Quarter End Review - Dec 07
January 31 2008 - 10:27AM
UK Regulatory
RNS Number:0098N
Bear Stearns Private Equity Limited
31 January 2008
Bear Stearns Private Equity Limited ("BSPEL")
31 December 2007 Quarter End Review
Objective
BSPEL seeks to opportunistically build a well-balanced, diverse, global private
equity portfolio through secondary investments, co-investments, and selective
primary fund allocations.
Launched - 30 June 2005
Company Summary
Equity Shares Zero Dividend Packaged Units
Preference Shares
Net Asset Value ("NAV") US$1.70 49.54p US$2.68
per share
No. of shares in issue 285.30 mm 59.47 mm -
Currency of Quotation US$ � Sterling � Sterling
Ticker BPLE BPLZ BPLU
Sedol B07V0H2 B07V0R2 B07V102
ISIN GB00B07V0H27 GB00B07V0R25 GB00B07V1026
Market Makers Cazenove ABN Amro Collins Stewart
Collins Stewart Cazenove Dresdner
Dresdner Collins Stewart HSBC Bank
HSBC Bank Dresdner
HSBC Bank
Winterflood
All figures as at 31 December 2007.
Company Description
Bear Stearns Private Equity Limited ("BSPEL" or the "Company") is a London Stock
Exchange listed investment company that seeks to invest with the world's leading
private equity fund managers. BSPEL invests in private equity partnerships and
direct investments primarily in Europe, North America, and Asia. BSPEL pursues
the following strategies to meet its investment objectives:
- Acquires secondary portfolios of direct investments, significantly
invested partnership investments, and partially drawn commitments, in order to
accelerate NAV development
- Obtains exposure to individual companies by co-investing alongside
private equity sponsors in companies that offer the potential for substantial
equity appreciation
- Opportunistically invests in buyout, venture capital, and other
special situations funds and investments throughout the world based on
attractive transaction values, advantageous market conditions, and compelling
risk-adjusted return potential
- Diversifies its portfolio by manager, industry, geography, investment
stage, and vintage year
The Company's capital structure consists of two classes of shares: Equity Shares
and Zero Dividend Preference Shares ("ZDP Shares").
Manager's Comments
Performance Through 31 December 2007
NAV of the Equity Shares has grown 66.7% since BSPEL's inception on 30 June
2005.
The Company's unaudited net asset value ("NAV") per Equity Share increased from
$1.65 at the beginning of the quarter to $1.70 as at 31 December, representing
an increase in NAV of approximately 3.0% for the quarter. The unaudited NAV of
the ZDP Shares also rose during the quarter, improving from 48.65p per share to
49.54p per share. BSPEL's rapid capital deployment since its April 2007 capital
raise resulted in capital calls during the quarter of $17.8 million, which
outweighed the $11.5 million of distributions from fund investments received
over the same period.
BSPEL's portfolio benefited during the quarter from strong performance in
several special situations funds and co-investments. This was somewhat offset by
stalled buyout activity and a sluggish real estate market, which resulted in
fewer realisations and valuation upticks among several buyout fund interests.
Currency had a muted effect over the quarter, as the Euro appreciated
approximately 2.3% against the dollar while the Pound depreciated 3.0% against
the Dollar.
Consistent with its publicly listed peers, BSPEL's share price closed at a
discount to NAV. The Equity Shares closed at $1.49 per share, a 10.2% discount
to the quarter-end reported NAV of $1.66 per share (released 14 December 2007).
Though market uncertainty continued throughout the quarter, BSPEL's Equity Share
price grew 2.8% above the 30 September 2007 close, versus a 9.6% decline in the
LPX(R) Europe TR index (an index based on 25 leading listed private equity
companies) over the same period. The ZDP shares ended the period trading at
51.75p per share, a 5.1% premium to the quarter-end reported NAV of 49.24p per
share (released 14 December 2007).
Data as at 31 December 2007
Summary of Portfolio
as at 31 December 2007
Number of Funds 81
Buyout Funds 38
Special Situations 23
Venture Capital 14
Real Estate 6
U.S. Funds 45
Non-U.S. Funds 36
Co-investments 7
Source: Manager
Fund total includes 34 private equity fund interests (7 of which were already
held by BSPEL) indirectly owned through the purchase of secondary interests in
Private Equity Access Fund II Ltd., Bear Stearns Global Turnaround Fund, L.P.,
and BoS Mezzanine Partners Fund, L.P.
Balance Sheet Information
as at 31 December 2007
Investments at Market Value US$388.8 mm
Bank Deposits US$153.4 mm
Net Asset Value US$542.1 mm
Source: Manager
Fund Level - Investment Strategy1
Leveraged Buyout 50.7%
Special Situations 33.9%
Venture Capital 11.4%
Real Estate 4.0%
Fund Level - Investment Type1
Secondary 65.0%
Co-Investments 15.6%
Funded Primary 12.0%
Primary 7.4%
Fund Level - Vintage Year1,2
1997 2.4%
1998 0.1%
1999 6.2%
2000 11.8%
2001 20.8%
2002 2.8%
2003 4.9%
2005 11.8%
2006 29.7%
2007 9.4%
Company Level - Geography1
Europe 60.0%
North America 28.4%
Asia 8.9%
Other 2.7%
Company Level - Industry Diversification1
Industrial 21.9%
Consumer Goods 14.6%
Media 13.8%
Healthcare 9.4%
Real Estate 7.1%
Energy 6.6%
Technology 6.3%
Business Services 5.3%
Retail 5.0%
Financial Services 3.9%
Communications 3.7%
Leisure & Gaming 2.4%
1. The diversification charts above are based on Net Asset Value as at 31
December 2007 and use underlying company-level and fund-level values. In
addition, they include 34 private equity fund interests indirectly owned through
the purchase of secondary interests in Private Equity Access Fund II Ltd, Bear
Stearns Global Turnaround Fund, L.P., and BoS Mezzanine Partners Fund, L.P.; BoS
company-level exposure includes estimated pro rated fund-level leverage.
2. Excludes co-investments and debt-related strategies.
Source: Manager.
Investment Activity
During the quarter, BSPEL continued to position itself to benefit from macro
shifts in the global economy and committed approximately $87.4 million to 17
private equity fund investments. The majority of these commitments were done
through a large secondary portfolio purchase of mostly distressed and turnaround
funds. The investments made over the quarter were highly funded at close,
resulting in $48.9 million drawn at quarter end (56.0% of new commitments).
Secondary Commitments
BSPEL completed the purchase of a portfolio of 14 private equity funds,
including 11 special situations funds, 2 buyout funds, and 1 venture capital
fund. The Managers had exclusive insight into the portfolio prior to its
purchase, and believe it will provide BSPEL with a unique ability to participate
in the distressed, turnaround, and restructuring sectors within the private
equity market. The assets were highly invested with approximately 64.9% funded
at close, representing BSPEL's continued emphasis on acquiring opportunistic,
value investments with near term upside potential and an international focus.
Primary Commitments
The Company made three primary commitments during the quarter, one of which was
a 'funded primary' investment with significant amounts of capital already drawn.
In the US, BSPEL completed a $10.0 million funded primary commitment to
Guggenheim Aviation Offshore Investment Fund II, L.P. The fund focuses on
purchasing, leasing, and converting aircrafts from passenger planes to
commercial carriers. The commitment represents BSPEL's pursuit of niche
strategies that are projected to benefit in the current investing environment.
At quarter end, approximately 43.0% of BSPEL's commitment to Guggenheim was
drawn.
In Europe, BSPEL committed Euro5.0 million to Norvestor V L.P., a fund focused on
investments in Norway and the broader Nordic region. BSPEL has invested with
Norvestor previously in both a separate primary fund and in BSPEL's first
co-investment (SCAN Geophysical). Both of these previous investments have
performed well for the Company. In addition, BSPEL increased its primary
commitment to Realza Capital Fondo FCR by Euro5.0 million. Realza is a Spanish fund
focused on small to mid-sized buyout transactions in Spain and the greater
Iberian Peninsula.
Market Commentary
The quarter ended 31 December 2007 proved to be one of additional uncertainty
and dislocation for private equity. Credit issues continued to filter through
the financial system and caused a broad pullback in the debt markets. Mega
deals, sponsored by well known managers including Blackstone and Cerberus, fell
apart amid this uncertainty. In spite of this, buyout activity continued
through the quarter, with mid-market deals experiencing less lending-related
setbacks.
The Managers believe the current market situation has created an attractive
investing environment for BSPEL's secondary investment strategy. BSPEL currently
has a robust pipeline of investments, and the Managers believe the remainder of
the year will offer additional attractive investment opportunities. The
Managers also believe that BSPEL's highly diverse portfolio is well positioned
to benefit in the current market, and that BSPEL's investment pipeline will
enable the Company to continue opportunistically investing in unique,
well-priced transactions with attractive risk-adjusted returns.
Company Actions
Following an Extraordinary General meeting held 28 November 2007, BSPEL's
Shareholders approved the following resolutions: (i) to purchase a secondary
portfolio of funds from Bear Stearns (a related party transaction), (ii) to
increase the authorised share capital of the Company through the creation of 500
million further Unclassified Shares, (iii) to amend the provisions of the
Articles to restructure the semi-annual redemption facility as a tender offer
facility, (iv) to amend the Company's Articles to allow the Company to hold
Treasury Shares, and (v) to grant authority for the Company to make future
purchases of its own Shares by way of tender offer in accordance with the
Listing Rules.
At BSPEL's 2007 Annual General Meeting held 20 December 2007, the Shareholders
resolved that the Company be authorised to make market purchases of equity
shares and zero dividend preference shares of up to 14.99% of the issued Shares
as at 20 December 2007.
Contacts - Investment Manager
Troy Duncan
US (212) 272-9959
tduncan@bear.com
Rosemary DeRise
US (212) 272-8756
rderise@bear.com
Bear Stearns Asset Management Limited
Authorised and Regulated by FSA
45 Old Bond Street
London W1S 4QT UK
Bear Stearns Asset Management Inc.
237 Park Avenue
New York, NY 10017 USA
BSPEL is managed by Bear Stearns Asset Management Inc. ("BSAM Inc.") and Bear
Stearns Asset Management Limited ("BSAM Ltd."), each a wholly-owned subsidiary
of The Bear Stearns Companies Inc. BSAM Inc. currently manages private equity
portfolios that include over 175 separate private equity funds with total
commitments of approximately US $1.8 billion.
The Bear Stearns Companies Inc. is a publicly listed company on the New York
Stock Exchange under the symbol BSC. The Bear Stearns Companies Inc., through
its subsidiaries and affiliates, employs approximately 14,000 individuals and
has 19 offices worldwide.
The Bear Stearns Companies Inc. had approximately US $80.3 billion in total
capital as at 30 November 2007, making it among the top ten largest US
securities firms in terms of total capital.
Board of Directors
Chairman
Trevor Ash (Guernsey Resident)
Members
John Loudon (UK Resident)
Troy Duncan (US Resident)
Christopher Paul Spencer (Guernsey Resident)
All of whom may be contacted through
St Martin's House
Le Bordage
St. Peter Port
Guernsey GY1 4AU
SECRETARY, ADMINISTRATOR AND
REGISTERED OFFICE
HSBC Management (Guernsey) Limited
St Martin's House
Le Bordage
St. Peter Port
Guernsey GY1 4AU
AUDITOR
KPMG Channel Islands Limited
2 Grange Place
PO Box 235
St. Peter Port
Guernsey GY1 4LD
SOLICITOR
Herbert Smith LLP
Exchange House
Primrose Street
London EC2A 2HS UK
REGISTRAR
Capita IRG (CI) Limited
1 Le Truchot, 2nd Floor
St. Peter Port
Guernsey GY1 4AE
This document may only be issued to or passed on to persons to whom it may be
lawfully communicated pursuant to the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, or otherwise only to professional clients and
eligible counterparties and should not be used for the purpose of an offer or
solicitation in any jurisdiction or in any circumstances in which such offer or
solicitation is unlawful or unauthorised. In addition, this document may not be
given to a U.S. citizen or resident who is not a "Qualified Purchaser" within
the meaning of the U.S. securities laws.
This document is issued on behalf of BSPEL and has been approved by Bear Stearns
Asset Management Limited, which is Authorised and Regulated by the Financial
Services Authority ("FSA") in the United Kingdom. The information in this
document is provided solely for information, does not constitute investment
advice or personal investment recommendations, and is neither an offer to buy or
sell, nor a solicitation to buy or sell, any investments or units or shares in
BSPEL. To the extent that this document is issued in the United Kingdom, it is
being issued to persons who are professional clients or eligible counterparties
for the purposes of the FSA's rules. Past performance is not necessarily a
guide to future performance.
Some information contained in this document may have been received from third
party or publicly available sources that we believe to be reliable. We have not
verified any such information and assume no responsibility for the accuracy or
completeness thereof. The information stated and opinions expressed constitute
best judgment at the time of publication, and are subject to change without
prior notification. The price of units or shares (and the income from them) can
go down as well as up and may be affected by changes in rates of exchange. An
investor may not receive back the amount invested. Current tax levels and
reliefs are liable to change and their value will depend on individual
circumstances. The market prices of units and shares in BSPEL do not
necessarily reflect their underlying net asset value.
(c) 2008 Bear Stearns Asset Management Limited. All rights reserved. No
information in this document may be reproduced or distributed in whole or in
part without the express written prior consent of Bear Stearns Asset Management
Limited.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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