Tetragon Financial Group Limited · EURONEXT:TFG
Tetragon Financial — Q1 2015 Earnings Presentation
29 slides from Tetragon Financial's earnings presentation, May 13, 2015
Slide 1: First Quarter 2015 Investor Call
Tetragon Financial Group Limited (“TFG”) First Quarter 2015 Investor Call 13 May 2015 THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE ANY SECURITY OF TFG. THIS INFORMATION IS CURRENT ONLY AS OF THE DATE ABOVE, UNLESS OTHERWISE STATED. T
Slide 2: Contents
Contents Investment Strategy 3 TFG Overview 4 Key Metrics and Financials 5 TFG Asset Management 14 Analysis by Business Segment 19 TFG Exposure to Asset Managers 20 CLO Market Commentary 23 Cash Balances & Potential New Investments 24 Endnotes 26 2015 Q1 Report Presentation | 2
Slide 3: Investment Strategy
Investment Strategy TFG’s investment objective is to generate distributable income and capital appreciation. To achieve this objective, TFG’s current investment strategy is: • To identify attractive asset classes and investment strategies. • To identify asset managers it believes to be superior. • T
Slide 4: TFG Overview
TFG Overview(i) HAWKE’S POINT $14B Assets Under Management 194 Employees Globally TFG Euronext Listed (i) Assets Under Management (“AUM”) and “Employees Globally” include the GreenOak Real Estate, LP (“GreenOak”) joint venture funds and advisory assets, LCM Asset Management LLC, Polygon Recovery Fun
Slide 5: Financials – TFG Key Metrics
Financials – TFG Key Metrics TFG focuses on four key metrics for TFG’s business(i): 1 2 3 4 Earnings (Return Net Asset Value Dividends per AUM Growth on Equity and per share share • Increasing fee EPS) • How value is being • How asset value income within TFG • TFG’s Operating accumulated within has
Slide 6: Key Performance Metrics – RoE
Key Performance Metrics – RoE(i) Annual Return on Equity 60% 47.7% 50% Target RoE 10-15% 36.1% 40% Average 13.4% 30% 20.8% 11.4% 15.3% 6.6% 20% 16.8% 10% 0% -3.7% -10% -20% -30% -27.6% -40% 2007 2008 2009 2010 2011 2012 2013 2014 2015 annualised (i) LIBOR directly flows through some of TFG's investm
Slide 7: Key Performance Metrics: Earnings Per Share
Key Performance Metrics: Earnings Per Share(i) Adjusted EPS Comparison Q1 2013 - 2015 (USD) $0.79 $0.70 $0.48 Q1 2013 Q1 2014 Q1 2015 (i) Please see page 26 of this presentation for certain relevant definitions. 2015 Q1 Report Presentation | 7
Slide 8: Key Performance Metrics: Earnings Per Share
Key Performance Metrics: Earnings Per Share(i) TETRAGON FINANCIAL GROUP TFG Earnings per Share Analysis (Q1 2014 - Q1 2015) Q1 2015 Change Q1 2015 Q1 2014 % of Total 2014-2015 CLO and other loans $0.40 $0.29 51% $0.11 Hedges, FX and options ($0.08) ($0.07) (10%) ($0.01) Other asset classes $0.73 $0.
Slide 9: Key metrics: NAV per Share
Key metrics: NAV per Share TFG Consolidated Net Assets ($MM) and Pro Forma Fully Diluted NAV per Share(i) Consolidated Net Assets ($MM) $17.57 $2,000 $16.83 $17.08 $18.00 NAV / Share (pro forma fully diluted) $16.82 $17.05 $16.36 $15.49 1,882 $1,800 $16.00 $14.29 $14.65 $15.02 $15.17 1,803 1,818 1,8
Slide 10: Key metrics: Dividends Per Share (DPS)
Key metrics: Dividends Per Share (DPS) 12-month Rolling DPS Comparison Q1 2013 - Q1 2015 (USD) TFG declared quarterly dividends for Q1 2015 totalling $0.1575 per share, the same +7.8% $0.6250 $0.580 as in Q4 2014 +16.0% $0.500 On a rolling 12-month basis, the dividend of $0.625 per share represe
Slide 11: Assets Under Management
Assets Under Management TFG AM Assets Under Management ($BN) $13.8 $11.1 $10.5 $10.8 $10.4 $9.1 $9.2 $8.7 $8.0 $7.7 $7.0 $7.0 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 LCM GreenOak Polygon Equitix (i) GreenOak AUM includes funds and advisory asse
Slide 12: TFG Asset Management Statement of Operations
TFG Asset Management Statement of Operations TETRAGON FINANCIAL GROUP TFG Asset Management Statement of Operations Q1 2015 vs. Q1 2014 Q1 2015 Q1 2014 $MM $MM Fee income(i) 34.2 12.7 Unrealised Polygon performance fees(ii) 1.4 3.4 Interest income - 0.1 Total income 35.6 16.2 Operating, employee and
Slide 13: TFG Asset Management’s growing contribution to TFG’s result
TFG Asset Management’s growing contribution to TFG’s result Total TFG Asset Management balance sheet value TFG AM Balance Sheet Value ($mm) was $242 million at 31 March 2015, 13% of the total $250 TFG NAV, up from 6.4% at 31 December 2014 $200 $66.5 million relates to TFG’s 23% holding in $125.9 G
Slide 14: LCM AUM History ($BN)
TM LCM AUM History ($BN) $5.8 $5.3 $5.1 $4.8 $4.9 $4.5 $4.3 $4.3 $4.3 $4.2 $4.1 $3.9 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 CLO 1.0 CLO 2.0 2015 Q1 Report Presentation | 14
Slide 15: GreenOak AUM History ($BN)
TM GreenOak AUM History (i)($BN) $4.6 $4.4 $4.1 $4.2 $3.9 $3.6 $3.6 $3.2 $3.0 $2.3 $1.9 $1.7 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Europe U.S. Japan (i) Includes investment funds and advisory assets managed by GreenOak at 31 March 2015. TFG o
Slide 16: Polygon Funds
Polygon Funds TM AUM at Annualised Net YTD Net Fund 31 March 2015 LTD Performance ($MM) Performance Convertibles(i) 411.0 1.7% 18.9% European Event-Driven Equity(ii) 554.8 6.7% 12.1% Mining Equities(iii) 68.6 2.8% 3.0% Distressed Opportunities(iv) 104.9 2.2% 9.4% Other Equity(vi) 21.9 1.9% 17.2% 1,1
Slide 17: Polygon Funds
Polygon Funds TM Polygon Hedge Funds Assets Under Management ($MM) (Convertibles, European Event-Driven Equity, Mining Equities, Distressed, Other Equity) $1,149 $1,161 $1,094 $1,113 $930 $855 $686 $605 $624 $529 $451 $448 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 20
Slide 18: Summary of Equitix Funds Assets Under Management
TM Summary of Equitix Funds Assets Under Management ($MM) AUM at Fund 31 March 2015(i) Equitix Fund I 186 Equitix Fund II 545 Equitix Fund III 750 Energy Efficiency Funds 327 Managed Accounts 148 Total Equitix AUM 1,955 (i) USD-GBP exchange rate at 31 March 2015. 2015 Q1 Report Presentation | 18
Slide 19: Analysis of Net Assets and Q1 2015 Profitability by Business Segment
Analysis of Net Assets and Q1 2015 Profitability by Business Segment TETRAGON FINANCIAL GROUP Analysis of Net Assets and Q1 2015 Profitability by Business Segment Net Asset Net Economic EBITDA Value Income Before Equivalent Business Segment Tax ($MM) ($MM) ($MM) Investment Portfolio 1,640.0 73.7 N/A
Slide 20: TFG Exposure to Asset Managers
TFG Exposure to Asset Managers TFG Exposure to Asset Managers TFG Carrying Value Total NAV Percentage Investments of Asset of in Products Manager Total NAV ($MM) ($MM) ($MM) LCM 248.9 - 248.9 13.2% GreenOak 100.4 66.5 166.9 8.9% Polygon 332.3 28.0 360.3 19.1% Equitix 12.5 125.9 138.4 7.4% Hawke's Po
Slide 21: Balance Sheet Composition Overview
Balance Sheet Composition Overview YE 2014 Net Asset Breakdown Q1 2015 Net Asset Breakdown U.S. CLO 1.0 Infrastructure Net Investible 24.2% 0.7% Cash(i) Net Investible 20.3% Cash(i) 12.2% U.S. CLO 1.0 TFG Asset Management 22.6% TFG Asset 6.5% Management 12.9% Real Estate U.S. CLO 2.0 14.2% Real Esta
Slide 22: Asset Types
Asset Types Q1 2015 Net Assets Income Q1 2015 Asset Type ($MM) ($MM) U.S. CLO 1.0(i) 425.2 25.5 U.S. CLO 2.0(i) 281.7 9.4 European CLOs 100.1 2.8 U.S. Direct Loans 18.3 0.6 Hedges(ii) 0.6 - Polygon Equity Funds 187.3 9.4 Polygon Credit, Convertibles & Distressed Funds 144.9 2.0 Other Equities, Credi
Slide 23: CLO commentary
CLO commentary • Risk retention focus • TFG’ strategy 2015 Q1 Report Presentation | 23
Slide 24: Cash Balances & Potential New Investments
Cash Balances & Potential New Investments Cash as at end March 2015 $275.8 million Debt (at Equitix) as at end March 2015 Approximately $87.6 million Potential New Investment Amounts(i) CLOs $25 - $100 million Real Estate $25 - $75 million Hawke’s Point $0 - $100 million Infrastructure $10 - $50 mil
Slide 25: Q&A
Q&A Contact us anytime: ir@tetragoninv.com 2015 Q1 Report Presentation | 25
Slide 26: Endnotes
Endnotes Certain definitions: TFG uses, among others, the following metrics to understand the progress and performance of the business: • Net Economic Income ($76.2 million): adds back to the U.S. GAAP net income ($69.7 million) the imputed 2014 share based employee compensation ($5.8 million), whic
Slide 27: Endnotes (continued)
Endnotes (continued) Polygon Funds Note: The AUM noted includes investments in the relevant strategies by TFG, other than in respect of the Private Equity Vehicle, where there is no such investment. The Private Equity vehicle, at the time of the Polygon transaction and currently, remains a closed in
Slide 28: Endnotes (continued)
Endnotes (continued) (v) The fund began trading with Class B/B1 shares, which carry no incentive fees, on 12 September 2011. Returns shown from inception through August 2013 have been pro forma adjusted to account for a 2.0% management fee and a 20% incentive fee, in each case, as to be set forth in
Slide 29: Legal Disclaimer
Legal Disclaimer This document has been prepared by TFG (together with the Master Fund, the “Company”). TFG is a Guernsey closed-ended investment company whose shares (“Shares”) are listed on Euronext Amsterdam N.V. The Company’s investment manager is Tetragon Financial Management LP (the “Investmen
Tetragon Financial Group — Q1 2015 Earnings Presentation on 6ix