The document discusses similarities between the tech bubble burst of 2000 and current private equity markets, examining whether a PE bubble may be forming. It notes huge increases in money flowing into PE, larger fund and deal sizes without barriers, and similarities to classic bubbles like abandonment of downside caution and rapid price growth beyond fundamentals. Reasons for concern include more capital than ever searching for deals and investors increasing already large PE allocations.

1. The Similarities & Differences Between The Tech Bubble Burst of 2000 & The Current Private Equity Markets: Are We On The Verge Of A PE Bubble Burst? David M. Rubenstein Co-Founder and Managing Director February 28, 2007

17. Source: Forbes Tech Bubble Had Numerous Symptoms (In Retrospect) 378% 386% 427% 442% 458% 482% 483% 508% 525% 698% First-Day Return 120 Network Equipment CacheFlow 1999 144 Internet Software webMethods 2000 173 Internet Retailing FreeMarkets 1999 110 Network Equipment Cobalt Networks 1999 234 Internet Services Akamai Technologies 1999 28 Internet Services theglobe.com 1998 284 Network Equipment Sycamore Networks 1999 216 Telecom Products Avanex 2000 125 $132 Offer Value Telecom Products Computer Software Business Foundry Networks 1999 VA Linux Systems 1999 Company Year ($ mil)

18. Source: Forbes Tech Bubble Had Numerous Symptoms (In Retrospect) 330% 13 Consulting Services Intgrtd. Sys. Consultg. 1996 357% 155 Telecom Products Finisar 1999 356% 110 Internet Services FirePond 2000 337% 68 Network Equipment Crossroads Systems 1999 331% 160 Internet Services Priceline.com 1999 331% 72 Internet Services Andover.Net 1999 313% 60 Telecom Services Wireless Facilities 1999 303% 91 Internet Services Neoforma.com 2000 42 $120 Offer Value Internet Services Internet Services Business 364% Ask Jeeves 1999 371% Selectical 2000 First-Day Return Company Year ($ mil)

23. Are We Repeating Tech-Bubble Situation In Private Equity?

24. Distributions To LPs from U.S. Buyout Market Remain High Source: Thompson Venture Economics, data for partnerships and investment bank affiliate or subsidiary partnerships; includes primary U.S. market buyout funds; 2006E is annualized estimate, data as of 9/30/06

25. U.S. Buyout Has Outperformed Public Markets Source: Thomson Venture Economics, PE data as of 9/30/06 and for partnerships and investment bank affiliate or subsidiary partnerships; Bloomberg, market data as of 6/30/06 35.7 27.2 41.5 23.2 24.8 20.0 U.S. Buyout Top Quartile 8.3 10.5 8.7 5.0 9.9 9.4 7.1 5.7 8.0 DJIA 9.2 8.6 6.9 5.1 10.3 S&P 500 9.1 8.8 7.0 6.2 11.0 Russell 3000 10.2 9.8 6.3 8.1 8.5 NASDAQ 21.0 11.0 12.7 8.7 14.5 8.8 U.S. Buyout All Quartile 1-year 15-year 20-year 10-year 3-year 5-year (IRR %) 37.2 U.S. $2 bil plus Top Quartile

26. Europe Buyout Has Outperformed Public Markets Source: Thomson Venture Economics, PE data as of 6/30/06 and for partnerships and investment bank affiliate or subsidiary partnerships; Bloomberg, market data as of 6/30/06 37.3 23.6 26.8 28.7 22.5 14.7 Europe Buyout Top Quartile 14.1 6.1 6.5 4.6 13.1 0.7 FTSE 22.2 12.5 13.2 13.7 10.9 7.0 Europe Buyout All Quartile 1-year 15-year 20-year 10-year 3-year 5-year (IRR %)

31. Reasons For Concern: Investors Increasing Already Large Allocations Source: Dow Jones – Private Equity Analyst, data as of July 2006 15% 7,500 50,000 Michigan Department of Treasury 10% 10,000 100,000 GIC Special Investments 10% 7,924 79,241 Ontario Teachers’ Pension Plan Board 10% 8,089 80,891 Canada Pension Plan Investment Board 5% 10,457 209,143 ABP Investments 7,920 10,000 10,400 10,835 11,520 $12,426 Allocation 132,000 56,000 130,000 69,900 128,000 $207,100 Total Assets 6% 15% 8% 16% 9% 6% % To PE Florida State Board of Administration Washington State Investment Board New York State Common Retirement Fund California Public Employees’ Retirement System California State Teachers’ Retirement System Oregon State Treasury ($ mil) Institution

32. Reasons For Concern: Funds Bigger In U.S. (1) Estimated target fund size. Source: Firm press releases; Citigroup Estimates; Capital IQ; PEI Average % increase: 130% Blackstone V KKR Millennium II Apollo VI Bain Capital IX TH Lee VI (1) (1) TPG V Warburg IX (1) Carlyle V

34. Reasons For Concern: Funds Bigger In Asia Source: Capital IQ Average % increase: 141% CVC Asia Pacific II Carlyle Asia Partners II CCMP Capital Asia II Newbridge Asia IV Carlyle Japan Partners II

39. Reasons For Concern: 2005-2007YTD: 9 of 10 Biggest U.S. Buyouts Source: Dealogic; FT; WSJ; 2006-2007YTD ‡‡ Estimated, deal not closed ‡‡ ‡‡ ‡‡ ‡‡ ‡‡ KKR/TPG/GS United States TXU $45.0 2007 Bain/Lee United States Clear Channel 25.7 2006 Apollo/TPG United States Harrah’s 25.7 2006 Blackstone United States EOP 36.0 2006 Carlyle/Merrill/CDR SuperValu/CVS/Cerberus Blackstone/Carlyle/Permira/TPG Carlyle/GS/AIG KKR KKR/Bain/ML Acquirer United States United States United States United States United States United States Location Freescale 17.6 2006 HCA 32.7 2006 Albertson’s 17.4 2006 Kinder Morgan 21.6 2006 Hertz 15.0 2005 RJR Nabisco 31.4 1988 Target Value Date ($ bil)

40. Reasons For Concern: 2005-2006: 7 of 10 Biggest Buyouts in Europe Source: Dealogic; 2005-2006 ‡‡ Estimated, deal not closed ‡‡ ‡‡ Renova Group Russia SUAL Holding 5.2 2006 Permira/Saban Germany ProSiebenSat 7.7 2006 3i/Colonial First State UK AWG 7.9 2006 Weather Invest. Italy Wind Telecom. 12.1 2005 KKR/Wendel France Legrand 5.0 2002 KKR/Silverlake/Apax/Bain/ Alpinvest Netherlands Philips Semiconductor 7.4 2006 Apax/Blackstone/KKR/Permira/ Providence Denmark TDC € 12.8 2006 Value (€ bil) AlpInvest/Blackstone/ Carlyle/Hellman/KKR/Lee Netherlands VNU 9.2 2006 BC/CVC/Permira Italy Seat Pagine Gaille 5.7 2003 UK Location 5.6 Madison Dearborn Acquirer Jefferson Smurfit sub. 2002 Target Date

41. Reasons For Concern: 2005-2006: 6 of 10 Biggest Asia (ex Japan, Australia) Buyouts Source: Dealogic; 2005-2006 ‡‡ Estimated, deal not closed Ripplewood Korea Daewoo Electronics 721 2006 Onex Singapore Omni Industries 799 2001 CVC/Fransisco/Court Square Warburg Pincus KKR MBK Partners Gilbert Global Equity Colony Lone Star GS Acquirer Korea India India Taiwan Korea Singapore Korea China Location Hynix Semicon. 822 2004 Anam Semicon. 950 1999 ICBC $2,582 2006 HDFC Securities 874 2000 China Network Sys. 932 2006 Raffles 1,019 2005 Flextronics Software 900 2006 KEB 1,194 2006 Target Value Date ($ mil)

42. Reasons For Concern: 2005-2006: 6 of 10 Biggest Japan Buyouts Source: Dealogic; AVCJ; APER; 2005-2006 ‡‡ Estimated, deal not closed Cerberus/Nikko Japan Seibu Railway Co. 1,390 2005 Harbor Holdings Japan World Co. 1,900 2005 Colony Capital Ripplewood/ABN/ Bank of Nova Scotia/Citi GS/Mori Trust Unison Capital Carlyle/Kyocera GS/Newbridge/Ripplewood/TVG/PPM GS/Daiwa/Sumitomo Mitsui CVC/Nomura Acquirer Japan Japan Japan Japan Japan Japan Japan Japan Location LTCB/Shinsei Bank 1,149 1999 Fukuoka Hawks Town (from Daiei) 915 2003 DDI Pocket/Willcom 2,023 2004 Skylark $3,155 2006 Recruit Cosmos 1,516 2005 Japan Telecom 2,210 2003 Fujita Corp. 1,349 2005 Sanyo Electric 2,585 2005 Target Value Date ($ mil)

43. Reasons For Concern: 2005-2006: 7 of 10 Biggest Latin America Buyouts Source: Dealogic; 2005-2006 Advent Uruguay Banco Comercial 167 2005 Advent Argentina OCA 280 2004 GP Investimentos Brazil CEMAR 350 2003 Newbridge/Advent/Capital Heartland Industrial Oaktree/Onex Southern Cross AIG Blackstone/Soros/AIG Advent Acquiror Mexico Brazil Mexico Chile Brazil Mexico Brazil Location Controladora Milano 200 2006 ESSBIO 405 2006 Brasif Duty Free Shop $500 2006 Grupo Cinemex 285 2002 Grupo Providencia 466 2006 COTEMINAS 200 2005 Avantel 500 2006 Target Value Date ($ mil)

44. Reasons For Concern: Credit Statistics Tighter in U.S. / Convenants More Favorable Source: Standard & Poor’s LCD; excludes Media and Telecom loans; data as of 4Q06 30% 52% (34%) (36%)

45. Reasons For Concern: Credit Statistics Tighter in Europe / Covenants More Favorable Source: Standard & Poor’s LCD; data as of 4Q06 29% 26% (13%) (15%)

61. The Similarities & Differences Between The Tech Bubble Burst of 2000 & The Current Private Equity Markets: Are We On The Verge Of A PE Bubble Burst? David M. Rubenstein Co-Founder and Managing Director February 28, 2007