JZ Capital Partners Limited · LSE:JZCP
JZ Capital Partners — FY2015 Earnings Presentation
39 slides from JZ Capital Partners's earnings presentation, 2015
Slide 1: 2015 Annual Results Presentation
2015 Annual 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 Highlights Strategic Developments Portfolio review Investment and realisation activity Capital management Outlook 3
Slide 4: FY 15 Highlights
FY 15 Highlights Pre-dividend NAV • NAV growth in 22 of the past 24 quarters of US$11.16 • NAV of US$705.5 million (28/02/14: US$666.5 million) +8.9 % • Pre-dividend NAV per share of US$11.16 (28/02/14: US$10.25) • Solid three-year cumulative total shareholder return of 27.5% Solid shareholder • Dis
Slide 5: Balance sheet summary
Balance sheet summary US$ 000 US$ 000 Investments 28/02/15 28/02/14 US Micro cap Investments 297,340 341,560 US$ 000 US$ 000 Investments 28/02/15 28/02/14 European Micro cap 245,884 186,781 Total Assets 995,677 804,255 Investments - Liabilities (115,791) (30,598) Real Estate Investments 221,151 112,
Slide 6: Net asset value growth
Net asset value growth $0.11 $0.46 ($0.13) $1.75 ($0.31) ($0.24) ($0.12) ($0.29) ($0.22) $10.85 ($0.41) $10.25 NAV per Value of Value of Income from Escrows Change in Dividends Management Incentive Fees Finance Costs Foreign NAV per Ordinary Private Public Investments received CULS fair Paid Fees an
Slide 7: Share price and NAV per share performance
Share price and NAV per share performance Cumulative NAV total returns Cumulative total shareholder returns 72.7% 79.8% 24.4% NAV to market price discount 27.5% 8.9% 42% 38% 41% -3.9% 1 year 3 year 5 year 27% 1 year 3 year 5 year 28/02/2015 28/02/2014 28/02/2012 28/02/2010 7
Slide 8: Strategic Developments
ol ore Z CAPITAL PARTNERS LIMITED ~ ie Strategic Developments = Z CAPITAL PARTNERS LIMITED SB
Slide 9: Value Investing Proposition
Value Investing Proposition • Long-term value-oriented approach to investing has been the focus of JZCP’s adviser over the past 28 years • Successful long-term track record – NAV has grown in 22 of past 24 quarters • Net seller of US micro cap given valuations based on high multiples • Realized US$2
Slide 10: Investment Policy
Investment Policy • Investment policy amended to provide greater flexibility to invest in the most attractive opportunities across several asset classes • Corporate objective: to create a portfolio of investments providing a superior overall return comprised of a current yield and significant capita
Slide 11: Portfolio Review – Real Estate
Portfolio Review – Real Estate
Slide 12: Real estate
Real estate Strategy • Developing and repositioning retail, residential and office properties in Brooklyn and Miami • Strong demographics • Value-oriented prices in off-market, negotiated sales • Large value-added component Portfolio • Portfolio expected to contribute significant value in the future
Slide 13: Real estate – investment lifecycle
Real estate – investment lifecycle Identification • Identify undervalued and underutilized, off-market properties in prime locations in communities that are undergoing significant positive demographic changes Value Add • Reposition: • Vacate under-market units through lease workouts/expirations and
Slide 14: Real estate: portfolio by neighbourhood (Brooklyn)
Real estate: portfolio by neighbourhood (Brooklyn) 14
Slide 15: JZCP's current real estate portfolio: Brooklyn, NY
JZCP’s current real estate portfolio: Brooklyn, NY What we’ve purchased: • Williamsburg: Epicenter of positive shifting demographics in North Brooklyn • 11 mixed-use properties, located on most trafficked retail corridors • 55,000 sq. ft. residential / 274,000 sq. ft. retail • Two development sites
Slide 16: Recent real estate acquisitions: Brooklyn, NY
Recent real estate acquisitions: Brooklyn, NY Roebling 184/204 192 Bedford 950 Hart St. Portfolio Bedford Ave. Ave. 130,000 sq. ft. mixed-use 17,000 sq. ft., 21 unit loft- Two properties featuring Prime retail development loft building in style residential building 21,000 sq. ft. of build to site fe
Slide 17: Case study: Redbridge Bedford
Case study: Redbridge Bedford 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 Av
Slide 18: JZCP's current real estate portfolio: Miami, FL
JZCP’s current real estate portfolio: Miami, FL What we’ve purchased: • Wynwood: rapidly increasing retail rents amid a thriving arts scene • Top development site: 60,000 sq. ft. buildable • Cash flowing Class-A retail property with substantial air rights • Design District: innovative fashion, desig
Slide 19: Real estate: portfolio by neighbourhood (Miami)
Real estate: portfolio by neighbourhood (Miami) Rising retail rents amidst thriving arts scene Vibrant shopping and cultural scene; home to world’s most prestigious brands 19
Slide 20: Recent real estate acquisitions: Miami, FL
Recent real estate acquisitions: Miami, FL 2407 NW 2nd 2621 NW 2nd 1-35 NE 40th St. Ave. Ave. Prime development site in Fully-leased Class-A retail Two highly visible properties in Miami’s Wynwood property with existing Miami’s Design District neighborhood with 60,000 sq. 27,000 sq. ft. and signific
Slide 21: Portfolio Review — Micro cap
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Slide 22: US micro cap
US micro cap Strategy: Verticals • Identify and purchase smaller businesses in “verticals” where an industry executive can add value via organic growth and cross company synergies • Sell “agglomerated” companies as one entity for a significant multiple expansion Strategy: Co-investments • Co-invest
Slide 23: US micro cap verticals
US micro cap verticals Industry sector driven “build-ups” created to add value through operational synergies across businesses and exit multiple expansion Industrial Services Testing Healthcare Water Services Solutions (ISS) Services Industrial Revenue cycle Environmental Infrastructure equipment ma
Slide 24: Significant US micro cap co-investments
Significant US micro cap co-investments K2 Towers* Sloan LED* TierPoint One of the largest Designer and Provider of IT and private cell phone manufacturer of LED data centre colocation tower companies in lights and lighting services North America systems May 2015 April 2015 June 2014 Invested: US$22
Slide 25: Significant US micro cap realizations
Significant US micro cap realizations • Gross proceeds of US$219.4 million from realizations over the year Safety Insurance • US$57.3 million Galson Laboratories • US$10.1 million Amptek • US$19.4 million Milestone Aviation • US$41.8 million Dental Services Group • US$50.5 million Water Vertical Ref
Slide 26: European micro cap
European micro cap Strategy • Value-oriented investment approach • Targeting high quality micro cap companies • Investment focus on financial services outsourcing Management • Strategy coordinated by an experienced management team • The management team has invested in European micro cap deals (UK, I
Slide 27: European micro cap
European micro cap JZCP has invested $131.7m in EuroMicrocap Fund 2010, L.P., which has a NAV of $204.0m Main Investments: • Factor Energia: Energy/utility distribution and resale to SMEs and consumers in Spain (Revenue €324.7m, LTM EBITDA €13.6m). • Toro Finance: Short term financing platform to to
Slide 28: Recent European micro cap acquisitions
Recent European micro cap acquisitions Petrocorner Fincontinuo S.A.C* A strategic build-up to acquire A leading independent Operational van leasing (lease & 2 – 3% of Spain’s petrol station distribution, servicing and service) company in Denmark, market. lending platform for salary specialized in la
Slide 29: Portfolio Review – Spruceview
Portfolio Review – Spruceview
Slide 30: Spruceview Capital Partners
Spruceview Capital Partners Background • Newly established asset management business • Experienced management team led by Richard Sabo, former Chief Investment Officer of Global Pension and Retirement Plans at JPMorgan • In July 2014, the Bright Spruce Fund, LP was launched with a US$50 million inve
Slide 31: Capital Management
ol ore Z CAPITAL PARTNERS LIMITED ~ ie Capital Management = Z CAPITAL PARTNERS LIMITED SB
Slide 32: Capital Management
Capital Management • June 2014: US$50 million one-year loan US$ 000 US$ 000 facility with Jefferies Liabilities 28/02/15 28/02/14 • Enhance short term liquidity position and fund launch of Bright Spruce Fund Total Assets 995,677 804,255 • Plan to repay this loan with proceeds from - Liabilities (115
Slide 33: Investment and Realisation Activity
Investment and Realisation Activity
Slide 34: JZCP investment activity
JZCP investment activity Since February 28, 2014 (US$ millions) Fidor Bank 7.2 Igloo 6.0 Toro Finance 10.6 TierPoint 25.3 Petrocorner 24.9 Southern Petroleum Laboratories 4.0 Paragon 9.1 Other US micro cap 8.2 Other European micro cap 6.2 Real Estate 68.1 Bright Spruce Fund 50.0 Other 7.0 Total* 226
Slide 35: JZCP realisation activity
JZCP realisation activity Gross Proceeds Since February 28, 2014 (US$ millions) Safety Insurance 57.3 Galson Laboratories 10.1 Amptek 19.4 Water Vertical Refinancing 21.8 Milestone Aviation 41.8 Dental Services Group 50.5 Escrows Received 6.8 Other 11.6 Total* 219.4 *Numbers subject to rounding 35
Slide 36: Summary & Outlook
Summary & Outlook Another year of strong NAV Positive outlook - sustained global recovery taking place growth Increasingly diversified portfolio Investment policy change to provide Attractive realization opportunities in greater flexibility US and acquisition opportunities in Europe Continuing progr
Slide 37: Appendix
Appendix ag 1Z CAPITAL PARTNERS LIMITED ~
Slide 38: 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 Approximately US$1.0 billion of gross assets Principally invests in US and European micro cap companies and US real estate Guernsey resident — t
Slide 39: Major holdings
Major holdings Value (US$ 000) % of gross Company Type (28/2/2015) assets Industrial Services Solutions US micro cap 77,294 7.8 Factor Energia European micro cap 70,483 7.1 Bright Spruce Fund Other 50,113 5.0 Greenpoint Real estate 47,355 4.8 Toro Finance European micro cap 44,618 4.5 Grupo Ombuds E