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 markedio the lop olthe market P'.011 11r, 01 ':AV mut Se :endary market rot rre -0-50:inefary market racm 30 A :2!)03 23Ce 2036 2c1Xi i)07 I11:6 I HI. 1€ • Clamed liansations consisted most) olutilunded1Pinteresrs IC • Now stable kw 2 years 80-954 as supply Condon beam to market Ar r tat vo nine :SS Sit P,) IHI' 2••It 2HI2 IN I3 airimmiS , The Competitive Environment 25 5 10 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