JZ Capital Partners Limited · LSE:JZCP
JZ Capital Partners — H1 2020 Earnings Presentation
27 slides from JZ Capital Partners's earnings presentation, Nov 27, 2019
Slide 1: 2019 Interim Results Presentation
2019 Interim 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 NAV Validation Strategic Initiatives: Revised Investment Policy 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 Segment of the London Stock Exchange Led by Jay Jordan and David Zalaznick – invested together for more than 35 years Gordon Nelson (C
Slide 5: Financial highlights
Financial highlights Total NAV return • Total NAV return per share of (3.8)%, from $10.04 (28/02/19) to $9.66 (31/08/19) per share • NAV of $748.2m (28/02/19: $810.3m) Significant • Realized $121.2m during the period, at or above NAV realisations YTD • Additional post period realization of $18.5m**
Slide 6: Share price and NAV per share performance
Share price and NAV per share performance Cumulative NAV total returns* Cumulative total shareholder returns* 3.3% 25.8% 1 year 3 year 5 year -1.6% 9.1% 8.6% -5.7% 1 year 3 year 5 year NAV to market price discount 43% 41% 39% 29% 8/31/14 8/31/16 8/31/18 8/31/19 *All performance figures assume re-inv
Slide 7: Net asset value
Net asset value 12 11.5 11 $0.56 $0.82 10.5 $10.04 10 $0.09 $0.08 $0.13 $0.02 $9.66 9.5 9 NAV per Ordinary US and European Real Estate Expenses and Finance Costs Net Foreign Exchange Appreciation from NAV per Ordinary Share as of 28 Micro-cap Investments Taxation Effects Share Buybacks Share as of 3
Slide 8: Balance sheet summary
Balance sheet summary $000 $000 Investments 31/08/19 28/02/19 US Microcap Investments 424,914 478,970 $000 $000 Investments 31/08/19 28/02/19 European Microcap 104,863 128,698 Total Assets 1,048,982 1,124,608 Investments - Liabilities (190,643) (196,234) Real Estate Investments 422,656 443,044 - ZDP
Slide 9: Portfolio breakdown
Portfolio breakdown Portfolio by Investment Type Portfolio by Industry 9
Slide 10: NAV Validation
Paes Z CAPITAL PARTNERS LIMITED Sg NAV Validation =i IZ CAPITAL PARTNERS LIMITED Se! :
Slide 11: Discount of NAV carrying value to actual exit value
Discount of NAV carrying value to actual exit value JZCP has seen significant valuation uplift relative to historical carrying values Discount of NAV Carrying Value to Actual Exit Value (All US & European Microcap Exits 2014-2019)* % NAV Discount 35% 29.4% 30% 26.3% 25% 22.0% 20.0% 20% 15% 10% 5% 0%
Slide 12: Gross MOIC on exits
Gross MOIC on exits Gross MOIC on Exits (All US & European Microcap Exits 2014-2019)* Multiple 4.0x 3.5x 3.5x 3.0x 3.0x 2.8x 2.5x 2.1x 2.0x 1.8x 1.6x 1.5x 1.0x 0.5x 0.0x 2014 2015 2016 2017 2018 2019 Multiple of Invested Capital * As of 28 Oct. 2019. Analysis includes full exits of US & European mic
Slide 13: Successful realizations
Successful realizations • Felix Storch – March 2019 • JZCP refinanced Felix Storch, its manufacturer of small and custom refrigeration appliances. This refinancing resulted in gross proceeds to JZCP of approximately $14.0m, which returned JZCP’s entire March 2017 investment in Felix Storch of $12.0m
Slide 14: Strategic Initiatives: Revised Investment Policy
Strategic Initiatives: Revised Investment Policy
Slide 15: Strategic initiatives: revised investment policy
Strategic initiatives: revised investment policy • In October 2019, shareholders voted to approve a new investment policy whereby JZCP will look to realize investments and materially reduce commitments to new investments in order to return capital to shareholders and pay down debt • Approximately $5
Slide 16: Portfolio Review – Microcap
ee JZ CAPITAL PARTNERS LIMITED NY = sts. “s ~ c 3 : Portfolio Review - Microcap an JZ CAPITAL PARTNERS LIMITED
Slide 17: US microcap
US microcap Strategy: Verticals • Identify and purchase businesses in “verticals” where an industry executive can add value via organic growth and cross company synergies • Sell vertical companies as one entity for a multiple expansion Strategy: Co-investments • Co-invest with known private equity g
Slide 18: US microcap verticals
US microcap verticals Industry sector driven “build-ups” created to add value through operational synergies across businesses and exit multiple expansion Industrial Flexible Services Flow Controls Testing Services Solutions (ISS) Packaging Industrial Acquisition Flow handling Environmental testing e
Slide 19: Significant US microcap co-investments
Significant US microcap co-investments Deflecto Peaceable Street ABTB K2 Towers II George Industries Capital Diversified, global Acquirer of fast Private cell phone Manufacturer of Platform providing manufacturer and casual and quick tower company highly engineered preferred equity to distribution b
Slide 20: Significant US microcap investments
Significant US microcap investments Felix Storch Avante Orizon Priority Provider of compact Build-up of healthcare Platform established Provider of same day and specialty equipment, service & to invest in aerospace express courier refrigerators and installation companies and defence services other a
Slide 21: European microcap
European microcap Strategy • Value-oriented investment approach targeting microcap companies in Western Europe • Diversified investment focus: portfolio companies in seven countries across five industries Management • Strategy coordinated by an experienced management team, which has invested in Euro
Slide 22: Fund III – significant portfolio companies
Fund III – significant portfolio companies Alianzas en Fincontinuo S.A.C Collingwood My Lender ERSI Aceros Italian salary- Operational van Niche UK-based Independent Steel Reinforced steel backed consumer leasing (lease & motor insurance consumer transformation business lending platform service) com
Slide 23: Summary & outlook
Summary & outlook Appx. $50m returned to shareholders over the past 18 months (combination of market purchases / tender) Shareholders approved a new Potential impairment to the value of the real estate investment policy whereby portfolio dictates that the Company must protect its balance sheet i
Slide 24: Appendix
Appendix Z CAPITAL PARTNERS LIMITED
Slide 25: Major holdings
Major holdings Cost ($ 000) Value ($ 000) % of gross Company Type (31/08/2019) (31/08/2019) assets Design District – Southern Parcel Real estate 138,541 99,914 9.5 Industrial Services Solutions vertical US microcap 48,250 95,893 9.1 Greenpoint Real estate 43,225 58,261 5.6 TierPoint US microcap 44,3
Slide 26: JZCP investment activity
JZCP investment activity Since 28 February 2019 ($ millions) Real Estate Investments 43.6 US Micro-cap Investments 6.1 Total* 49.7 (*) Numbers subject to rounding 26
Slide 27: JZCP realisation activity
JZCP realisation activity Since 28 February 2019 Gross Proceeds ($ millions) Avante – Sale of 80% of JZCP’s stake 37.5 Orizon – Sale of 80% of JZCP’s stake 28.0 Waterline Renewal – Sale 23.3 Fund III – Proceeds from Sale of Petrocorner / Refinancing of Collingwood & Fincontinuo 14.5 Felix Storch – R