Track 1: Exits: Liquidity lags

 What is the outlook for PE-backed IPOs across different markets?

 Can GPs secure favourable exit outcomes through more targeted sale processes?
 In what circumstances does a single-asset continuation fund make sense?
 Are traditionally defensive sectors still commanding premiums?

Chrys Capital: India focus firm, investing for past 25 years. IT services, financials, healthcare,
consumer. $5.5b. Both minority and control. $50-200m. can do larger, but with GP coinvest

GSAM. Capital investments and buyouts and growth. $30-50m. Buyouts will be larger. Invest out of
global fund, $10b. $5.25b growth equity fund.

Advantage partners. Started in Japan, mid market PE firm. Focused on Asia. Pipe, buyout.

Quadria Capital. Healthcare. SEA, India. $3.5b. Core focus on investing in future giants of the
industry.

Is GP’s focus on continuation vehicles and NAV financing harming relationship with LP

Quadria Capital

- Asia GMs are viewed as good at portfolio growth, but bad at DPI
- Most managers are focused on building great companies, which is why DPI is slow
historically
- But good companies are still doing IPO
- On continuation vehicles and NAV financing, LPs are not keen on
- Continuation vehicles will mean the asset will be discounted, whereas LPs would want a
premium
- NAV financing – not keen because of high interest rates

Advantage partners

- No direct experience with continuation vehicle

- Had looked at a single asset continuation vehicle. Had spend 3-5 years with the company,
but face the issue of timing of having to exit the vehicle
- But LPs had negative views on it, so its about having to educate the investors

Chrys Capital

- Had a few situations where they exited the company, then came back and reinvested in the
company
- Also about how to manage the conflict
IPO markets have been weak, how much of this is a surprised compared to 9 months ago?

GSAM:

- Not just China focused, but global

- GPs need to be flexible, need to think how to position the companies
- Look for upstream downstream M&A, look for growth outside of China
- Help to rejig their balance sheet so it will be more interesting for trade sale buyers

Quadria Capital

- M&A market continues to be strong

- Capital markets in India still robust
- But people will become nervous when they are using financial engineering to structure a
sale

Contrast the picture in China vs India?

Chrys Capital

- Exit strategy also depends on your entry. If you are minority, probably sell to bigger
shareholder or IPO, you cant influence major shareholders to do a trade sale
- India is doing well now compared to historical or compared to other macros
- Govt balance sheet strong, bank balance sheet strong, govt is stable, GDP growth is good,
currency is stable
- Pullback for China is good for India
- A lot of the returns in US has been because of low interest rates
- On exit side the macro in India has been helping. India has had more than 40 IPOs since
Covid
- Issue about DPI in India, mostly solved now. A lot of capital have been paid back to the
recent vintages

How is macros in Japan affecting exits? Is trade exits popular in Japan?

Advantage partners

- 90% have been trade sales in Japan

- Have done IPO, trade sale, secondary transaction, IPO which become trade sale

How is ESG affecting investment decisions

Quadria Capital

- Only if it helps the business

- If only bringing capital, then its only helping to bring market returns
- Have market optimisation team that is on the ground and helps the business
- Value creation comes first before ESG
GSAM

- It’s a firm policy at GS. GS aims to have the best industry practice for ESG
- ESG is top of mind for AM division from sourcing, DD, management, to exits
- There is an ESG team that monitors the transaction and telling the deal team
- Value creation team is still critical, they have teams that helps with go to market, country
experts, HR, risk and governance, DEI

Exit valuations – anything that surprise on the up or downside

Chrys

- Pharma has been hot, done better than expected

- IT services is a soft, more related to global macro or US macro
- But really dependent on sector

Advantage partners

- No really surprises because they do modelling

- Dependent on sectors

Quadria Capital

- Also dependent on sectors

- Healthcare driven by events that’s not reversible – population growth for example

Is Japan benefiting from risk pulling back in other regions?

- Yes for sure, and also because corporate governance reforms taking in place in Japan
- A lot of capital wants to be in Japan right now
- Easier for fund managers in Japan to raise money
- But historically have seen a lot of events where floodgates are supposedly going to open up
but eventually did not

Which sectors can have higher multiples?

Advantage

- Industrials in Japan are seeing higher multiples, especially because they have been helping
out portfolio companies, giving them a boost in expanding

Chrys

- Likes IT services, US economy is resilient, might have a few bumpers, but technology is not
going away
 - Or use technology to cut costs. So will always be here

On secondary deal, did the LP come along, was it friendly?

Advantage

- Was supposed to be a continuation but become secondary

- Management was comfortable, they knew the buyer from the continuation process

One prediction or takeaway for the audience

Quadria

- Despite volatility in PE and China, do believe that Asia will be the centre of gravity in the next
decade

Chrys

- Longer term, agree that Asia will be centre of gravity. Very bullish on India

GSAM

- Specific knowledge of GP will be very important especially for exits

Advantage

- GPs will be more open to all options for exits