CVC Capital Partners plc · EURONEXT:CVC
CVC Capital Partners — CVC Income & Growth — Investor Presentation (March 2024)
54 slides from CVC Capital Partners's investor presentation, March 2024
Slide 1: CVC Income & Growth Q1 2024
• Marketing Material CVC Income & Growth Q1 2024 • For Qualified Institutional and Professional Investors only. Strictly Confidential – Not for Redistribution
Slide 2: I. Why CVC Income & Growth Now?
I. Why CVC Income & Growth Now?
Slide 3: Why CVC Income & Growth Now?
Why CVC Income & Growth Now? € Focus on reliable Rising dividend with 55% weighted Secured position in Experience portfolio income generation low sharpe ratio average loan to capital structure management team with capital growth value limits credit losses with long track record 3 Note: The above sta
Slide 4: II. Introduction to CVC Group
II. Introduction to CVC Group
Slide 5: CVC: One Integrated Platform
CVC: One Integrated Platform Managing €188bn of AUM1 across six complementary investment strategies €188bn AUM1 Private Equity €118bn AUM 1 Secondaries Credit Infrastructure Europe / Americas Asia StratOps Growth Strategy Global leader – ability Complementary Highly scalable, lower Complementary Pro
Slide 6: CVC A Leader in Global Credit & Private Equity
CVC A Leader in Global Credit & Private Equity1 Europe / Americas Asia Credit Strategic Opportunities Secondaries & Growth 1981 1999 2005 2014 2021 Assets Under Management | €39.6bn Performing Credit | €29.1bn Private Credit | €10.5bn Liquid strategies based in U.S. and Europe focused on senior secu
Slide 7: Portfolio Management Team
Portfolio Management Team P I E T E R S TA E L E N S M I T C H E L L G LY N N Managing Director Managing Director Portfolio Manager Assistant Portfolio Manager 22 Years’ Experience | 6 Years at CVC 16 Years’ Experience | 11 Years at CVC Pieter joined CVC in 2018. Pieter is a member of the Performing
Slide 8: Performing Credit Investment Team
Performing Credit Investment Team Portfolio Management & Credit Research Team Portfolio Management Team Credit Research Team Kevin Wong Chloe Qiao Alvaro Ruiz Nolasco Giovanni Visentin Irene Huete Managing Director | 11 Yrs Exp. Director, Asst. PM | 12 Yrs Exp. Director | 15 Yrs Exp. Director | 14 Y
Slide 9: III. Introduction to CVC Income & Growth
III. Introduction to CVC Income & Growth
Slide 10: Borrower Statistics
Borrower Statistics Borrower Statistics Borrowers €2.2 bn LTM Revenue €385 m LTM EBITDA 5.6x Total Leverage 10.1x Enterprise Multiple 55% LTV For informational purposes only. Borrower statistics shown as a weighted average of the portfolio as at 31 December 2023. 10 The investments presented herein
Slide 11: Fund Monthly NAV Performance
Fund Monthly NAV Performance CVC Income & Growth Limited Fund NAV Total Return Performance (since inception)1,2 EUR Share Class Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2023 3.9% 2.7% (0.6%) 2.0% 1.5% 1.4% 1.9% 2.1% 2.4% (0.3%) 0.6% 2.3% 21.7% 2022 0.3% (1.3%) 0.4% (0.8%) (3.2%) (5.4
Slide 12: Performance Update: Allocation, Return & Attribution Comparison
Performance Update Allocation, Return & Attribution Comparison1,2,3 Asset Allocation by Strategy Gross Return by Strategy Attribution by Strategy 30.0% 22.5% 0% Net Return 22% 25.0% 20.0% Performing Credit 13.3% 20234 49% 15.0% 51% 10.0% 26% 5.0% 10.5% Credit Opportunities 0.0% -0.3% -0.9% -5.0% 8.7
Slide 13: Portfolio Positioning
Portfolio Positioning Snapshot as at 31 December 2023 Portfolio Overview1 Asset Class Exposure1 Performing Credit / Credit Opportunities Strategy % 52.1% / 47.9% Loans (1st Lien) 3% 2% 2% Floating Rate / Fixed Rate / Other % 78.2% / 19.4% / 2.6% 7% Senior Secured Bonds (Fixed Rate) 8% Loans (2nd Lie
Slide 14: IV. Why CVC Income & Growth?
IV. Why CVC Income & Growth?
Slide 15: Dividends Outlook
Dividends Outlook £ Share Dividends € Share Dividends 4.50p 4.50¢ 4.00p 4.00¢ 3.50p 3.50¢ 3.00p 3.00¢ Dividend Dividend 2.50p Guidance1 2.50¢ Guidance1 2.25p 0.475¢ 2.00p 2.00¢ 1.00p 0.25¢ 1.50p 1.50¢ 1.00p 1.00¢ 2.0625p 2.0625p 2.0625p 2.0625p 1.8125¢ 1.8125¢ 1.8125¢ 1.8125¢ 0.50p 0.50¢ 1.125p 1.12
Slide 16: Strong Long Term Track Record With Low Volatility
Strong Long Term Track Record With Low Volatility Resulting in Attractive Sharpe Ratio 10yr 10yr 10yr 10yr Total Return Annualised Return Standard Deviation Sharpe Ratio CVCG Share Price1 66.0% 5.2% 14.2% 0.37 CVC IG (€) NAV 65.4% 5.2% 8.4% 0.61 CS WELLI (€) 42.4% 3.7% 5.8% 0.63 CS WEHYI (€) 38.7% 3
Slide 17: Why CVC Credit: CVCG vs. Other Debt Trusts
Why CVC Credit: CVCG vs. Other Debt Trusts1 Underlying 12 Month Dividend NAV Return2 Ticker Stated Target Yield Investments Yield2 1yr | 3yr | 5yr 1yr: 18.8% GBP: CVCG LN Sub investment grade CVC Income & Growth 8-10% 8.48% 3yr: 23.9% EUR: CVCE LN loans and bonds 5yr: 30.1% 1yr: 13.0% M&G Credit Inc
Slide 18: V. Why Leveraged Loans
V. Why Leveraged Loans
Slide 19: Leveraged Loans & High Yield Bonds: The Key Differences
Leveraged Loans & High Yield Bonds The Key Differences Floating-rate Loans Fixed-rate Bonds VS Most senior and best protected layer of debt in the capital In Europe – both senior and subordinated structure Seniority In U.S. – both senior and subordinated Secured on assets Security Secured and Unsecu
Slide 20: Senior Secured Nature of Loans
Senior Secured Nature of Loans European Leveraged Loan & High Yield Default & Recovery Rates European Leverage Loan Default & Recovery Rates1 European High Yield Default & Recovery Rates1 9% 100% 9% 100% 8% 90% 8% 90% 80% 80% 7% 7% 70% 70% 6% 6% 60% 60% 15Y Loan Recovery Average: 55.9% 5% 5% 50% 50%
Slide 21: Dividend Yields vs. Leveraged Loan
Dividend Yields vs. Leveraged Loan European Leveraged Loan vs. Equity Yields1 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Stoxx600 CS WELLI For informational purposes only. 1. Sources: Bloomberg - Stoxx600 dividend yield as at 31 Jan
Slide 22: Considerable Rate Cuts Are Priced Into the Market Today
Considerable Rate Cuts Are Priced Into the Market Today Market pricing in BoE target rate going to 4.25% and ECB target rate going to 2.5% by end of 20241 EUR GBP 4.0 0.0 5.2 0.0 3.8 -0.5 -1.0 Number of Hikes/Cuts Priced In 5.0 Number of Hikes/cuts Priced In 3.6 -1.0 Impled Policy Rate (%) Implied P
Slide 23: VI. Default Outlook
VI. Default Outlook
Slide 24: Yields vs. Loss Rates: European Leveraged Loan
24 10% 12% 0% 2% 4% 6% 8% Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 For informational purposes only. May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Yields vs. Loss Rates Sep-09 Jan-10 May-10 European Leveraged Loan Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Curren
Slide 25: CVC European Performing Credit Portfolio Loan Default & Loss Rates
CVC European Performing Credit Portfolio Loan Default & Loss Rates European Performing Credit Portfolio Loans in Default vs. European Leveraged Loan Market Defaults Over Time1 CVC European Performing Credit Default Rate CVC Avg Annual Default Rate S.I. 0.87% CVC European Performing Credit Loss Rate
Slide 26: 2024 European Default Rate Forecast
2024 European Default Rate Forecast 2023 Forecast1 2024 Forecast2 Loans: 5.0% Loans: 3.0% Goldman Sachs High Yield: 3.0% High Yield: 2.3% Loans: 3.0% Loans: 3.0% Barclays High Yield: 5.0% High Yield: 2.5% Loans: 3.7% Deutsche Bank Speculative grade: 4.2% High Yield: 2.2% Loans: 1.0% Loans: 3.0% J.P.
Slide 27: VII. Overview of CVC Income & Growth
VII. Overview of CVC Income & Growth
Slide 28: Key Terms
Key Terms Company Type Limited liability closed-ended company incorporated in Jersey Listing London Stock Exchange Main Market – Premium Listing on the Official List on 26 June 2013 Shares in Issue1 €97m (Euro Class) / £129m (GBP Class) Market Capitalisation1 €91m (Euro Class) / £32m (GBP Class) Cur
Slide 29: Fund NAV & Discount
Fund NAV & Discount CVC Income & Growth Limited GBP NAV & Discount1 EUR NAV & Discount1 1.2 10% 1.2 10% 31 December 2023 31 December 2023 GBP Discount: -9.6% EUR Discount: -5.9% GBP NAV: 1.10 5% EUR NAV: 1.00 5% 1.1 0% 1.1 0% -5% -5% 1 -10% 1 -10% Discount Discount NAV NAV -15% -15% 0.9 -20% 0.9 -20
Slide 30: VIII. ESG
VIII. ESG
Slide 31: CVC Credit UN PRI Reporting Score
CVC Credit UN PRI Reporting Score In December 2023, CVC Credit received is inaugural UN PRI reporting score Policy, Fixed Income - Fixed Income – Confidence Governance and corporate Private Debt Building Strategy Measures 4 out of 5 stars achieved across the three key modules Assessing CVC Credit’s
Slide 32: ESG: Investment Process
Environmental, Social and Governance (ESG): Investment Process I N V E S T M E N T P R O C E S S ONGOING PROCESS ENHANCEMENT • Semi-monthly ESG Working Group Meetings to enhance SCREENER INVESTMENT ONGOING ESG processes and projects STAGE COMMITTEE MONITORING • Ongoing proprietary enhancements to IT
Slide 33: ESG: Declined European Deals Due to ESG Concerns
Environmental, Social and Governance (ESG): Declined European Deals Due to ESG Concerns Company Urbaser Median Groupe Casino Coveris Company Integrated waste management Largest private operator of Leading food retailer in Europe. Leading packaging company that company, primarily focused on rehabilit
Slide 34: Appendix
Appendix Additional Information
Slide 35: Monthly Performance Overview: European Credit Opportunities Strategy
Monthly Performance Overview European Credit Opportunities Strategy Strategy Monthly Fund Net Returns1 Benchmark3 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Return2 CS WELLI MS ELLI 2023 4.0% 2.8% (0.6%) 2.1% 1.5% 1.4% 2.0% 2.2% 2.5% (0.3%) 0.7% 2.4% 22.48% 12.5% 13.4% 2022 0.2% (1.3%)
Slide 36: Detailed Attribution Analysis (1/2)
Detailed Attribution Analysis: European Credit Opportunities Strategy (1/2) Historic Net Return Attribution (Inception - 2017) 35% Performing Credit Credit Opportunities Cash/Expenses Fees 29.2% 30% 25% 19.1% 20% 14.0% 15% 29.5% 9.5% 9.2% 16.2% 15.4% 10% 7.6% 5.1% 7.7% 4.5% 5.6% 8.9% 5% 3.1% 3.7% 3.
Slide 37: Detailed Attribution Analysis (2/2)
Detailed Attribution Analysis: European Credit Opportunities Strategy (2/2) Historic Net Return Attribution (2018 – 2023) 30% Performing Credit Credit Opportunities Cash/Expenses Fees 25% 22.5% 20% 12.4% 13.3% 15% 8.7% 10% 11.8% 2.4% 7.2% 5% 2.0% 10.5% 0.3% 1.6% 0.8% 3.3% 2.0% 2.8% 3.3% 0% 1.0% (0.4
Slide 38: Portfolio Allocation by Asset Class
Portfolio Allocation by Asset Class Highlights Dynamic Investing Across the Capital Structure Dynamic Investing Across the Capital Structure IPO of CVC Credit Partners CRP II / CEC Roll European Opportunities Ltd. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Senior Secured Loan Senior Secured Bond 2n
Slide 39: Allocation Analysis by Strategy
Allocation Analysis by Strategy Shows Dynamic Investing Across Strategies IPO of CVC Credit Partners CRP II / CEC Roll European Opportunities Ltd. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Performing Credit Credit Opportunities Cash For informational purposes only. Source: CVC Credit Partners. As
Slide 40: CVC Global Performing Credit Composite Performance
CVC Global Performing Credit Composite Performance Through a combination of solid credit selection and pro-active trading, CVC has more than offset any realised losses with realised gains. In fact, investors have benefited from a +0.2% annualised GAIN from a combination of fee income and trading gai
Slide 41: Important Disclaimers
Important Disclaimers
Slide 42: Important Disclosures (1/2)
Important Disclosures (1/2) This presentation (the "Presentation") shall mean and include the slides that follow, the oral presentation of the slides, the question-and-answer session that follows that oral presentation, hard copies of this document and any other materials distributed at, or in conne
Slide 43: Important Disclosures (2/2)
Important Disclosures (2/2) In addition, in the United Kingdom, this communication is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments who fall within the definition of "investment professional" in Article
Slide 44: Additional Footnotes
Additional Footnotes
Slide 45: Additional Footnotes
Additional Footnotes Performance Updated: Allocation, Returns & Attribution Comparison (slide 12) 1. CVC Credit Partners adopted the categorisation of investment strategies described above in September 2011 and accordingly the attribution of investment returns as between strategies above in respect
Slide 46: Additional Footnotes
Additional Footnotes CVC European Performing Credit Portfolio Loans Default & Loss Rates (slide 25) 1. Source: CVC Credit Partners and Morningstar European Leveraged Loan Index, Q3 2023. Data relates to European CLOs, separately managed accounts and commingled funds, from date of inception to Q3 202
Slide 47: Additional Footnotes
Additional Footnotes CVC Credit Global Performing Credit Composite Performance (slide 40) 1. Performance statistics reflect returns (gross of fees) from inception (May 2013) through 31 December 2023. Global Performing Credit Composite is a composite of 13 Performing Credit SMAs and 3 commingled fund
Slide 48: Additional Disclosures
Additional Disclosures Indices The Credit Suisse Leveraged Loan Index is an unmanaged market value-weighted index representing the investable universe of the U.S. dollar-denominated leverage loan market. The index reflects reinvestment of all distributions and changes in market prices. The Credit Su
Slide 49: Principal Risk Factors
Principal Risk Factors
Slide 50: Principal Risk Factors
Principal Risk Factors An investment in the Company will carry a number of risks, including the risk that the entire investment may be lost. Set out below is a non-exhaustive list of the material risks that should be considered by recipients of this presentation. The list below does not constitute a
Slide 51: Principal Risk Factors
Principal Risk Factors 2. Risks relating to the Investment Vehicle ▪ No reliance should be placed by investors on the past performance of the Investment Vehicle ▪ Substantial redemptions by investors in the Investment Vehicle may cause a liquidation of the Investments which may distort the balance o
Slide 52: Principal Risk Factors
Principal Risk Factors ▪ The Investment Vehicle may be subject to losses on Investments as a result of insolvency or clawback legislation and/or fraudulent conveyance findings by courts ▪ The collateral and security arrangements attached to an Investment may not have been properly created or perfect
Slide 53: Principal Risk Factors
Principal Risk Factors Risks relating to Law, Regulation and Taxation ▪ Changes in law or regulations, or a failure to comply with any laws or regulations, may adversely affect the respective businesses, investments and performance of the Company, Investment Vehicle, CVC Credit Investment Services a
Slide 54: CVC
CVC
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