38 slides from Epe Capital Partners Ltd. Class A's earnings presentation, Sep 28, 2022
Slide 1: Ethos Capital Investor Presentation
ETHOS CAPITAL INVESTOR PRESENTATION 28 SEPTEMBER 2022
Slide 2: Contents
1 Performance review 2 Portfolio overview CONTENTS 3 Liquidity analysis 4 Outlook
Slide 3: Executive Summary
EXECUTIVE SUMMARY Year ended 30 June 2022 headlines at a glance NAV per share: NAV per share: 16% and 27% R10.66 R8.49 growth in NAVPS over the year on an aggregate basis on an accounting basis with the Brait (Brait at current share price and NAV with Brait investment at its NAVPS investment at its
Slide 4: Ethos Capital Strategy
ETHOS CAPITAL STRATEGY R3.37bn cumulative commitments made R148m net commitments outstanding Return capital to Drive long-term, market-leading shareholder returns from investing shareholders in private equity assets across select sectors Commitment phase Manage liquidity for existing commitments whi
Slide 5: Trading Comparables
MARKET BENCHMARKING OF FUND PERFORMANCE Overview of the unlisted portfolio JSE PERFORMANCE Ethos Capital’s NAVPS # companies 6 months 1 year 3 years increased by 16% and 27% Index respectively over the past year Absolute growth Absolute growth CAGR based on Brait’s NAVPS and JSE All Share its share
Slide 6: Performance Review: Portfolio Performance
PERFORMANCE REVIEW PORTFOLIO PERFORMANCE – 16% increase in NAVPS for the year to 30 June 2022 from R9.19 to R10.66 • 22% return on the unlisted portfolio as operational performance improved broadly across the portfolio and the Optasia valuation also benefitted from a weakening ZAR : US$ over the yea
Slide 7: Performance Review: Ethos Capital Liquidity
PERFORMANCE REVIEW ETHOS CAPITAL LIQUIDITY – Ethos Capital remains fully invested with Invested Capital of c.R2.7 billion – R292 million of RMB facility drawn at 30 June 2022; R450 million committed and covenant levels reset – Current net undrawn commitments total c.R148 million across the various E
Slide 8: Portfolio Company Performance Overview
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Overview of Ethos key unlisted Portfolio Companies – Strong operational performance has continued but FX losses impacting US$ reported results – 27% increase in LTM EBITDA y-o-y, driven by advances growth, higher services penetration, good default management an
Slide 9: Brait Portfolio Company Overview
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Brait Portfolio Company overview – Strong performance has continued to 30 June 2022 (LTM EBITDA up 36% YoY) driven by volume increases and price inflation – Premier has completed the integration of Mister Sweet and the combined confectionary business has had a
Slide 10: Overview of Progress on Brait
OVERVIEW OF PROGRESS ON BRAIT Ethos participated in the Brait Rights Issue and was appointed as advisor to the Brait Board with a strategy of maximising / realising value from the portfolio within 5 years INVESTMENT THESIS Invest into Brait’s assets at a discount to fair value with a clear pathway t
Slide 11: Key Investment Sectors
KEY INVESTMENT SECTORS High growth, tailwind themes, sectors, geographies and strategies (buy and build / special opportunities / GP Consolidation) Key themes Examples of investments Applicable sectors Growing connectivity and data access Technology Enablers Telecommunication Services High impact, d
Slide 12: Track Record of Realised Returns
TRACK RECORD OF REALISED RETURNS Realised returns from exited Ethos Funds (in ZAR) Ethos Fund III (1997-2003) Ethos Fund IV (2004-2007) Ethos Fund V (2008-2016) New Funds post 2016 2003 1997 2007 2016 IRR 26% 29% 12% TMB 3.1x 3.9x 2.0x Assets realised since 2016 (in ZAR) Value uplift 27% 12% 69% 2%
Slide 13: Turning Unrealised into Realised Returns
TURNING UNREALISED INTO REALISED RETURNS For Ethos investments realised over the last 15 years, 42% of the total value created has been delivered in the last year prior to exit The largest contribution Proportion of value created to value creation is in the final years of an investment (profit growt
Slide 14: Contents
1 Performance review 2 Portfolio overview CONTENTS 3 Liquidity analysis 4 Outlook
Slide 15: Ethos Capital NAV Analysis
ETHOS CAPITAL NAV ANALYSIS Changes in NAV since 30 June 2021 Changes FY Audited Audited Audited 2022 (Brait at NAVPS) (Brait at share price) 30 June 30 June 30 June 2021 2022 2022 Investments 2,478 97.7% 731 3,209 99.5% 2,651 99.4% Brait (at NAV) 1,020 40.2% 61 1,081 33.5% 523 19.6% Optasia 537 21.2
Slide 16: Total Asset Contribution
TOTAL ASSET CONTRIBUTION The largest 10 assets constitute 89% of total assets 7% 24% 37% % of total assets with Brait @ NAVPS 56% 29% % of total assets with Brait @ share price 17% South Africa 15% Rest of sub-Saharan Africa International 6% 6% 6% 5% 10% 4% 4% 4% 9% 2% 7% 7% 7% 1% 2% 2% 6% 1% 1% 5%
Slide 17: Portfolio Company Performance Overview
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Broad based growth in both LTM revenue and EBITDA LTM REVENUE GROWTH BY UNLISTED COMPANY 1-YR INVESTMENT RETURN % Change Value - R'm 4 Number Optasia 253.4 47% 4 Brait (share price) 153.7 42% 948 564 4 Brait (NAVPS) 60.7 6% 2 249 36 Other 40.1 6% < 0% 0% to < 1
Slide 18: Portfolio Company Valuation Multiples
PORTFOLIO COMPANY VALUATION MULTIPLES Market implied EV / LTM EBITDA multiples of the portfolio companies - - - - EV / EBIAT 8.1x 7.3x 10.6x 9.0x 15.5x 6.4x 9.2x 10.2x 8.0x 16.1x 9.9x (25.1x) 4.2x 8.1x 8.4x 5.8x 5.9x 5.5x 5.4x 5.4x 4.9x 4.9x 4.9x 5.4x 4.7x 4.4x 4.4x average 3.6x 3.1x Optasia Vertice
Slide 19: NAV Composition by Portfolio Company
NAV COMPOSITION BY PORTFOLIO COMPANY Ethos Capital’s market capitalisation is less than the combined NAV of the top 2 assets Attributable NAV (Brait at 30 June NAVPS) 558 78 (151) 134 NAV (Brait at 30 June share price) 137 169 187 46% 32% 189 200 Current market capitalisation (3) 523 765 Optasia Bra
Slide 20: Optasia
OPTASIA (previously Channel VAS) 29% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R765m 2.47x 20% +47% 1-yr return vs. 1.81x in June 2021 (Ethos consortium) Leading Fintech provider of Mobile Financial Services (“MFS”) and BNPL Airtime Credit Financial performance in US$ Services (“A
Slide 21: Optasia
OPTASIA +30 countries of Highly cash Key investment +530m >US$8bn in operation across highlights: addressable customer base advances to date 4 continents generative Value creation initiatives Growth Opportunities – Diversify profitability of ACS Upsell existing products and increase transaction freq
Slide 22: Vertice
VERTICE 7% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R189m 1.47x 80% +3.0% 1-yr return vs. 1.46x in June 2021 (EF VI, EAiF I & EHP) Vertice sells medical technology and supplies across a wide range of applications Financial performance predominantly to support emergency and critic
Slide 23: Vertice
VERTICE Eight bolt-on acquisitions concluded, covering diverse sectors Value creation initiatives Growth Opportunities – Focus on like-for-like growth and Based on Discovery Health’s (DH) manufacturers, Vertice has a c.4.7% market share, making it the 2nd largest MedTech player in DH advancing organ
Slide 24: Echo
ECHO 7% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R187m 1.09x 64% +1% 1-yr return vs. 1.08x in June 2021 (EMMF I & EF VII) Echo is a corporate Internet Service Provider, providing Information & Communications Financial performance Technology (”ICT”) services through an aggregation
Slide 25: Echo
ECHO Echo provides end-to-end hosting; SaaS / Echo has >102 interconnects and direct connects Echo offers customers a single point of cloud / hosted applications; Internet Access; with upstream infrastructures, which means accountability and the best product that the private cloud / MPLS; all last m
Slide 26: Synerlytic
SYNERLYTIC 6% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R169m 1.65x 88% -% 1-yr return vs. 1.65x in June 2021 (EMMF I) Synerlytic operates in subsets of the Testing, Inspection and Certification market and is Financial performance one of the leading condition monitoring and fluid
Slide 27: Crossfin
CROSSFIN 5% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R137m 1.11x 31% New investment New investment (EMMF I & EAiF I) Crossfin operates a highly differentiated business model with an ecosystem of Financial performance complimentary fintech businesses. Investment thesis FY Revenue
Slide 28: Gammatek
GAMMATEK 5% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R134m 1.43x 51% +34% 1-yr return vs. 1.07x in June 2021 (EMMF I) Gammatek is a leading distributor of mobile accessories and low-technology products Financial performance Investment thesis LTM Revenue (rebased to 100) – Gammate
Slide 29: Primedia
PRIMEDIA 3% Ethos Capital Value: TMB: Ethos ownership: % of Need picture Total Assets R78m 0.51x 24% and logo +14% 1-yr return vs. 0.45x in June 2021 (EF VI & EC Co-invest) Leading media and advertising company in South Africa, with a footprint in the rest of Financial performance in US$ Africa Inve
Slide 30: TymeBank
TYMEBANK 2% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R61m 2.03x 3.4% +103% 1-yr return vs. 1.00x in June 2021 (EAiF I) TymeBank is an exclusively digital retail bank based in South Africa that uses digital Operating Results technology to make banking simple and affordable Investm
Slide 31: Overview of Other Ethos Unlisted Portfolio Companies
PORTFOLIO COMPANY PERFORMANCE OVERVIEW Overview of other Ethos unlisted Portfolio Companies % of Total Assets – Negative impact on performance from COVID lockdowns, supply chain issues, IT integration and consolidation of DCs – New management team has resolved internal operating issues and stabilise
Slide 32: Premier
PREMIER 10% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R260m n/a 12.8% +6% 1-yr return (EF VII, EDI & LC) Premier is a leading South African FMCG manufacturer offering branded and private label solutions Twelve months ended 31 March 2022 Revenue: Adjusted EBITDA(2): EBITDA margin %
Slide 33: Virgin Active
VIRGIN ACTIVE 9% Ethos Capital Value: TMB: Ethos ownership: % of Total Assets R232m n/a 12.8% +6% 1-yr return (EF VII, EDI & LC) Virgin Active is one of the leading international health club operators providing customers with a combination of outstanding exercise experiences Total members at 75% of
Slide 34: Contents
1 Performance review 2 Portfolio overview CONTENTS 3 Liquidity analysis 4 Outlook
Slide 35: Ethos Capital Liquidity Profile
ETHOS CAPITAL LIQUIDITY PROFILE Liquidity profile and outlook Investment period Investment “J curve” Realisations Cash held in low risk bonds Cash invested into assets Cash returned to investors Ethos Capital cash position profile 2016 2018 2020 2022 2024 2026 500 3,950 400 300 2,950 200 123 271 1,9
Slide 36: Contents
1 Performance review 2 Portfolio overview CONTENTS 3 Liquidity analysis 4 Outlook
Slide 37: Outlook
OUTLOOK Strong operational and financial turnaround across the portfolio POSITIVE NEGATIVE Broad based recovery across the portfolio benefitting from Generationally high inflationary outlook will impact global operational decisions taken to reposition the businesses growth prospects SA consumers rem
Slide 38: Disclaimer
DISCLAIMER THE INFORMATION CONTAINED HEREIN IS PROVIDED FOR INFORMATIONAL AND DISCUSSION PURPOSES ONLY AND IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER AS, LEGAL, TAX OR INVESTMENT ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY A LIMITED PARTNERSHIP INTEREST IN ANY ETHOS FUNDS.