Fund selection: Disciplined, repeatable and scalable

The “Four P’s” are the core elements of bottom-up decision making in a detailed and robust
investment process

Emphasis is on downside risk protection through manager due diligence and effective portfolio
construction

PEP seeks fund managers that exhibit consistency, skill and execution across the “Four P’s”:

People Philosophy Process Performance

 History, experience, vision  Basic thesis for value  Consistent with philosophy  Level of returns and Total
creation  Deal sourcing Value to Paid-In Capital
 Skills consistent with
philosophy  Specific niches  Due diligence  Dispersion of returns
 Capital commitment, share  Diversification  Monitoring  Realization experience
of carried interest  Target returns, deal size,  Write-offs, lessons learned
 Exits
 Alignment of interests number of deals per fund  Value creation consistent
with philosophy
 Sustainability
 Accuracy
 Benchmarking
 Valuation policy

Please note that the above process applies to all investments in underlying funds made by the BlackRock PEP Investment Team, including all strategies discussed herein.

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Applying the “Four P’s”: GP Scorecard

 Relative ranking of fund managers based on qualitative and quantitative factor scores
• Performance attributes (50% weighting)
– Track record (20%)
– Unrealized portfolio status (10%)
– Risk management: Investment pace, use of leverage, covenant issues (10%)
– Portfolio value creation: Operational value-add of GP, purchase price discipline, effective use of capital, ability to exit efficiently (10%)

• Qualitative attributes (50% weighting)

– People/Management: Team size and capability, organization structure (20%)
– Strategy: Attractiveness and consistency (10%)
– Process: Deal flow/sourcing, decision-making, monitoring (10%)
– Terms & Structure: GP/LP alignment of interests, carried interest, managing fees, transparency, co-invest potential (10%)

GP Scorecard sample outputs

Shown for illustrative purposes only

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