JZ Capital Partners Limited · LSE:JZCP
JZ Capital Partners — H1 2015 Earnings Presentation
33 slides from JZ Capital Partners's earnings presentation, October 2014
Slide 1: 2014 Interim Results Presentation
2014 Interim Results Presentation
Slide 2: Disclaimer
This Document and the presentation to which it relates (‘Presentation’) do not constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite or otherwise acquire or dispose of any securities o
Slide 3: Contents
Contents Investment strategy Highlights Convertible Unsecured Loan Stock (CULS) Portfolio review Investment and realisation activity Outlook 3
Slide 4: Our investment strategy
Our investment strategy Focus on strategic build-ups in the specialised microcap market in the US and Europe Value investing in the NY real estate sector, replicating proven microcap strategy of buying businesses at reasonable values in conjunction with excellent management teams Experienced m
Slide 5: Financial highlights
Financial highlights •NAV growth in 20 of the past 22 quarters including: •NAV of US$657.4 million (FYE 28/02/14: US$666.5 million) •Pre-dividend NAV per share of US$10.27 (28/02/14: US$10.25) Performance •Interim Dividend of 15 cents per share for the period (H1 2013: 14.5 cents per share) •Solid t
Slide 6: Operational highlights
Operational highlights • Deployed US$128.6 million in new investments • Proceeds of US$96.4 million from realisations Investment • US$50.0 million investment in Bright Spruce Activity Fund, the “founders fund” of our newly established asset management business • US$12.5 million in new real estate in
Slide 7: Balance sheet summary
Balance sheet summary US$ 000 US$ 000 Investments 31/08/14 28/02/14 US Microcap Investments 368,736 341,560 US$ 000 US$ 000 Investments 31/08/14 28/02/14 European Microcap 217,811 186,781 Total Assets 904,024 804,255 Investments - Liabilities (63,918) (30,598) Real Estate Investments 127,198 112,792
Slide 8: Net asset value development
Net asset value development $0.25 $0.10 ($0.10) $0.32 $0.13 ($0.16) ($0.20) ($0.11) $10.25 ($0.11) $10.11 NAV per Value of Private Value of Public Income from Escrows Change in Dividends Paid Fees and Finance Costs Foreign NAV per Ordinary Share Investments Investments Investments received CULS fair
Slide 9: Share price and NAV per share performance
Share price and NAV per share performance NAV total returns Total shareholder returns 20.5% 29.8% 5.5% NAV to market price discount 0.3% 33% -1.6% -4.7% 29% 3 months 1 year Three years 26% 3 months 1 year Three years 31/08/2011 31/08/2013 31/08/2014 9
Slide 10: Convertible Unsecured Loan Stock
Convertible Unsecured Loan Stock
Slide 11: Convertible Unsecured Loan Stock
Convertible Unsecured Loan Stock First of two tranches issued in July, raising £40 million Rationale: To enhance NAV growth in the future Summary of Tranche 1 of CULS through capitalising on investment opportunities in an attractive investment Size £40m environment To improve liquidity in JZCP’s
Slide 12: Portfolio Review
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Slide 13: Portfolio review
Portfolio review Industry Real estate - 14% Vintage Gaming - 1% >10 years - 2% Financial services - 13% Cash & cash equivalents 5-10 years - - 11% 11% Industrial - 25% 3-5 years - 28% Service - 14% 1-3 years - 31% Healthcare - 10% <1 year - 28% Transportation/ logistics - 9% Consumer - 3% 13
Slide 14: US micro cap verticals
US micro cap verticals Verticals are sector driven “build-ups” created to add value through operational synergies across businesses and through exit multiple expansion Industrial Services Testing Water Logistics Solutions Healthcare Services Services Solutions (ISS) Industrial Revenue cycle Laborato
Slide 15: Significant US micro cap co-investments
Significant US micro cap co-investments TierPoint Vitalyst Suzo-Happ MedPlast/UPG Provider of Provider of “how to” Designer, Precision plastics information support for software manufacturer and moulding business technology and data users distributor of parts (April 2012) centre services (September 2
Slide 16: European micro cap
European micro cap Strategy • Identical value-oriented investment approach • Targeting high quality micro cap companies • Investment focus on financial services outsourcing Investment Case • Strategy coordinated by an experienced management team • The management team has invested in European micro c
Slide 17: Recent European micro cap acquisitions
Recent European micro cap acquisitions Petrocorner Fincontinuo* A strategic build-up to acquire A leading independent 2 – 3% of Spain’s petrol lending platform in Italy. station market. Post-period end, JZCP Backing one of the industry’s invested €2.1 million in “best in class” management October 20
Slide 18: Established European micro cap investments
Established European micro cap investments Factor Energia Xacom Docout Grupo Ombuds Toro Finance Energy/utility Telecoms products Provider of document Provider of personal Provider of short-term distribution and business in Spain processing and security and asset working capital reselling business s
Slide 19: Real estate
Real estate Strategy • Applying the principles of our micro cap investment strategy • Investing with an experienced and successful management team • Buying properties in off-market transactions Investment Case • Developing and repositioning residential and retail properties in Brooklyn, New York • S
Slide 20: Real estate: portfolio by neighbourhood
Real estate: portfolio by neighbourhood 20
Slide 21: Real estate overview
Real estate overview Valuations continue to rise as rents grow: • Median residential rental price in Northern Brooklyn increased 6.6% from July 2013 to July 2014 • 14th consecutive year-over-year increase in monthly rent(1) • Along Bedford Ave. in Williamsburg, average retail rents were appx. $50/sq
Slide 22: Recent real estate acquisitions
Recent real estate acquisitions Roebling Portfolio Hart St. 125,000 sq. ft. mixed-use loft 17,000 sq. ft., 21 unit loft-style building in Williamsburg, residential building in Brooklyn’s Brooklyn, located within blocks of Bushwick-Wyckoff Heights our other assets in the neighborhood neighborhood Dat
Slide 23: JZCP's current real estate portfolio
JZCP’s current real estate portfolio What we’ve purchased: • Greenpoint: Dynamic, waterfront neighborhood with panoramic Manhattan views • Top waterfront development site: 650,000 sq. ft. buildable • Williamsburg: Epicenter of positive shifting demographics in North Brooklyn • 8 mixed-use properties
Slide 24: JZCP's current real estate portfolio
JZCP’s current real estate portfolio Bedford Avenue Triangle Fulton Portfolio 100,000 sq. ft. mixed use facility 4,791 sq. ft. commercial building Development parcel with significant on one of the most desirable directly across from the front buildable air rights on Fulton Mall blocks in Williamsbur
Slide 25: Case study: Bedford Ave.
Case study: Bedford Ave. Original Thesis (Acquired April 2012) Value Add Redevelop and re-tenant commercial and • Transform building into two floors of retail residential spaces into a class A mixed use plus apartments property • Signed lease with AAA credit multi-national tenant for Bedford Ave. pr
Slide 26: Spruceview Capital Partners
Spruceview Capital Partners Background • Newly established asset management business • Experienced management team: Richard Sabo (CEO) and David Russ (CIO) • In July 2014, the Bright Spruce Fund, LP was launched with US$50.0 million investment from JZCP. Objective • To address the growing demand fro
Slide 27: Investment and Realisation Activity
Investment and Realisation Activity
Slide 28: JZCP investment activity
JZCP investment activity Since 28 February 2014 US$ million Bright Spruce Fund 50.0 Petrocorner 24.9 TierPoint 16.2 Five properties in Brooklyn, NY 12.5 Toro Finance 5.5 Igloo 4.2 Southern Petroleum Laboratories 4.0 Fidor Bank 3.6 Other 7.7 128.6 28
Slide 29: Realisation activity
Realisation activity Since 28 February 2014 US$ million Sale of Safety Insurance 57.3 Sale of Amptek 19.4 Sale of Galson Laboratories 10.1 Escrows 6.3 Other 3.3 96.4 29
Slide 30: Summary & Outlook
Summary & Outlook High level of investment and realisation activity Challenging macro-economic conditions prevail Healthy pipeline Market dislocation provides significant private equity Building upon proven track opportunities record JZCP has the track record, capital and flexible mandate to c
Slide 31: Appendix
Appendix JZ CAPITAL PARTNERS LIMITED
Slide 32: About us
About us JZ Capital Partners Limited is one of the oldest closed-end investment companies listed on the Specialist Fund Market of the London Stock Exchange and the Channel Islands Stock Exchange Approximately US$900 million of gross assets Principally invests in US and European micro cap compa
Slide 33: Major holdings
Major holdings Value (US$ 000) % of gross Company Type (31/8/2014) assets Factor Energia, S.A. European microcap 80,225 12.2 Bright Spruce Fund, LP Other 49,570 7.5 Industrial Services Solutions US microcap 47,968 7.3 Milestone Aviation Group, Inc US microcap 40,000 6.1 Dental Services Group US micr