The Macroeconomic Outlook for Private Equity in the

The Macro-economic Outlook for Private Equity in the Nordics Gabriel Urwitz, Executive Chairman, Segulah

Why the Nordics? BVCA Nordic Forum November 24, 2017 London Gabriel Urwitz 3

Net Returns in PE 1989 -2016 # of funds IRR Mo. I Nordic P/E 105 19. 0% 1. 88 x European P/E 535 16. 0% 1. 54 x Source: Prequin 4

Nordics / GDP Development Positive growth across the region Denmark: Robustness GDP levels, index 100 = Q 1 2007 § Activity above pre-crisis level § Population growth (immigration) SWE NOR EU DEN Finland: Recovery § Economic sentiment rebound § Inflation pick-up (ECB stimulus) FIN Norway: Stabilization § Oil investment decline slowdown § Consumption driving growth Sweden: Strength § Broad-based economic growth § Continued dovish monetary policy Forecast 2016 2017 2018 F 2019 F DEN 1. 7% 2. 3% 2. 4% FIN 1. 9% 2. 5% 2. 2% NOR 0. 9% 2. 0% 2. 3% SWE 2. 9% 3. 5% 2. 9% 2. 5% Source: IMF Source: OECD, IMF forecasts, SEB Nordic Outlook February 2017, Danske Bank Nordic Outlook March 2017. 5

Nordics / Industrial Activity After a prolonged period of stagnation, Nordic industrial activity shows some positive momentum Industrial Production, index 100 = Q 1 2011 Denmark Norway Sweden Finland Source: OECD. 6

Nordics / Activity By Sector Widespread Nordic momentum; the majority of sectors show healthy growth Gross value added by sector, 2014 -2016 % CAGR (constant prices) Source: OECD. 7

Nordics / Digital Performance & Competitiveness The Nordics have the most advanced digital economies in the EU Digital Economy & Society Index (DESI) 2017 ranking The Nordic economies are characterized by high levels of digitization, skilled human capital and widespread connectivity Source: European Commission, The Digital Economy and Society Index (DESI) 2017. 8

Nordics / New Technology & Innovation Globally, the Nordic Region is considered a technology hot bed Gross expenditure on R&D as % of GDP (2014) Global Innovation Index 2016 PCT 1 patent applications per bn PPP$ GDP (2015) 1 Switzerland 2 Sweden 3 UK 4 US 5 Finland 6 Singapore 7 Ireland 8 Denmark 9 Netherlands 10 Germany The Global Innovation Index is an annual ranking of countries by their capacity for, and success in, innovation. Source: The Global Innovation Index Report 2016. Note: (1) Patent Cooperation Treaty. 9

Nordics / The Social Fabric The Nordic Region is characterized by strong institutions and stable social framework Rule of Law Index (2016) Corruption Perceptions Index (2016) Ease of Doing Business Index (2016) 1 Denmark 1 Finland 1 New Zealand 2 Norway 1 New Zealand 2 Canada 2 Singapore 3 Finland 3 Denmark 4 Sweden 4 Australia 4 Hong Kong 5 Netherlands 5 Switzerland 5 South Korea 6 Germany 6 Norway 6 Sweden 6 Norway 7 Austria 7 Singapore 7 Norway 7 UK 8 New Zealand 8 Netherlands 8 US 9 Singapore 9 Canada 9 UK 9 Sweden 10 UK The World Justice Project Social Progress Index (2016) Regulatory enforcement Civil and criminal justice Constraints on government powers 10 Germany Transparency International Press freedom Public spend info access High integrity standards for public officials Source: The World Justice Project, Transparency International, The Social Progress Imperative, The World Bank. 10 Iceland The Social Progress Imperative Basic human needs Foundations of wellbeing 10 Macedonia The World Bank Ease of starting a business Ease of operating a business Personal opportunities 10

Nordics / Immigration (Swedish example) The economic effects of immigration are far-reaching and complex Swedish net migration (000’) Population: +3% 2015 -2017 Short term: Fiscal boost Mid/long term: Structural challenges Source: Swedish Migration Agency, SCB, “Migration, en åldrande befolkning och offentliga finanser” Lennart Flood & Joakim Ruist (2015). Note: (1) March 2017. Govt’ spend: 1. 2% of GDP in 2016 (+50% y-o-y) Net fiscal cost: 0. 5 -1% of GDP p. a. Unemployment rate: c. 15% (natives c. 4. 5%)1 11

Nordic. Stable, Buyout Market / Activity growing number of transactions in the Nordic mid-market Number of Nordic Mid-market Buyouts (MEUR 5 -250) CAGR: 2% 92 84 77 75 64 2012 Source: Unquote 12 2013 2014 2015 2016

Nordic. IPOs. Buyout Market / IPOs play a growing role as exit route for Nordic Mid-caps Swedish IPOs Total issue volume, USDbn # of issues +80% 100 90 80 70 60 50 40 30 20 10 0 -51% 4 3 2 1 0 2007 2008 2009 2010 Number of issues (LHS) 2016 versus 2015, change in total issue volume (%) 2011 2012 2013 2014 2015 2016 Issue volume (RHS) 2016 versus 2015, change in # of issues (%) Swedish IPO activity in 2016 saw a sharp increase in number of issues, but a decrease in total issue volume, indicating that more but smaller issuers were listed during 2016 13 6 5 2006 Source: Carnegie 7

Nordic. Readily Buyout Market / Acquisition Finance available, at higher multiples and lower margins PE-backed leverage loan primary spreads PE-backed loan average leverage 6 475 450 5 425 4 x. EBITDA 400 Bps 4. 8 x 375 350 3 2 325 300 1 275 Q 2 Q 3 Q 4 Q 1 2015 2016 2017 TLA/RCF (Syndicated) Source: Nordea 14 TLB (Syndicated) 0 Q 2 Q 3 Q 4 Q 1 2015 2016 2017

Nordic. Similarly, Buyout Market / The Bond Market high-yield bonds have become an integral part of the market Nordic HY Issuance Nordic HY Funds Flow Index 2016 YTD 2017 (BEUR 6. 7 ) (BEUR 3. 6) 12% 200 20% MEUR 150 88% 80% 100 50 0 March April -50 To date, Segulah portfolio companies have successfully completed five high yield issues Source: Nordea, Danske Bank 15 May

Nordic. Pricing, Buyout Market / Pricing both public and private, is moving up as a result Sweden 12 m Forward P/ERatio “Pricing growth in the region has been supported by the long-standing low interest rate environment established by the Nordic central banks and resulting cheap leverage. ” Unquote Nordic Annual Buyout review “Acquisition multiples reached record or near-record highs across the US and Europe, at more than 10 times EBITDA in both regions at the start of 2016” Bain Global Private Equity Report 2017 “With more competitors in the fray, deal multiples continued their recent rise, and in 2016 reached levels not seen since 2006” Mc. Kinsey Global Private Markets Review Feb 2017 Source: Carnegie, Unquote Nordic Annual Buyout review, Bain Global Private Equity Report 2017, Mc. Kinsey Global Private Markets Review Feb 2017 16

Conclusions § § § Economic growth in the Nordic region is broad based Industrial activity is picking up, new technology is prospering The Nordic societies are stable and law abiding The Nordic Model well suited for a globalized world The Nordic Model includes a constant drive for industry to stay competitive Continue to be a solid market for Private Equity investments and hence a geography that should be included in all international P/E-portfolios! 17

Nordic Private Equity: Performance and Prediction Elias Latsis, Chief Data Officer, Preqin

Nordic Private Equity: Performance and Prediction BVCA: Nordic Forum Elias Latsis Chief Data Officer, Preqin 24 November 2017, London

About Preqin Private Equity & Venture Capital Hedge Funds Real Estate Infrastructure Private Debt Natural Resources Data available via online databases, publications and research reports Clients include over 44, 000 industry professionals from 16, 000 firms London San Francisco New York Guangzhou Singapore Multi award-winning service Hong Kong Manila

What is coming up… • An update on the global Private Equity landscape • How are investors viewing the Private Equity industry • Nordic Private Equity in focus

An update on the global Private Equity landscape

Net cash flow at an all time high

Fundraising continues to be strong

Record dry powder levels

Valuations are high – comparing PE buyouts and exits average deal sizes 700 Average Deal Value ($m) 600 500 400 300 200 100 0 2006 2007 2008 2009 2010 2011 Buyouts ($m) 2012 Exits ($m) 2013 2014 2015 2016 2017 YTD

Private Equity outperforming in the long-term

But the gap between the top and bottom performers is widening

How are Investors viewing the global Private Equity industry?

Investor satisfaction shifting

Investor views on key issues

(and GP views are not too different)

Investor preferences by geography

Nordic Private Equity in focus

Nordic-based Private Equity fundraising…

…as a % of total European-based fundraising (by value)

Nordic-based fundraising by fund type

24 Nordic-based funds currently on the road…

…aiming to raise € 7. 3 bn

Time spent on the road fundraising

Nordic-based PE fund managers: AUM ($69. 4 bn)

Dry powder at steady levels (by GP location)

PE-backed buyouts of Nordic targets

Venture Capital deals of Nordic targets

Nordic PE firms increasingly looking for targets outside the region

Nordic focused Private Equity funds: Median net IRRs by vintage

Nordic focused funds vs. all Europe PE funds: Median net IRRs by vintage

Private Equity risk/return by GP location (vintages 2004 -2014)

229 Nordic-based LPs

864 LPs that have previously invested in Nordic-focused funds

396 LPs globally with an appetite for Nordicbased funds

Data Sources • Free reports available from www. preqin. com/research • Preqin’s online services: www. preqin. com/services

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