Transcript Devices: The Path to Value Creation

Fresno County Employees'
Retirement Association
February 1, 2006
This presentation is being furnished on a confidential basis solely for informational
purposes and may not be reproduced or provided to others without the prior written
consent of Warburg Pincus LLC. By accepting delivery of this presentation, each
recipient agrees to the foregoing. This presentation does not constitute an offer to sell,
nor a solicitation of an offer to buy, an interest in Warburg Pincus Private Equity IX, L.P.
(“WP IX”) or any other Warburg Pincus private equity fund. This presentation may also
include pro forma values and forward-looking statements relating to existing Warburg
Pincus private equity funds, which are inherently uncertain and based on assumptions
that could change as a result of company operating performance, capital markets risks
and general economic conditions. The recipient acknowledges that it is aware that
federal and state securities laws prohibit any person who has material, non-public
information about a company from purchasing or selling securities of such a company or
from communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such securities.
Warburg Pincus
Experienced investors
 Over three decades of private equity investing
 $22 billion invested in 525 companies
 58 partners currently investing $8 billion
Compelling strategy
 Industry and geographic specialization
 Venture capital to late stage
 Specialized investors create diversified funds
Leading performance
 30% net return for last 10 years
 27% net IRR for mature funds
 Consistently top quartile in IRR and multiple
Unparalleled distributions
 $13 billion in last 5 years
 $30 billion in last 10 years
 2% of investments and 7% of distributions in US private
equity industry in last 10 years
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Experienced Investors
 145 investment professionals
 Industry focused for decades
 Healthcare/Life Sciences, Natural Resources, Financial Services, Industrial,
Computer Software/Services, Communications Hardware/Services, Media/Business Services
 Global presence
 New York (1966), Menlo Park
 London (1987), Frankfurt
 Hong Kong (1994), Beijing, Shanghai, Tokyo, Seoul, Mumbai
 11 funds – $27 billion of committed capital
Recent Funds
WP IX
WP VIII
WPIP*
WPEP
WPVI*
(2005)
(2001)
(2000)
(1998)
(1997)
$8.0B
$5.3B
$2.5B
$5.0B
$.8B
Mature Funds
WPV
(1994)
WPI
(1989)
WPCC
(1986)
WPCP
(1983)
WPA
(1980)
EMWV
(1971)
$2.0B
$1.8B
$1.2B
$341MM
$101MM
$41MM
* International fund
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Leading Performance
As of June 30, 2005
Warburg Pincus
*Private
Equity
S&P 500
Nasdaq
Russell 2000
1 Year
26.6%
19.9%
6.3%
0.4%
9.4%
3 Year
12.4%
7.6%
8.3%
12.0%
12.8%
5 Year
6.2%
-0.5%
(2.4)%
(12.2)%
5.7%
10 Year
30.0%
12.6%
9.9%
8.2%
9.9%
20 Year
22.6%
14.2%
12.3%
10.2%
10.5%
30 Year
18.9%
14.3%
12.4%
11.1%
N/A
* Source: Venture Economics
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Unparalleled Distributions
 1 year distributions
$6 billion
 3 year distributions
$10 billion
 5 year distributions
$13 billion
 10 year distributions
$30 billion
2% of investments and 7% of distributions
of the US Private Equity Industry in the last 10 years
5
Fresno County Investment Summary
As of December 31, 2005 (estimate)
A
Total Capital
Committed
Total Capital
Invested
as of 12/31/2005
% of
Committed
Funds Invested
Total Distrib.
Received
as of 12/31/2005
B
Est. Remaining
Value of
Capital Acct.
as of 12/31/2005
A+B
NET IRR
Through 12/31/05
FULLY INVESTED FUNDS - NOT MATURE
Warburg, Pincus Equity Partners
(1998)
20,000,000
20,000,000
100.0%
23,144,740
6,487,780
29,632,520
10.0%
(2001)
25,000,000
23,000,000
92.0%
5,380,925
22,112,125
27,493,050
10.2%
45,000,000
43,000,000
28,525,665
28,599,905
57,125,570
INVESTING FUNDS
Warburg Pincus Private Equity VIII
TOTAL
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Warburg Pincus Equity Partners (1998)
$5.0 Billion, $6.1 Billion Distributed
 Final Closing – September 1998
 25% return in 2004
 12 Year Term + 2 Year Extension
 54% return in 2003
 30 current and 147 total portfolio companies
 Carrying Value – 12/31/05 est.
 3.2 years average life
Realizations
 15% gross IRR; 10% net IRR
Driving Returns
FHP
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Warburg Pincus Equity Partners Breakdown
By Stage
By Industry
Industrial/
Computer
Other
Software/
Financial
Services
Services/
3%
Real
18%
16%
Estate
Media/
Leveraged
Buyouts
6%
Recaps/
Special
Situations
28%
Venture
Capital
43%
5%
Natural
9%
Resources
18%
23%
Growth
Capital
By Geography
Communications
Hardware/
Services
Europe
11%
Asia
12%
Consumer
Goods
31%
Health Care/
Life Sciences
77%
North America
Note 1: Cost of investments 1998 through 2005
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Warburg Pincus Equity Partners
As of 12/31/05 - estimate
Exited or Significantly Exited Investments ($ in millions)
Company
Total
Investment
Total
Profit
Multiple
IRR
Develops, manufactures and markets medical devices for
treatment of urological and gynecological disorders
57.2
401.1
8.0x
69.8%
Leading operator of telecommunication services businesses
in India
182.5
776.8
5.3x
50.2%
Operates health maintenance organizations (HMOs)
100.2
354.7
4.5x
70.1%
Leading regional thrift bank
238.1
525.2
3.2x
122.0%
Acquires and develops oil and gas properties in the onshore
continental United States
57.5
206.1
4.6x
35.9%
Start-up oil and gas exploration and production company with
an initial focus in the waters off the Gulf of Mexico
84.7
142.1
2.7x
27.7%
Description
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Warburg Pincus Equity Partners
As of 12/31/05 - estimate
Exited or Significantly Exited Investments ($ in millions)
Company
Total
Investment
Total
Profit
Multiple
IRR
Fourth largest cement manufacturer in India
35.2
69.8
3.0x
28.2%
Mortgage Bank in India
35.3
70.3
3.0x
33.6%
Branded children's clothing distributor
16.0
36.8
3.3x
35.7%
Global financial services company
25.1
84.9
4.4x
104.3%
Provides neutral third-party services to the communications
industry
77.0
1,142.9
15.8x
55.0%
Manufacturer and marketer of orthopedic implant devices
for total joint reconstruction
100.0
326.6
4.3x
48.4%
Leading Central and Eastern European generic
pharmaceutical company
41.9
310.5
8.4x
39.8%
Description
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Warburg Pincus Equity Partners
As of 12/31/05 - estimate
Significant Remaining Investments ($ in millions)
Company
FHP
Total
Investment
Multiple
IRR
Outsource provider of document and information services to
medical records departments
78.6
0.9x
-2.9%
Provider of software and marketing services to the automotive
retail market
91.7
0.9x
-1.0%
Leading participant in oral drug delivery technology and
production
51.6
1.5x
8.2%
Medical device company focused on identifying and
developing new technologies in underserved treatment
markets for cardiovascular, neurovascular and peripheral
vascular diseases
588.5
0.9x
-5.3%
Leads and operates skilled nursing facilities in Florida
10.0
20.5x
128.7%
Description
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Warburg Pincus Equity Partners
As of 12/31/05 - estimate
Significant Remaining Investments ($ in millions)
Company
Total
Investment
Multiple
Internet product directory that links buyers and sellers of
electrical, mechanical and optical components
32.5
1.0x
0.0%
Develops protein therapeutics for pulmonary and infectious
diseases
83.9
1.3x
11.5%
Manufactures and markets optical storage media including
recordable CDs, rewritable CDs and recordable DVDs
40.1
1.2x
2.9%
Specialty pharmaceutical company focused on the
development of therapeutics for the treatment of bone and
dermatological disorders
25.2
0.9x
-2.7%
Platform for financial supply chain management
72.3
1.0x
0.0%
Drug discovery and development company seeking to identify
novel proteins from the human genome and develop those
proteins as pharmaceutical products
75.3
1.5x
8.0%
Description
IRR
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Warburg Pincus Private Equity VIII (2001)
$5.3 Billion, $1.1 Billion Distributed
 Final Closing – April 2002
 92% capital called
 12 Year Term + 2 Year Extension
 Carrying Value – 12/31/05 est.
 65 current and 79 total portfolio companies
 20% gross IRR; 10% net IRR
 1.6 years average life
Realizations
Driving Returns
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Warburg Pincus Private Equity VIII Breakdown
By Stage
By Industry
Computer
Software/
Services
Leveraged
Buyouts
26%
Recaps/ 17%
Special
Situations
By Geography
Venture
Capital
21%
Industrial/
Other
14%
18%
Financial
Services/ 8%
Real
Estate
36%
Growth
Capital
Europe
Media/
Consumer
14% Goods
Asia
8%
6%
14%
Health Care/
Life Sciences
13%
Natural
Resources
19%
Communications
Hardware/
Services
86%
North America
Note 1: Cost of investments 2001 through 2005
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Warburg Pincus Private Equity VIII
As of 12/31/05 - estimate
Selected Investments ($ in millions)
Company
Total
Investment
Total
Profit
Multiple
IRR
Insurance and reinsurance company
222.5
352.5
2.6x
26.4%
The leading domestic pharmaceutical group
in China
53.5
0.0
1.0x
0.0%
Manages coalition loyalty programs worldwide
19.3
8.3
1.4x
11.6%
Early-stage oil exploration and production
company
47.7
42.3
1.9x
53.9%
Leading luxury retailer that offers distinctive
merchandise and superior customer service
catering to the needs of the affluent customer
300.0
0.0
1.0x
0.0%
Leading worldwide provider of digital speech
imaging and speech recognition products
156.6
88.4
1.6x
47.1%
Description
15
Warburg Pincus Private Equity VIII
As of 12/31/05 - estimate
Selected Investments ($ in millions)
Company
Total
Investment
Total
Profit
Multiple
IRR
Provides transaction monitoring software
to financial services companies
67.8
0.0
1.0x
0.0%
Midstream energy company
195.1
165.5
1.8x
58.3%
Leading provider of core software and
services for major communication service
providers
157.8
0.0
1.0x
0.0%
Leading manufacturer of highly
engineered aircraft components
285.0
88.9
1.3x
12.1%
Leading supplier of BPO services
21.5
0.0
1.0x
0.0%
Description
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For Additional Information
466 Lexington Avenue, 10th Floor
New York, NY 10017
Fax: 212-878-6167
www.warburgpincus.com
Rosanne Zimmerman
Managing Director
Tel: 212-878-9358
[email protected]
Barry E. Taylor
Managing Director
Tel: 650-798-0401
[email protected]
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