{ "docId": "019dd923-5ca1-7489-b635-efee526b2162", "docSlug": "6ebe7bc3c470921e", "documentTitle": "Global Private Equity Report 2015", "authorId": "Bain", "authorName": "Bain", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "portrait", "aspectRatio": 0.773, "pageNumber": 22, "pageCount": 68, "prevPage": 21, "nextPage": 23, "slideType": "industry_trends", "function": "summarize", "density": "overcrowded", "nDataPoints": 2, "notes": "This is a page from a Bain & Company report. It contains two distinct sections: one on Brazilian PE market dynamics and one on global PE returns.", "elementsJson": [ "paragraph" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-5ca1-7489-b635-efee526b2162/22", "deckHref": "/decks/019dd923-5ca1-7489-b635-efee526b2162", "deckJsonHref": "/decks/019dd923-5ca1-7489-b635-efee526b2162.json", "deckAnchorHref": "/decks/019dd923-5ca1-7489-b635-efee526b2162#slide-22", "components": [ { "bbox": null, "kind": "callout", "text": "Unlike in other emerging markets, where PE money goes in but rarely comes out, Brazilian PE funds have been able to sell assets and return capital to LPs even under difficult economic and market conditions.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd951-b48c-7655-b2fc-a2c0e8ed797a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.185, "w": 0.764, "x": 0.118, "y": 0.215 }, "kind": "paragraph", "text": "Applying the same lessons for deal making in a slow Brazilian economy should serve PE funds well in 2015, when GDP growth is forecast to be no better than it was last year and a further devaluation of the real is anticipated. Companies suffering from financial distress could generate refinancing and consolidation opportunities for PE. A dormant IPO market may incline entrepreneurs who are looking to raise new capital to turn to PE for bridge investments that will tide them over until conditions for new public offerings improve. And the currently low value of the public equity markets may present opportunities for PE funds investing in public company shares to pick up bargains. PE investors should continue to find deals in sectors that are less tied to the growth themes that first attracted them to Brazil, such as rising consumer spending, by targeting assets that are more insulated from the business cycle—like education, agribusiness, infrastructure and healthcare.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "13fa40a8-84b1-4c7c-b23c-f60543761316", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.105, "w": 0.764, "x": 0.118, "y": 0.407 }, "kind": "paragraph", "text": "The major shadow hanging over Brazilian PE in 2014 has been constricted exit channels. With IPOs off the table and just a few sponsor-to-sponsor transactions taking place last year, purchases made by corporate acquirers presented the rare bright spot for PE exits. Though there were not many sales to strategic buyers, those that occurred commanded strong valuations and produced sizable returns. For example, GP Investments’s sale of Sascar, a leading fleet management and cargo tracking company, to tire company Michelin in 2014 generated a return of 2.6 times equity within three years.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "14c54616-8afa-4566-a7f8-f0b3c9a254b3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.115, "w": 0.764, "x": 0.118, "y": 0.795 }, "kind": "paragraph", "text": "Today, however, PE is back. Riding the tailwinds of sharply higher public equity markets, PE returns roared ahead in 2013 and had another strong showing through midyear 2014, according to the latest data available at the time of publication. A cascade of capital is flowing to PE investors. A recent survey by Preqin found that just one out of every 12 LPs felt that PE failed to meet its expectations compared with one in four surveyed in July 2009. A wave of market beta—a heady mix of GDP growth, near-zero interest rates and covenant-lite loans, and rising mark-to-market valuations—helped power PE’s rebound. GPs also had a starring role in the recovery.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "73cf40b9-59f8-487f-8841-a77de31b8e99", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.764, "x": 0.118, "y": 0.718 }, "kind": "paragraph", "text": "The bar is always set high for PE returns. Long experience has accustomed LPs to expect that PE will remain their best performing asset class. But as recently as just a few years ago, their confidence that GPs could deliver on those high expectations was badly shaken. PE returns lagged the public equity markets through 2009 and 2010, and worries mounted that PE investments made during the boom years would end up being a disaster.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c1f1bece-3b32-48f5-9344-e40c5ec97a68", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.045, "w": 0.764, "x": 0.118, "y": 0.145 }, "kind": "paragraph", "text": "markets, patiently courted the owners of Genesis Group—a major provider of inspection, certification and compliance services to the Brazilian agribusiness sector—after extensive research put the company, located in the interior of the state of Paraná, on its radar.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ea10444f-4ec6-47b4-b3e8-a9dc94d1fb73", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.764, "x": 0.118, "y": 0.521 }, "kind": "paragraph", "text": "Unlike in other emerging markets, where PE money goes in but rarely comes out, Brazilian PE funds have been able to sell assets and return capital to LPs even under difficult economic and market conditions. PE firms’ continued ability to do so in what is shaping up to be another challenging exit environment in 2015 will be an important test of their future fund-raising prowess.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "eb104dc8-e1cc-439e-85be-7fbe8aaa0d97", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.018, "w": 0.215, "x": 0.118, "y": 0.685 }, "kind": "title", "text": "Returns: Mind the gap", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1a75b2cb-630e-4a6c-ad2e-73301b3b599a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.013, "w": 0.388, "x": 0.306, "y": 0.056 }, "kind": "title", "text": "Global Private Equity Report 2015 | Bain & Company, Inc.", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1e06f4b6-9b4a-430c-b10a-cb58a5f7ddb6", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Action Titles", "slug": "action-titles", "agent": "Architect", "layer": "slide", "matchId": "019dd95a-173e-703c-8767-883b5af28d2f", "evidence": "'Returns: Mind the gap' — memorable framing", "confidence": 85 }, { "name": "Before-After-Bridge", "slug": "before-after-bridge", "agent": "Storyteller", "layer": "slide", "matchId": "0c4f23bd-ae25-4592-a9b1-83e1345fd776", "evidence": "The slide compares the current state of PE returns to previous years, which could involve a before-after bridge narrative.", "confidence": 0.6 }, { "name": "Metaphor & Analogy", "slug": "metaphor-analogy", "agent": "Storyteller", "layer": "slide", "matchId": "019dd95a-173e-703c-8767-8e7ab3d36063", "evidence": "'Mind the gap' tube-station analogy for returns", "confidence": 80 } ], "frameworks": [], "arcBeats": [ { "to": 28, "from": 20, "beatId": "019dd95a-07a4-702a-b0b2-8bbe0cc98a23", "arcName": "The Consultant's Gambit", "arcSlug": "consultants-gambit", "beatName": "Problem & Complication", "beatSlug": "consultants-gambit-problem-complication", "evidence": "'Mind the gap' returns concern and key takeaways frame the tension", "position": 2, "confidence": 82, "parentBeatName": "Complication", "parentBeatSlug": "complication" }, { "to": 28, "from": 7, "beatId": "019dd95a-07a5-761b-9143-81ee316ec9c7", "arcName": "The Triple Take", "arcSlug": "triple-take", "beatName": "The Facts (What)", "beatSlug": "triple-take-the-facts-what", "evidence": "Section 1: what happened in PE in 2014", "position": 1, "confidence": 70, "parentBeatName": "Setup", "parentBeatSlug": "setup" } ], "loops": [ { "to": 27, "from": 22, "name": "Benchmark Gap", "slug": "39-benchmark-gap", "bestFor": "Performance improvement, competitive analysis, target setting", "matchId": "019dd95a-088c-724c-b312-34a8e73fd7b5", "evidence": "Short-term, long-term, vintage and top-quartile vs bottom-quartile comparisons.", "position": 4, "objective": "Benchmark PE returns vs public markets and across quartiles", "structure": "Our Performance -> Industry Average -> Best-in-Class -> The Gap = The Opportunity", "confidence": 80, "description": "Compare performance against best-in-class to quantify the opportunity" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }