IIR & IBC
Clean-Tech Investor Summit 6-7 February 2013 Palm Springs, CA IBF Conferences
Swiss Private Equity Conference 08 February 2013 Zurich PE-Conference
SuperInvestor US 11-13 February 2013 San Francisco ICBI
SuperReturn International 25-28 February 2013 Berlin ICBI
SuperReturn Latin America 4-6 March 2013 Brazil ICBI
Private Equity World Middle East 2013 4-5 March 2013 Dubai Terrapinn
2013 Preqin Ltd. www.preqin.com
Download Data Conferences
Conferences Spotlight
Private Equity Real Estate Forum 2013
Date: 30-31 January 2013 Information: www.iiribcfinance.com/event/pe-re-estate
Location: Central London
Organiser: IBF, International Business Forum
Covering both equity and debt investments in property, this conference comprises expert contributions and investment strategies from
leading European private real estate investment professionals and institutional investors. Click here to claim 10% discount quoting VIP
code: FKW52494PQL
Clean-Tech Investor Summit
Date: 6-7 February 2013 Information: www.cleantechsummit.com
Location: Palm Springs, CA
Organiser: IIR & IBC
The Clean-Tech Investor Summit chaired by Technology Partners Ira Ehrenpreis, is the premier clean-tech investment and innovation
summit of the year. The event brings together leading investors, Fortune 500 executives, entrepreneurs, and service providers for two
days of high-level presentations, conversations, and networking. Register now at the rate of $1495 with discount code: CTPREQ
Swiss Private Equity Conference
Date: 8 February 2013 Information: www.pe-conference.com/swiss
Location: Zurich
Organiser: PE-Conference
After the success of the 1st Swiss Private Equity Conference, it is our pleasure to invite you to the next edition of this industry leading
event: The 2nd Swiss Private Equity Conference will take place at the Zurich Marriott Hotel on 8th February 2013.

Preqin Private Equity Spotlight January 2013

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