Quarter End Review - 30 June 2008
August 04 2008 - 5:14AM
UK Regulatory
RNS Number : 5476A
Bear Stearns Private Equity Limited
04 August 2008
Bear Stearns Private Equity Limited ("BSPEL")
30 June 2008 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
Zero Dividend Preference Share
Ordinary Share
Net Asset Value ("NAV") US$ 1.85 51.31p
per share
No. of shares in issue 292.64 mm 59.20 mm
Currency of Quotation US$ � Sterling
Ticker BPLE BPLZ
Sedol B07V0H2 B07V0R2
ISIN GB00B07V0H27 GB00B07V0R25
Market Makers Cazenove ABN Amro
Collins Stewart Cazenove
Collins Stewart
Dresdner Dresdner
HSBC Bank HSBC Bank
Winterflood
All figures as at 30 June 2008.
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 30 June 2008
NAV of BSPEL's Equity Shares has grown 8.8% year to date.
The Company's unaudited net asset value ("NAV") per Equity Share increased from $1.83 at the beginning of the quarter to $1.85 as at 30
June, representing an increase of 1.1% for the quarter and an 8.8% increase year to date. The unaudited NAV of the ZDP Shares also rose
during the quarter, improving from 50.42p per share to 51.31p per share. Distribution activity remained robust with total distributions of
$21.7 million while new investment activity was also strong with capital calls reaching $33.4 million.
BSPEL's Equity Shares responded positively to the completion of the JPMorgan Chase & Co. merger with The Bear Stearns Companies Inc.,
ending the quarter at $1.74 per share, a 16.6% increase over the 31 March 2008 Equity Share price. At quarter end, the Equity Shares traded
at a slight discount of 3.9% to the last reported NAV of $1.81. This performance places BSPEL in the top of its peer group. For the quarter,
BSPEL's Equity Shares outperformed the S&P 500 Index as well as the FTSE 100 Index, which declined 3.2% and 1.3%, respectively. When
compared against the LPX� Composite Index over the same period, BSPEL's Equity Shares outperformed the
index by 26.7%(1).
BSPEL's portfolio continued to benefit from strong performance across several investment strategies and geographic regions. In
particular, the Company's exposure to special situations funds served to protect BSPEL's NAV against recent market turbulence. The
portfolio's focus on both non-US investments and on the smaller end of the buyout market again led to positive performance in a difficult
market. During the quarter, BSPEL received several large distributions from its investments in Olympus Capital Asia III (Offshore), L.P.,
Global Opportunistic Fund and Esprit Capital I Fund.
Overall, the Manager is pleased with the portfolio's performance, particularly given the difficult market environment.
(1) See Listed Private Equity Index at www.lpx.ch. The LPX� Composite is a global Listed Private Equity (LPE) index with a broad number
of constituents. The index is well diversified across regions and LPE investment styles and represents the development of all LPE companies
covered by LPX that fulfill certain liquidity constraints.
Data as at 30 June 2008
Summary of Portfolio as at 30 June
2008
Number of Funds 161
Buyout Funds 87
Special Situations 32
Venture Capital 35
Real Estate 7
U.S. Funds 75
Non-U.S. Funds 86
Co-investments 11
Source: Manager.
Fund total includes private equity fund interests indirectly owned through the purchase of secondary interests in Private Equity Access
Fund II Ltd, Bear Stearns Private Opportunity Ventures, L.P., 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) and BSPEL Australia Limited (formerly known as Macquarie
Private Capital Group). Co-investment total includes 4 co-investments that were acquired as part of the Macquarie Private Capital Group
transaction.
Balance Sheet Information
as at 30 June 20081
Investments at Market Value $612.1 mm
Bank Deposits $25.0 mm
Net Asset Value $602.0 mm
Source: Manager
Diversification as at 30 June 2008
Fund Level - Investment Strategy1
Buyout 59.3%
Special Situations 26.6%
Venture Capital 11.8%
Real Estate 2.2%
Fund Level - Investment Type1
Secondary 69.6%
Funded Primary 15.1%
Co-Investment 10.1%
Primary 5.2%
Fund Level - Vintage Year1, 2
1995-1998 1.5%
1999 1.6%
2000 14.2%
2001 8.0%
2002 3.0%
2003 3.3%
2004 3.9%
2005 27.7%
2006 27.7%
2007 8.9%
Company Level - Geograpy1
Europe 50.0%
North America 25.1%
Asia 15.8%
Other 9.1%
Company Level - Industry Diversification1
Energy 4.0%
Materials 4.9%
Industrials 16.6%
Consumer Discretionary 19.3%
Consumer Staples 7.5%
Media 12.9%
Health Care 11.9%
Financials 10.1%
Information Technology 8.9%
Telecommunication Services 2.0%
Utilities 1.9%
1 The diversification charts above are based on Net Asset Value as at 30 June 2008 and use underlying company-level and fund-level
values. In addition, they include private equity fund interests indirectly owned through the purchase of secondary interests in Private
Equity Access Fund II Ltd, Bear Stearns Private Opportunity Ventures, L.P., 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) and BSPEL Australia Limited (formerly
known as Macquarie Private Capital Group).
2 Excludes co-investments and debt-related strategies.
Investment Activity
During the quarter, the Company committed $182.6 million in 3 private equity fund transactions and 2 add-on investments to existing
co-investments. The majority of this activity was in relation to the Macquarie Private Capital Group ("MPCG") acquisition, a
public-to-private transaction representing approximately $146.5 million or 80% of new commitments over the quarter.
Secondary Commitments
On 12 June 2008, BSPEL completed the acquisition of Macquarie Private Capital Group in an all-cash, take-private transaction at an
adjusted purchase price of approximately A$106.5 million (US$100.7 million). MPCG was an Australian Stock Exchange listed private equity
fund that invested in a broad range of unlisted companies and assets. The transaction provided BSPEL with the opportunity to increase its
exposure to Asian markets; the region now represents 15.8% of the Company's private equity portfolio. BSPEL also acquired a EUR3.5 million
secondary interest in Montagu III, L.P., a fund that focuses on mid-market pan-European investments and typically backs management buyouts
and similar private equity deals. In addition, the Company committed $30 million to Liberty Partners II, L.P., a fund that concentrates on
the education sector. This commitment follows last quarter's investment in Leeds Equity Partners IV, L.P., a fund that is also focused on
education, an industry that the manager believes to have counter-cyclical attributes.
Co-Investments
The Company completed small follow-on investments in two existing co-investments. BSPEL added to its investments in Luxury Optical
Holdings Company LLC, a premier optical retailer, and Rocket Dog Brands Holdings LLC, a footwear manufacturer.
Market Commentary
Ongoing issues surrounding the banking sector, coupled with the continued rise in energy and commodity prices, have hampered the private
equity markets. The slowdown has been most apparent in the US, where private equity deal flow and exit activity has come down substantially
from their 2007 levels.
The Manager believes that BSPEL's portfolio, which is focused primarily on non-US lower and middle market buyout assets as well special
situation investments, is well situated for the current market. In addition, there continues to be unique and attractive global
opportunities in the secondary market as investors seek liquidity in constricted credit markets.
Company Actions
On 6 August 2008, the Company will tender 18,478,066 Equity Shares at $1.85 per share and 1,233,836 Zero Dividend Preference Shares at a
price of 51.31p per share. Following the tender offer, BSPEL will have 274,166,383 Equity Shares and 59,963,001 Zero Dividend Preference
Shares in issue.
On 5 June 2008, BSPEL announced that the entire investment management team responsible for managing the Company since its IPO in 2005,
has become part of JPMorgan Asset Management following the acquisition of The Bear Stearns Companies, Inc. by JPMorgan Chase & Co on 31 May
2008. The investment management team will continue to be responsible for all of the Company's investment decisions and its other day to day
activities. Further information about the acquisition of The Bear Stearns Companies Inc. by JPMorgan Chase & Co. can be found at
www.jpmorganchase.com.
On 8 May 2008, BSPEL entered into a $100 million secured credit facility. The Company intends to draw under the facility in order to
take advantage of an attractive secondary private equity environment as well as for general corporate purposes.
Company Overview
Investment Manager
BSPEL is managed by Bear Stearns Asset Management Inc. ("BSAM Inc."), 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 $2.6 billion.
On 31 May 2008, JPMorgan Chase & Co. completed the acquisition of The Bear Stearns Companies Inc. Following the acquisition of The Bear
Stearns Companies Inc. by JPMorgan Chase & Co., the investment management team within BSAM Inc. has become part of JPMorgan Asset
Management. JPMorgan Asset Management is one of the world's largest asset managers with approximately $1.2 trillion in assets under
management.
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm with assets of $1.6 trillion and operations in over 60 countries.
The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction
processing, asset management, and private equity.
Further information about the acquisition of The Bear Stearns Companies Inc. by JPMorgan Chase & Co. can be found at
www.jpmorganchase.com
Contacts - Investment Manager
Troy Duncan
US (212) 272-9959
troy.duncan@jpmorgan.com
Rosemary DeRise
US (212) 272-8756
rosemary.derise@jpmorgan.com
Bear Stearns Asset Management Inc.
237 Park Avenue
New York, NY 10017 USA
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
Secretray, 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.
� Bear Stearns Asset Management. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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