Redcliffe’s Private Equity 2011 Conference – Recent Deals & The Road Ahead

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Confirmed Speakers from:

Welcoming note from the Chairman

Following the financial and economic crisis in 2007/2008, private equity went through a difficult period and pulled back from entering new transactions in order to concentrate on managing their portfolios of existing businesses which, in many cases, were purchased at high multiples and were overleveraged given the economic volatility being experienced at the time.

This backdrop meant that very few transactions were completed in 2009, with volumes further hampered by the reduction in debt liquidity and financing being restricted to club transactions provided on conservative terms (low leverage, amortising loans, high fees/margins and generous equity cushions). According to LCD, there were only EUR15bn of senior loans issued in 2009 vs EUR166bn in 2007.

2010 started to see a recovery as portfolio management became less onerous and private equity firms were able to prioritise putting some of their large amounts of committed but unutilised capital to work (estimated to be in excess of EUR150bn in Europe in 2011). Deal volume increased at a pace with a significant rise in the second half of 2010 helped by increasing depth in the debt market and the return of institutional liquidity, albeit mainly driven by the recycling of capital released through a maturing and buoyant European high yield market providing prepayments to CLOs (European HY primary issuance attained EUR38bn in 2010 v only c.EUR1bn in 2008). This allowed transactions to be underwritten under more competitive debt terms (higher leverage, lower equity contributions, more bullet debt and improved pricing) facilitating more transactions to work from a returns perspective with senior loan volumes rising to Eur42bn in 2010.

These trends continued into 2011 with volumes in H1-2011 69% above H1-2010. In addition, private equity firms have been on the fund raising trail with a number of new funds successfully being raised or in the process of being raised (such as Montagu, BC Partners, EQT) which has reinforced the ongoing importance and longevity of the private equity model. However, in recent weeks, uncertainty, at least in the short term, has returned to the markets driven by the concerns around sovereign debt in Ireland and Greece and the further potential contagion impacts on Spain, Portugal and Italy. These concerns have negatively impacted the high yield market which in turn has constrained the all important availability of institutional liquidity for new LBO transactions which flows through to the size of liquidity pool and attraction of terms for underwritten debt deals.

As such, the future direction of the industry is now very much open to debate. This conference will cover many of the different aspects of the private equity industry, focusing on the examples of recent deals and considering future trends in depth. The debt markets will be considered in detail – senior debt, mezzanine and the use of securitisation in private equity deals. The conference will also review the valuation of the buy-out funds, how value is created, how turnarounds are successfully achieved and the advantages and disadvantages of the various exit routes. Other interesting and relevant topics, such as the choice of incentives for management, whether there is in fact any need for a financial adviser and the impact on the industry of the latest regulatory developments will additionally be addressed. Overall, conference participants should enjoy a thorough coverage of all of the important areas of the private equity industry, learning about recent deals and the latest market trends.

I look forward to welcoming you on the day of the conference.

Michael Lucas
Managing Director
Head of Financial Sponsors Group
ING Bank

Conference Content

08:15 – 08:45 Coffee & Registration

09:00 Chairman’s Opening Remarks

Michael Lucas, Managing Director – Head of Financial Sponsor Group, ING Bank

09:10 Private Equity Performance & Future Trends/Predictions

Robert Pulford, Managing Director – Financial Sponsor Coverage, Goldman Sachs International

• Review of Private Equity Activity Since the Crisis
• Key trends in Private Equity Investments
• Overview of Private Equity Monetisations of Portfolio Companies
• Outlook for Private Equity Investing in Europe

09:40 Active Partnership – Creating Value Across the Portfolio

Miles Graham, Director, 3i

• What is Active Partnership?
• How and Where Active Partnership Creates Value
• Value Creation in Practice at 3i

10:10 Management Incentives

Ian Bagshaw, Co-Head of Private Equity Group & Alex Woodward, Senior Managing Associate, Linklaters LLP

• What is Market – Reconciling US/European Sponsor Practice
• Restructuring Packages v New Money Packages – Will There be any Changes to the Way MIPs are Structured Long-term?
• Tax is Shaping the Structuring More and More
• Do non Competes Work?
• Deep Equity Incentivisation and Practical Tips on Managing Layers of Tiered MIP

10:40 Morning Coffee

11:00 Leverage & Pricing of Senior and Junior Debt in LBOs

Chris Skinner, Director, Debt Advisory, Deloitte LLP

• Current Trends, Leverage Multiples in Acquisition Finance
• Liquidity Dynamics Underpinning Lending Appetite
• The Use of Alternative Sources of Finance to Secure Competitive Advantages
• The Implications of Current Debt Market Trends for the Restructuring Market

11:30 Is There Any Real Value in Using Financial Advisor?

Simon Davies, Managing Director – Restructuring & Reorganisation, Cairn Capital Limited

• Restructuring Advisory – Overview and Key Strengths of the Different “Types” of Adviser
• Why Use a Financial Adviser – the Objectives of the Client
• When is a Financial Adviser Most Relevant – Quality Versus Quantity
• What’s a Typical Engagement?
• Can Financial Advisers Be Seen As Cost Effective?

12:00 Buy-out Fund Valuation

Nick Rea, Partner & Attul Karir, Director PwC

• Current Themes within PE Valuations
• Reconciling DCF Value to Market Pricing
• The impact of IFRS on PE Valuations

12:30 Lunch

14:00 Private Equity Turnarounds

Jon Moulton, Chairman, Better Capital LLP

• Why Do Turnarounds?
• Looking For Bad Managers
• Examples Of How Not To Run A Company
• The Future Opportunity
• A Wall Of Failure?

14:30 Regulatory Issues in Private Equity Deals

Frank Miller, Partner & Geoff Nicholas, Partner, Freshfields Bruckhaus Deringer LLP

• The Impact of AIFM Directive & The UK Bribery Act 2010
• The Past Few Years Have Seen an Increasing Intensity of the Regulatory and Compliance Environment
• Coordinated Action by Investigators and Regulators Across Multiple Jurisdictions as Well as Tension Between Regulatory Demands on Companies (Particularly Public Companies) has Increased the Complexity
• Financial Sponsors are Exposed to These Risks in Important Ways, and Private Equity Business Managers are Adopting More Sophisticated Procedures for Addressing and Managing the Risks:- Enhanced Due Diligence on Target Companies- More Scrutiny/Adoption and Implementation of Best Practice in Portfolio Companies- Taking Care to Manage Exposure of Director-Appointees

15:00 Afternoon Tea

15:15 Mezzanine Debt

Matthew Robinson, Director, Intermediate Capital Group

• Why Use Mezzanine
• Evolution of the Mezzanine Market Over the last Decade (Structures Early 2000 vs Today)
• Challenges to Mezzanine Finance Providers
• The Outlook for Mezzanine

15:45 Successful Exits: IPO, Trade Sale or Secondary Buy-out?

Fernando Chueca, Director, The Carlyle Group

• What is a successful exit?
• Does the exit planning start at entry?
• Timing makes perfect
• Selling the future
• Leverage the ecosystem
• No size fits all

16:15 Public to Private Deals

Ken McGrath, Managing Director – Financial Sponsor Coverage, Barclays Capital

• Recent History of Public to Private Transactions
• Trends and New Developments
• Near-term Outlook

16:45 Chairman’s Closing Remarks

Please note that this event is a conference and not a training course. Participants will listen to many expert speakers and will have the opportunity to ask questions, but there is no formal training, exercises or tuitional material being delivered. Should this be your objective, Redcliffe organises several training courses in this and related subjects. Please click here for full details.