JZ Capital Partners Limited · LSE:JZCP
JZ Capital Partners — FY2016 Earnings Presentation
34 slides from JZ Capital Partners's earnings presentation, May 2016
Slide 1: 2016 Annual Results Presentation
2016 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 About us Financial Highlights Strategic Initiatives Portfolio Review Outlook Appendix 3
Slide 4: About us
About us JZCP is one of the oldest closed-end Adviser is Jordan/Zalaznick Advisers, Inc. – investment companies listed on the Specialist founded in 1986 Fund Market of the London Stock Exchange Led by Jay Jordan and David Zalaznick – invested together for more than 35 years Gordon Nelson (CI
Slide 5: Financial highlights
Financial highlights • NAV of $851.7 m (28/02/15: $705.5 m) – after paying $21.8 m in dividends NAV growth of +6.3%* • NAV growth of 6.3% per share (pre-dividend, pre-dilution**) to $11.46 (28/02/15: $10.85) (pre-dilution) (pre-dividend, post-dilution** NAV per share fell 3.5%) • Raised or realized
Slide 6: Share price and NAV per share performance
Share price and NAV per share performance Cumulative NAV total returns (post-dilution)* Cumulative total shareholder returns* 18.3% 31.7% 15.3% 2.0% -3.5% 1 year 3 year 5 year 1 year 3 year 5 year -9.3% NAV to market price discount 46% 42% 26% 22% 2/28/11 2/28/13 2/28/15 2/29/16 *Calculated on a div
Slide 7: Dividend history
Dividend history Consistent dividend paying stock Dividend yield of 6.1% at 29/02/16 Policy of distributing 3% of NAV per More than $92 million in dividends annum in two semi-annual distributed to shareholders since 28 February 2011 instalments Five-year Dividend History ($ millions) Five-ye
Slide 8: Net asset value
Net asset value 13 12.5 $0.11 $1.21 $0.01 12 ($0.43) 11.5 ($0.26) ($0.03) $11.12 11 ($0.335) $10.85 10.5 $10.15 ($0.97) 10 9.5 9 NAV per Underlying Listed Bonds Change in CULS Expenses and Finance Costs Other / Foreign Dividends Paid NAV per Dilution NAV per Ordinary Share Investments and Gilts fair
Slide 9: Balance sheet summary
Balance sheet summary $ 000 $ 000 Investments 29/02/16 28/02/15 US Micro-cap Investments 386,173 297,340 $ 000 $ 000 Investments 29/02/16 28/02/15 European Micro-cap 168,798 245,884 Total Assets 1,139,580 995,677 Investments - Liabilities (126,198) (115,791) Real Estate Investments 366,158 217,276 -
Slide 10: Major holdings
Major holdings Cost ($ 000) Value ($ 000) % of gross Company Type (29/2/2016) (29/2/2016) assets Industrial Services Solutions vertical US micro-cap 33,174 84,372 7.4 Fulton Real estate 32,668 62,822 5.5 Factor Energia European micro-cap 536 57,907 5.1 Greenpoint Real estate 34,271 56,138 4.9 Bright
Slide 11: Portfolio Breakdown
Portfolio Breakdown Portfolio by Vintage Portfolio by Investment Type Cash & Cash >10 years Equivalents Mezzanine 1% <1 year 12% 5-10 years / Other 6% 10% 6% US Listed Debt Microcap 1% 34% Real Estate Euro 32% Microcap 15% 3-5 years 1-3 years 37% 46% Portfolio by Valuation Write-ups (net) based Writ
Slide 12: Strategic Initiatives: Building Significant Liquidity
Strategic Initiatives: Building Significant Liquidity
Slide 13: Building Liquidity – Raised $479.0 million
Building Liquidity – Raised $479.0 million • September 2015: Placing and Open Offer of Ordinary Shares • Total net proceeds after transaction costs of approx. $116.4 m • Significant investment by principals: David Zalaznick/Jay Jordan invest a further £35.5 m into the Company • September 2015: Rollo
Slide 14: Secondary Sale of European Investments
Secondary Sale of European Investments Transaction Overview In February 2016, JZCP completed the sale of six of its European investments (held through EMC 2010) to a major financial institution for €96.3 million (at NAV) Validates JZCP’s NAV - the sale was undertaken as a secondary transaction a
Slide 15: New European Fund: Final Close
New European Fund: Final Close Transaction Overview Successful completion of fundraising for JZI Fund III, L.P. (“Fund III”), the successor fund to EuroMicrocap Fund 2010, L.P. (“EMC 2010”) €400 million in total commitments: Surpassed €350 million target, receiving strong backing from institut
Slide 16: Portfolio Review – micro-cap
Portfolio Review – micro-cap
Slide 17: 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 vertical platform companies as one entity for a significant multiple expansion Strategy: Co-investments • Co-inve
Slide 18: 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 Healthcare Testing Services Revenue Cycle Water Services Solutions (ISS) Services Management Industrial Revenue cycle Environmental In
Slide 19: Significant US micro-cap co-investments
Significant US micro-cap co-investments Global Medical Peaceable Street Imaging Tech Industries K2 Towers Capital Sells, repairs and New platform Platform established One of the largest installs new and providing preferred to invest aerospace private cell phone refurbished medical equity to commerci
Slide 20: European micro-cap
European micro-cap Strategy • Value-oriented investment approach targeting high quality micro-cap companies • Investment focus on financial services outsourcing – non-bank lending Management • Strategy coordinated by an experienced management team, which has invested in European micro-cap deals (UK,
Slide 21: European micro-cap
European micro-cap Main Investments: • Factor Energia: Energy/utility distribution and resale to SMEs and consumers in Spain • Revenue €416.1m, LTM EBITDA €11.4m • Winn Group: UK legal services and claim management business • Revenue ₤43.2m, LTM EBITDA ₤9.9m • Fidor Bank: Social media innovative onl
Slide 22: Fund III – Portfolio Companies
Fund III – Portfolio Companies Petrocorner Fincontinuo S.A.C Collingwood MyLender A strategic build-up to A leading independent Operational van leasing Niche UK-based motor Independent acquire 2-3% of Spain’s distribution, servicing (lease & service) insurance company consumer lending petrol station
Slide 23: Portfolio Review – Real Estate
Portfolio Review – Real Estate
Slide 24: Real estate
Real estate Strategy • Value-added investment strategy analogous to micro-cap investing • Developing and repositioning retail, residential and office properties in Brooklyn and Miami neighborhoods with strong growth demographics Value Add • Reposition: Vacate under-market units through lease workout
Slide 25: Real estate write-ups: 62 cents per share ($52m) for the year
Real estate write-ups: 62 cents per share ($52m) for the year Brooklyn, New York Redbridge New Bedford Fulton Greenpoint Bedford Ave. Portfolio Assemblage Mixed use facility on Premier development site Three separate retail Mixed use development Williamsburg’s most on the Greenpoint reposition oppor
Slide 26: Real estate: portfolio by neighbourhood (Brooklyn)
Real estate: portfolio by neighbourhood (Brooklyn) 26
Slide 27: 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 28: 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 • Two top development sites: each with 60,000 sq. ft. buildable • Cash flowing Class-A retail property with substantial air rights • Prime retail redevelopment
Slide 29: 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 29
Slide 30: Case study: Redbridge Bedford
JZCP cost: $18.1 m Case study: Redbridge Bedford JZCP value: $44.6 m 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 cred
Slide 31: Summary & Outlook
Summary & Outlook Raised and realised $479.0 million Strong balance sheet to take New share issuance, ZDP rollover advantage of opportunities at lower cost, debt refinance, realizations NAV of $851.7m at 29/02/16 vs. Long-term track record of NAV $705.5m at 28/02/15 growth Five-year NAV grow
Slide 32: Appendix
Appendix JZ CAPITAL PARTNERS LIMITED
Slide 33: JZCP investment activity
JZCP investment activity Since February 28, 2015 ($ millions) Jordan Healthcare Products 18.0 ROI & Avectus (healthcare revenue cycle management vertical) 19.6 Chemco (water vertical) 5.7 K2 Towers & Peaceable Street Capital 25.8 Tech Industries 7.3 Sloan LED 4.9 TierPoint 19.0 European Investments
Slide 34: JZCP realisation activity
JZCP realisation activity Since February 28, 2015 Gross Proceeds ($ millions) Healthcare Revenue Cycle Management Vertical Refinancing 15.2 Salter Labs 3.2 Petco 3.5 Dekko 10.5 Justrite Manufacturing 21.4 Driggs Ave. Refinancing 4.6 Flatbush Portfolio Refinancing 2.6 Secondary Sale (Docout, One Worl