EFTA01451578.pdf

SOF III - 1081 Southern Financial LLC Section 5: Secondary Opportunities Fund III Secondary Opportunities Fund III. LP were very low because the high discount to already low net asset values being demanded by buyers did not match seller expectations, even those sellers in a certain amount of distress. Since then. from 2010 to today. pricing has recovered to within the transactable range: Exhibit 10: Secondary Market Pricing Secondaryniarketpcteingarptivateequity RandInterestsanddealvolumes • 0vathealed market in 2006 and 2007 will law • FeArtansacborts docadatihit pncang • Prkmo teamed barltionommitsed sellers /LOW a wide bkl-ask spread histoncallevels • Ptertstans ps d for tkets.levatedcarrvaatas • Clamed liansations consisted most) • Now stable kw 2 years 80-954 as markedio the lop olthe market olutilunded1Pinteresrs supply Condon beam to market P'.011 11r, 01 ':AV Ar r tat vo nine :SS 1€ 25 Sit mut Se :endary market rot rre P,) -0-50:inefary market racm 5 10 IC 30 A : 2!)03 23Ce 2036 2c1Xi i)07 I11:6 I HI. IHI' 2••It 2HI2 IN I3 , airimmiS The Competitive Environment The secondary market is made up of a range of funds targeting secondary opportunities varying in size from under US$100 million up to the largest, at US$7.1 billion, that closed in 2011. Funds are further differentiated by their geographic focus and increasingly by their sourcing and investment strategy. Sourcing Strategies Many of the larger funds source investments through auctions designed to sell large portfolios where the seller is looking to significantly reduce its private equity exposure. These sellers are typically financial institutions that are compelled to sell by incoming regulations, or pension plans looking to actively manage their private equity portfolios. Whilst many of these transactions have already taken place. it is estimated that US$100 billion of private equity assets remain on bank balance sheets representing 6% of private equity assets globally'. Pension plans also remain large investors in private equity and will continue to sell periodically to manage their exposure. Following the sale of these large portfolios, the Manager expects the Fund to be ideally positioned to selectively acquire some of the remaining assets and positions held by these potential sellers. These transactions tend to be more complicated to execute or less conventional in asset type (real estate, infrastructure, mezzanine and special situations). The Manager's expertise in structuring relatively complex transactions, together with its target deal size of under US$100 million, make it a potential buyer of choice in these transactions. 06 Source: UBS Outlook 2013, January 2013. Confrdenhal Private Placement Memorandum 32 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0108261 CONFIDENTIAL SDNY_GM_00254445 EFTA01451578