TIDMJZCP TIDMJZCC TIDMJZCN
JZ CAPITAL PARTNERS LIMITED
(a closed-end investment company incorporated with limited liability under the
laws of Guernsey with registered number 48761)
Q1 2018 Interim Management Statement
27 June 2018
LEI: 549300TZCK08Q16HHU44
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
JZ Capital Partners Limited (LSE: JZCP.L, the "Company" or "JZCP"), the London
listed fund that selectively invests in US and European micro-cap companies and
US real estate, today releases its Interim Management Statement for the period
1 March 2018 to 31 May 2018.
Results Highlights
* Net Asset Value ("NAV") of $819.2 million (28/02/18: $837.6 million)
* NAV per share of $9.78, a decrease of 2.0% for the quarter (28/02/18:
$9.98)
* $84.1 million invested during the period, including:
+ $10.0 million in a new Flexible Packaging vertical, through the
acquisitions of Phoenix Converting and Valley Packaging Supply
+ $9.1 million invested in the Testing Services vertical, $15.1 million
invested in the ISS vertical and $4.3 million invested in K2 Towers II
+ $20.4 million in follow-on real estate investments in our Williamsburg,
Greenpoint, Fulton, Design District and Wynwood assemblages
* $124.1 million realised, including:
+ $105.7 million from the sale of Bolder Healthcare Solutions (a further
c.$4.2 million in proceeds is expected)
+ $15.7 million from Paragon Water Systems (a further c.$0.5 million in
proceeds is expected)
* $1.3 million used to buy back a total of 188,685 shares. A further $4.1
million used to buy back an additional 636,489 shares, post-period end
(June 2018)
* At the end of the period, the portfolio consisted of 38 micro-cap
investments across nine industries and five major real estate "assemblages"
(59 total properties) located in New York and South Florida
David Zalaznick, Founder and Investment Advisor of JZCP said: "We made good
progress with our realization program at or above NAV during the period. The
uplifts were again offset by pre-development and carrying costs in our real
estate portfolio but we expect these will decline going forward when we take in
outside investors into the development projects. The acceleration of our
buyback program further underlines the Board's confidence in the future
prospects of the Company."
Net Asset Value
NAV per share for the quarter decreased from $9.98 to $9.78, or 2.0%.
NAV Returns
Net Asset Value per Ordinary Share as of 1 March 2018 $9.98
Change in NAV per share due to capital gains and income received / accrued on
investments
US Micro-cap 0.02
European Micro-cap 0.03
Real Estate (0.17)
Other changes in NAV per share
Change in CULS Fair Value 0.01
Finance Costs (0.07)
Foreign Exchange Effect (0.01)
Expenses and Taxation (0.02)
Appreciation from Share Buyback 0.01
Net Asset Value per Ordinary Share as of 31 May 2018 $9.78
The US micro-cap portfolio had a net increase of 2 cents, primarily due to
write-ups at our Felix Storch investment (6 cents), our Water vertical (3
cents) and net accrued income of 5 cents. These increases were offset by
write-downs at our ISS vertical (6 cents) and Nationwide investment (5 cents).
The European micro-cap portfolio had a net increase of 3 cents, primarily due
to accrued income.
The real estate portfolio had a net decrease of 17 cents, primarily due to
pre-development operating expenses and debt service.
The chart below summarizes the cumulative total NAV returns and total
shareholder returns for the most recent three-month, twelve-month, three-year
and five-year period.
31/05/18 28/02/18 31/05/17 31/05/15 31/05/13
Share price (in GBP) GBP4.64 GBP4.51 GBP5.66 GBP4.55 GBP4.89
NAV per share (in USD) $9.78 $9.98 $9.93 $10.69 $9.90
NAV to market price discount 37% 38% 26% 35% 25%
3 month 12 month 3 year 5 year
return return return return
Dividends paid (in USD) - - - $0.47 $1.25
Total Shareholders' return - 2.9% (18.0)% 10.2% 14.1%
(GBP)1
Total NAV return per share - (2.0)% (1.5)% (4.3)% 11.9%
(USD)1
______________
1. Total returns are cumulative and assume that dividends were reinvested
RECENT ACTIVITIES
Share Buybacks
In JZCP's first fiscal quarter of 2018, we began to buy back our stock at a
significant discount and plan to continue doing so as it represents an
excellent investment opportunity for the Company.
In the three-month period ended 31 May 2018, JZCP invested approximately $1.3
million to repurchase a total of 188,685 of its ordinary shares.
Post-period (June 2018), JZCP has repurchased a further 636,489 of its ordinary
shares.
Significant Investments and Realizations
US Micro-cap Investments - Verticals
In May 2018, JZCP invested approximately $10 million in a new Flexible
Packaging vertical, which was used to make the first two acquisitions into the
vertical: Phoenix Converting and Valley Packaging Supply. The initial focus of
our strategic build-up is niche film and pouch packaging conversion businesses.
We have targeted companies specializing in shorter-run, complex pouch packaging
conversion, a growing segment of the market that is currently underserved and
remains highly fragmented. In time, we hope to incorporate additional product
and service adjacencies, which could include co-packing, shrink sleeve, label
and lidding and other flexible packaging formats serving the same customer base
and benefitting from the same demand drivers.
In April 2018, JZCP invested approximately $15.1 million in its Industrial
Services Solutions ("ISS") vertical, primarily to pay down a line of credit
with a third-party lender which had been used to make four acquisitions into
the vertical in 2016 (PTI, Buna, CPL, IPEC).
In March 2018, JZCP invested approximately $9.1 million in Tech Safety, the
first acquisition into the newly established Contamination Control and
Certification ("CCC") sub vertical of our Testing Services build-up. Via the
CCC sub vertical, we intend to acquire companies that provide comprehensive
testing, certification and validation services for cleanroom, critical
environments and containment systems.
Co-investments
In March 2018, JZCP invested a further approximately $4.2 million in K2 Towers
II, a portfolio of cell tower assets across the United States.
Other US Micro-cap Investments
In March 2018, JZCP invested a further approximately $3.5 million in Avante
(formerly known as Jordan Health Products), to acquire EMS, a business which
sells, services, and installs refurbished medical imaging equipment,
specializing in MRI and CT equipment.
Real Estate Investments
In the three-month period ended 31 May 2018, JZCP invested a total of $20.4
million in follow-on investments in our Williamsburg, Greenpoint, Fulton,
Design District and Wynwood assemblages.
Realizations
Paragon Water Systems
In March 2018, Paragon was acquired by Culligan Water, the world leader in
residential, office, commercial and industrial water treatment.
Founded in 1988 and headquartered in Tampa, Florida, Paragon develops and
produces "point-of-use" water filtration products for leading global Original
Equipment Manufacturer ("OEM") clients, big brand suppliers to specialty and
big box retailers, direct sales organisations and companies with national or
international water filtration dealership networks.
JZCP expects to realise approximately $16.2 million in gross proceeds
(including escrows) from the sale, representing an increase of approximately
$3.7 million, or 29.6% on the carrying value of Paragon of approximately $12.5
million as of 31 January 2018. This transaction represents a gross multiple of
invested capital ("MOIC") of approximately 1.8x and a gross internal rate of
return ("IRR") of approximately 18.4%.
Bolder Healthcare Solutions
In March 2018, BHS was acquired by a subsidiary of Cognizant, one of the
world's leading professional services companies.
Headquartered in Louisville, Kentucky, BHS offers a full suite of healthcare
revenue cycle management services to the hospital and physician marketplace in
the United States. BHS was formed through a co-investment partnership between
JZCP and the Edgewater Funds.
JZCP will realise approximately $110.0 million in gross proceeds from this sale
(including escrows), which represents an increase in NAV of approximately $37.1
million, or 4.5% of NAV, as of January 31, 2018.
PORTFOLIO SUMMARY
At 31 May 2018, the Company's portfolio consisted of 38 micro-cap investments
across nine major industries and five major real estate "assemblages" (59 total
properties) located in New York and South Florida.
($'000)
At 31/05/18 At 28/02/18 % Gross Assets 31/
05/18
US Micro-cap Portfolio 409,911 488,258 36.3%
European Micro-cap Portfolio 116,310 103,457 10.3%
Real Estate Portfolio 469,096 463,391 41.6%
Other Portfolio 16,302 16,897 1.4%
Total Private Investments 1,010,619 1,072,003 89.6%
Cash and Liquid Investments 112,269 83,962 10.0%
Total Investments (and Cash) 1,123,888 1,155,965 99.6%
Other Current Assets 5,011 507 0.4%
Total Investments (and Cash) 1,128,899 1,156,472 100.0%
At 31 May 2018, 10.0% of gross assets were invested in liquid assets (cash).
The remaining portion of the portfolio was invested in private investments in
US or European micro-cap companies or real estate. Our micro-cap investments
are valued at fair value by JZCP's directors each quarter whereas our real
estate portfolio is valued at least annually and based upon third party
appraisals, generally done prior to JZCP's fiscal year end.
We value our privately held businesses cautiously. Our average multiple used
for our US micro-cap businesses is 8.3x trailing EBITDA. In addition, we do
not have substantial debt in these businesses. The multiple of debt senior to
JZCP's position is approximately 3.6x EBITDA.
Top Ten Investments
Our ten largest investments as of 31 May 2018 are summarized below:
($000's) Asset Valuation % Gross
Category 31/05/18 Assets
31/05/18
Design District Assemblage Real Estate 93,660 8.3%
Industrial Services Solutions US 89,454 7.9%
Vertical
Fulton Assemblage Real Estate 69,323 6.1%
Williamsburg Retail Assemblage Real Estate 66,817 5.9%
Greenpoint Real Estate 64,573 5.7%
TierPoint US 46,813 4.2%
Avante. US 37,098 3.3%
Roebling Real Estate 31,588 2.8%
Redbridge Real Estate 30,462 2.7%
Esperante Real Estate 29,688 2.6%
Top Ten Investments 559,476 49.5%
Remaining Assets 569,423 50.5%
Gross Assets 1,128,899 100.0%
Balance Sheet
Below is a summary of JZCP's balance sheet as of the relevant dates:
($000's) 31/05/18 28/02/18
Cash and cash equivalents 112,269 83,962
Investments & other assets 1,016,630 1,072,510
(-) Other net liabilities (248,253) (256,056)
(-) ZDPs due 2022 (61,467) (62,843)
Net Asset Value 819,179 837,573
At 31 May 2018, "other net liabilities" includes $56.9 million from the
issuance of Convertible Unsecured Loan Stock ("CULS") in July 2014, which
carries an interest rate of 6%, and $149.4 million from a six-year term loan
with Guggenheim Partners, which carries an interest rate of LIBOR plus 5.75%.
For Further Information:
Ed Berry / Kit Dunford +44
(0) 20 3727 1046 / 1143
FTI Consulting
David Zalaznick
+1 212
485 9410
Jordan/Zalaznick Advisers, Inc.
Paul
Ford
+44 (0) 1481 745001
JZ Capital Partners Limited
About JZCP
JZ Capital Partners ("JZCP") is one of the oldest closed-end investment
companies listed on the London Stock Exchange. It seeks to provide shareholders
with a return by investing selectively in US and European microcap companies
and US real estate. JZCP receives investment advice from Jordan/Zalaznick
Advisers, Inc. ("JZAI") which is led by David Zalaznick and Jay Jordan. They
have worked together for more than 35 years and are supported by teams of
investment professionals in New York, Chicago, London and Madrid. JZAI's
experts work with the existing management of micro-cap companies to help build
better businesses, create value and deliver strong returns for investors. For
more information please visit www.jzcp.com.
END
(END) Dow Jones Newswires
June 27, 2018 02:00 ET (06:00 GMT)
Jz Capital Partners (LSE:JZCP)
Historical Stock Chart
From Apr 2024 to May 2024
Jz Capital Partners (LSE:JZCP)
Historical Stock Chart
From May 2023 to May 2024