AN INTRODUCTION TO PROVIDENCE INVESTMENT FUNDS PCC LIMITED

Transcription

1 AN INTRODUCTION TO PROVIDENCE INVESTMENT FUNDS PCC LIMITED

2 Agenda About Providence Group The Investment Opportunity Key Benefits The Fund How the Investment Works Charges & Fees Brazil Current Outlook Factoring in Brazil Risk Analysis Management Communication & Reporting Providence s Business Service Providers Why Guernsey? Summary Contact Information 2

3 About Providence Group Privately owned & established in 2008 Diversified global commercial group with financial services and factoring interests, mainly in Brazil 21 offices in 12 territories, across developed and developing world Over 200 staff globally, of which over 100 devoted full time to factoring activities Guernsey investment management company established in 2012 Regulation - investment management company is licensed by the Guernsey Financial Services Commission & other group companies have ANFAC membership in Brazil 3

4 The Investment Opportunity - Key Benefits High yielding, non-correlated, consistent, fixed coupon investment returns, paid either regularly throughout investment term, or compounded and paid at end of investment term Access to an exciting, thriving, growing and stable economy not generally accessible to foreign investors Access to an under-exploited but large and diverse economic sector with high appetite for credit Efficiently structured, professional fund in reputable, stable and well regulated jurisdiction Liquid underlying fund assets with low credit default rates Investment access in USD, GBP, EUR and CHF Potential to benefit from political risk mitigation insurance Receivables factoring offers abundant origination based on growing consumer markets - access to the profitable and central part of the Brazilian economy 4

5 The Fund Protected cell company registered with the Guernsey Financial Services Commission Each cell s assets & liabilities are segregated and protected by law Investment strategy to generate attractive, uncorrelated, fixed coupon absolute returns from investing in the factoring of receivables of small and medium sized businesses in Brazil The Providence Group has two Brazilian subsidiaries to purchase such receivables Receivables typically 30 to 180 days in tenure and purchased at discounts of approximately 2% to 4% per month 42 closed ended cells distinct as to investment currency, term, distribution payment frequency and whether the cells benefit from political risk mitigation insurance or not 3 preference share classes dependent on investment amount Minimum amounts - US$50k/EUR37.5k/GBP30k/CHF45k Investment term - 18, 24, 36 or 48 months Distributions - paid monthly or quarterly or, alternatively rolled-up, compounded and paid at end of investment term 5

6 The Fund (continued) DISTRIBUTION CELLS Cell Name Currency Distribution Period Return (per annum) SHARE CLASS A SHARE CLASS B SHARE CLASS C 18 Month Monthly Distribution USD, EUR, GBP or CHF Monthly 18 months 9.50% 10.50% 11.50% 18 Month Quarterly Distribution USD, EUR, GBP or CHF Quarterly 18 months 10.75% 11.75% 12.75% 36 Month Monthly Distribution USD, EUR, GBP or CHF Monthly 36 months 11.00% 12.00% 13.00% 36 Month Quarterly Distribution USD, EUR, GBP or CHF Quarterly 36 months 12.25% 13.25% 14.25% ACCUMULATION CELLS Cell Name Currency Distribution Period Return (per annum, compounded quarterly) SHARE CLASS A SHARE CLASS B SHARE CLASS C 18 Month Accumulation USD, EUR, GBP or CHF On Maturity 18 months 10.75% 11.75% 12.75% 36 Month Accumulation USD, EUR, GBP or CHF On Maturity 36 months 12.25% 13.25% 14.25% POLITICAL RISK MITIGATION INSURED CELLS Cell Name Currency Distribution Period Return (per annum) SHARE CLASS A SHARE CLASS B SHARE CLASS C 24 Month Monthly Distribution USD, EUR or GBP Monthly 24 months 7.00% 8.00% 9.00% 24 Month Quarterly Distribution USD, EUR or GBP Quarterly 24 months 8.25% 9.25% 10.25% 24 Month Accumulation USD, EUR or GBP On Maturity 24 months 8.25% 9.25% 10.25% 48 Month Monthly Distribution USD, EUR or GBP Monthly 48 months 9.00% 10.00% 11.00% 48 Month Quarterly Distribution USD, EUR or GBP Quarterly 48 months 10.25% 11.25% 12.25% 48 Month Accumulation USD, EUR or GBP On Maturity 48 months 10.25% 11.25% 12.25% NB. The political risk mitigation insured accumulation cell returns are compounded quarterly. 6

7 How the Investment Works The Fund enters into a contractual secured loan agreement with the group s Brazilian factoring subsidiary The factoring subsidiary then uses the loan proceeds to purchase receivables under a series of debt factoring contracts in the course of its normal day-to-day business activities The Fund receives agreed sums from the factoring subsidiary to enable it to meet its distribution commitments and capital repayment obligations to the Fund s investors As a result, investors receive their agreed distribution payments plus return of capital at the end of the cell s term Each cell is closed-ended with a fixed investment term, upon maturity investors have the opportunity to reinvest into new cells Liquidity - no redemptions for 18 and 24 month cells, but may be permitted for 36 and 48 month cells at the discretion of the Fund s directors 7

8 Charges & Fees No fixed management fee to investors by the Manager, which only receives a performance fee after investors have been paid in full Administration fee - 0.5% paid by the Manager No custody fees Introductory commission available to licensed introducers of investors 8

9 Brazil - Current Outlook South America s most influential country, an economic giant and one of the world s biggest democracies (population million) Recovered quickly from the 2008/09 global financial crisis, has followed conservative economic policies for last 20 years, and has investment grade credit rating from all major agencies Exports and retail sales are increasing, inflation remains under control, continuing and sustainable economic growth, a stable political environment, expanding lower and middle economic classes, and increasing demand for consumer credit Energy self-sufficient, even before discovery of the world s largest offshore oil reserves in 2007 Today is the world s 7th largest economy, growing at an average rate of over 3% per annum Last year Brazil hosted the 2014 FIFA World Cup and is hosting the 2016 Olympic Games anticipated combined economic contribution of over US$120 billion. Banking and financial services are profitable but very protected thus creating high barriers to entry Well developed manufacturing, mining, agricultural and service industries, as well as a large labour pool, provide strong macroeconomic fundamentals resulting in a very positive short and long term outlook Known as the country of the future for decades, the Brazilian promise is happening today 9

10 Factoring in Brazil Known in Brazil as Fomento Mercantil, factoring involves purchasing receivables arising from the sale of goods or services with maturities typically of 30 to 300 days The most common receivables are duplicatas (commercial invoices) and post-dated cheques, the latter being a legacy of Brazil s high inflationary years of the 1980s/90s when consumer credit was scarce - today, they are the norm and are regulated by the Central Bank Pricing habits of retailers - typically prices for items paid with 10 or 12 post-dated cheques are not discounted even if paid in cash. This perpetuates the unique consumer financing structure Cheque default rates are very low at only c.2.0% due to the severe penalties imposed by robust banking regulations 10

11 Factoring in Brazil (continued) Although Brazil s banking system is amongst the healthiest and most advanced in the world, credit for small and medium sized businesses is still very limited and expensive. As a result, factoring of receivables is a highly desirable and less expensive alternative for such businesses Factoring offers the fastest, least expensive access to financing as traditional bank and credit card credit are charged at rates in excess of 10% per month Providence s factoring subsidiary is the only foreignowned member of ANFAC. This national factoring trade association is the self regulatory body monitored by the Brazilian Central Bank to regulate the domestic factoring market. This membership brings access to highly sophisticated credit monitoring systems allowing better implementation of credit policies There are over 700 regulated factoring companies in Brazil, which provide services to more than 65,000 small and medium sized businesses with over US$90 billion of receivables being purchased per annum 11

12 Risk analysis Execution Providence has raised capital in a similar way from Americas based investors for last 7 years and always met principal and interest payments in full Abundance of deployment demand, exceeding supply at present Credit diversification policy - generally 1/3 retail, 1/3 industrials, 1/3 other Default risk mitigated by robust online credit systems & restrictive central bank regulations Yield Although gross yields of 2% - 4% per month are high, there are associated overheads (including staff, taxes, currency hedging, collection and administration) but this still leaves a sufficient buffer to enable these attractive fund yields to be paid Also, should the average monthly discount as published by ANFAC fall below 2.0% per month, the Fund may hold more cash and/or bonds to provide returns to investors as effectively as possible 12

13 Risk analysis (continued) Liquidity No redemptions for 18 and 24 month cells, but may be permitted for 36 and 48 month cells (after 18 and 24 months respectively) at Fund s discretion - subject to 30 days notice and 1% redemption penalty Taxation For non-guernsey investors, the Fund structure is effectively tax neutral. Investors therefore need to take their own advice relevant to their own jurisdiction on the tax consequences of investing in the Fund Exchange rate All returns are fully hedged into USD, GBP, EUR or CHF, as appropriate, at the cost of the Brazilian factoring company - it is not a drain on the Fund 13

14 Management Antonio Buzaneli Mr Buzaneli is a co-founder and Group CEO of the Providence Group and brings over 30 years experience in creating & growing businesses, with a deep expertise in operations, global trading, expansions and consolidation. He has worked in a variety of different industry sectors, including development & construction, retail consumer goods, wholesale distribution, finance, commodities, agriculture & fisheries, and manufacturing and has served in several executive positions including CEO, President, COO, and Country Manager for various international companies, including one of the largest distributors of dried marine products in the world. He is the driving force behind the group s factoring activities having developed close working relationships with many small and medium sized businesses in Brazil over many years. Mr Buzaneli holds a law degree from Anchieta Law School in Brazil, as well as a Harvard Business School executive management course with specialisation in international trade & finance. He has multicultural experience & is multilingual speaking English, Italian, Portuguese and Spanish enabling him to integrate cultural differences to help focus upon deliverable results. He is a director of Providence Investment Management International Limited, Providence Investment Funds PCC Limited and Lumiere Fund Services Limited. 14

15 Management (continued) Jose Ordonez Mr Ordonez is a co-founder of the Providence Group and brings 16 years of experience in the banking, real estate and international trade sectors. After a banking career specialising in corporate lending in Florida, he served as the Vice President - Finance in Miami for one of the world s largest tobacco leaf growers before leading a rapidly growing local commercial real estate development company. Here, he increased annual revenues from $15 million to $350 million over 32 months, expanding it from a local presence to a regional south-eastern United States presence with over 30 active projects. Mr. Ordonez holds a degree in finance & international business from Florida International University and is multilingual speaking English, Portuguese and Spanish. He is a director of Providence Investment Management International Limited. 15

16 Management (continued) Paul Everitt Mr Everitt is European CEO of the Providence Group. He has over 25 years experience in the finance industry and oversees Providence s financial services and trading businesses, which are based in London and Guernsey. His particular area of focus is in developing new businesses and financial products. He has lived in Guernsey since 1998 and has worked as head of Fund Services for Barclays Wealth s offshore operations and, at Northern Trust, ran the administration of Permira s venture and larger pan-european buy-out funds. Mr Everitt has a degree in Economics from the University of East Anglia and qualified as a chartered accountant with BDO. He is a director of Providence Investment Funds PCC Limited and non-executive chairman of Lumiere Fund Services Limited. 16

17 Management (continued) Roger Parry Mr Parry is a co-founder and the Managing Director of Lumiere Fund Services Limited. He has specialised in fund administration services since 2001 and prior to establishing Lumiere in 2007, was Head of Fund Services at Barclays Wealth, Guernsey, responsible for client relationships and the Guernsey administration team. Before moving to Guernsey in 2006, Mr Parry worked in London as financial controller of Phoenix Equity Partners, a private equity house responsible for five funds with assets of more than 900 millions. He was responsible for all fund administration activities. Mr Parry has an honours degree in accounting from the University of Hull and qualified as a chartered accountant with Wilder Coe in London. He is a director of Providence Investment Management International Limited. 17

18 Management (continued) Steve Dewsnip Mr Dewsnip is the Providence Group s Head of Worldwide Wholesale Distribution and a director of several Providence Group Companies. He has over 30 years experience in domestic and international financial services and has served as an executive director of a Guernsey regulated bank as well as various non-executive and consultancy roles with different finance sector regulated businesses. He trained with the National Westminster Bank Group before moving to N M Rothschild & Sons in 1990 where he specialised in corporate lending. He moved to Guernsey in 1994 to establish an offshore lending business and oversaw the growth of a private client loan portfolio from start-up to over $1billion. He also managed a successful private banking division including relationship managers, treasury, dealing and marketing staff before leaving the N M Rothschild & Sons Group in 2010 having served as an executive director of its Guernsey regulated bank for the previous 11 years. Mr Dewsnip holds a BTEC National Certificate (with distinction) in Business and Finance and qualified as an associate of the Chartered Institute of Bankers with distinctions in accountancy, investment and international trade. He is a co-founder and the chairman of Guernsey Football Club, and a director of Providence Investment Management International Limited, Providence Investment Funds PCC Limited and Lumiere Fund Services Limited. 18

19 Communication & Reporting Regular account statements Regular management newsletters Manager meetings as required Informative website at 19

20 Providence s Business Service Providers Administrator - Lumiere Fund Services Limited Independent administration firm focused on director-led outsourced investment solutions with a particular expertise in alternative investment classes Auditors - PricewaterhouseCoopers One of the world s largest professional services firm, one of the Big Four accountancy firms and with a particularly strong financial services franchise Legal Advisers - Collas Crill A leading and full service Channel Islands law firm providing both commercial and personal legal services with a particular strength in structuring investment funds Bankers - The Royal Bank of Scotland International Ltd RBS International is the offshore banking entity of the RBS group and is one of the leading offshore banks, with a longstanding history and expertise providing banking services to the investment fund industry 20

21 Why Guernsey? Well regulated British Crown Dependency in a convenient time zone for international business Transparent, tax-neutral status of investment funds Long history of political stability Robust and well-respected corporate governance and legislative regimes, compliant with international standards Well-established network of financial services professionals providing a competitive and professional business environment with high international standards Not part of the United Kingdom and has autonomy of internal government, including taxation Legal system derived in part from the customary laws of Normandy but strongly influenced by English law principles 21

22 Summary A great opportunity to access an investment market not generally available to foreign investors Investment into a real business at the heart of the exciting and growing Brazilian economy based on a strong local presence and a very relational approach Fixed income from attractive non-correlated investment returns Efficiently structured, professional fund in reputable, stable and well regulated jurisdiction Manager s and investors interests aligned in that Manager only gets paid after investors have - a measure of the manager s confidence in the underlying investment strategy 22

23 Contact Information Administrator Lumiere Fund Services Limited PO Box 268, Mill Court, La Charroterie, St. Peter Port, Guernsey GY1 3QZ T: ; F: Manager Providence Investment Management International Limited PO Box 268, Mill Court, La Charroterie, St. Peter Port, Guernsey GY1 3QZ Global Sales Steve Dewsnip - steve.dewsnip@provfinancial.co.uk T: (mobile) / (direct) UK Sales Lee Isham - lee.isham@provfinancial.co.uk T: (mobile) / (office) International Sales James Machon - james.machon@provfinancial.co.uk T: (mobile) / (direct) 23

24 Important information This document has been issued and approved by Providence Investment Management International Limited ( PIMIL ). Although information and any opinions in this document have been obtained from sources believed to be reliable, PIMIL does not represent or warrant their accuracy, and such information may be incomplete or condensed. Past performance is not a guide to future performance and the income from it can rise as well as fall as a result of currency and market fluctuations and you may not get back the amount originally invested. This publication is for private circulation and information purposes only and does not constitute a personal recommendation or investment advice or an offer to buy or sell or an invitation to buy or sell securities in any fund referred to. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with Guernsey laws and regulations. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them. The Fund is not authorised or regulated under the provisions of the Financial Services and Market Act Accordingly, the Fund is an Unregulated Collective Investment Scheme and cannot be promoted or sold in the United Kingdom, other than under the exemptions permitted by the Act, in particular, the Financial Services and Market Act 2000 (Participation of Collective Investment Schemes) (Exemptions) Order The Fund may not be offered or sold in the United States or to U.S. persons at any time (as defined in Regulation S under the U.S. Securities Act of 1933 or the U.S. Internal Revenue Code). The Fund has not been and will not be registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state in the United States and is subject to U.S. tax requirements. In purchasing the Fund, you represent and warrant that you are neither located in the United States nor a U.S. person and that you are not purchasing for the account or benefit of any such person. The Fund may not be offered, sold, transferred or delivered without compliance with all applicable securities laws and regulations. Providence Investment Funds PCC Limited is registered with, and Providence Investment Management International Limited is licensed by, the Guernsey Financial Services Commission. Providence Investment Management International Limited PO Box 268, Mill Court, La Charroterie, St. Peter Port, Guernsey GY1 3QZ T: PR_