Aventus Capital Inc. · TSXV:AVTS
Aventus Capital — The Westaim — C4K Sohn Canada Conference 2015
30 slides from Aventus Capital's conference presentation, Sep 30, 2015
Slide 1: Chasing Illiquidity
Chasing Illiquidity. September 30, 2015 ,
Slide 2: Important Disclosure
Important Disclosure This document has been created exclusively for the educational benefit of the attendees of the C4K Sohn Conference. This document does not constitute an offering of interests in any fund. No person in any jurisdiction may treat this document as constituting either an offer to se
Slide 3: Table of Contents
Table of Contents Page 4 Section I: Arena Page 6 Section II: Chasing Illiquidity Page 21 Section III: Three Examples Page 23 Appendix: Cases C4K Sohn Canada Conference I September 29 & 30, 2015 I Toronto, Canada PAGE 3
Slide 4: I Arena
fi) ARENA
Slide 5: Arena
Arena Arena is a global investment firm and merchant capital provider that seeks to generate attractive, risk-adjusted, stable, and uncorrelated returns by opportunistically investing across the entire credit spectrum in areas where conventional sources of capital are scarce. ● The Arena Group (“Are
Slide 6: II Chasing Illiquidity
Il Chasing Illiquidity fi) ARENA
Slide 7: Overview
Overview Six areas of investment opportunities. Corporate Private Credit Real Estate Private Credit* Commercial and Industrial Assets Structured Finance Consumer Assets Corporate Securities * Real Estate and Real Estate-related credit investments C4K Sohn Canada Conference I September 29 & 30, 2015
Slide 8: Overview
Overview Arena capitalizes on the credit opportunities that are created by a world of heightened regulation, systemic deleveraging, and diminished credit expansion. ● We believe the current environment bodes well for Arena to originate compelling new opportunities and to acquire high quality investm
Slide 9: The Environment
The Environment Challenges facing smaller commercial banks and depository institutions ● Despite improvements in the broader landscape for depository institutions, many small commercial banks face challenges posed by non-performing legacy assets and an oppressive regulatory environment that strongly
Slide 10: The Environment
The Environment Challenges facing specialty finance companies, middle market lending funds, and BDCs ● Wholesale banks – majority of banks large enough to provide rediscount financing have limited incentive to do so and have eliminated origination teams. Without vibrant rediscount financing, special
Slide 11: The Environment
The Environment The macro environment and the reduced competition amongst capital providers are widening the great divide between those to whom credit is easily accessible and those to whom it is not. Optimal • The macroeconomic environment is as favorable to Arena’s Macro strategy as it has been fo
Slide 12: The Environment
The Environment The macro environment and the reduced competition amongst capital providers are widening the great divide between those to whom credit is easily accessible and those to whom it is not. • The competitive environment for Arena is as favorable as it has Reduced Competition been since th
Slide 13: The Environment
The Environment Basel III – Implementation will continue through 2019. • Basel III aims to improve global banks’ abilities to absorb shocks from financial/economic dislocation by: (i) strengthening capital, (ii) increasing liquidity, and (iii) improving funding. Issues addressed under Basel III are:
Slide 14: The Environment
The Environment Under Basel III, global banks will encounter a number of new challenges which are supportive of non-regulated providers of capital such as Arena. Institutional limitations of traditional Common Equity Requirements lenders or conventional sources of on the rise(1) capital • Reduced cr
Slide 15: Ongoing asset liquidation expected to generate trillions of asset sales
The Environment We expect the ongoing liquidation of assets in the next several years to generate trillions of financial asset sales, further increasing supply of opportunities available to us. (1)Federal Deposit Insurance Corporation (2)Federal Reserve Bank of St. Louis. “Corporate Response to Dist
Slide 16: The Environment
The Environment Financial institutions remain ill-suited to finance non-standard, idiosyncratic assets. The demand from those with limited Providing credit to the middle market access to the capital markets is high is difficult: yet underserved: • It is generally more labor intensive than • The mark
Slide 17: The Environment
The Environment Institutional limitations of traditional lenders or conventional sources of capital • Narrowly drawn investment guidelines prevent otherwise compelling opportunities from being considered. • Particular geographies or industries are frequently “disliked” without fundamental reasons. •
Slide 18: The Environment
The Environment The ABS market remains greatly challenged and securitization has become less accessible, thereby restricting flow of credit. ● Investing public remains skeptical. Investors lost Issuance of Asset-Backed billions investing in securities that were supposed to Securities be safe. As a r
Slide 19: The Environment
The Environment Yet, the economy is growing and credit is needed. This creates significant opportunities for Arena. ● Economic growth driving new U.S. Real GDP businesses. U.S. GDP has been (Q4 2007 – Q4 2014; in $ billion)(1) growing more or less constantly 16,500 since 5+ years. 16,000 ● This cons
Slide 20: The Environment
The Environment Spread Remain Very Tight Source: Barclays, Bloomberg C4K Sohn Canada Conference I September 29 & 30, 2015 I Toronto, Canada PAGE 20
Slide 21: III Three Examples
lll Three Examples fi) ARENA
Slide 22: Examples
Examples Three areas of investment opportunities for AOC. These investments (mostly senior-secured, first lien loans to companies) presume Corporate the possibility of the worst case, which can be a default or even bankruptcy. Corporate Private Private They are loans to asset-heavy Credit businesses
Slide 23: Appendix Cases
Appendix Cases fi) ARENA
Slide 24: Corporate Private Credit
Corporate Private Credit Credit opportunities in Healthcare Services, Enterprise Software, Corporate Communications Franchises, Oil & Gas, Oilfield Services, Franchised Private Restaurants, etc. Credit Where we focus: For example: We like investments that conventional providers of An American enterp
Slide 25: Corporate Private Credit
Corporate Private Credit Recurring themes and why “chasing illiquidity” makes sense in Corporate corporate private credit. Private Credit We would consider: Why the opportunity exists: - Bridge loans/transition financing - The majority of the most effective competitors were housed within the investm
Slide 26: Structured Finance
Structured Finance Credit opportunities in “off-the-run” loans and securities backed by Structured Mortgages, Equipment Leases, Auto Loans, Retail Purchase Loans Finance and unsecured Consumer Loans, etc. Where we focus: For example: The business of extending loans against loans is 3-year, $30MM sec
Slide 27: Structured Finance
Structured Finance Recurring themes and why “chasing illiquidity” makes sense in Structured corporate private credit. Finance We would consider: Why the opportunity exists: - CMBS and RMBS - Large number of poorly performing structured credit pools, some of which are in liquidation. - CLOs & CDOs -
Slide 28: Real Estate
Real Estate Credit opportunities in Office, Retail, Healthcare, Multi-family, Large- Real Estate scale Single Family, Hotels, etc. Private Credit Where we focus: For example: There often are attractive situations that traditional The owner of a $60MM development property in a high-end suburb lenders
Slide 29: Real Estate
Real Estate Recurring themes and why “chasing illiquidity” makes sense in Real Estate corporate private credit. Private Credit We would consider: Why the opportunity exists: - Idiosyncratic, short-term, highly secured - Refinancing rates to non-trophy NOI-producing properties opportunities that othe
Slide 30: Contact
Contact Contact Dan Zwirn Arena Investors, LP 405 Lexington Avenue, 59th Floor New York, NY 10174 T: 212-612-3208 E: dzwirn@arenaco.com PAGE 30