Investec plc · LSE:INVP
Investec — Investor Day (May 2006)
38 slides from Investec's investor day presentation, May 19, 2006
Slide 1: Investor Day
Investor Day 19 May 2006 Agenda (SA time) • 10h00 – 11h00 Steven Heilbron - Global head of Private Banking • 11h00 – 12h00 David van der Walt - Global head of Treasury and Specialised Finance • 12h00 – 13h15 Andy Leith and Bradley Fried - Joint Global heads of Investment Banking
Slide 2: Private Banking: Partner of choice
Private Banking Partner of choice from wealth creation to wealth management Steven Heilbron Global head Partner of choice – from wealth creation to wealth management Who we are… • QUALITY private client business • PASSIONATE • Disciplined people, disciplined thinking and disciplined action • Strive
Slide 3: Areas of specialisation and target market
Partner of choice – from wealth creation to wealth management Areas of specialisation 31 March 2006 31 March 2005 4.6% 2.3% 5.2% 4.2% 7.4% 6.5% 10.8% 8.7% 47.1% 48.9% 26.0% 28.3% Structured Property Finance Banking and Treasury Growth and Acquisition Finance Trust and Fiduciary Investment Management
Slide 4: 3 core geographies and geographical strategy
Partner of choice – from wealth creation to wealth management 3 core geographies South Africa Europe Australia Specialised Lending X 9 X Structured Property Finance 9 9 9 Growth and Acquisition Finance 9 9 9 High Net Worth Investment Management 9 9 9 Trust and Fiduciary Services 9 9 X Banking and Tr
Slide 5: Financial performance
Partner of choice – from wealth creation to wealth management Financial performance Salient financials Operating profit*…………………... ▲ 52.7% to £101.5 million Loan book…..………………….…. ▲ 43.2% to £6.2 billion Retail deposit book………….…... ▲ 46.3% to £4.8 billion Funds under advice……...…….... ▲ 75.9% to £1
Slide 6: Structured property finance and Banking and Treasury
Partner of choice – from wealth creation to wealth management Structured property finance • Focus on partnering with and providing senior and mezzanine debt lines to both property investors and developers • Strategy is to optimise through leverage – Planning or value uplifts – Yield shifts – Opportu
Slide 7: Growth and acquisition finance; Trust and fiduciary
Partner of choice – from wealth creation to wealth management Growth and acquisition finance • Activities are event driven, targeted at management buy ins and buy outs in the owner managed space • Developments – Continued to develop the profile and pipeline in all geographies – “Best Alternative Deb
Slide 8: Investment management and Specialised lending
Partner of choice – from wealth creation to wealth management Investment management • Differentiation – Quality of advice – Focused delivery of special opportunities – Uncompromising quality of our investment practitioners • Developments – Nominated as the “Most Innovative Provider of Products and S
Slide 9: Closing
Partner of choice – from wealth creation to wealth management Closing • Opportunities to grow market share in all our geographies • Assuming market conditions hold, we expect good growth off this base • Current momentum in the markets supported by – strong pipeline of NEW initiatives – new deal flow
Slide 10: Treasury and Specialised Finance
Treasury and Specialised Finance Specialist structuring and advisory business David Van Der Walt Global head Treasury and Specialised Finance Specialised lending, capital markets, funds and derivatives SA • Project finance • Asset finance • Structured finance Distribute Advise • Financial products S
Slide 11: Competitive advantage; Overall positioning for growth
Competitive advantage • Focus – this is all we do • Quick turn-around • Fund across spectrum – senior, mezzanine, junior and equity • Entrepreneurial culture in disciplined environment • Locally responsive and globally networked – forefront of product developments • Strategy driven from a divisional
Slide 12: Enhanced returns
Enhanced returns Specialised lending is increasingly a driver of wholesale revenues Breakdown of European Commercial • Vanilla lending still dominates the Banking Revenue €’bn revenue pie • Specialist lending is growing swiftly – from its base of around 25% of commercial banking revenues • Vanilla l
Slide 13: Structured derivatives; Capital markets / securitisation
Structured derivatives • Proprietary trading is a necessary part of the business – price making ability is leveraged across the division • Focus on developing customer flow and structured derivatives • Structured derivatives is a major growth market – ability to capture margin is good – structured m
Slide 14: Funds
Funds • Macquarie has lead in specialist funds although assets now expensive • Sector experiencing strong growth • Skill set extends across: – Credit – Infrastructure – Power – Clean energy – Property – Aircraft – Resources Treasury and Specialised Finance UK & Ireland
Slide 15: Current positioning; Growth initiatives 2006
Current positioning • Relatively small player in a market with large potential • While we compete at an individual deal level we are generally below the radar screen of major investment banks • Benefits of leveraging the business platforms starting to be felt – incremental revenue is starting to flo
Slide 16: Growth initiatives 2006; Strategic objectives
Growth initiatives 2006 • Capital markets / securitisation – acquired top European principal finance team – first European CLO launched – signed up two mortgage origination platforms • Funds – progressed plans but failed to get any specialist funds up and running – any initiative must be in an area
Slide 17: Operating environment; Outlook
Operating environment Division Operating Prospects environment Structured finance Acquisition finance Asset finance Project finance Commodities finance Principal finance Balance sheet Equity derivatives Fixed income Forex Outlook • Deal pipeline is good • Line of sight income is good • Activity leve
Slide 18: Treasury and Specialised Finance Australia
Treasury and Specialised Finance Australia Overview • Relocated a senior professional from SA to Australia in November • Current focus on project and resource finance • Early days and will be developing broader Treasury and Specialised Finance strategy • Will be a substantial beneficiary of the Roth
Slide 19: Treasury and Specialised Finance South Africa
Treasury and Specialised Finance South Africa Present positioning • We attempt to occupy a top tier positioning in each of our chosen niches • We have significant dept of management – with over 14 divisional heads in deal making / trading roles – 6 operational heads • We are able to leverage off our
Slide 20: Initiatives 2006
Initiatives 2006 • Regained market position in warrants and equity derivatives – team substantially increased – significant improvement in profitability (>300%) • Derivative structuring and sales centralised – deal flow improved – all targets exceeded, including profitability • Improved market posit
Slide 21: Operating environment; Strategic objectives 2007
Operating environment Division Operating Prospects Market environment 2007 positioning Structured finance 1 Ï Good market / Project finance - - 1 economic conditions Resource finance - - 1 – Neutral conditions and Securitisation and 1 outlook DCM* Ò Reasonable growth Equity derivatives 1 prospects I
Slide 22: Prospects for 2007
Prospects for 2007 • Balance of earnings between lending, trading and structuring is now such that reasonable earnings growth can be expected • Momentum within each business segment is good but in a slow and competitive environment • Significant growth in earnings is contingent upon: – Improved fina
Slide 23: Investment Banking: What we are
Investment Banking Integrated business focused on local client delivery with international access Andy Leith/Bradley Fried Joint Global heads What we are Integrated business focused on local client delivery with international access Positioned to generate strong revenues across market cycles C
Slide 24: What we do
What we do Intellectual capital Research Domestic business operated on an with access to international international platform network Research, Corporate Sales and Finance Trading AUS UK Corporates Government Institutions Private Direct Equity Investments Selective, Growing opportunistic businesses
Slide 25: Integration, leverage skills, opportunities
“...we are not a small bulge bracket…” Integration ► leverage skills ►opportunities client network EMEA network technical competence hedge fund network advisory ECM advisory debt (TSF) debt (TSF) derivatives products advisory hedging debt ECM advisory debt DI country network advisory internal resear
Slide 26: International market trends; Growth initiatives
International market trends Commoditisation and margin pressures Growth of hedge funds Risk taking and capital commitment Industry growth dynamics remain attractive Increased specialisation Competition from commercial banks Increased regulatory pressures Growth initiatives • Serve a br
Slide 27: Performance in context; Operating profit history
Performance in context • Over the last few years refocused business: - Improved quality: people, clients, investments - New initiatives • Created: - Strong integrated platforms - Increased brand recognition - Presence enabling us to leverage risk taking • Resulting in: - Sustainable business - Very
Slide 28: Operating profit – March 2006
Operating profit* – March 2006 £’000 March 06 March 05 % Change Corporate Finance 11,608 7,986 45.4% Institutional Research, Sales and 14,982 4,609 225.1% Trading Direct Investments 34,218 16,568 106.5% Private Equity 40,122 20,123 99.4% Operating profit* 100,930 49,286 104.8% Strong deal pipeline a
Slide 29: Investment Banking South Africa: Corporate Finance and Securities
Investment Banking South Africa Corporate Finance Strategy Leverage leading position Generate cross border deal flow Source direct investments New developments International sector specialisation Deal specific partnerships Growing market share BEE experienced team + deal pipeline + M&A IPO = maintai
Slide 30: Investment Banking South Africa: Direct Investments and Private Equity
Investment Banking South Africa Direct Investments Strategy Opportunistic approach Leverage returns Own balance sheet New developments Focused team New BEE platforms created underlying portfolio + unlocking of value + new opportunities = sustainable business Investment Banking South Africa Private E
Slide 31: What do our SA clients say?
What do our SA clients say? “More innovative and aggressive than competitors” “Do aggressive, clever deals” “My experience with Investec has been extremely positive - dedicated people with real sector knowledge who are capable of delivering creative and executable solutions” “Harmony Goldfields did
Slide 32: Investment Banking Australia: Corporate Finance and Direct Investments
Investment Banking Australia Corporate Finance Strategy Trusted client relationships Private equity advisory Cross division/border leverage New developments Specialist advisory capability Growing national platform Rothschild acquisition New head of division solid national team + pipeline + M&A activ
Slide 33: Australia Private Equity; client feedback
Investment Banking Australia Private Equity Strategy Fund approach High profile retail investors Investec co-investment New developments Reinforced team structure New investments Exit opportunities quality business reputation + pipeline + exit opportunities = earning superior returns What do our Aus
Slide 34: Investment Banking UK: Corporate Finance
Investment Banking UK Investment Banking UK Corporate Finance Strategy Dominate mid-market Grow size/quality of client base New developments Debt advisory capability Foreign listings in London Pro-active client interaction IPO/M&A activity + active clients + new sector coverage = growth via quality
Slide 35: Investment Banking UK: Securities and Private equity
Investment Banking UK Securities Strategy Leverage platform - products/geographies - capital/principal risk - people/specialisation New developments Expanded research coverage International distribution Unbundling regulations New teams dominate specialisation + international distribution + capital =
Slide 36: What do our UK clients say?
What do our UK clients say? “Investec are specialists…and really understood the investors that would invest in our company. They certainly proved their worth” “There are few mid-market brokers with your depth of research and quality distribution” “If you improve your corporate deal flow you will tot
Slide 37: Investment Banking Hong Kong Direct Investments; Key message
Investment Banking Hong Kong Direct Investments Strategy Pre-IPO direct investments Co-investment opportunities Select sectors Driven by senior Investec person New developments Experienced Chinese team Leveraging off UK capability Two investments realised Good portfolio and pipeline opportunistic +
Slide 38: Investor Day
Investor Day 19 May 2006 ay o Investec