RIT Capital Partners (LSE:RCP) — Investor Webinar

0:01 Good afternoon, and welcome to the RIT CAPITAL PARTNERS PLC Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions could be submitted by the Q and A tab situated in the right hand corner of your screen. Simply just type in your question and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and public responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to the team of RIT CAPITAL PARTNERS PLC. Good afternoon.

0:30 Good afternoon and welcome. I very much appreciate you taking the time to join this investor webinar. We've invited shareholders from leading investment platforms, along with those who follow us on the investor meet company platform. We continue to focus on shareholder engagement and marketing to better inform you around our objectives and strategy as well as create sustained demand for your company shares. I'm delighted that Maggie Fanari, CEO of RIT's manager, Jay Rothschild, capital management, joins me today. Maggie has recently spoken at events such as the AAC Investment Company Showcase and taken part in the Money Maze and Investors Chronicle podcasts. I will shortly hand you over to Maggie to give you an update on performance and outlook.

1:18 We will then take questions. Given the number of attendees today, we will be unable to get through all your questions during the webinar, and we will focus on all the key questions areas emerging from the pre submitted and live Q and A. As a reminder, shareholders can direct any questions to us after this webinar through our dedicated Investor Relations email address, investorrelationsritcap dot co dot uk. I will now hand you over to Maggie for the manager presentation.

1:52 Thank you, Philippe, and thank you for everyone, joining us today. It's a real pleasure to have the opportunity to speak to everyone directly. At RIT, our purpose is to grow and compound your investment over the long term, giving shareholders access to opportunities you wouldn't usually have and aiming to deliver strong returns with less of the ups and downs of equity markets. For those of you who are less familiar with us, RIT has a long history going back more than fifty years. It was founded by Lord Rothschild to manage his family wealth and then listed on the London Stock Exchange in 1988, allowing private and retail investors to access opportunities traditionally reserved for institutions and families.

2:41 At the time of listing, RIT had a total assets of around £280,000,000 Today, it is one of The UK's largest investment trusts, FTSE two fifty listed, with total assets of more than £4,000,000,000 a testament to the power of both compounding and long term investing. Our approach combines access to high quality, often exclusive investment opportunities based on our global network and brand, which we have built over decades. Our experience is that the Rothschild brand resonates throughout the world. Before RIT, I worked at the Ontario Teachers Pension Plan, a very large investment firm with more than $300,000,000,000 of assets.

3:28 And our IT and Ontario teachers were seeing the same deal flow, which is really amazing. Our flexibility to invest across different asset classes and regions allows us to build a diversified and resilient portfolio and respond quickly to changes in the market. We allocate to public markets. We allocate to private markets to capture growth. And then we have what is called uncorrelated strategies ranging from hedge fund type investments to real assets like gold to support a stable through the cycle return for our shareholders. And our expertise, that's built on our deep relationships with some of the best investors globally across asset classes with some of with the experience of our very talented in house team.

4:20 Over the last decade, we've been able to grow our NAV by 102% with less risk than equity markets. Since inception, we've delivered NAV growth of 10.4% with a similar shareholder return, while the MSCI ACWI Global Equities Index has grown at 7.7%. In other words, for £10,000 invested in RIT, that's worth three... That that... At that time, that would be worth £375,000 today, and we've been able to do that with lower volatility than equity markets, something we know is very important to our shareholders.

5:06 Our portfolio is deliberately structured to be diversified and resilient. We invest across three main pillars: quoted equities, which are public market investments across very global themes and geographies with the aim of producing differentiated returns private investments, which gives us exposure to high quality companies compounding at strong rates of return as well as uncorrelated strategies, which includes absolute return, credit and gold, which are designed to provide that stability and resilience in the portfolio. And this combination allows us to benefit from global growth while also protecting capital when markets are volatile.

5:56 2025 has been a strong year so far with all three of our investment pillars delivering positive returns. Our NAV per share total return as of the end of September is 10%. And over the last twelve months, our NAV return is 10.6%. Our private investments have delivered outstanding performance as of our interim report to the end of June, where we noted we had a 29% return in our direct investments and 175,000,000 in realizations, an overall return for our private investments for the first six months of the year of 9%. Our quoted equities performed well, especially in areas of the world like China and Japan through our specialist managers, and uncorrelated strategies did what it was designed to do, delivering steady, stable returns.

6:57 One of the reasons many of you invest in RIT is because we can access private companies that individuals often cannot. We have access to some of the very best specialist managers in private equity and venture and growth equity.

7:17 We believe these managers know how to, importantly, see, pick and win the best deals. And we benefit by being able to invest not only in their funds, but in their exclusive deal flow, backing high quality companies, which are market leaders compounding very strong rates of growth. Our strong performance in our privates portfolio in 2025 is due to them and us being very early in themes before they become topical. So our fund partners and correspondingly, our ability to invest in some of those investments, They were very early in AI as an example and fintech as another example. And today, we're seeing those very strong exits and attractive returns emerge.

8:05 Here, we just wanted to give you a few examples of who some of our world class managers are and who we've been investing alongside. We partner with, for example, THRIVE Capital, which is Josh Kushner's firm, best known for backing transformative companies like OpenAI very early on. We also work with Green Oaks, where we co invested alongside Neil and Kupang, often described as the Amazon of South Korea, where we made roughly seven times our original investment. And Founders Fund, of course, led by Peter Thiel, is another one of our long standing partners. Along these alongside these managers, we've also built a high quality direct investment portfolio, which includes category leading businesses with strong cash flows and high margins.

9:01 A few of the names you'll recognize on the page include SpaceX, Stripe, and and, Epic Epic Systems along with, Wiz, which was recently, acquired by Google. On the on the following page, you can see that we have had a significant upswing in IPO and m and a activity, where RIT has been able to benefit, thanks to our high quality investments. Interestingly, The US saw 109 IPOs in the first half of twenty twenty five, the strongest first half since 2021. Within that, we've had three major realizations in our direct investments this year, which I wanted to talk about. The first is Zappo Bank, the world's first crypto storage bank, which was acquired through M and A, delivering a cash exit of 2.3 x our original investment, more than doubling our money.

10:02 Second, Meta's investment in Scale AI, where a partial sale gave us 1.7 times our original investment in cash while still retaining an equity position for future upside. And third, Webull, a leading zero commission trading platform in The U. S, which went public at a 40% premium to our cost basis and where we recently exited our equity position, delivering a 2x return for shareholders. In addition to these direct investments, we've also streamed strong IPO and M and A activity, which we've been benefiting FUN through our fund investments. So our fund partners, which I mentioned previously, we've seen a number of IPOs come through through Metcera, Chime, Figma, Net Scope, and just recently in October, Alliance Laundry Systems.

10:58 And we see these themes continuing into, the second half or the remainder of this year and into next year. Now moving from privates to publics, our listed equity portfolio is designed to deliver long term risk adjusted returns by investing in durable growth opportunities globally. We do not look to chase short term market momentum.

11:27 We focus on long term structural themes and sectors that have very strong tailwinds. And what do I mean by that? I mean quality quality quality growth, value, biotech, Japan, but specifically corporate governance reforms that are leading to very strong outcomes for Japanese companies and as well as China. Rather than relying on broad index exposure, we partner with specialist managers who bring deep local insight and sector expertise into specific themes within those markets. This gives us access to high conviction, differentiated ideas that are often overlooked by investors, going back to we always like to be early.

12:15 It's a disciplined and patient approach designed to create diversified sources of alpha and sustainable long term returns. Uncorrelated strategies, the steady portfolio diversifier within our portfolio. This includes absolute return, credit, and I'll note this is public credit, not private credit, as well as gold, areas that don't move lockstep with equity markets. In the first half of the year, the absolute and credit funds, which represent the majority of this pillar, delivered 5.5% and fulfilled its role in supporting the overall stability of the portfolio.

13:07 It's worth stepping back to reflect on the key issues that have shaped markets this year. We've seen persistent inflation and tariffs, debates around AI and large cap tech valuations, rising geopolitical tensions, growing focus on investing outside of The United States and concerns around fiscal deficits. This is a long list, and importantly, these aren't short term headwinds. We're in the midst of a paradigm shift in the global landscape, and this is exactly the type of environment our portfolio is designed to navigate. In the first quarter, when markets were down, our portfolio delivered gains. And when markets rebounded, we were able to capture a meaningful part of the rally.

13:56 Looking ahead to the second half of this year, we're focused on the implications of a multipolar world. As The US steps back from certain global roles, countries as we have seen, particularly in Europe, are being pushed to invest more in their own infrastructure, defense and energy security. We expect this broadening out of the markets to continue as we don't anticipate a reversal in this trend. We also expect volatility to remain a feature of the markets for years to come. And that's why we're actively increasing our allocation to uncorrelated strategies, including hedge funds and real assets like gold.

14:45 Our diversified and flexible approach allows us to benefit from performance across different regions and sectors, not just one narrow segment of the market. And with a permanent capital structure, we can be tactical when near term opportunities arrive while staying firmly focused on the long term.

15:09 Many existing shareholders tell us they hold RIT because we offer something different from a typical fund track... A fund tracker. And of course, we do. Access to opportunities not usually available to individual investors through our unique global network, a diverse, differentiated set of returns across themes, geographies and asset classes and a portfolio that is designed to be resilient, with the outcome being a core holding that's offering investors equity like returns with lower risk, with unique access to public markets, private investments and uncorrelated strategies, and a single listed vehicle aiming to deliver strong with... Strong returns with less of the ups and downs of equity markets.

16:03 Thank you.

16:08 Let's now turn to your questions. We've grouped them by theme, and the first of these is performance and outlook. I have been a long term investor in RIT CAPITAL PARTNERS PLC. I would like to hear the management team's view on why the historically strong and consistent performance of the investment trust has not been achieved for the last few years, and what the team are doing to return to the consistent and steady performance that previously epitomized RIT CAPITAL PARTNERS and made it an attractive investment. Thank you. So in 2020 and 2021, we delivered exceptionally strong returns for our investors. '20, 2022 and 2023 were a bit more challenging.

16:56 But in the last twelve months, we've delivered more than a 10% NAV return for our shareholders. And as of the end of September, just above 10%, for year to date '25. And we will continue to drive on that performance, demonstrating that our portfolio does what it is designed to do to be resilient in volatile markets and also highlight the exceptional opportunities that we can deliver, such as we've done in the current year through our private investments.

17:30 Staying with performance. How did the fund perform during the April 2023 market drops, specifically the short positions on the S and P five hundred? Did these positions provide good protection and was good profit made from them? Are similar defensive measures still in place?

17:47 So we always think about our defensive positioning in our portfolio. So it's diversified by nature such that not any one position in the portfolio will detract entirely from all the hard work all the other pieces of our portfolio is designed to do. We did have hedges on, so they did exactly what they were designed designed to do as well as the fact that our uncorrelated strategies did what they were designed to do delivering positive returns. Moving to discount evaluation. With the current 25... 27% share price discount and relatively low 3% return year to date, how will RIT improve share price in the short term?

18:34 So we have been able to realize an improvement in the share price in the near term. So our share price and NAV have roughly followed suit in the last little while year to date, so roughly up 1710%. And over the last twelve months, our share price is likely up more than 17% at this time. We will continue to drive returns. We believe that a strong driver of returns and narrowing of the discount

19:05 will also come through in the performance which we're seeing. Thank you. Turning to private investments. Why persist with such a high proportion of unlisted private equity investments when the market doesn't value them and when there are few exits?

19:25 So in 2022, our proportion of investments was high. It was just north of 40%. The the the board has has come out, and we and we are looking to keep private investments between a quarter to a third of our balance sheet. So we have made a tactical top down decision.

19:45 But at the same but at the same time, private investments has been a very strong driver of return for our shareholders. Over the last ten years, our private portfolio has compounded at a 15% rate of return and over the last five years at 19%. And what we've seen more recently this year is our private portfolios delivering very strong realizations across AI and fintech themes, and we expect that to continue, because we have really invested in the right fund partners over time who have been able to identify the themes and the investments that are generating strong returns for us. So we very much see the value there, and we think that the market is also starting to see the value come through our privates portfolio.

20:41 Can we know more about the sizable unlisted assets, please? So absolutely. And what what I would like to say is just, as we, as a firm, look to continue to improve transparency, we have published a first half twenty twenty five update on our website, specifically on our private investments. If I take a step back, our our our approach to private investments is really very much partnership driven. We look to invest alongside a very core specialist, in our view, top quartile, set of private private funds where then we are able to selectively invest alongside them in their in their deal flow.

21:27 And I mentioned a few of those names earlier. You know, we view our core partners to be Green Oaks, Thrive, Ribbit, BDT CAPITAL, and a few and a few others. And then within our portfolio, we have always highlighted our direct investments. And those... So those include, today, SpaceX. They include Kraken. They include Motive. A few of these larger holdings are rumored to be thinking about IPOs either later this year or early early next year as well, and we can see that as the IPO market has has improved. But we've also looked to show our shareholders where some of our more meaningful holdings are indirectly through our funds portfolio. And those include

22:17 great names like Stripe, the payments operator that everyone knows is compounding over time. It includes Wizz, the cybersecurity company I spoke about that that was recently acquired by Google. It also includes names like OpenAI and so on. And some of these names, they will go public. And in some of these names, like a SpaceX or a Stripe, will choose to stay private for longer. And it's really through our privates portfolio

22:49 we wanna give our shareholders both early access such that we're compounding returns, and we'll continue to compound returns when those companies go public. But at the same time, some of them have the luxury of staying private for longer. And we really want to be able to give our shareholders both. So SpaceX and Stripe will compound for a longer period of time in the in the private market, and that's access and growth we're giving we're giving to our shareholders. That's the way we think about it. That's great. What steps can you take to demonstrate the true value of private companies, which hopefully leads to a share price rerating?

23:27 So I I think that's a a combination of really explaining our valuation process, which is very robust. So our funds portfolio is revalued every quarter, and our direct private investments

23:44 are revalued twice a year. And effectively, goes to an independent committee of the board or the the valuation committee. But also importantly, that you see realizations come through our portfolio. And what you've seen particularly over the last, eighteen months or so is we've been able to realize close to 10%

24:11 of of our portfolio in private assets. So 5% of our NAV in the first six months of this year and five per... 5% in the last twelve months. And that's really been at or near carrying values to NAV. And, historically, what you've seen over the last decade is that we tend to be a bit conservative, and there's generally, just over a 23% uplift to private company valuations.

24:39 And the more recent uplifts of some of the recent realizations that we spoke... I have spoke about, so Scale dot ai or ZappoBank or Webull, collectively, those were just above a 100%

24:55 valued at about a 100 a 100% above the the carrying values to December NAV. Regarding the private investments portfolio, could you comment on the valuation of the fintech and AI companies you're invested in?

25:13 Yes. So they've been very positive for our for our portfolio and and for our shareholders. You know, we've heard and seen the recent write ups for companies like OpenAI and the very strong revenue growth that they've had. But also, importantly, we've seen the realizations come through our portfolio. So Scale AI would be AI infrastructure where we had a very notable increase and and cash exit... Partial cash cash exit in that firm and Zappo and Zappo Bank where we had a very strong return. And then within the

25:54 IPOs that have taken place, what's pleasing to see is many of those companies continue to trade well above their IPO prices, again, speaking to the quality

26:08 of of of of those companies and also that they continue to compound growth. Having said all that, how is the opportunity set in private investments given the high current valuations?

26:22 So I... That's... The the the... There... That question is really in and around... There are pockets where valuations are high, and there are actually pockets where valuations are are more reasonable. And we also... When we think about making investments in private companies, we try to structure such that we have some downside protection to ensure effectively for ourselves a minimum level of return with asymmetric upside.

26:51 Also, companies don't normally partner with fund partners like ours only because they're paying the highest valuation. In most cases, actually, that's not... It's not the case. It's actually because they want to partner with us to benefit from many of the things that we can offer them as well as what our fund partners can do. So it's a combination of things. And also too, we maintain a very high bar for any new investments coming into our portfolio. I think many of our shareholders have seen that. And in certain cases where it makes sense, we have looked to exit at very strong valuations as well. The discount seems to indicate that the market attributes little value to that listed portfolio. Yet, I understand that the record in disposing of items in it has has been good.

27:41 Is it or the market which has has got things wrong? In a latter case, what can be done about it? Our record of successful realizations as significant uplift to carrying value suggests that the market is undervaluing the private portfolio. We believe that discount reflects broader sentiment towards investment trust sector and caution towards private holdings. To address this, we are enhancing disclosure around valuations and exits, actively buying back shares when accretive, maintaining a disciplined focus on performance and communication,

28:18 and continue to realize assets and recycle capital into new opportunities. We believe that by consistently growing NAV and engaging with investors, the market will re rate the shares over time. On strategy, structure and governance, Maggie will take the investment points.

28:38 Is your specific US weighting important, or do you operate a more bottom up approach?

28:45 So it's a combination of the two. We don't allocate by geography. But where we see very strong opportunities is in The U. S. So The U. S. Remains a core market to us, particularly in the areas of innovation. But at the same time, just given the paradigm shift we're seeing, we're starting to diversify to other places in the world, more investments in Asia, more investments in Europe. And we started to do that fairly fairly early on. We added to our

29:16 Asia exposure at the beginning of last year. We added to our European exposure in q four of last year and have been able to see very strong gains come from from being early and thinking about what could change in the in the world. Do you have regular meetings regarding RIT CAPITAL's future plans?

29:40 Yes. The board and management team meet regularly to review portfolio positioning, strategic priorities and progress against our investment objectives. We've strengthened governance and investment oversight in recent years to ensure RIT's structure supports long term underperformance... Overperformance. The board also continues to engage actively with shareholders to listen to their feedback.

30:06 For the financial years ending 2022 through twenty twenty five, first half, the company has spent over GBP200 million buying back shares versus 100,000,000 on dividend distributions. When considering total shareholder return, has the board got the balance right? Yes, we believe the board is striking the right balance between the one time gains from buying out shares at a discount to NAV, with the need to reinvest in long term investments at a portfolio level and providing a helpful source of growing income to shareholders. Over recent years, we have prioritized buybacks, given the deep discount as they represent attractive value for shareholders.

30:45 Since 2023, we have bought back approximately 10% of the company's share capital, equivalent to nearly £300,000,000 adding an estimated 2.5% to NAV accretion. We continue to monitor this balance carefully, maintaining a dividend policy which has now increased for twelve consecutive years, earning us a place in the AAC's list of next generation dividend heroes. One radical solution would be to split the trust into three smaller units, keeping the management and the admin teams, but allowing investors to decide whether they're using RIT for quoted equities, un correlated strategies, or private investments. Having all three means that performance will almost certainly be average at best.

31:30 The chances that all three outperform simultaneously are not good.

31:35 Through RIT, shareholders can access unique opportunities in public, private and non correlated strategies in a single listed vehicle. The combination of our three investment pillars is designed to enable shareholders to access growth globally while managing risk. Our flexible mandates across asset classes and geographies allow us to respond quickly to seize opportunities in changing markets. In the first half of twenty twenty five, all three investment pillars delivered positive returns, demonstrating the strength of our diversified model in volatile markets.

32:16 Let's now discuss currency and risk management. Given the historical depreciation of sterling against other major currencies, coupled with The UK's similar sovereign debt challenges compared to other developing economies, what is the rationale for hedging sterling? So that that comes down to our portfolio construction, where we're really trying to mitigate for translation risk. So we have a fair amount of assets in The United States. If we don't hedge, we're taking a very large large bet one way or another over time. So we look to mitigate by hedging 5050% of that of that exposure. So in a year like this year, as we reported in our first half results when sterling appreciated 10% against the US dollar.

33:07 That could have had an impact on our portfolio of close to a 7%... A minus 7% depreciation of of of the portfolio. We were able to mitigate that by more than half in the portfolio. FX had a negative impact of 33.2%. And over time, it balances itself out. But if we didn't do that, shareholders would be very much exposed to FX, and and we're trying to protect them from that.

33:33 We'll now move to question about RIT's role role in portfolios. I listened to your recent Investors Chronicle podcast and found it interesting the fund positioning itself as a good way for smaller investors to get exposure to less accessible assets. How does the trust see itself contributing to a typical investor portfolio? Have you modeled benefits to holding RIT CAP along something alongside a sixty forty passive portfolio for a turn or resiliency downturn? So our RIT is very much considered a core a core holding in that in that example. It's it's designed and has shown over time that it's giving investors equity like returns with lower risk.

34:19 It's global, so you get access to wonderful opportunities, whether it's in listed securities, private equities, or hedge funds, be that in The United States, in Europe, in places like Asia or Japan. We also have fantastic managers who invest in specialized areas such as biotech. And this is all... Everything within that is designed within... Designed to give shareholders access to all of that within one single listed listed vehicle. So it's a very attractive opportunity from that from that from that perspective. And as we've seen, it's generated close to a 10 and a half percent return since inception. Year to date, we're up just over over 10% over the last twelve months sim... Similarly.

35:09 But importantly, through our scale, it enables investors to get access to to that opportunity set that oftentimes is very much reserved for large institutions similar to the one that I came from. And now to adviser sentiment. Why, in your opinion, has RIT fallen out of favor with some investment advisers who are no longer recommending it to individual private investors? I can't speak on behalf of investment advisers. What I can say is that in RIT's case, a widening discount has masked the underlying strength of the portfolio. We recognize this and are addressing it through performance delivery, clearer communication, and transparency around our portfolio, including detailed reporting on realizations and valuations.

36:02 It's important to remember that RIT's structure and approach are designed for long term compounding with lower volatility. When performance improves, sentiment typically follows, as seen in prior cycles. We are thankful to our lower shareholder base, who have benefited from long term wealth creation since our inception. That is all we have time for. I hope you have found this a useful session. Please follow us on the Investor Meet Company platform for details of future webinars, and LinkedIn, and the News and Insights page of ritcap.com for company developments. As Maggie covered, we have performed strongly in the year to date, with 10% NAV per share total return as of September 30, and positive returns from all three investment pillars.

36:51 We believe that our portfolio is well placed for the current market, in which we're seeing a broadening out of returns beyond The US. Europe, seeking greater security and independence and AI and advanced technologies transforming our range of sectors. Our edge comes in part from our network, which provides access to exclusive investment opportunities, unavailable to most passive index trackers or traditional managers. Our flexible mandate allows us to invest across asset classes and geographies, while a permanent capital structure enables us to realize investments when we believe conditions are most favorable. These advantages enable us to build a diversified and resilient portfolio designed to perform through market cycles and deliver equity like returns with lower risk.

37:41 Thank you for your time and your continued support. That concludes today's webinar. Goodbye. Thank you for updating investors today. And of course, the company can review all questions submitted today, and we'll publish responses where appropriate to do so on the Investor Meet company platform. I'd like to ask investors not to close the sessions. You'll now be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete, and that is greatly valued by the company. On behalf of the management team for RIT CAPITAL PARTNERS PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you.