capman specialised listed alternative asset...
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CapMan
– Specialised listed alternative asset manager
Carnegie Small and Mid Cap Seminar
9 September 2010, Stockholm
Jerome Bouix, Deputy CEO, Senior Partner
0 %
20 %
40 %
60 %
80 %
100 %
Institutional investors allocations to alternative asset class
Alternative Assets (Private Equity, Real Estate Fund Investments and Hedge Funds)
Equities and Fixed income products
Our business is alternative asset management
» Allocations to alternatives are increasing
• CapMan is specialised in private equity funds and private equity real estate funds
• CapMan manages currently €3.5 billion in its funds
– €3.4 billion raised from institutional investors and €0.1 billion committed by
CapMan
– Long term business with approx. 10 year commitments in funds
– Earnings model is based on stable management fees, varying carried interest
income (“performance fee” from funds) and returns on own fund investments
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5-20%
80-95%
Capital under management* €1,800bn €532bn ~€60bn
“Dry powder” in 2009 $1,000bn €113bn €9.3bn
Funds raised in 2009 $281bn €16bn €1.0bn
Amount invested in 2009 €91bn €23bn €2.7bn
Amount divested in 2009 n/a €11bn €1.1bn
# PE firms* ~5,000 >1,200** ~250**
The size of private equity market
3
* Global figures for year 2008, European and Nordic for 2009. ** Number of members in EVCA or in National assocations.
Source: Preqin, EVCA, FVCA, SVCA, NVCA, Bain&Company.
~5,000 PE firms headquartered in 92 countries employ 65,000 people worldwide
and manage ~12,000 funds*
31 December 2009
09 September 2010CapMan - Carnegie Small & Mid Cap Seminar
CapMan’s home market
• Local investment operations
in Nordic countries and in Russia
• International fundraising
and customer base
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We are active owner for portfolio companies and real estate
• 64 portfolio companies
– total turnover of €5.9 billion in 2009
– approx. 40,000 employees
• 60 real estate investments
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One-stop-shop for investors investing in Nordic and
Russian private equity
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Our customers
• Pension funds
• Insurance companies
• Funds of funds
• Banks
• Public sector
institutions
• Other institutions
We invest inFund management
company
90–93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Q2/10
One of the pioneers in the industry
• CapMan has had a multi-product strategy since
mid-90s
• CapMan’s associated company Access Capital
Partners* is one of the leading funds of funds
managers in Europe with €2.6 billion under
management
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Assets under
management
€3.5 bn
Real Estate funds
Life Science funds
Technology funds
Mezzanine funds
Buyout funds Russia fund
Public Market fund
CapMan owns 35% of Access Capital Partners.
Our track record
100
267
0
50
100
150
200
250
300
Value at the time of the investment
Realisation value*
100
133
0
50
100
150
200
250
300
Value at the time of the investment
Realisation value**
8
2.7x money back multiple for
investments in portfolio companies
*)Incl. dividends, interest income and sales revenue. Incl. exits made by Swedestart AB. Excl.
exits made by Alliance ScanEast Fund and Nordic Private Equity Partners and from early
stage growth financing companies. Indexed (time of investment =100)
30 June 2010
** The figures have been calculated for the total invested capital
incl. net rental income. Indexed (time of investment =100)
1.3x money back multiple for
real estate investments
• 100 exits by
equity funds
• IRR 56% (gross)
• Average holding
period 4.7 years
• 24 exits by real
estate funds
• IRR 26% (gross)
• Average holding
period 1.4 years
• Solid track record with top quartile returns
• Over 100 investment professionals in six investment teams
• Senior team members have over 20 years experience from private equity
and/or relevant industries
• Well-functioning platform to support investment activities
09 September 2010CapMan - Carnegie Small & Mid Cap Seminar
Multi-product strategy with several benefits
• Sharing best practises and industry intelligence between investment teams
• Economies of scale in fund management operations
• Partner role in the ecosystem
– for example portfolio company purchasing pool
• Leveraging CapMan brand
• Diversification of risks across investment areas, countries and cycles
09 September 20109 CapMan - Carnegie Small & Mid Cap Seminar
CapMan
Buyout
CapMan
Technology
CapMan
Life Science
CapMan
Russia
CapMan
Public Market
CapMan
Real Estate
• Industrial and
service
companies
• Manufacturing,
retail and
services
• Both equity and
mezzanine
investments
• Expansion and
later stage
technology
companies
• Medical
technology and
healthcare
services
• Commercial
properties,
property
development
targets and hotel
properties mainly
in Finland
• Nordic public
companies
8 portfolio company investments
1 real estate investment
10 final and 1 partial exits from
portfolio companies
1 exit from real estate investment
Investments Exits*
Helsinki
Busy year with several investments and exits
Helsinki
LMZ
Investments in Q3
Partial exits
+
* ON2 exit related to original investment in Hantro Products, PacketFront exit related to original investment in 42Networks.
10
3 fundraising projects
Fundraising
Exits in Q3
• CapMan Buyout IX closed at
€295 million
• Fundraising for CapMan
Mezzanine V ongoing
• Investigation ongoing regarding
the potential on taking active
role on the housing property
market in Greater Helsinki
09 September 2010CapMan - Carnegie Small & Mid Cap Seminar
One of the first listed private equity fund managers
• Listed in NASDAQ OMX Helsinki since 2001
• Market cap approx. €122 million (incl. unlisted A shares)
• Management and personnel still significant shareholders
KEY FIGURES 2009 H1 2010
Turnover, M€ 36.3 21.0
Operating profit, M€ 0.1 4.5
Profit, M€ 0.1 5.2
EPS, € -0.03 0.05
ROE, % 0.2 13.3
Equity ratio, % 55.1 55.7
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36 %
27 %
37 %
CAPMAN’S OWNERSHIP*
Management and personnel
Nominee registered and other foreign shareholders
Domestic institutions and households
* EuroClear Finland Oy, CapMan analysis 30 June 2010. Personnel’s holding includes shareholdings among the 100 largest CapMan shareholders.
09 September 201012 CapMan - Carnegie Small & Mid Cap Seminar
• Form of profit distribution
• 20% of cash flows after
reaching a fund’s hurdle rate
• Hurdle rate typically 7 to 8%
p.a. (preferred annual return
on investment after returning
the paid-in capital)
• CapMan’s share of carried
interest 50 to 75% and
investment teams’ share 25 to
50%
• Dependent on exits and fund
level performance
• Function of AUM
• Paid for a fund’s life time
(typically 10 years)
• At CapMan on average 1% of
AUM
• Increase with new capital
raised
• Decrease with exits made
• Own investments at fair value
€61 million per 30 June 2010
• Remaining commitments €37
million 30 June 2010
• Nearly 60% in buyouts funds
• Objective to invest 1 to 5% of
the capital in the new funds
• Long-term return target 15%
p.a.
• Fair value changes and
realised gains
Management Company business Fund Investment Business
Management fees Carried interest
Returns on direct
fund investments from
own balance sheet
Real estate
consulting
• Based on hourly
fees, demand
driven
• Mostly external
clients
• Realprojekti
market leader in
RE consulting in
Finland
Attractive earnings model
Stable and predictable
income sourcesLarge profit potential
Carried interest potential
1 % 7 %
55 %6 %
34 %Funds generating carried interest
Funds that are expected to start generating carried interest in 2011
Other funds not yet in carry*
Funds with no carried interest potential to CapMan
Remaining investment capacity in CapMan funds
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* Current portfolios at fair value include €836.1 million debt financing in three real estate funds.
Portfolios at fair value, €2,152.4 million, and remaining investment capacity,
€1,110.0 million
30 June 2010
Majority of own investments in buyout funds
0
10
20
30
40
50
60
Investments at fair value and remaining commitments
Investments at fair value, in total €60.7 million
Remaining commitments, in total €37.0 million
30 June 2010
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M€
Key holdings from
CapMan Plc point of view:
09 September 201015 CapMan - Carnegie Small & Mid Cap Seminar
• Exit negotiations are under way in respect of
a number of companies in the portfolios of
CapMan funds, but the cautious atmosphere
in the marketplace could well continue to
postpone the exits from portfolio companies
planned by our funds.
• CHANGE IN GUIDANCE: We expect the
CapMan Equity VII A, B, and Sweden funds,
as well as the Finnmezzanine III A and B
funds, to transfer to carry during 2011.
• Management fees and
income from real estate
consulting will cover
CapMan’s fixed costs and
interest expenses in 2010.
• The development of the fair
value of fund investments
will depend on the
development of portfolio
companies and the general
market situation; we expect
fair value development to be
at least neutral for the rest of
this year.
Management Company businessFund Investment
Business
Management fees
+ real estate consultingCarried interest
Returns on direct
fund investments from
own balance sheet
Future outlook
We expect the overall result for 2010 to exceed the previous year’s result.
Why invest in CapMan?
• Alternative investing is a strong growth business globally, in all Nordic
countries and in Russia
• CapMan’s team is one of the most experienced ones in its home market
and has a solid track record
• Attractive earnings model as an alternative asset manager
– Operating costs covered by management fees and real estate consulting
income
– Significant carried interest potential
– CapMan’s own investments and remaining commitments to funds amount to
around €100 million and offer additional upside potential
– Risks are well spread over a large number of funds and investments
09 September 201016 CapMan - Carnegie Small & Mid Cap Seminar
IR calendar and IR schedule
IR Calendar IR team
Carnegie Small and Mid Cap
Seminar
9 Sep 2010, Stockholm
Silent time
22 October 2010
Q3 Result
5 November 2010
Lennart Simonsen, CEO, Senior Partner
tel. +358 207 207 567
Jerome Bouix, Deputy CEO, Senior Partner
tel. +358 207 207 558
Niko Haavisto, CFO
tel. +358 207 207 583
Mari Reponen, Communications Director
tel. +358 207 207 522
17 9 September 2010CapMan - Carnegie Small & Mid Cap Seminar
Additional slides
Summary of H1 2010
Transaction activity in the Nordics has increased...
...and CapMan has been active in making both new investments and exits.
Tough fundraising market continued in H1 2010...
...but CapMan has been able to close CapMan Buyout IX at satisfactory level.
Good deal flow in all investment areas...
...and CapMan is very well-placed in its chosen markets seeing most of the
relevant deals.
Satisfactory result for H1 2010...
...we expect our overall result for 2010 to exceed the previous result. We expect
the CapMan Equity VII A, B, and Sweden funds, as well as the Finnmezzanine III
A and B funds, to transfer to carry during 2011.
We will continue to focus on improving our profitability...
...in which respect the success of our investment activities and the efficiency of
our fund management operations will be critical.
09 September 201019 CapMan - Carnegie Small & Mid Cap Seminar
Key figures
09 September 201020 CapMan - Carnegie Small & Mid Cap Seminar
* The interest on the hybrid bond (net of tax) for the review period has been included when calculating EPS.
** In line with IFRS standards, hybrid bond included in equity also when calculating equity per share.
*** ROE and ROI have been annualised .
30.6.10 30.6.09 31.12.09
Earnings per share, cents* 4.6 -8.0 -3.0
Diluted, cents 4.6 -8.0 -3.0
Shareholders' equity / share, cents** 92.0 89.1 94.2
Share issue adjusted number of shares 84,281,766 82,257,171 83,015,987
Number of shares at the end of period 84,281,766 83,674,965 84,281,766
Number of shares outstanding 84,255,467 83,648,666 84,255,467
Company's possession of its own shares,
end of period 26,299 26,299 26,299
ROE, % p.a. 13.3 -14.2 0.2
ROI, % p.a. 11.7 -7.6 2.8
Equity ratio,% 55.7 54.4 55.1
Net gearing,% 37.4 36.5 34.8
• Target equity ratio at least 50%, realised 55.7%
• Target ROE over 25% p.a, realised 13.3% p.a.
Financial objectives
Objective H1/2010
GrowthAverage growth of capital under
management at least 15% p.a.
2.4% growth y-on-y to 30 Jun 2010.
Average growth 30.4% in 2004-2009.
Profitability
Return on equity over 25% p.a.
Equity fund performance above 15%
net IRR to fund investors p.a.
Return on equity 13.3% p.a.
Net return to investors historically
16.5% in equity funds (31 Dec 2009).
Capital structure
Finance 50% of CapMan Plc’s future
fund investments with debt financing
Equity ratio at least 50%
Net gearing 37.4% in 30 Jun 2010.
Equity ratio 55.7% in 30 Jun 2010.
Dividend policyPay-out ratio at least 50% of the net
profit
Dividend paid €0.04 per share
(EPS € -0.03 in 2009).
21 CapMan - Carnegie Small & Mid Cap Seminar 09 September 2010
Group Income Statement
€ million 1–6/10 1–6/09 1–12/09
Turnover 21.0 16.8 36.3
Management fees 17.3 15.6 33.3
Carried interest 2.5 0.0 0.0
Real Estate consulting 0.8 1.0 2.4
Other income 0.4 0.2 0.6
Other operating income 0.1 0.1 0.1
Operating expenses -16.9 -16.5 -33.0
Fair value gains / losses of investments 0.4 -4.6 -3.3
Operating profit 4.5 -4.2 0.1
Financial income and expenses 0.0 -0.2 -0.2
Share of associated companies' result 1.9 -1.2 1.3
Profit before taxes 6.4 -5.6 1.2
Profit for the period 5.2 -5.0 0.1
09 September 201022 CapMan - Carnegie Small & Mid Cap Seminar
Group balance sheet – Assets, IFRS
09 September 201023 CapMan - Carnegie Small & Mid Cap Seminar
€ thousands 30.6.10 30.6.09 31.12.09
Tangible assets 704 1,024 838
Goodwill 10,245 10,245 10,245
Other intangible assets 2,677 3,131 2,972
Investments in associated companies 7,698 4,345 6,547
Investments at fair value through profit and loss
Investments in funds 60,697 56,190 59,421
Other financial assets 617 796 585
Receivables 25,378 23,944 25,304
Deferred income tax assets 6,586 4,685 6,177
Non-current assets 114,602 104,360 112,089
Trade and other receivables 9,075 11,451 10,291
Other financial assets at fair value
through profit and loss 1,368 852 1,673
Cash and bank 14,611 18,210 17,978
Current assets 25,054 30,513 29,942
TOTAL ASSETS 139,656 134,873 142,031
Group balance sheet – Total equity and liabilities, IFRS
09 September 201024 CapMan - Carnegie Small & Mid Cap Seminar
€ thousands 30.6.10 30.6.09 31.12.09
Share capital 772 772 772
Share premium account 38,968 38,968 38,968
Other reserves 38,678 36,625 37,347
Translation difference -317 -703 -392
Retained earnings -585 -2,550 1,097
Capital attributable the Company's equity holders 77,516 73,112 77,792
Minority interest 247 186 413
Total equity 77,763 73,298 78,205
Deferred income tax liabilities 1,897 341 1,824
Interest-bearing loans and borrowings 38,819 43,125 40,625
Other liabilities 1,267 2,297 2,291
Non-current liabilities 41,983 45,763 44,740
Trade and other payables 13,660 12,806 12,227
Interest-bearing loans and borrowings 6,250 2,875 6,250
Current income tax liabilities 0 131 609
Current liabilities 19,910 15,812 19,086
Total liabilities 61,893 61,575 63,826
TOTAL EQUITY AND LIABILITIES 139,656 134,873 142,031