European Private Equity

1
European Private Equity Venture Capital and
Business Angels

• EBANCONGRESS2008
• Arnhem, 14 April 2008
• Georges H. Noël, EVCA Director

2
Agenda

• European Venture Capital in 2007
• The EVCA VC Platform Action Plan
• Collaboration between EVCA and EBAN

3
2007 European Private Equity
Activity Survey

• Preliminary data produced by
• PEREP_Analytics

4
Evolution Activity Flows
Source PEREP_AnalyticsEurope location of PE
firm
5
2007 Fundraising Profile Incremental amount
raised for each 2007 closing
Source PEREP_Analytics
6
2007 Fundraising Profile Incremental amount
raised for each 2007 closing
Source PEREP_Analytics
7
2007 Fundraising Profile Full amount raised at
2007 final closings for independent funds
Source PEREP_Analytics
8
Typology of LPs behind the 2007 fundraising
Source PEREP_Analytics
9
European investments at 63.3 Billion (Equity
only from private equity funds)
Source PEREP_Analytics Europe location of PE
firm
10
Investments by stage of financing
Source PEREP_Analytics Europe location of
target

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European Divestments by Segment
Venture
Buyouts
cos
cos
1.4 bn
6.2 bn
221
226
4.0 bn
0.6 bn
358
278
0.5 bn
3.7 bn
53
265
2007 Top Exit routes
Trade Sale
Repayment of principal loans
Source PEREP_AnalyticsEurope location of
target
Sale to another PE house
12
2007 European Private Equity Performance
Statistics

• Preliminary Data produced byThomson Financial

13
Indicators Show Good Average Performance
European Private Equity Funds Formed
1980-2007Investment Horizon IRR () for period
ending 31-Dec-2007
Source Thomson Financial on behalf of EVCA
14
Mid- to Long-Term Venture IRR Remains In Positive
Territory
European Venture 3-,5-,10-Year Rolling IRRs
Source Thomson Financial on behalf of EVCA
15
Mid- to Long-Term Buyout IRR Shows Strong
Momentum for Buyout Funds
European Buyouts 3-,5-,10-Year Rolling IRRs
Source Thomson Financial on behalf of EVCA
16
Industry Average Stays Close to 12 Net IRR
European Private Equity Funds Formed 1980-2007,
Measured as of 31-Dec-07
Net IRR
Percentile
100
357.2
Avg Top quarter 23.5
11.0
75
2nd quarter
50
3rd quarter
25
4th quarter
The top quarter IRR is the pooled return of
funds above the upper quartile
Source Thomson Financial on behalf of EVCA
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Private Equity and Public Market Comparators
10-Year Rolling IRR for 2000-2007
Comparators are Internal Rates of Return (IRR).
IRRs for public market indices are calculated by
investing the equivalent cash flows that were
invested in private equity into the public market
index. Then an equivalent IRR is calculated for
each index. Calculations based on methodology
proposed by J Coller and published by A Long and
C Nickles.
Source Thomson Financial on behalf of EVCA
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Conclusions

• Increasing asset allocations Growing inflow into
  the asset class from all over the world and
  particularly from North America and from SWF
• European Buyout experienced an exponential growth
  over the last 8 years but what will be the
  longer term impact of the state of the debt
  markets? How small and mid-cap buyouts will
  evolve in comparison with the mega and large
  buyouts? Quid fund and deal sizes?
• PE/VC benefits from a superior governance model
• PE/VC to outperform consistently public markets
• European VC has passed turning point and looks to
  a brighter future increased funds available but
  not oversupplied trend to expansion
• Greater competition for funds between asset
  classes (HF, Real Estate, Infrastructure,
  Distressed Debt) and from Government funds as
  investors
• PE/VC growingly under public scrutiny and need
  for more disclosure and improved communication
• Impact of recession of the US economy and state
  of the stock markets on the whole PE/VC
  Ecosystem? Decreasing valuations? Increasing
  holding periods?
• EVCAs Set of Professional Standards considered
  being the world standard

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EVCA Venture Capital Platform

• ACTION PLAN
• September 2007 December 2008

20
Venture Capital Platform

• Industry Structure
• EVCAs Market Share

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Industry Structure

• VC Industry Structure EVCA Market Share
• Total VC Funds active in Europe
• Of which doing more than 4 deals per year
• EVCA Full VC Members (strictu sensu Early Stage)
• Assets under Management by EVCA VCs

565 141 (25) 183 35bn

• Top 10 36
• Top 20 55
• Top 50 80
• (of Assets under Management)

Funds gt 1bn 8 Funds gt 500m 12 Funds
over 100m 74 Funds lt 100m 83
Key Markets UK 20, Germany 19, France 17,
Benelux 15, Scandinavia 14
Sources EVCA Desk Research VentureOne
22
European PE/VC Industry in terms of activities by
segment

• 7-Year Investment activity (transactions)
  2001-2007
• Segment Number of transactions Value
• Venture 55.000 79 82bn 27
• Buyout 15.000 21 () 223bn 73
• () included 111 transactions with EV over 1bn
  2005-2007

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EVCA Venture Platform Action Plan

• Articulated mainly around
• Support for fundraising
• Support for Exits
• Public Affairs
• EVCA Venture Forum
• Member services involvement
• Research
• Communication

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Venture Capital Platform Action Plan (1)
First 100 Days

• Actions derived from the 18 months action plan
• Biotech Roundtable Chairmans initiative (done
  30 August 2007 7 February 2008 2 additional
  meetings in 2008)
• Reach out to members Workshop with members and
  academics from LBS/CEFS in Munich, London, Paris
  - Meeting with key media on VC at the occasion of
  the 3 workshops
• Selling European VC
• - LPs Workshops and visits in Europe,
  Australia, Asia
• - Lobby Meeting with the relevant DGs of
  EC Public Procurement for small medium sized
  companies- YICS
• Prepare Message grid and communication plan for
  the VCP
• Recompose the representation of the VCP

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Venture Capital Platform Action Plan (2) Plan
for 2008

• Main goals
• Selling European VC
• 1.1. Fundraising support
• - LP Workshops in the mid-East, Europe, North
  America, Asia, Australia
• - Presentations _at_ Family office conferences
• - VC Panel in Geneva Investor Forum
• - Integrate VC in all IRC initiatives
• 1.2. Public Affairs
• - Develop Execute action plan for Biotech
• - Push EC for Public Procurement system for
  technology firms
• - Co-operate with EC on ICT, Biotech, Tax
  Legal Benchmark, Regulatory issues and EC Action
  Plan for SMEs

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Venture Capital Platform Action Plan (3) Plan
for 2008

• Main goals
• 2. Events
• - VCP Workshops in Barcelona, Stockholm, CEE
  countries, Cleantech Workshop September 2008,
  Dublin (fall 2008), Benelux (with EBAN) fall
  2008, Zurich (November 2008), Ljubljana, Moscow
• - CVC Workshop (8 April 2008)
• - Seed/Cluster/Spin-off Workshop
• - Further increase quality and status of the
  VC Forum
• - Co-operate with EC on the ICT event 25-28
  November 2008
• - Support EC DG ENTERPRISE on 27 SME Events
  until 2009
• 3. Member support
• - Desk research on Serial Entrepreneurs
  networks
• - Launch a new academic research based on
  members feedback

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Venture Capital Platform Action Plan (4) Plan
for 2008

• Main goals
• 4. Communication
• - Exploit LBS Study
• - Engage dialogue with media raising
  awareness of economic societal benefits of VC
• - Re-compose data for communications with
  stakeholders
• 5. Representativity of the VCP
• - Create a strong VC community within EVCA
• - Increase market share where appropriate
• 6. Other
• - Monitor trends for PS (VC4S, CSR, SRI,
  etc.) with PSC
• - Increase visibility for VCP through
  non-EVCA conferences speakers pool
• - Maintain extend Academic Network
• - Build relationship with other markets
  NVCA, BRIC countries, etc.

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Venture Capital Platform Action Plan (4)
Potential additional actions for 2008

• Other actions ongoing
• Academic Research PhD candidates support
• Workshop/Roundtable with the top TTOs/Seed Funds
  European Research Institutes (how VC can enhance
  transformation of Innovation into businesses?)
• Exit initiative (IPO and MA) (how to enhance
  liquidity for VC-backed companies?)
• EVCA/Business Angels initiative (how to improve
  interactions between VCs SE(s?)
• Other co-operations TechTour, EBAN, Copenmind,
  etc.

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Venture Capital Platform -Challenges

• Five big challenges
• Succeed new VCP representation
• Get active members support for creating buoyant
  VC community and execution of the action plan
• Increase data coverage
• Position VCP as THE European market- meeting
  place for VC and the legitimate representation of
  European VC
• Develop a 5 year strategic plan for the VCP with
  VCP representatives

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Opportunities of Collaboration between EVCA and
EBAN

• BA and VC are part of the same Ecosystem
• Joint Regional Fora or network events
• Contributions to specific EVCA Workshops
• Academic and/or desk research
• Publications links
• EVCA Institute
• Lobbying
• Professional Standards

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Thank you very much!

• For more informationwww.evca.eu
• Georges.noel_at_evca.eu