Private Equity: where should you invest today? P&I Global Pension Symposium, Tokyo

Private Equity: where should you invest today? P&I Global Pension Symposium, Tokyo David Seex, Head of Alternatives, APAC November 2018 For Institutionall investors only. Not suitable for retail clients

01 Private Equity is helping to shape our world

Private equity touches the lives of almost everybody Media/Entertainment Restaurants Automotive /Travel * List includes several formerly buyout backed companies that have been exited. Source: Web clippings/company websites, Schroder Adveq, December 2017 2

It changes the lives of some Emily Whitehead just celebrated her 12 th birthday At 5 years old she was diagnosed with a severe case of leukaemia which resisted all usual treatments Doctors genetically modified her own body cells to attack and kill cancer cells (CAR-T) CAR-T developed in collaboration by Private Equity and Medical Research 3

Private Equity has grown rapidly with many satisfied investors Private Equity* $453bn Aggregate capital raised by 921 in 2017 53% Investors plan to increase allocation to PE long-term 84% Investors with a positive perception of PE, the greatest proportion among alternative asset classes $2.8tn AUM $233bn Total capital distributions in H1 2017, following the record $520bn distributed in 2016. 98% AUM increase over past 10 years 95% Investors felt their private equity investments met or exceeded their expectations in 2017. Source: Preqin Global Private Equity & Venture Capital Report 2017; AUM related information as of June 2017 *For the purpose of this presentation, Private Capital refers to the broader spectrum of private closed-end funds, including private equity, private debt, private real estate, infrastructure and natural resources; Private Equity in this presentation is defined as the core asset class centred on the buyout and venture capital industry, together with other closely related strategies 4

Pensions are the largest investors in private equity? 35 30 Number of LPs by percentage Amount of capital invested by percentage 25 20 15 10 5 0 5 Source: Preqin, Adveq, September 2018

02 Why Private Equity?

Private equity = active, illiquid investments in privately held companies with a high alignment of interest Non-listed Active Aligned Illiquid Privately held companies that are not accessible through the stock market Fund managers typically in full control of underlying companies through: - Majority ownership (buyouts) or - Strong minority rights & de facto control Strong value add through high alignment of interest: - Between companies and fund managers and - Between fund managers and investors Company and fund investments are fundamentally illiquid - Typical company holding periods of 3-7 years - Typical fund durations of 10-15 years 7

Private equity provides investors with exposure to companies along the entire life cycle Maturity Decline Strong growth Restructuring/turnaround Company creation Venture Capital Venture-/ Wachstumskapital Growth Capital Buyouts Listed equities Reguläre Buyouts Distressed/turnaround Turn-arounds 8 For informational purposes only. Source: Schroder Adveq, September 2018

Different private equity strategies have different risk and return characteristics Risk/return/cash flow profile of different private equity strategies* Private equity strategy Return expectation (IRR) Risk profile Correlation Venture capital Lowest correlation** Turnaround Growth capital High Low volatility (about ½ of listed equities)** Medium correlation** Small/mid-sized buyouts Large buyouts Medium (high entry valuations) Highest volatility within private equity, but still lower than listed equities Highest correlation due to public comparables and leverage** 9 * Based on highly diversified allocations by strategy and investments with high quality funds ** Compared to listed equities Schroder Adveq, September 2018

Institutional investors target a 2-4% annual illiquidity premium from their Private Equity investments Index Return (Rebased to 100 as of 31-Dec-2000) 450 400 350 300 250 200 150 100 50 PrEQIn Quarterly Index: All Strategies vs. S&P 500 TR Index (Rebased to 100 as of 31 December 2000) S&P 500 TR PrEQIn Private Equity 0 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 10 Schroder Preqin, Bloomberg, Schroder Adveq, December 2017

Risk in Private Equity % of runs for which TVPI <1 40% 35% 30% 25% 20% 15% 10% 5% 0% Capital risk Cases for which the TVPI for simulated portfolios of private equity funds was below 1x after 10 years 1 5 20 50 Number of funds There are 4 typical risks: Market risk - fluctuation in value Funding risk meeting calls when due Liquidity risk secondary market pricing Capital risk probability of losing capital Capital risk can be almost completely mitigated by diversification Source: Preqin. Number of runs: 5000. 11

Its not just about allocating to right parts of the market: fund selection is very important too Interquartile range for US private equity net internal rates of return, by vintage year, % 40 35 30 25 20 15 10 5 0-5 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Cambridge Associates 12

03 Market assessment

2017 marked by record fund raising Annual private equity fund raising in USD billion 800 700 All-time fund raising records broken in 2017 All-time-record Fund Size Year Largest fund ever raised Softbank Vision USD 100bn 2017 600 500 400 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 non-rmb funds RMB funds Largest first time fund ever raised Largest buyout fund ever raised Largest European buyout fund ever raised Largest Asian buyout fund ever raised Largest venture/growth fund ever raised Largest US growth fund ever raised Softbank Vision USD 100bn 2017 Apollo USD 24.7bn 2017 CVC VII EUR 17.9bn 2017 KKR Asia III USD 9.3bn 2017 NEA 16 USD 3.3bn 2017 TPG Growth IV USD 3.7bn 2017 Fund raising numbers shown include 50% of Softbank Vision Fund. Source: Preqin, Zero2IPO, Schroder Adveq, September 2018 14

Historically, fundraising is negatively correlated with vintage year performance Correlation of fund raising and vintage year performance USD billion 300 Net IRR 5% 250 200 150 100 50 0-50 7% 9% 11% 13% 15% 17% -100 19% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Global private equity fund raising (detrended and inflation adjusted) Global private equity vintage year net IRR 15 Schroder Adveq Fund Raising Indicator (FRI) is a proprietary tool which was developed to help tie down the fund raising/returns relationship. Fund raising amount has been de-trended and inflation adjusted. Source: Schroder Adveq, September 2018

The Schroder FRI separates long term fund raising growth from cyclical effects Global annual private equity fund raising and its long term trend (excl. RMB funds) USD billion 600 500 400 300 200 100 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fundraising (inflation adjusted) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Long term trend with 80% confidence interval 2018E Fund raising numbers include 50% of Softbank Vision Fund, exclude RMB funds. FRI: Fund Raising Indicator. 16 Schroder Adveq Fund Raising Indicator (FRI) is a proprietary tool which was developed to help tie down the fund raising/returns relationship. Fund raising amount has been de-trended and inflation adjusted. Source: Schroder Adveq, September 2018

Large buyout fund raising is heating up, but situation still less dramatic than in 2006-2007 Large buyouts: annual fund raising (US/Europe) and long-term trend USD billion 300 250 200 Growth rate of long-term trend: 6% 150 100 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fundraising (inflation adjusted) Long term trend with 80% confidence interval Large buyouts: funds with fund sizes at or above EUR/USD 2bn 17 Schroder Adveq Fund Raising Indicator (FRI) is a proprietary tool which was developed to help tie down the fund raising/returns relationship. Fund raising amount has been de-trended and inflation adjusted. Source: Schroder Adveq, September 2018

Small/mid buyout fund raising is marked by strong stability Small/mid buyouts: Annual fund raising (US/Europe) and long-term trend USD billion 100 90 80 70 60 50 40 30 20 10 0 Growth rate of long-term trend: 2.5% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fundraising (inflation adjusted) Long term trend with 80% confidence interval Small buyouts: funds with fund sizes below EUR/USD 500m; mid-sized buyouts: funds with fund sizes above EUR/USD 500m and below EUR/USD 2bn. 18 Schroder Adveq Fund Raising Indicator (FRI) is a proprietary tool which was developed to help tie down the fund raising/returns relationship. Fund raising amount has been de-trended and inflation adjusted. Source: Schroder Adveq, September 2018

Small buyout transactions continually sourced from private owners and corporates 100% Small buyout transactions by deal source 100% Large buyout transactions by deal source 80% 80% 60% 60% 40% 40% 20% 20% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Small buyouts: deals <USD 100 million in enterprise value; large buyouts: deals >USD 500 million in enterprise value. Source: Pitchbook, Schroder Adveq, September 2018 19 Family/private Corporate Secondary Public to private

EBITDA multiple difference between small and large buyouts is bigger than ever EV/EBITDA purchase multiples small and large buyouts (Europe) Pro forma trailing EBITDA multiples 12.0x 11.0x 10.0x 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EV/EBITDA purchase multiples small and large buyouts (US) Pro forma trailing EBITDA multiples 12.0x 11.0x 10.0x 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Baird, S&P 2017, Schroder Adveq, September 2018 Small buyouts: <EUR 100 million EV Large buyouts: >EUR 500 million EV 20

Venture capital is driving the 3 rd and 4 th industrial revolution 4th industrial revolution Today Robotics Artificial Intelligence/ Machine Learning Internet of Things Autonomous vehicles Bio-Technology Higher quality food New energy sources 3rd industrial revolution 1960-2000 Digital electronics Computer Internet 2nd industrial revolution 1870-1914 Telephone Light bulb Combustion engine Cars 1st industrial revolution 1760-1820 Steam engine Train Source: Wikipedia, Schroder Adveq, September 2018 21

Over last 10 years, venture and growth capital represent one third of global private equity Fund raising of buyouts and venture/growth capital funds 100% 90% 80% 70% Venture/ growth capital 60% 50% 40% 30% Buyouts 20% 10% 0% 22 199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017 Based on final closing data, excluding fund of funds (no double counting) and RMB funds. Source: Preqin, Analysen von Schroder Adveq, September 2018

Late stage/growth capital experiencing excess supply Late stage/growth capital: annual fund raising (EU and US) of private equity firms with long-term trend USD billion 180 160 140 120 100 23 80 60 40 20 0 1997 1998 Growth rate of long-term trend: 11.9% 1999 2000 2001 2002 2003 2004 Fundraising (inflation adjusted) Fund raising numbers include 50% of Softbank Vision Fund. Source: Schroder Adveq, September 2018 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Long term trend with 80% confidence interval 2017 2018

Abundance of capital for late stage/growth capital leads to longer holding periods and sharp increase in valuations Median rating late stage/growth capital USD million 600 500 400 300 200 100 0 10x increase in US late stage valuations in 5 years 2006 2008 2010 2012 2014 2016 US Europe Asia Major unicorns with current valuations Company Region Founding date Last valuation (USDbn) Ant Financial China 2014 150.0 Uber USA 2009 68.0 Didi Chuxing China 2012 56.0 Xiaomi China 2010 46.0 Meituan-Dianping China 2003 30.0 AirBnB USA 2008 29.3 SpaceX USA 2002 21.5 Palantir USA 2004 20.0 WeWork USA 2010 20.0 Toutiao China 2012 20.0 Lufax China 2011 18.5 Pinduoduo China 2015 15.0 Pinterest USA 2009 12.3 Lyft USA 2012 11.5 Infor USA 2002 10.0 DJI China 2006 10.0 Stripe USA 2010 9.2 Snapdeal India 2010 7.0 GrabTaxi Singapore 2012 6.0 Manbang Group China 2008 6.0 24 Source: Schroder Adveq August 2018. Valuations of the right hand chart are as of latest funding round of each companies. Valuations for companies which went public are as of last funding round before IPO.

Early stage venture capital fund raising in a healthy state Early stage venture capital: annual fund raising (US/Europe) and long-term trend USD billion 100 90 80 70 60 50 40 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 Fundraising (inflation adjusted) Growth rate of long-term trend: 1.2% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Long term trend with 80% confidence interval 2018 25 Schroder Adveq Fund Raising Indicator (FRI) is a proprietary tool which was developed to help tie down the fund raising/returns relationship. Fund raising amount has been de-trended and inflation adjusted. Source: Schroder Adveq, September 2018

US and European private equity looks healthy for small buyouts and early stage venture capital Schroder Adveq FRI for US and Europe by strategy 500 450 400 350 300 250 200 150 100 50 0 Early stage venture capital 2000 For comparison Large buyouts 2006/07 500 450 400 350 300 250 200 150 100 50 0 Large buyouts Small/mid buyouts Late stage/growth capital Situation by end of 2017 Early stage venture capital Large buyouts: funds >= USD/EUR 2bn, small/mid buyouts: funds < EUR/USD 2bn; past results of this indicator are not an indicator that this indicator will be reliable in the future. Risk of overheating Long term trend Private equity funds Private equity funds and non-traditional sources of capital 26 Schroder Adveq Fund Raising Indicator (FRI) is a proprietary tool which was developed to help tie down the fund raising/returns relationship. Fund raising amount has been de-trended and inflation adjusted. Source: Schroder Adveq, September 2018

In conclusion Private Equity is a return enhancer It gives access to more of the company life cycle than can be found in the public markets and is therefore a diversifier The attractiveness of market segments is not uniform pay close attention to the supply and demand for capital Be diversified and choose the best 27

Biography David Seex is Head of Alternatives, Asia Pacific at Schroders. In this role he is responsible for supporting clients in their investments in Private Equity, Infrastructure, Real Estate, Private Debt and Hedge Funds. He was previously the Head of Asia Pacific for Schroder Adveq. David Seex Head of Alternatives, Asia Pacific Prior to joining Adveq, David was Chief Executive Officer of RAB Capital in Asia. In his previous roles, he was Head of Citigroup Alternative Investments Asia and was a member of the founding management team serving on both the division s management and operating committees. His main responsibility was leading the build-up of the firm s investor franchise in the region. Over 15 years with Citigroup, David also served as a transactor in leveraged finance in London and New York and as Head of Restructuring Advisory in Asia. David also spent three years with United Distillers PLC as Head of Corporate Finance and as Commercial Development Director in Asia. He holds a Master of Business Administration from Columbia Business School and a Bachelor s degree in Latin and Ancient History from the University of Exeter. 28 Schroder Adveq, September 2018

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