SVG Capital IMS Q October 2014

Transcription

1 SVG Capital IMS Q October 2014

2 Q results highlights Significant distributions from the portfolio continue NAV of 521p -3% total return on the investment portfolio over Q3 Good performance in the unquoted portfolio partially offsets decline in the value of the quoted portfolio and foreign exchange - Unquoted portfolio + 29m; share prices of Hugo Boss and Freescale - 54m - Negative foreign exchange impact of 21m or -10p per share Distributions continue to outweigh calls Net inflow of 32m in the quarter 105m of distributions; 73m of calls Since September 218m of realisations announced Arysta sold to Platform Specialty Products at an uplift of 14m to June 2014 value - Combination of cash and convertible preferred note - 221m of value; 156m in cash expected on completion in Q (subject to regulatory approval) Red & Black (investment holding company for Hugo Boss) recapitalised - 62m of proceeds expected Portfolio transition gaining momentum Disciplined capital allocation Post-2012 investment portfolio 1 represents around c. 17% of the net investment portfolio Calls paid for 10 investments in Q3, including two co-investments - TeamViewer (alongside Permira) - total look through exposure of 19m - Visma (alongside Cinven) - total look through exposure of 17m Expect to complete the return of 470m to shareholders by the end of Q m returned to date 2 50m Tender Offer in December 2014 Pricing with reference to share price and NAV - Circular will be sent to Shareholders in due course Will continue to balance the benefits of reinvestment, repaying debt and returning capital to shareholders 2 1. The Company s new investment objective and policy was adopted by shareholders in March As at 20 October 2014

3 Q balance sheet Balance sheet management strong short and long term liability coverage 20 Oct 14 5 Roll forward m Sep 14 4 m Jun 14 Investment portfolio 963 1,029 1,091 Cash Other assets m m Total liabilities 3 Short term Liquidity and assets 193m Long term 175m Total assets 1,180 1,186 1, m Bank facility Convertible bonds (97) (97) (96) Other liabilities (6) (9) (5) Shareholders funds 1,077 1,080 1,138 NAV per share 522p 521p 535p m 1.2x 1.3x 365m 1.2x coverage of uncalled commitments from available liquidity 1.3x coverage of all liabilities from available liquidity and expected Arysta LifeScience proceeds Net (cash)/debt as % of Shareholders funds Gross debt as % of gross assets 3 (7%) (2%) - 8% 8% 8% LTV ratio (maximum 30%) Total short and long term liabilties Available liquidity (inc. HB proceeds & net of 50m tender) Pre-2009 MBO portfolio ASVG funds New investments Uncalled commitments 2016 convertible bonds Cash Bank line Expected Arysta proceeds Pre 2009 investments ASVG funds Post-2012 investments Available liquidity has been calculated at 30 September 2014 and includes distributions and call notices to 17 October, the expected Hugo Boss proceeds and of the expected call notice for Visma., Eco Services and PQ Corporation. The figure is net of the 50m tender offer in December Total facility of 300m with a maturity of Flexibility to go up to 40% for one three month period 3. Uncalled commitments of 303m at 20 October 2014 and 101m of convertible bonds which mature in % of the investment portfolio value is based on 30 September valuations. The remainder is based on 30 June 2014 valuations, updated for any cash flow and foreign exchange movements, or value of recent acquisitions 5. Roll forward for movement in the quoted portfolio, foreign exchange and Red & Black recapitalisation

4 4 Investment portfolio

5 Investment portfolio Broadly split between MBO portfolio (78%) and SVG Diamond programme MBO portfolio - good portfolio company performance - transition to new investments gathering pace MBO portfolio 30 Sept Oct 2014 (roll forward for movement in quoteds and realisations) 1 Hugo Boss 233m 170m 1 2 Arysta 221m N/A 3 Freescale 72m 63m 4 iglo Group 57m N/A 5 The Hillman Group 2,4 24m N/A 6 New Look 21m N/A 7 TeamViewer 2, 4 19m N/A 8 Visma 3,4 17m N/A 9 Legico 17m N/A 10 Saga 15m 13m In the short-medium term will continue to be dominated by Permira IV investments Announcement of partial realisation of Arysta in October m cash expected in Q (subject to regulatory clearance) Red & Black, investment holding company of Hugo Boss, recapitalised returning an expected further 0.3x to investors ( 62m) High quality portfolio of companies, with diversified global revenue streams Transition to newer investments gathering pace c. 17% of the investment portfolio ( 175m 5 ): Three co-investments made: Hillman (CCMP) - 24m 4 Teamviewer (Permira) - 19m 4 Visma (Cinven) - 17m 4 Top 10 companies (gross) 696m 5 SVG Diamond portfolio - strong portfolio value growth % of investment portfolio Q gain 30 September value Total SVG Diamond Programme 19% 3% 190.4m Portfolio of high quality private equity investments Distributions from the portfolio continue at a good pace and majority of these at significant uplifts to carrying value SVG Diamond I now completely de-leveraged, SVG Diamond II has reduced leverage by c.30% and SVG Diamond III by c.40% 1. Red & Black, investment holding company for Hugo Boss, was recapitalised in October, returning an expected 0.3x cost to investors. The value of this recapitalisation for SVG Capital is expected to be 62m June 2014 valuation roll forward for cash flows and foreign exchange movements 3. The Fifth Cinven Fund portfolio valuations are based on 30 June 2014 fund value, updated for any cash flow, foreign exchange movements and SVG Capital s expected pro-rata share of the Visma fund investment 4. Combined co-investment and pro-rata share of fund investment 5. Including all investments announced to 30 September 2014

6 Investment portfolio Transition to newer investments over medium to long term Increasing exposure to new investment portfolio Evolution of the investment portfolio (simulation) Uncalled commitments 30 Sept 2014 Management buyout funds 100% CCMP Capital Investors III 69m Clayton, Dubilier & Rice Fund IX 58m Permira V 67m Fifth Cinven Fund 47m 74% of uncalled commitments to post-2012 funds Permira IV 51m Aberdeen SVG Private Equity funds ACP 11m SVG Diamond Private Equity III 16m Schroder Private Equity Fund of Funds III 1-0% Sept 14 (proforma for HB and Arysta 2 realisations Mid-term Long-term Non-core portfolio 7m Total 326m Pre-2009 MBO portfolio SVG Diamonds/other Post-2012 investment portfolio 6 1 Uncalled commitment to SPEFOF III is 76k 2 Proforma for the recapitalisation of Red & Black holdings and the partial realisation of Arysta

7 7 Outlook

8 Q Outlook Pursue investment opportunities within disciplined capital allocation framework Transition to new investment portfolio gathering pace Post-2012 investment portfolio now c. 17% of net investment portfolio 1, including three co-investments Permira continue to realise investments, allowing for recent realisations post-2012 investment portfolio is c. 22% of investment portfolio 74% of uncalled commitments to post-2012 commitments Our managers continue to focus on operational and strategic change We believe our managers are disciplined and pursuing a differentiated approach Potential to generate attractive returns for investors through the cycle Value gain focused on operational and strategic change Our investment portfolio will continue to develop in a selective manner Continue to focus on top performing US and European private equity investors Building a balanced portfolio of co-investments Good balance of both private direct and fund investing skills on the team. Will add resource, as required Cautious on the macro economic outlook and mindful of the need for a strong balance sheet in periods of volatility Disciplined capital allocation Selective new investments Visibility on a pipeline of further investment opportunities Ongoing capital returns to shareholders 390m returned to date 2 - expect to complete the return of 470m to shareholders by the end of Q Up to 50m Tender Offer in December Will continue to balance the benefits of reinvestment, repaying debt and returning capital to shareholders 8 1. Including all investments announced as at 30 September As at 20 October 2014

9 Supplementary information Investment portfolio 9

10 Supplementary information Portfolio analysis at 30 September 2014 MBO portfolio Valuation 1 % Geography 1 % Sector 1 % Quoted Cost Written down earnings Earnings Third party Global UK North America Cont. Europe Industrials TMT Financial Support services Business services Retail Consumer Healthcare Leisure 1. By value at 30 September

11 Supplementary information Underlying companies - vintage year analysis at 30 September m & before Cost Earnings Quoted Third Party Written Down Year of original investment in underlying company

12 Supplementary information Post-2012 investment portfolio Sector 1 % Post-2012 investments now account for 17% of the investment portfolio ( 175m) 3 TMT Consumer Industrials Healthcare Support services Business services Geography 1 % Largest post-2012 investments Manager 30 Sep The Hillman Group 2 CCMP 24m 3 TeamViewer 2 Permira 19m 3 Visma 2 Cinven 17m 4 Jetro Holdings CCMP 5 AMCo Cinven 6 Brand Energy & Infrastructure CD&R 7 CeramTec Cinven 8 Solenis CD&R 9 Host Europe Cinven 10 PharMEDium CD&R In 10 largest companies in the MBO portfolio 3 Global Cont. Europe North America UK By value at 30 September 2014 and includes all investments announced as at 30 September 2014 (valued at cost) 2. Co-investments value is calculated on a look through basis, including SVG Capital s pro-rata share of the fund investment 3. Including all investments announced to 30 September 2014

13 13 Cinven

14 Cinven Established European private equity manager SVG Capital committed 100m to the Fifth Cinven Fund Strategy Invest in buyouts headquartered in or with significant operations in Europe, typically with an enterprise value of greater than 300m Sector focus Focus on six core sectors: business services; consumer; financial services; healthcare; industrials; and TMT Team Investment model Rationale for investment 55 investment staff operating from seven offices (Guernsey, London, Frankfurt, Paris, Milan, Luxembourg and Hong Kong) Cinven s approach to growing its portfolio is based on two main pillars: - Revenue growth, via both expansion into new markets and execution of buy and build strategies - Applying global best practices across the portfolio Strong track record Consistent returns Long standing ASVG relationship Co-investment pipeline 14

15 Fifth Cinven Fund portfolio Nine investments to date; 46% committed Sector 1 % TMT Healthcare Industrials Business services Financial services Geography 1 % Company Prezioso Pronet AMCo CeramTec Host Europe Group Heidelberger Leben Medpace Visma Ufinet Sector Business services Business services Healthcare Industrials TMT Financial services Healthcare TMT TMT Co-investment alongside the fund, total exposure to the company of 17m 2 Global Cont. Europe 15 1 Based on the Fifth Cinven Fund s commitments at 30 June 2014 rolled forward for transactions announced to 30 September Combined co-investment and pro-rata share of fund investment at 30 September 2014 exchange rates

16 Visma co-investment with Fifth Cinven Fund Investment attractions Visma is the leading provider of Enterprise Resource Planning (ERP) in the Nordic region Attractive financial profile Exceptional track record of growth: Strong historical growth (revenue growth of 16% EBITDA growth of 18% during ). Organic growth of 8% CAGR over 10 years Recurring revenues: Significant percentage of revenues are recurring or repeatable in nature. Provides critical function for highly sticky customer relationships Excellent cash conversion: Due to limited capitalisation of R&D, low capex requirements and negative working capital Strong market position Market leader: Leading provider of ERP software across the Nordic region - Leading positions in Norway, Sweden and Finland - Strong market positions, with market shares of 20-40% Well diversified business Low customer concentration: More than 300,000 customers, primarily Small and Medium Enterprise (SMEs) - Wide range of products and services - Diversified across geographies and sectors Source: Cinven 16

17 Visma co-investment with Fifth Cinven Fund Investment attractions (continued) Advanced transition to Software-as-a- Service (SaaS) Saas growth potential: Visma is leading the transition to Software-as-a-Service (SaaS) in the Nordic region - SaaS to drive further growth over medium to long term - Substantial investment already made in SaaS products - Proactive management of transition from On-premise to SaaS Substantial M&A opportunity Proven M&A track record: Visma has strong history of identifying and executing value-accretive acquisitions bolt-on acquisitions completed in last 15 years - Quasi-unique position to acquire smaller software companies in the Nordics at attractive valuations - Significant pool of targets to pursue further M&A Excellent management team Strong, committed management: High calibre management team, led by CEO Øystein Moan, has successfully led Visma since Clear strategic vision - CEO is committed to staying with Visma and reinvesting substantially Source: Cinven 17

18 18 Permira

19 Permira Global coverage with strong sector focus SVG Capital committed 125m to Permira V Strategy Will invest primarily in mid to large cap buyouts with exposure to faster-growing global markets and sectors, typically with an enterprise value of up to 3bn At least 70% of Permira V will be invested in businesses which have or intend to have significant activities in Europe Sector focus Focus on five sectors: Consumer; TMT, Industrials; Financial Services; and Healthcare Team Investment model Rationale for investment Around 120 professionals operating from 13 offices - Europe - London, Frankfurt, Madrid, Milan, Paris, Guernsey, Stockholm and Luxembourg - US - Menlo Park and New York - Asia - Hong Kong, Tokyo and Seoul A thematic focus on acquiring businesses with resilient growth: - Sub-sector growth - Potential to globalise - Market-leading positions Strong long-term track record - Recent performance of Permira IV, especially post 2008 deals, has been very good Long standing relationship Co-investment pipeline - First co-investment in TeamViewer completed 19

20 Permira V portfolio Seven investments to date; 30% called Sector 1 % Company TMT Consumer Industrials Financial services Healthcare Geography 1 % Dr Martens Atrium Innovations LegalZoom Tilney Bestinvest TeamViewer CABB Mesa and Asteral Consumer Consumer TMT Financial services TMT Industrials Healthcare 15m co-investment alongside the fund, total exposure to the company of 19m 2 Global UK North America Continental Europe 20 1 Based on 30 June 2014 valuations rolled forward for cashflows to 30 September Combined co-investment and pro-rata share of fund investment at 30 September 2014 exchange rates

21 Permira V co investment in Teamview TeamViewer - a global leader in secure remote software Investment summary FYE Mar 2014 Billings 107m Cash EBITDA 77m 250k+ SMB customers globally, 130m active users with installation on more than 700m devices to date Differentiated origination and complicated diligence process Attractive resilient market growth: - Mobile workforce - Increased device proliferation (mobile, tablets) - IT outsourcing High customer satisfaction and usage, contributing to high share of recurring revenues Scalable on-demand platform with high margins and cash flow conversion Source: Permira 21

22 Permira V co investment in Teamview TeamViewer - value creation Marketing re-vamp Pricing & packaging Sales force optimisation Product re-investment 22 Source: Permira

23 23 CCMP Capital

24 CCMP Capital Investment model focused on fully integrated operating and investing team SVG Capital committed $150m to CCMP Capital Investors III Strategy Enhance the value of middle market companies in North America and Europe through an active approach to operational transformation in leading buyout and growth equity investments Typical enterprise value of $250m - $2bn Sector focus Focus on four sectors: consumer/retail; industrials; healthcare; and energy Team Investment model Rationale for investment 37 full time investment professionals with offices in New York, Houston and London Combines proprietary, research-driven sourcing capability with a fully integrated operating/investment professional team Attractive geographic and deal-size target market Differentiated investment model focused on integrated operating and investment professional team Strong track record Potential co-investment opportunities 24

25 CCMP Capital III portfolio Five buyout investments to date; Fund is approximately 40% committed 4 Sector 1 % Company Jamieson Laboratories Consumer The Hillman Group Consumer Jetro Industrials Eco Services 3 Industrials Geography 1 % Industrials Consumer PQ Corporation 3 Industrials US$25m co-investment alongside the fund, total exposure to the company of 24m 2 Global North America 25 1 Based on 30 June 2014 valuations rolled forward for any cashflows and transactions announced up until 30 September 2014 (valued at cost) 2 Combined co-investment and pro-rata share of fund investment at 30 September exchange rates 3 Investment announced but not yet complete 4 Includes pending investments which have been announced but not yet complete

26 Co-investment alongside CCMP The Hillman Group Company overview Leading value-added distributor of consumable, low price point hardware-related products and services Strong and highly sticky relationships across diverse customer base Sales, distribution, and customer support network, managing complexity across the supply chain Long history of profitable growth and superior economic model Recent evolution Added new product lines and stock keeping units ( SKU ) managed Expanded addressable market opportunity Captured numerous organic business wins Accessed new geographies Completed and fully integrated four strategic acquisitions Executed operational and cost savings initiatives Substantially increased investment in innovation to facilitate launch of next-generation technologies in keys, engraving and fasteners Sales channel (2013 revenues) Product split (2013 revenues) National home improvement retailers Traditional hardware stores Regional retail outlets, pet supply stores and other Canada and Mexico Fasteners Keys Engraving Letters, numbers & signs Threaded rod & metal shapes Builders' hardware Other Source: CCMP Capital 26

27 Co-investment alongside CCMP The Hillman Group: Key investment highlights Proven management team and deep bench of talent Superior economic model for profitable growth Proven acquisition strategy and history of execution Leading positions in existing categories and highly actionable adjacent new product categories Industry-leading engine for innovation No.1 segment share position in core product categories Over 130,000 SKUs managed Best-in-class profitability and returns Proven management team well-positioned to take The Hillman Group to the next level Attractive growth opportunities going forward Numerous attractive growth opportunities Mission critical sales, distribution and customer support network to manage important, complex customer categories Strong, highly sticky relationships across a diverse blue chip customer base Source: CCMP Capital 27

28 28 Clayton Dubilier & Rice IX

29 Clayton Dubilier & Rice Consistent strategy underpinned by operational skill set SVG Capital committed $140m to Clayton, Dubilier & Rice IX Strategy Control investments in upper mid-market companies in the US and Europe (Germany, France and the UK) Typical enterprise value of between $1bn and $5bn Sector focus Primarily concentrating on industrials, business services, healthcare and consumer/retail Team 51 professionals, based in New York and London Investment model Rationale for investment Focused on operational improvement within portfolio companies Utilises the combined skills of operating partners, who are former CEOs or other senior corporate leaders, and private equity investment executives Strong long term track record Consistent strategy focused on the partnership between private equity and operating skills runs right through deal process from origination through to due-diligence and post investment value creation stages Co-investment pipeline 29

30 CD&R IX portfolio Six investments to date; 40% committed Sector 1 % Company Geography 1 % Support services Industrials Healthcare Brand Energy & Infrastructure PharMEDium Services Solenis Mauser Healogics CHC Group Support services Healthcare Industrials Industrials Healthcare Support services Global North America 30 1 Based on 30 June 2014 valuations rolled forward transactions announced to 30 September 2014

31 Important information The information in this presentation is issued by SVG Capital plc ("SVG Capital"), whose registered office is at 1 Bread Street, London, EC4M 9HH. SVG Capital is registered in England: No The information contained in this presentation is not intended to make any offer, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations for financial, securities, investment or other advice or to take any decision. You should seek individual advice from your personal, financial, legal and other advisers before making any investment or financial decisions or purchasing any financial, securities or investment related service or product. The information contained in this presentation is provided for general information and is not comprehensive and has not been prepared for any other purpose. Any financial, securities or investment related service or product referred to may not be available to all customers or in all cases; may be available only where specifically requested and agreed upon; may be associated with certain specific fees and conditions and may be materially different than as described. Certain information in this presentation has been obtained from third party sources that are believed by SVG Capital to be reliable. However, such information may be incorrect, incomplete or condensed; SVG Capital does not accept any responsibility for, or guarantee, its accuracy. Accordingly, no representation or warranty, expressed or implied, as to the fairness, correctness, accuracy or completeness of such information (or any part of it) is made by any party and no reliance may be placed on such information. None of SVG Capital, its respective members, directors, officers, agents or representatives, or any other person accepts any obligation or responsibility to advise any person of changes in the information set forth herein after the date hereof. This presentation contains certain forward-looking statements with respect to the portfolio of investments of SVG Capital. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast. 31

32 Risk considerations You should remember that the value of investments, and the income from them, may go down as well as up, and is not guaranteed, and investors may not get back the amount of money invested. Past performance cannot be relied on as a guide to future performance. Exchange rate changes may cause the value of overseas investments or investments denominated in different currencies to rise or fall. In addition, there is no guarantee that the market price of shares will fully reflect their underlying net asset value and it is not uncommon for the market price of such shares to trade at a substantial discount to their net asset value. These are not all the risks of an investment in SVG Capital shares. Investors should take advice from their own independent, professional financial advisers before making an investment decision and are responsible for ascertaining any income tax or other tax consequences which may affect their acquisition of any investment. For further information please contact: Alice Kain Head of Communications and Investor Relations Aberdeen SVG Private Equity Advisers Limited Bow Bells House 1 Bread Street London EC4M 9HH Tel: