34 slides from Epe Capital Partners Ltd. Class A's earnings presentation, Sep 26, 2019
Slide 1: 2019 Results Presentation
2019 RESULTS PRESENTATION 26 SEPTEMBER 2019 0
Slide 2: Contents
Introduction Portfolio overview CONTENTS Valuation overview Liquidity analysis Conclusion 1
Slide 3: Impact of key market drivers
Market conditions, cost pressures and uncertainty provide a tough investment backdrop! Key drivers impacting top-line performance… Key cost of sales drivers… Petrol price Quarterly GDP growth (%) Fund VI Fund VI 1900 Impact of key market drivers 8.0 MM Fund Price (95ul; coastal; c/l) 1700 MM Fund 6.
Slide 4: Update on a fund by fund basis
The difficult operating environment has lent itself to opportunities across the funds Large Equity • Fund VI finished investing phase and commenced exit phase – two exits Kevro and Eaton • Intensive focus on portfolio companies with strong traction in restructurings and cost reductions Update on a f
Slide 5: Key performance metrics
Highlights of the operating results # of Portfolio Companies NAV per Share Growth in NAV per share Key performance metrics 19 R11.34 3% EV / EBITDA Capital Invested Capital Invested (Actual) (Proforma) 6.9x R1.43bn R1.58bn Net Debt / EBITDA Total Assets Proforma invested capital (Actual) (as % of To
Slide 6: Contents
Introduction Portfolio overview CONTENTS Valuation overview Liquidity analysis Outlook 5
Slide 7: Portfolio overview and value contribution
Portfolio overview and value contribution Exposure to 19 portfolio companies across various sectors and vintages Invested Capital by sector / geography 3% 15% 4% 30% 10% Portfolio overview 12% 26% Banking Consumer goods FinTech Industrials Media MedTech Telco services 40% 60% South Africa Sub Sahara
Slide 8: Fund investments in 2019
Fund investments in 2019 Significant investment in the past 12 months across six new portfolio companies 867 712 Net new investments 7
Slide 9: Portfolio composition
Net asset value contribution and “age” of the investment portfolio 18% Assets owned for more than one year 46% Portfolio composition Assets owned for less than one year 36% Cash Assets < 1yr Assets > 1 yr 8
Slide 10: Successful exit of Eaton Towers
Successful exit of Eaton Towers Investment / Exit date: June 2015 / October 2019 Ethos consortium ownership: 14.4% Business: Telecommunications Fund VI Invested Capital: R405m Portfolio company overview Ethos Fund VI ownership: 4.8% Gross returns (ZAR): 2.4x TMB / 23.4% IRR Pan-regional presence Eat
Slide 11: Channel VAS update
Channel VAS update Date of investment October 2018 % of EC Invested Capital 26% Total Ethos ownership 17.5% (increasing to 20%) % of EC NAV 21% % of Ethos LTM change Capital NAV: in NAV: EC Invested Capital R372m Current valuation R408m (1.14x TMB) 21% +R53m Portfolio company overview LTM Return +R5
Slide 12: Kevro update
Kevro update Date of investment October 2017 % of EC Invested Capital: 13% Total Ethos ownership 27.6% % of EC NAV: 11% % of Ethos LTM change EC Invested Capital R185m Current valuation: R202m (1.10x TMB) Capital NAV: in NAV: Portfolio company overview LTM Return +R9m (5%) Multiple unchanged, gearin
Slide 13: Primedia update
Primedia update Date of investment December 2017 % of EC Invested Capital: 12% (including SKT) Total Ethos ownership 19.9% + 5.0% (EC) % of EC NAV: 10% (including SKT) % of Ethos LTM change EC capital investment R172m Current valuation: R194m (1.13x TMB) Capital NAV: in NAV: Portfolio company overvi
Slide 14: Echo update
Echo update Date of investment February 2018 % of EC Invested Capital: 11% Total Ethos ownership 31% (inc. to >65%) % of EC NAV: 9% % of Ethos LTM change EC Invested Capital R26m (+R152m) Current valuation: R28m (1.07x TMB) Capital NAV: in NAV: Portfolio company overview LTM Return +R2m (+7%) Effect
Slide 15: Synerlytic update
Synerlytic update Date of investment April 2019 % of EC Invested Capital: 7% Total Ethos ownership 93.4% % of EC NAV: 5% % of Ethos LTM change EC Invested Capital R92m Current valuation: R105m (1.14x TMB) Capital NAV: in NAV: Portfolio company overview LTM Return +R13m (14%) Multiple unchanged, EBIT
Slide 16: Gammatek update
Gammatek update Date of investment September 2018 % of EC Invested Capital: 6% Total Ethos ownership 51.0% % of EC NAV: 5% % of Ethos LTM change EC capital investment R98m Current valuation: R98m (1.0x TMB) Capital NAV: in NAV: Portfolio company overview LTM Return R0m Held at cost of investment 5%
Slide 17: Vertice update
Vertice update Date of investment May 2018 % of EC Invested Capital: 4% Total Ethos ownership >75% % of EC NAV: 3% % of Ethos LTM change EC Invested Capital R58m Current valuation: R61m (1.05x TMB) Capital NAV: in NAV: Portfolio company overview LTM Return +R3m (+5%) Effectively held at cost of inve
Slide 18: MTN Zakhele Futhi update
MTN Zakhele Futhi update Date of investment July 2017 % of EC Invested Capital: 3% Total Ethos ownership 4.1% % of EC NAV: 2% EC Invested Capital R43m Current valuation: R41m (0.96x TMB) % of Ethos LTM change Capital NAV: in NAV: Portfolio company overview LTM Return -R2m (-2%) Marked to market off
Slide 19: Tyme Bank
Tyme Bank Date of investment June 2019 % of EC Invested Capital: 3% Total Ethos ownership 8% % of EC NAV: 2% % of Ethos LTM change Capital NAV: in NAV: EC Invested Capital R46m Current valuation: R46m (1.0x TMB) 2% - Portfolio company overview LTM Return R0m Held at cost of investment Proven acquisi
Slide 20: Performance of selected portfolio companies
Performance of selected portfolio companies AUTOMOTIVE PARTS RETAILER & FMCG INDUSTRIAL EQUIPMENT WHOLESALER Portfolio company overview Date of investment Dec 2016 Dec 2016 Dec 2016 % of Ethos Capital NAV 2% 4% 2% Current value R40m (-R46m YoY) R74m (-R9m YoY) R34m (-R12m YoY) LTM Return / TMB -54%
Slide 21: Investment Strategy – backing key investment trends
Investment Strategy – backing key investment trends Key themes Recent investments Most likely sectors LSM migration-led growth in consumer goods Key investment trends Retail Growing connectivity and data access Convenience FMCG Manufacturing Lowest cost-to-serve, scalable businesses Logistics Financ
Slide 22: Contents
Introduction Portfolio overview CONTENTS Valuation overview Liquidity analysis Outlook 21
Slide 23: Portfolio composition and valuation metrics
Portfolio composition and valuation metrics Portfolio composition Key valuation metrics NAV discount 8.0x 31.3% % of NAVPS % of NAVPS 31% 6.9x 7.0x 31.2% Portfolio Composition 80% 88% 6.0x 31.2% 9.06 10.03 31% 5.0x 31.1% NAV 4.0x 31.1% 11.34 31% 3.0x 31.0% 7.80 1.9x 2.0x 31.0% 1.0x 30.9% 2.28 1.31 -
Slide 24: Market implied valuation analysis
Market implied valuation analysis Portfolio valued at a 31% discount to the peer group... .....market “look-through” values portfolio at 4.8x EV / EBITDA 6.9x 100 2.28 1.9x NAV BASED VALUATION Valuation over view 31% 11.34 69 9.06 5.0x 31% NAV Cash Invested NAV Valuation 48 4.8x SHARE BASED VALUATIO
Slide 25: Growth rates and market implied EV / LTM EBITDA multiples
Growth rates and market implied EV / LTM EBITDA multiples of the portfolio Sales growth by company Net debt / EBITDA by company 3 3 Portfolio company performance 4 3 8 2 6 4 477 443 393 291 296 270 269 201 1 40 <= 0% > 0% - <= 5% > 5% - <= 15% > 15% <= 0x > 0x - <= 1.5x > 1.5x - <= 3x > 3x - <= 4.5x
Slide 26: Portfolio company returns
Portfolio company returns 4.0 1.6 5.0 0.9 0.7 0.2 2.4 1.7 1.6 1.3 1.1 0.0 0.9 1.9 6.9 4.3 4.3 3.4 4.5 Portfolio company performance Positive value contribution 1.71x 1.54x 1.38x New assets at cost Negative value contribution 1.15x 1.14x 1.14x 1.11x 1.10x 1.08x 1.07x 1.05x 1.00x 1.00x 0.96x 0.92x 0.8
Slide 27: Contents
Introduction Portfolio overview CONTENTS Valuation overview Liquidity analysis Outlook 26
Slide 28: Current Fund commitments
Fund commitments and levels of undrawn capital by Fund 141 950 48 250 1,250 150 371 3,161 6 1 12 Current Fund commitments 360 54 1,531 887 211 EF VI EMMF I EHP EMP 3 EF VII EaiF I Direct Investments Total Invested/Committed Undrawn commitments Ethos Capital commitment to underlying fund (Rm) 27
Slide 29: Ethos Capital liquidity benchmarked against international peers
Ethos Capital liquidity benchmarked against international peers Total commitment ratio = (Invested Capital + Undrawn Commitments) / Net Asset Value Relative liquidity benchmarks 173% 163% 139% 125% 126% 109% Harbourvest Hg APAX Princess Pantheon Ethos Capital Commitment coverage ratio = (Cash + Unut
Slide 30: Available liquidity and outlook
Liquidity profile analysis based on current commitments Realisations Existing outflows Available liquidity 3,000 308 12% 3,000 Available liquidity and outlook 32% 19% Estimated 2,500 outflows 2,500 by year 2,143 1,452 19% 19% 2,000 2,000 1,514 3,161 1,500 FY20 FY21 FY22 FY23 FY24 1,500 2,853 493 1,0
Slide 31: Relative share price to NAV discount
Relative share price to NAV discount South African listed PE firms trade at 2x the discount of international peers 55% 45% Average = 36% 35% 2x 25% Average = 18% 15% 5% -5% -15% -25% Discount to NAV 3 Year NAV Growth -35% 30
Slide 32: Contents
Introduction Portfolio overview CONTENTS Valuation overview Liquidity analysis Outlook 31
Slide 33: Outlook
Outlook Unlikely to be any short term improvement in business confidence and corporate investment Outside of South Africa, growth remains strong although currency and political risks remain elevated Outlook Growth in NAV likely to increase as the portfolio is c.80% invested Investment pipeline remai
Slide 34: 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