Rand Capital Corporation · NASDAQ:RAND
Rand Capital — Shareholder Meeting (April 2016)
19 slides from Rand Capital's shareholder meeting presentation, Apr 21, 2016
Slide 1: 2016 Annual Shareholders Meeting
2016 Annual Shareholders Meeting April 21, 2016 Allen F. “Pete” Grum President & CEO © 2016 Rand Capital Corporation NASDAQ: RAND
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements included in these slides that do not relate to present or historical conditions are “forward- looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, and in Section 21E of the Securities Exchange Act of 1934. Additional oral
Slide 3: 2015 – Another Year of Solid Growth
2015 – Another Year of Solid Growth Five Consecutive Years of Net Asset Value (NAV) Per Share Growth (NAV per Share is After Tax) $5.11 $5.35 $4.38 $3.90 $3.38 $3.58 2010 2011 2012 2013 2014 2015 SIGNIFICANT EXITS: Innov-X Synacor Liazon BinOptics Gemcor II Systems Ultra-Scan QuaDPharma GridApp Syna
Slide 4: Gross 5-Year Returns: ~30%
Gross 5-Year Returns: ~30% Rand Capital Exits* December 31, 2010 - March 31, 2016 Full-Cycle Average Achieved Total Cash Gross Cash Investments Holding Generated Cash IRR Length Invested Exited (Interest & Gain) Multiple (years) 17 6.3 $19.0mm $67.5mm 3.6 30.2% More than tripled cash investment * In
Slide 5: Results Demonstrated in Stock Performance
Results Demonstrated in Stock Performance Outperformed 5-year BDC Index and S&P 500 Share Price Change © 2016 Rand Capital Corporation 5
Slide 6: Top-Tier BDC Performance in NAV Growth
Top-Tier BDC Performance in NAV Growth Rand ranked #1 BDC with highest NAV/Share growth among 32 BDCs Rand’s NAV grew 4.7% 2014 to 2015 Year-over-Year NAV/Share Growth 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% Source: BDCInvestor.com © 2016 Rand Capital Corporation 6
Slide 7: Top-Tier BDC Performance in Shareholder Returns
Top-Tier BDC Performance in Shareholder Returns 12-Month Total Shareholder Return Comparisons RAND is up 15.4% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% Source: Seacap Financial BDC Group as of March 31, 2016 © 2016 Rand Capital Corporation 7
Slide 8: Success Story – Gemcor II, LLC
Success Story – Gemcor II, LLC Acquired: 6/28/04 Revenue increased to > 5x Workforce grew from 29 to 95 Investment: 31% equity position Equity cost: $625 thousand Sold 3/31/16 for ~ $50 million Rand gross proceeds ~$15.2 million Return on invested capital: ~11x Internal rate of ret
Slide 9: Five Largest Investments = 43% of Portfolio
Five Largest Investments = 43% of Portfolio $26 million total portfolio, 32 companies Investments % of Year Company at Fair Value Industry Total Acquired (in millions) Portfolio Healthcare—Testing Rheonix, Inc. $2.9 2009 Devices 12% Software—Predictive Outmatch $2.1 2010 Talent Selection 8% Software
Slide 10: Featured Portfolio Companies
Featured Portfolio Companies Initial equity investment: 10/29/09 Initial equity investment: 11/18/10 $680 thousand follow-on investment $500 thousand follow-on investment (2015) (2015) 4% equity position 5% equity position Equity cost: $2.1 million Equity cost: $2.8 million Equity
Slide 11: Stronger Investment Engine
Stronger Investment Engine Rand New & Follow-on Investments Projected to Investments Mature in 2 - 5 Years ($ in millions) $7.0 $6.1 $6.3 $5.2 $2.5 2011 2012 2013 2014 2015 © 2016 Rand Capital Corporation 11
Slide 12: Strong History: Now Defining Our Future
Strong History: Now Defining Our Future Completed busiest investment periods in 40+ year history • >$5 million invested in 2012, 2013, 2014 and 2015 • Record level of investment in 2015 at $7.0 million into 16 portfolio companies Large exits over last 4 years Current portfolio companies at var
Slide 13: Evaluated Strategic Alternatives for Rand
Evaluated Strategic Alternatives for Rand Objective: Drive Shareholder Value Options Considered - Voluntary Delisting from NASDAQ / Deregistering from SEC Reporting Also Called: Going Dark Significant negative impact to trading liquidity and value - Electing RIC Status (Special Tax Vehicle) • Requ
Slide 14: Selected Growth Strategies
Selected Growth Strategies Objective: Drive Shareholder Value Strategies to Pursue + Acquisitions & Mergers Looking for opportunities Will consider value-maximizing sale transaction + Accelerated Growth More aggressive plan with larger capital base Enhanced relationship with SBA: Expand borr
Slide 15: Long-Term Strategy to Drive Growth
Long-Term Strategy to Drive Growth Increase rate of growth with larger investment capacity Increase leverage for greater investment capability Increase participation in transactions Broaden investment network and geography Strengthen investor communications Create scale to add talent Higher funding
Slide 16: Capital Allocation Priorities
Capital Allocation Priorities Available Cash Balance*: ~$12 million Basis for increased leverage with SBA Uses of Cash Follow-on investments New investments Stock repurchases Debt repayment Acquisitions * At the SBIC, net of escrow and estimated taxes © 2016 Rand Capital Corporation 16
Slide 17: 2016 Investor Relations Action Plan
2016 Investor Relations Action Plan Continue increased level of investor communication Press releases – business events and portfolio company successes Website improvements Increase outreach effort to investment community Present at 2 investor conferences Host 1:1 meetings: New York, Bos
Slide 18: Why Rand?
Why Rand? Strong performance: financially and operationally Proven management team Delivers shareholder returns Strategy for NAV growth Only early and expansion stage SBIC fund in Upstate New York Solid reputation among investment partners • Decisive and responsive Opportunistic share
Slide 19: 2016 Annual Shareholders Meeting
2016 Annual Shareholders Meeting April 21, 2016 © 2016 Rand Capital Corporation NASDAQ: RAND