Rand Capital Corporation · NASDAQ:RAND
Rand Capital — Investor Presentation (September 2015)
27 slides from Rand Capital's investor presentation, September 2015
Slide 1: Investor Presentation
Investor Presentation September 2015 Allen F. “Pete” Grum President & CEO Daniel P. Penberthy Executive Vice President & CFO © 2015 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 21F of the Securities Exchange Act of 1934. Additional oral
Slide 3: Rand Capital Corporation
Rand Capital Corporation Rand Capital is a Business Development Company that makes venture capital investments in promising companies with an emerging product, service or technology concept. Market capitalization $23.9 million Total assets $43.0 million Recent price $3.77 Net assets $32.7 million Ne
Slide 4: Our Investment Objectives and Strategy
Our Investment Objectives and Strategy Drive near- and long-term portfolio growth Achieve long-term capital appreciation on equity investments Maintain current cash flow from debenture and pass-through equity instruments Partner with other investors Identify early expansion stage companies:
Slide 5: Regulations Provide Transparency
Regulations Provide Transparency Rand is a Business Development Company (BDC) Governed by the Investment Company Act of 1940 Requires detailed disclosure of investments and strategy Regulated by the SEC Provides for Small Business Investment Company (SBIC) subsidiaries Access to long-term,
Slide 6: Attractive Business Model
Attractive Business Model Provides for opportunistic equity and debt investments Rand Investment Mix Debt 20% Capital gains and appreciation Equity & Member- ship Increasing net asset value Interests 80% (NAV) Typical BDC Investment Mix Debt Dividend income 100% © 2015 Rand Capital Corporation
Slide 7: Significant BDC Industry Growth Since 2010
Significant BDC Industry Growth Since 2010 2010 2014 +117% # of Public BDCs 24 52 +170% Growth in Assets $23B $62B Industry Yields 10.1% 9.6% # of Institutional Investors ~400 ~800 Number of Rated BDCs 5 12 +274% Total Equity Market Cap $9.1B $34.0B Source: Keefe, Bruyette & Woods, Inc. filings © 20
Slide 8: Providing Venture Capital for Over 45 Years
Providing Venture Capital for Over 45 Years Rand becomes a Business Rand Capital Development Allen “Pete” Grum Corp. founded Company (BDC); named President; by George Rand Margaret Brechtel Dan Penberthy Raised and Don Ross named VP of named CFO and EVP $3.7 million Finance 1969 1971 1996 1997 2001
Slide 9: Strategy Drives Results
Strategy Drives Results Rand Net Asset Value (NAV) Per Share (NAV is After Tax) $5.11 $4.38 $3.90 $3.47 $3.54 $3.58 $3.40 $3.38 $2.93 $1.51 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 © 2015 Rand Capital Corporation 9
Slide 10: Diverse Portfolio of Investments
Diverse Portfolio of Investments © 2015 Rand Capital Corporation 10
Slide 11: Record New Investments in 2014
Record New Investments in 2014 Rand New & Follow-on Five Largest New Investments Investments—2014 ($ in millions) $6.1 $6.3 $5.2 $4.0 $3.4 $3.1 $2.6 $2.6 $2.5 $1.7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 © 2015 Rand Capital Corporation 11
Slide 12: Record Proceeds in 2013 - 2014
Record Proceeds in 2013 - 2014 Acquired: 11/8/11 Acquired: 11/9/10 Cost: $1.8 million Cost: $1.1 million Total Proceeds: $10.1 million Total Proceeds: $6.9 million Return on invested capital: Return on invested capital: >5.5x ~6.3x Internal rate of return: >75% Internal rate of r
Slide 13: Five Largest Investments = 54% of Portfolio
Five Largest Investments = 54% of Portfolio $34.3 million total portfolio, 31 companies Investments Year % of Total Company at Fair Value Industry (in millions) Acquired Portfolio $9.8 2004 Manufacturing— 29% Gemcor II, LLC Aerospace Machinery $2.9 2009 Healthcare— 9% Rheonix, Inc. Testing Devices $
Slide 14: Diverse Portfolio Reflects Strategy
Diverse Portfolio Reflects Strategy Investments by Industry Classification Oil & Gas Consumer and Other Products 5.3% 8.1% Contact Center 8.3% Manufacturing Healthcare 46.2% 11.3% Software 20.8% Based on total investments at fair value of $34.3 million as of June 30, 2015 © 2015 Rand Capital Corpora
Slide 15: Primary Geographic Focus
Primary Geographic Focus 31 investments at June 30, 2015, focused on Upstate NY and surrounding regions Additional investments: Georgia (1), Ohio (1), Tennessee (1) and Florida (1) 1 3 8 5 1 3 5 1 © 2015 Rand Capital Corporation 15
Slide 16: Largest Portfolio Company
Largest Portfolio Company Success Story – Gemcor II, LLC Acquired: 6/28/04 Revenue increased more than 5x over ten years Workforce grew from 50 to 82 in five years Investment type: 31% equity position Equity cost: $625 thousand Equity fair value at 6/30/15: $9.3 million Gemcor is a leadi
Slide 17: Efficient Internal Management of Assets
Efficient Internal Management of Assets Internal management structure offers SG&A leverage Investment managers are employed by Rand Greater transparency of fund manager compensation versus externally managed BDCs Shareholders may vote on compensation issues Fixed operating expense model driv
Slide 18: Co-Investment Partners
Co-Investment Partners Provide financial support and stability SBIC relationship provides financial flexibility SBA holds $8 million of RAND debt at 3.54% weighted avg. variable interest rate as of 6/30/2015 Partnering with other investment firms Deal sourcing Adds stability © 2015 Rand Ca
Slide 19: Varied Investment Partners
Varied Investment Partners © 2015 Rand Capital Corporation 19
Slide 20: Strong Capital Structure
Strong Capital Structure (in millions) June 30, December 31, 2015 2014 Cash $6.5 $13.2 Debentures guaranteed by the SBA* 8.0 8.0 Total stockholders’ equity 32.7 32.4 *Weighted average interest rate at June 30, 2015 was 3.54%; maturity date range from 2022-2025. © 2015 Rand Capital Corporation 20
Slide 21: Building Shareholder Value
Building Shareholder Value Results and communications drive stock performance Volume © 2015 Rand Capital Corporation 21
Slide 22: Why Rand?
Why Rand? Key Investment Highlights Opportunity to participate in venture capital opportunities BDC Access to SBA capital Early or expansion stage companies New or unique products, technologies or services with Investment Focus high growth potential Seek portfolio companies with strong lea
Slide 23: Investor Presentation
Investor Presentation September 2015 © 2015 Rand Capital Corporation NASDAQ: RAND
Slide 24: Supplemental Information
Supplemental Information © 2015 Rand Capital Corporation NASDAQ: RAND
Slide 25: Experienced Management Team
Experienced Management Team Allen F. “Pete” Grum – President and Chief Executive Officer Mr. Grum is a seasoned financial services executive with over 20 years of experience with financial services organizations. Mr. Grum oversees the Company’s investment activities and takes an active role in the i
Slide 26: What is a Business Development Company?
What is a Business Development Company? BDCs are publicly traded closed-end funds that enable investors to participate in high yielding private market investing while maintaining daily liquidity BDCs are regulated under the Investment Company Act of 1940 and by the SEC and have the following cha
Slide 27: For More Information, Contact:
For More Information, Contact: Allen F. (“Pete”) Grum Daniel P. Penberthy President & CEO Executive Vice President & CFO (716) 853-0802 (716) 853-0802 pgrum@randcapital.com dpenberthy@randcapital.com Deborah K. Pawlowski Investor Relations (716) 843-3908 dpawlowski@keiadvisors.com © 2015 Rand Capita
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