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1、1TEXTText #1R-255G-255B-255PRIMARY text colors (header body & charts)Text #2R-102G-204B-255Overview: Financial Services Industry - What Went Wrong & What Does it Mean?P. Olivier SarkozyP. Olivier SarkozyManaging Director & Financial Services Group HeadManaging Director & Financial Services Group Hea
2、dOctober 3, 2008October 3, 2008CHARTS & OBJECTSTEXT2TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & chart
3、s)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsImportant Info
4、rmationThis presentation is made available on a confidential basis to sophisticated investors for the purpose of providing certain information about TC Group, L.L.C. and its affiliates (“Carlyle”) and Carlyle-sponsored investment funds (each, a “Fund”). This presentation does not constitute an offer
5、 to sell or a solicitation of an offer to purchase interests in any Fund. Any such offer or solicitation shall only be made pursuant to a confidential private placement memorandum of Fund, which qualifies in its entirety the information set forth herein and which should be read carefully prior to in
6、vestment in any Fund for a description of the merits and risks of an investment in the Fund. An investment in a Fund entails a high degree of risk and no assurance can be given that a funds investment objective will be achieved or that investors will receive a return of their capital.As used through
7、out this document, and unless otherwise indicated, “gross IRR” shall mean an aggregate, annual, compound, gross internal rate of return on investments. In the case of portfolios of realized and unrealized investments, the gross IRRs are based on realizations and internal valuations of Carlyle as of
8、the applicable date. Gross IRRs do not reflect management fees, carried interest, taxes, transaction costs and other expenses to be borne by investors in the Fund, which will reduce returns and in the aggregate are expected to be substantial; for a description of such management fees and carried int
9、erest, please see the final confidential private placement memorandum. While Carlyle believes that projected returns for unrealized investments are based on assumptions and valuation methodologies that are reasonable under the circumstances, the actual realized returns on Carlyles unrealized investm
10、ents will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions on which the valuations used in the prior perfor
11、mance data contained herein are based. Accordingly, the actual realized return on these unrealized investments may differ materially from the projected returns indicated herein. Investors are encouraged to contact Carlyle representatives to discuss the procedures and methodologies used to calculate
12、the investment returns and other information provided herein, and may upon request obtain an illustration of the effect of fees, expenses and other charges in the gross IRRs presented. Past, targeted or projected performance is not necessarily indicative of future results and there can be no assuran
13、ce that targeted or projected returns will be achieved or that the Fund will achieve comparable results.References to portfolio companies are presented to illustrate the application of Carlyles investment process only and should not be considered a recommendation of any particular security or portfo
14、lio company. Information about recommendations over the last year is available upon request. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of past recommendations.Certain information contained in this presentation, including the val
15、ues given for some assets, is non-public, proprietary and highly confidential information. Accordingly, by accepting and using this presentation, you will be deemed to agree not to disclose any information contained herein except as may be required by law. In addition, certain information contained
16、in this presentation has been obtained from published and non-published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such information is believed to be reliable for the purpose used in this presentation, Carlyle does not assume any re
17、sponsibility for the accuracy or completeness of such information and such information has not been independently verified by Carlyle. Except where otherwise indicated herein, the information provided in this presentation is based on matters as they exist as of the date of preparation and not as of
18、any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof.Certain information contained herein constitutes “forward-looking statements,” which can be identified by the
19、 use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue,” “target” or “believe” (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual perfo
20、rmance of the Fund may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward-looking statements in making their investment decisions. No representation or warranty is made as to future performance or such for
21、ward-looking statements. CHARTS & OBJECTSTEXT3TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Colo
22、r #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsExecutive SummaryExe
23、cutive SummaryI.What Happened?What Happened?II.What Role Will Private Equity Play?What Role Will Private Equity Play?CHARTS & OBJECTSTEXT4TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY T
24、EXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found i
25、n the “area” color choice section for choosing pie & column chart colorsI. What Happened? A Crisis by Many NamesI. What Happened? A Crisis by Many Names“Sub “Sub Prime”Prime”“Leveraged “Leveraged Lending”Lending”“Credit “Credit Crunch”Crunch”“Structured “Structured Products!”Products!”“Super “Super
26、Senior!”Senior!”“Mono “Mono Lines”Lines”“Bear “Bear Stearns”Stearns”“Residential “Residential Real Estate”Real Estate”“Fannie/“Fannie/Freddie”Freddie”August August 20072007TodayTodayTo ComeMoney Market FundsMoney Market FundsAuto LoansAuto LoansCredit Card Lending Credit Card Lending Commercial Real
27、 Estate Commercial Real Estate LiquidityLiquidityand One Underlying Common Themeand One Underlying Common ThemeLEHLEHAIG AIG WaMuWaMu WachWachoviaoviaHypo Hypo REREFortisFortisB&BB&BDexiaDexiaTARP?TARP?CHARTS & OBJECTSTEXT5TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-
28、255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row
29、3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsLeverage!1.1.Reversal of Glass-Steagall in 1999 set off a leverage Reversal of Glass-Steagall in 1999 set off a leverage race on Wall Streetrac
30、e on Wall Street2.2.Leverage outside the banking system largely Leverage outside the banking system largely unregulated / misunderstoodunregulated / misunderstood3.3.Explosion of credit markets allowed each segment of Explosion of credit markets allowed each segment of risk to be isolated and furthe
31、r leveragedrisk to be isolated and further leveraged4.4.TieringTiering of risk allowed for multiple layers of leverage of risk allowed for multiple layers of leverage with limited transparency with limited transparency 5.5.Investors became complacent while regulators became Investors became complace
32、nt while regulators became overwhelmedoverwhelmedCHARTS & OBJECTSTEXT6TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (h
33、eader body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart co
34、lorsWhile Current Crisis in Many Ways Mirrors Past Credit CyclesInflated housing & realestate valuesInflated housing & realestate valuesLax monetary policy that lasted too longLax monetary policy that lasted too longFlat yield curve Flat yield curve Cheap credit compounded by loss of investor Cheap
35、credit compounded by loss of investor disciplinedisciplineWeak regulatory frameworkWeak regulatory frameworkLoss of confidenceCHARTS & OBJECTSTEXT7TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText
36、 #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can b
37、e found in the “area” color choice section for choosing pie & column chart colorsExtent of Leverage is a Differentiating Feature of this Particular CycleGovernment Debt 1Federal and Consumer Debt as % of GDP 2$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,000$10,0001938194219461950195419581962
38、19661970197419781982198619901994199820022006Federal Debt ($ bil)0%50%100%150%200%250%300%19431947195119551959196319671971197519791983198719911995199920032007Percent of GDPTotal Consumer DebtTotal Federal Debt(1) Office of Management and Budget, Budget of the United States, FY 2007(2) U.S. Chamber of
39、 Commerce as of 8/27/08CHARTS & OBJECTSTEXT8TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color
40、#1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsBank Leverage 2%Extent
41、 of Leverage is a Differentiating Feature of this Particular CycleShare of Intermediation Through Banks & Securities Markets 1 (1) Morgan Stanley. “Levered Losses: Lessons Learned from the Mortgage Market Meltdown” 2/08(2) SNL Financial. Data as of 7/31/0820%25%30%35%40%45%50%55%60%19801982198419861
42、988199019921994199619982000200220042006Intermediated Through Securities MarketsIntermediated Through Depository Institutions01234567%1998199920002001200220032004200520062007Reserves/LoansTCE/TA6.4%1.8%1.2%5.2%CHARTS & OBJECTSTEXT9TextBLACKBlackfor good contrast with bright background elementsText -
43、OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Colum
44、n 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsTotal Assets of Top 5 Brokers 1($ tril)6% CAGR16% CAGR(1) SNL Financial. Top brokers traded on the NYSE and NASDAQ(2) Source: Lehman Bro
45、thers. Data provided 8/28/08Global Issuance of Structured Finance Products 2 Extent of Leverage is a Differentiating Feature of this Particular Cycle-1002003004005006007008009001,0001995Q11996Q11997Q11998Q11999Q12000Q12001Q12002Q12003Q12004Q12005Q12006Q12007Q12008Q1(in $ bil)Total CDOTotal ABSCHARTS
46、 & OBJECTSTEXT10TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Col
47、umn 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsAnecdotes of Leverage$2.3 $2.3 triltril in “AAA” g
48、uarantees supported by six in “AAA” guarantees supported by six monolinesmonolines with with less than $20 less than $20 bilbil in equity (0.8%) in equity (0.8%)(1)(1)In June 2007, financials made up 20.9% of S&P 500In June 2007, financials made up 20.9% of S&P 500 Implies that approximately 30% of
49、every dollar earned by an S&P 500 Implies that approximately 30% of every dollar earned by an S&P 500 company was earned by a financial services firmcompany was earned by a financial services firm Total assets of the top 5 brokerage houses in the U.S. equaled Total assets of the top 5 brokerage hous
50、es in the U.S. equaled approximately 35% of the total U.S. annual GDP. Balance sheets approximately 35% of the total U.S. annual GDP. Balance sheets were levered on average 30:1were levered on average 30:1(3)(3)In 1998, failure of Long Term Capital brought markets to their In 1998, failure of Long T
51、erm Capital brought markets to their knees, based on a loss of $4.6 bil.knees, based on a loss of $4.6 bil.(4)(4) To-date system has incurred To-date system has incurred approximately 75xapproximately 75x(5)(5) this amount. Industrys capital base this amount. Industrys capital base increased by only
52、 2.5x that during this timeincreased by only 2.5x that during this time(6)(6) (1)Pershing Square Capital Management. “How to Save the Bond Insurers,” 11/07(2)Company Reports. Data as of Q4 2007(3)SNL Financial. Data as of Q4 2007(4)Financial Times. “Bank bailout shows need to intervene,” 6/08(5)Loss
53、 estimate to-date of $460 bil provided by Goldman Sachs. Data provided on 8/28/08. Inflation data provided by the U.S. department of Labor.(6)SNL Financial. As measured by tangible capital base of top 25 U.S. (7) financial institutions (excluding insurance companies, from 1998 to Q2 2008)CHARTS & OB
54、JECTSTEXT11TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4
55、Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsMortgagesMortgagesMortgagesCashCashCash & FeesAAACashCa
56、shAA BelowNotesCash10 to 150 to 1 (Warehouse)50 to 115 to 130 to 1ConsumerLoan OriginationWall StreetStructured ABSRatings Agencies70%FNMAFHLMC30% BankInsuranceCompaniesCDOsAAAs, AA, A, BBB, BBEquityWall StreetSource: Wachovia Securities, “Lifestyles of the Rich and Living Rich,A Tale of Two Consume
57、rs,” 2005400 to 1LeverageThe Leverage GameNotwithstanding the existing underlying leverage, banks Notwithstanding the existing underlying leverage, banks could lever AAA securities by over 100:1!could lever AAA securities by over 100:1!CHARTS & OBJECTSTEXT12TextBLACKBlackfor good contrast with brigh
58、t background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color
59、#5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsRisk vs. InformationOriginatorWarehouse ProviderSenior BondsMezzanine BondsSub BondsResidual NotesCDO Equity
60、Performance RiskUnderlying Collateral KnowledgeLeastMostLeastMostEfficient FrontierSource: Wachovia Securities, “Lifestyles of the Rich and Living Rich,A Tale of Two Consumers,” 2005Those who knew the most held the least amount of the riskwhile those who knew the least ended up holding the most risk
61、CHARTS & OBJECTSTEXT13TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color
62、 #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsAs shown by the inability of the nations 10
63、largest As shown by the inability of the nations 10 largest banks to deleverage, transition will take timebanks to deleverage, transition will take timeMake No Mistake We Are at the Beginning Make No Mistake We Are at the Beginning of This Crisisof This CrisisCredit markets point towards significant
64、ly more pain to comeConsumer slow to react & has yet to adjust to new realitiesWe are not even talking about large looming issues: autos, credit card & commercial REWeak political leadership will prolong recoveryTotal Assets of Top 10 Banks$ (tril)Source: SNL; Top banks traded on the NYSE and NASDAQ
65、$CHARTS & OBJECTSTEXT14TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Colo
66、r #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsStill in Early InningsIndustry has taken le
67、ss than 50% of losses Industry has taken less than 50% of losses estimated by most responsible analystsestimated by most responsible analystsIMFIMF$0.9 tril$0.9 tril(1)(1) PimcoPimco1.01.0(2)(2) Federal ReserveFederal Reserve1.21.2(3)(3) Paulson & Co.Paulson & Co. 1.31.3(4)(4) (1)International Monet
68、ary Fund, “Global Financial Stability Report,” 4/08 (2)Bill Gross of Pimco. “Investment Outlook: Mooooooo!” 7/08(3)Federal Reserve Board, “Foreign Exposure to Asset-Backed Securities of U.S. Origin” 8/08 (4)Bloomberg, “Paulson & Co. Says Writedowns May Reach $1.3 Trillion,” 6/08Source: Goldman Sachs
69、 Research. Data provided 9/26/08Losses Realized To-date Loss Estimates(figures in $bil)U.S.EuropeRest of worldTotalBrokers93761170Banks9710914221Specialty Finance37-37Insurance & Asset Mgr397-45Total26619115473CHARTS & OBJECTSTEXT15TextBLACKBlackfor good contrast with bright background elementsText
70、- OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Col
71、umn 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colors29614331380102030405060701964-19671973-19751979-19821986-19912006- PresentMonthsHousing Market Weakness To PersistDuration of Housing
72、Downtown from Peak to Trough as Measured by Housing Starts With Demand Dropping off Faster than Production,the Number of Vacant Units Ballooned?Housing market still materially weak due to significant over-supplyHousing market still materially weak due to significant over-supply Resets have yet to im
73、pact numbers (2009 / 2010 issue) nor has the full Resets have yet to impact numbers (2009 / 2010 issue) nor has the full impact of foreclosures been built into supply projectionsimpact of foreclosures been built into supply projections Vacant-for-sale homes are near a record-high share of the housin
74、g stockVacant-for-sale homes are near a record-high share of the housing stock Foreclosures at their highest levels since recordkeeping began in 1974 & Foreclosures at their highest levels since recordkeeping began in 1974 & likely to increaselikely to increase(1)(1) Mortgage rates have not fallen,
75、contributing to continued softnessMortgage rates have not fallen, contributing to continued softnessSource: U.S. Census Bureau. Data as of July 2008(1) Nouriel Roubini, “Prospects for the U.S. and Global Economy in 2008 and Implications for Financial Markets” 4/08%Note: New home sales and housing co
76、mpletions include single-family units only. Sources: U.S. Census Bureau, New Residential Construction & Housing Vacancy Survey% Change 2005-2007Housing CompletionsVacant Held Off MarketVacant for SaleNew Home SalesCHARTS & OBJECTSTEXT16TextBLACKBlackfor good contrast with bright background elementsT
77、ext - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #
78、6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsGovernment Intervention is IncreasingMacro measures: monetary & fiscal Macro measures: monetary & fiscal policypolicy Fed Funds: 5
79、.25% to 2.0%Fed Funds: 5.25% to 2.0% Discount Rate 5.75% to 2.25%Discount Rate 5.75% to 2.25% Bush stimulus plan / tax rebate: Bush stimulus plan / tax rebate: $168B$168BLiquidityLiquidity New / expanding liquidity facilitiesNew / expanding liquidity facilities Expanding collateral categoriesExpandi
80、ng collateral categoriesRegulatoryRegulatory Paulson PlanPaulson PlanAd hoc responsesAd hoc responses Bear StearnsBear Stearns Fannie Mae / Freddie MacFannie Mae / Freddie Mac AIGAIG WaMuWaMu WachoviaWachoviaPurchase $700B of troubled assetsPurchase $700B of troubled assets Remove toxic / illiquid a
81、ssets from Remove toxic / illiquid assets from systemsystem Focus on residential and Focus on residential and commercial real estate MBS and commercial real estate MBS and whole loanswhole loans Expanding to include several Expanding to include several additional asset classesadditional asset classe
82、sPricing mechanism will be keyPricing mechanism will be key Reverse auction likely toolReverse auction likely toolPrimarily targeting US financial firmsPrimarily targeting US financial firmsPrevious ActionsPrevious ActionsProposed Treasury Bailout (TARP)Proposed Treasury Bailout (TARP)Additional Mea
83、suresAdditional MeasuresMoney market fund guaranteeMoney market fund guaranteeShort-selling banShort-selling banIncreasing PE ownership limits to Increasing PE ownership limits to attract additional capital into banksattract additional capital into banksCHARTS & OBJECTSTEXT17TextBLACKBlackfor good c
84、ontrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4C
85、olumn 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsUnintended ConsequencesGSEsGSEs TakeoverTakeoverLehman Lehman BrothersBrothersWaMuWaMuTARP
86、TARPWhile dollar has been strong in the short While dollar has been strong in the short term, have we created a longer term term, have we created a longer term problem by doubling the size of the problem by doubling the size of the national debt?national debt?By focusing on avoiding the “moral By fo
87、cusing on avoiding the “moral hazard,” did we inadvertently create a hazard,” did we inadvertently create a run on the money market funds?run on the money market funds?Eradication of bank company debt Eradication of bank company debt forced Wachovia transaction and forced Wachovia transaction and in
88、creased cost of funding system-wideincreased cost of funding system-wideTo be determined, but outlook is not To be determined, but outlook is not goodgoodCHARTS & OBJECTSTEXT18TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for he
89、aders or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The
90、Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsLandscape of the Financial Services Industry Will Landscape of the Financial Services Industry Will Look Markedly DifferentLook Markedly DifferentFinancial services industry will unwind, slo
91、wly and painfullyFinancial services industry will unwind, slowly and painfully Investment Banks, Specialty Finance Companies and Rating Investment Banks, Specialty Finance Companies and Rating Agencies have the most to loseAgencies have the most to lose Non-traditional consumer borrowing will largel
92、y disappearNon-traditional consumer borrowing will largely disappear Wholesale funding models may never come backWholesale funding models may never come back Sector will shrink to be approximately 10% of the S&P 500Sector will shrink to be approximately 10% of the S&P 500Disintermediation will allow
93、 the banking industry to growDisintermediation will allow the banking industry to grow Consumer and commercial financeConsumer and commercial finance Rates will riseRates will riseFlight to quality will (has) force(d) high level of consolidationFlight to quality will (has) force(d) high level of con
94、solidation Heightened levels of receivershipHeightened levels of receivership Those without differentiation will mergeThose without differentiation will mergeCHARTS & OBJECTSTEXT19TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue fo
95、r headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4
96、The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsII. What Role Will Private Equity Play? A unique role in the recapitalization of A unique role in the recapitalization of theindustrytheindustry High volatility / low transparency limits
97、 the role High volatility / low transparency limits the role of the public marketsof the public markets Equivalent of buying a lottery ticket absent an ability to Equivalent of buying a lottery ticket absent an ability to complete significant due diligencecomplete significant due diligence Private e
98、quity has the capacity, competency and Private equity has the capacity, competency and mandate to undertake due diligence & evaluate / mandate to undertake due diligence & evaluate / structure transactionsstructure transactions However, limited financial services expertise currently However, limited
99、 financial services expertise currently exists in the industryexists in the industryCHARTS & OBJECTSTEXT20TextBLACKBlackfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR
100、-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice sectio
101、n for choosing pie & column chart colorsPrivate Equity to Play a Unique RoleSupply / demand imbalance to allow for Supply / demand imbalance to allow for outsizedreturnsoutsizedreturns Industry likely to need close to $500 Industry likely to need close to $500 bilbil in new equity in new equity Top
102、3 PE funds dedicated to Financial Services have less Top 3 PE funds dedicated to Financial Services have less than $20 than $20 bilbil in capacity in capacity While co-investment by LPs could increase available While co-investment by LPs could increase available capital by 2-3x, lack of available /
103、advisable leverage limits capital by 2-3x, lack of available / advisable leverage limits available capitalavailable capital Should allow PE to be thoughtful and demanding (has not Should allow PE to be thoughtful and demanding (has not been the case to date)been the case to date) Importantly, PE sho
104、ps able to instill confidence (in addition Importantly, PE shops able to instill confidence (in addition to injecting capital) will be able to charge dearly for to injecting capital) will be able to charge dearly for theircapitaltheircapitalCHARTS & OBJECTSTEXT21TextBLACKBlackfor good contrast with
105、bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1C
106、olor #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsPrivate Equity to Play a Unique RoleAnatomy of successful investments relatively straight Anatomy of su
107、ccessful investments relatively straight forwardforward Recapitalization Recapitalization mustmust solve the problem subsequent solve the problem subsequent dilutiontoo expensive / onerousdilutiontoo expensive / onerous In order to ensure that new capital solves the problem, In order to ensure that
108、new capital solves the problem, adequate due diligence adequate due diligence mustmust be performed be performed Convincing counterparties (investors, customers, regulators & Convincing counterparties (investors, customers, regulators & other liquidity providers) that problem has been fixed as other
109、 liquidity providers) that problem has been fixed as important as actually fixing the problem important as actually fixing the problem Which will place a premium on certain types of capital Which will place a premium on certain types of capital overothersoverothers In addition to capital & confidenc
110、e, responsible private In addition to capital & confidence, responsible private equityshould be able to bring other elements to bear, equityshould be able to bring other elements to bear, including managementincluding managementCHARTS & OBJECTSTEXT22TextBLACKBlackfor good contrast with bright backgr
111、ound elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row 4Color #4Column 2Row 1Color #5Column
112、 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsHowever, New Approach Is RequiredTraditional approval based on industrial experience Traditional approval based on i
113、ndustrial experience simply does not worksimply does not workYouve Youve gotgot to do the workto do the work May be boring, but its a sine qua nonMay be boring, but its a sine qua nonReestablishing counterparty confidence is as Reestablishing counterparty confidence is as important, if not more impo
114、rtant, than the capital important, if not more important, than the capital being infusedbeing infusedGood bank/ bad bank structure, while difficult to Good bank/ bad bank structure, while difficult to execute, likely to be reinstatedexecute, likely to be reinstatedCHARTS & OBJECTSTEXT23TextBLACKBlac
115、kfor good contrast with bright background elementsText - OTHERR-255G-204B-0SECONDARYorange & bright Blue for headers or “important” textText #2BODY TEXTR-102G-204B-255Text #1HEADERR-255G-255B-255PRIMARY text colors (header body & charts)Color #1R-255G-255B-255Color #2Column 4Row 3Color #3Column 2Row
116、 4Color #4Column 2Row 1Color #5Column 6Row 3Color #6Column 3Row 3Color #7Column 8Row 3Color #8Column 6Row 4The Column / Row values are can be found in the “area” color choice section for choosing pie & column chart colorsSome (Bold) PredictionsFinancials fall another 25%+Financials fall another 25%+
117、At least 1, and possibly 2 to 3, top 20 U.S. financial institutions will fail At least 1, and possibly 2 to 3, top 20 U.S. financial institutions will fail over next 12 monthsover next 12 monthsEurope will go (is going) through the same issue as the U.S., just on a Europe will go (is going) through
118、the same issue as the U.S., just on a delayed time frame, and the consequences will be more pronounced due to delayed time frame, and the consequences will be more pronounced due to the greater degree of leveragethe greater degree of leverage(1) Predictions made at Carlyle Investment Conference on 0
119、9/08/08Previous Predictions Already Materialized Previous Predictions Already Materialized (1)(1)Recent dollar strength is temporary Recent dollar strength is temporary Financials fall another 25%+Financials fall another 25%+Government intervention in inter-bank debt marketsGovernment intervention i
120、n inter-bank debt marketsAnother 2, and possibly 3, top 20 U.S. financial institutions will fail near-termAnother 2, and possibly 3, top 20 U.S. financial institutions will fail near-termProblems with commercial real estate and auto lending will be as big of a Problems with commercial real estate an
121、d auto lending will be as big of a “story” as residential real estate has been“story” as residential real estate has beenTARP will temporarily re-lubricate, but will fail to bring markets back towards TARP will temporarily re-lubricate, but will fail to bring markets back towards equilibrium equilibrium Still To ComeStill To Come
