Blackstone presentation on IPO valuations, October 2011. Accompanies blog post by Jeff Richards from GGV Capital.

1. “ Rare Air” A Technology IPO Discussion with Blackstone The Blackstone Group LP October 2011 Eric McAlpine Managing Director [email_address] www.blackstone.com Twitter: @Blackstone

2. “ Rare Air”— An Enviable and Small Club of Technology IPOs ________________________________________________ Source: Capital IQ. Company filings, Wall Street consensus estimates. Data as of 9/23/11. Note: Data for US technology IPOs from 1/1/10 to date. Excludes Private Equity (LBO) backed IPOs and recently priced IPOs where forward projections are not yet publicly available. (1) LTM revenues as of the date of IPO. Companies with LTM revenues greater than $500M shown as $500M on graph. (2) Forward revenue growth represents LTM to NTM revenue growth as of the date of IPO. Scale vs. Growth for Recent Technology IPOs (2010 – 2011 YTD) Few companies to date have attained “rare air” status – significant scale and growth. Highly anticipated IPOs for category leaders such as Facebook, Groupon, Zynga, etc. could create an enviable club of companies with both attributes. LTM Revenue ($ in millions) (1) Forward Revenue Growth (2) CNVO ELLI SQI MERU IPHI DVOX MKTG BSFT MOTR TNAV RLD CALX IL QLIK NPTN RLOC DMD AOSL ACTV QNST GGS FFN MITL MX FN NQ SQNS CSOD RENN MXL LEDS ONE “ Rare Air” “ The Pack” Anticipated Potential “Rare Air” IPO candidates AWAY “ Knocking on The Door” Z CARB TNGO SSNC

3. Valuation Multiples in Technology are Being Driven by Growth ________________________________________________ Source: Capital IQ. Market values as of 9/23/11. Valuation multiples in the technology industry are predominantly driven by a combination of top and bottom line growth. TEV / 2011E Revenue vs. 2011E Revenue Growth Price / 2011E EPS vs. LT EPS Growth Semiconductors Hardware Internet Comm. Equipment Software Services = TEV: $500bn

4. Where’s the Growth in Public Technology Companies? Current public technology companies no longer represent the high growth opportunity equity investors had come to expect. Technology equity investors are looking to the IPO market, albeit selectively, to gain exposure to growth and alpha. 2011 – 2012 Public Technology Market Growth Expected ’11 – ’12 Revenue Growth for Technology Industries Excluding Hardware and Semiconductors Revenue Growth Number of Companies ________________________________________________ Source: Capital IQ. Data as of 9/23/11.

5. Technology IPOs Offer Investors Access to Outsized Growth Stories The majority of technology IPOs since 2010 had LTM revenues in excess of $100 million with forward revenue growth exceeding 20%, or double the growth of the average public technology company. LTM Revenue Distribution of Recent IPOs (1) ($ in millions) Forward Revenue Growth Distribution of Recent IPOs (2) ________________________________________________ Source: Capital IQ. Company filings, Wall Street consensus estimates. Data as of 9/23/11. Note: Data for technology IPOs from 1/1/10 to date. (1) LTM revenues as of the date of IPO. (2) Forward revenue growth represents LTM to NTM revenue growth as of the date of IPO. # of Companies # of Companies

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