Epe Capital Partners Ltd. Class A · JSE:EPE
Epe Capital Partners Ltd. Class A — Ethos Capital — Shareholder Meeting (November 2017)
15 slides from Epe Capital Partners Ltd. Class A's shareholder meeting presentation, November 2017
Slide 1: Ethos Capital AGM Presentation
E T H O S C A P I TA L A G M P R E S E N TAT I O N P e t e r H a yw a r d - B u t t , E t h o s C a p i t a l C E O November 2017
Slide 2: Ethos capital and market update
2 Ethos capital and market update General market outlook Outlook for Ethos Capital Market conditions and business / consumer 40% of NAV invested on a proforma basis confidence likely to remain subdued Kevro, MTN closed in July and October, Seller’s pricing expectations are moderating Primedia to clo
Slide 3: NAV analysis
3 NAV analysis NAV performance Portfolio composition per share % of NAV % of NAV Discount to NAV NAV increase – R173m 19% 40% Yield on Temporary Assets – c.8% Gross IRR on Invested Capital – 14.7% 20% 1.99 0.03 10.61 0.75 0.04 0.14 0.02 0.17 4.28 R10.61 9.78 8.62 8.50 6.33 30 Sept 2017 Proforma Shar
Slide 4: Portfolio overview
4 Portfolio overview Proforma Invested NAV contribution Proforma EBITDA contribution (excluding MTN Zhakele Futhi) 1% 1% Primedia 36.2% 14% Kevro 27.4% 29% 1% Eazi Access 11.0% 1% Invested Capital Autozone 10.6% 9% R736m Twinsaver 9.6% Attributable EBITDA R147m Waco 2.0% 9% 7% Eaton Towers 1.0% 1% N
Slide 5: Portfolio valuation
5 Portfolio valuation Ethos Capital valuation and portfolio companies’ discount to peer group Valuation highlights 6.7x 29% 6.7x = value-weighted average portfolio EV / EBITDA 20% 2.1x = value-weighted average portfolio net debt / EBITDA 2.1x 20% = current Ethos Capital share price discount to NAV 2
Slide 6: An Alternative Advantage
A N A LT E R N AT I V E A D VA N TA G E Stuart MacKenzie, Ethos CEO
Slide 7: Performance of the Private Equity asset class
7 Performance of the Private Equity asset class 1 10-year asset class risk adjusted returns Asset class Annual Return Volatility Sharpe Ratio Private Equity 9.8% 14.4% 0.47 US Equities 6.9% 16.9% 0.23 High Yield Bonds 6.6% 11.5% 0.31 REITs 6.5% 25.5% 0.14 Investment Grade Bonds 6.4% 6.6% 0.52 Hedge
Slide 8: Global trends in EV / EBITDA multiples paid and capital structure dynamics
8 Global trends in EV / EBITDA multiples paid and capital structure dynamics 10.8 11.5 RoW 8.4 9.1 8.3 9.0 8.6 8.2 8.0 6.5 6.6 7.3 7.0 5.8 5.8 4.8 nm Western 11.5 Europe 10.6 8.2 8.5 9.0 8.4 8.4 9.0 8.6 7.1 7.1 7.3 7.9 7.0 6.7 6.9 6.6 North America 8.8 8.3 8.3 8.7 9.4 9.4 8.7 7.4 8.0 7.4 8.0 6.8 6.5
Slide 9: Ethos has an unrivalled private equity platform
9 Ethos has an unrivalled private equity platform 1 Ethos transformation 2 Ethos structure Royal RMI Bafokeng 50% 50% 2017 AI Fund 1984 Fund I Non BEE BEE RMI RIM Educational Ethos BEE US$75m US$101m Partners Partners Investments Investments Trust Staff 54.7% 6.9% 20.0% 10.0% 3.9% 4.4% 1992 Fund II
Slide 10: Leveraging the Ethos track record
10 Leveraging the Ethos track record 1 SAVCA PE Net Returns vs ALSI 2 Ethos Net Returns versus the ALSI 1-year 3-year 5-year 10-year 20-year 19.7% 3.6% Ethos Pooled 16.1% 16.0% (All nm 15.9% 17.4% 15.5% 17.7% 3.0% investments)1 13.0% Ethos Pooled (Realised 36.2% 45.9% 33.3% 32.4% 21.3% investments)2
Slide 11: Leveraging the Ethos track record
11 Leveraging the Ethos track record 3 Ethos track record (realised) 4 Ethos’ de-aggregated return profile (Proportion of capital invested) Realised returns Gross IRR attribution (since Fund III) (since Fund III) 10% 100% 28% 7% Multiple expansion 80% Early return of capital 17% 39% 60% 29% Leverage
Slide 12: Consistency of Ethos returns
12 5 Source: Ethos - 1,000 200 400 600 800 -600 -400 -200 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 NAV growth Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13
Slide 13: Life-cycle of Ethos Fund VI
Life-cycle of Ethos Fund VI Fund Average Age 2.5 Yrs 3 • KEVRO Exit ready • WACO • EATON 2.5 • AUTOZONE Investment • TWINSAVER Current TMB per category 2 phase • EAZI ACCESS 1.5 • RTT Fund Rand Turnaround TMB 1.3x • NEOPAK 1 New • BEVCO 0.5 investments • PRIMEDIA 0 Available for 0 1 2 3 4 5 new inve
Slide 14: Superior performance across economic and political cycles
Superior performance across economic and political cycles South Africa real GDP growth (LHS) Fully realised Funds - actual returns Live Funds - updated investment case returns (yoy %) New Funds South Africa real GDP growth (LHS) 8 Fund III 1996: 21.5% net IRR 7 Fund IV 1998: 22.1% net IRR 6 Fund V 2
Slide 15: 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 AN INTEREST IN ANY OF THE ETHOS PRIVATE EQUITY FUN