Jpel Priv Eqty Regulatory News (JPEL)

31 Jan 2008 15:27

Bear Stearns Private Equity Limited31 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 privateequity portfolio through secondary investments, co-investments, and selectiveprimary fund allocations. Launched - 30 June 2005 Company Summary Equity Shares Zero Dividend Packaged Units Preference SharesNet Asset Value ("NAV") US$1.70 49.54p US$2.68per shareNo. of shares in issue 285.30 mm 59.47 mm -Currency of Quotation US$ £ Sterling £ SterlingTicker BPLE BPLZ BPLUSedol B07V0H2 B07V0R2 B07V102ISIN GB00B07V0H27 GB00B07V0R25 GB00B07V1026Market 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 StockExchange listed investment company that seeks to invest with the world's leadingprivate equity fund managers. BSPEL invests in private equity partnerships anddirect investments primarily in Europe, North America, and Asia. BSPEL pursuesthe following strategies to meet its investment objectives: - Acquires secondary portfolios of direct investments, significantlyinvested partnership investments, and partially drawn commitments, in order toaccelerate NAV development - Obtains exposure to individual companies by co-investing alongsideprivate equity sponsors in companies that offer the potential for substantialequity appreciation - Opportunistically invests in buyout, venture capital, and otherspecial situations funds and investments throughout the world based onattractive transaction values, advantageous market conditions, and compellingrisk-adjusted return potential - Diversifies its portfolio by manager, industry, geography, investmentstage, and vintage year The Company's capital structure consists of two classes of shares: Equity Sharesand Zero Dividend Preference Shares ("ZDP Shares"). Manager's Comments Performance Through 31 December 2007NAV of the Equity Shares has grown 66.7% since BSPEL's inception on 30 June2005. 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, representingan increase in NAV of approximately 3.0% for the quarter. The unaudited NAV ofthe ZDP Shares also rose during the quarter, improving from 48.65p per share to49.54p per share. BSPEL's rapid capital deployment since its April 2007 capitalraise resulted in capital calls during the quarter of $17.8 million, whichoutweighed the $11.5 million of distributions from fund investments receivedover the same period. BSPEL's portfolio benefited during the quarter from strong performance inseveral special situations funds and co-investments. This was somewhat offset bystalled buyout activity and a sluggish real estate market, which resulted infewer realisations and valuation upticks among several buyout fund interests.Currency had a muted effect over the quarter, as the Euro appreciatedapproximately 2.3% against the dollar while the Pound depreciated 3.0% againstthe Dollar. Consistent with its publicly listed peers, BSPEL's share price closed at adiscount to NAV. The Equity Shares closed at $1.49 per share, a 10.2% discountto the quarter-end reported NAV of $1.66 per share (released 14 December 2007).Though market uncertainty continued throughout the quarter, BSPEL's Equity Shareprice grew 2.8% above the 30 September 2007 close, versus a 9.6% decline in theLPX(R) Europe TR index (an index based on 25 leading listed private equitycompanies) over the same period. The ZDP shares ended the period trading at51.75p per share, a 5.1% premium to the quarter-end reported NAV of 49.24p pershare (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 alreadyheld by BSPEL) indirectly owned through the purchase of secondary interests inPrivate 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 Strategy1Leveraged Buyout 50.7%Special Situations 33.9%Venture Capital 11.4%Real Estate 4.0% Fund Level - Investment Type1Secondary 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 Diversification1Industrial 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 31December 2007 and use underlying company-level and fund-level values. Inaddition, they include 34 private equity fund interests indirectly owned throughthe purchase of secondary interests in Private Equity Access Fund II Ltd, BearStearns Global Turnaround Fund, L.P., and BoS Mezzanine Partners Fund, L.P.; BoScompany-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 macroshifts in the global economy and committed approximately $87.4 million to 17private equity fund investments. The majority of these commitments were donethrough a large secondary portfolio purchase of mostly distressed and turnaroundfunds. 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 capitalfund. The Managers had exclusive insight into the portfolio prior to itspurchase, and believe it will provide BSPEL with a unique ability to participatein the distressed, turnaround, and restructuring sectors within the privateequity market. The assets were highly invested with approximately 64.9% fundedat 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 wasa 'funded primary' investment with significant amounts of capital already drawn.In the US, BSPEL completed a $10.0 million funded primary commitment toGuggenheim Aviation Offshore Investment Fund II, L.P. The fund focuses onpurchasing, leasing, and converting aircrafts from passenger planes tocommercial carriers. The commitment represents BSPEL's pursuit of nichestrategies that are projected to benefit in the current investing environment.At quarter end, approximately 43.0% of BSPEL's commitment to Guggenheim wasdrawn. In Europe, BSPEL committed €5.0 million to Norvestor V L.P., a fund focused oninvestments in Norway and the broader Nordic region. BSPEL has invested withNorvestor previously in both a separate primary fund and in BSPEL's firstco-investment (SCAN Geophysical). Both of these previous investments haveperformed well for the Company. In addition, BSPEL increased its primarycommitment to Realza Capital Fondo FCR by €5.0 million. Realza is a Spanish fundfocused on small to mid-sized buyout transactions in Spain and the greaterIberian Peninsula. Market Commentary The quarter ended 31 December 2007 proved to be one of additional uncertaintyand dislocation for private equity. Credit issues continued to filter throughthe financial system and caused a broad pullback in the debt markets. Megadeals, sponsored by well known managers including Blackstone and Cerberus, fellapart amid this uncertainty. In spite of this, buyout activity continuedthrough the quarter, with mid-market deals experiencing less lending-relatedsetbacks. The Managers believe the current market situation has created an attractiveinvesting environment for BSPEL's secondary investment strategy. BSPEL currentlyhas a robust pipeline of investments, and the Managers believe the remainder ofthe year will offer additional attractive investment opportunities. TheManagers also believe that BSPEL's highly diverse portfolio is well positionedto benefit in the current market, and that BSPEL's investment pipeline willenable 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'sShareholders approved the following resolutions: (i) to purchase a secondaryportfolio of funds from Bear Stearns (a related party transaction), (ii) toincrease the authorised share capital of the Company through the creation of 500million further Unclassified Shares, (iii) to amend the provisions of theArticles to restructure the semi-annual redemption facility as a tender offerfacility, (iv) to amend the Company's Articles to allow the Company to holdTreasury Shares, and (v) to grant authority for the Company to make futurepurchases of its own Shares by way of tender offer in accordance with theListing Rules. At BSPEL's 2007 Annual General Meeting held 20 December 2007, the Shareholdersresolved that the Company be authorised to make market purchases of equityshares and zero dividend preference shares of up to 14.99% of the issued Sharesas at 20 December 2007. Contacts - Investment Manager Troy DuncanUS (212) 272-9959tduncan@bear.com Rosemary DeRiseUS (212) 272-8756rderise@bear.com Bear Stearns Asset Management Limited Authorised and Regulated by FSA45 Old Bond StreetLondon W1S 4QT UK Bear Stearns Asset Management Inc.237 Park AvenueNew York, NY 10017 USA BSPEL is managed by Bear Stearns Asset Management Inc. ("BSAM Inc.") and BearStearns Asset Management Limited ("BSAM Ltd."), each a wholly-owned subsidiaryof The Bear Stearns Companies Inc. BSAM Inc. currently manages private equityportfolios that include over 175 separate private equity funds with totalcommitments of approximately US $1.8 billion. The Bear Stearns Companies Inc. is a publicly listed company on the New YorkStock Exchange under the symbol BSC. The Bear Stearns Companies Inc., throughits subsidiaries and affiliates, employs approximately 14,000 individuals andhas 19 offices worldwide. The Bear Stearns Companies Inc. had approximately US $80.3 billion in totalcapital as at 30 November 2007, making it among the top ten largest USsecurities firms in terms of total capital. Board of Directors ChairmanTrevor Ash (Guernsey Resident) Members John Loudon (UK Resident)Troy Duncan (US Resident)Christopher Paul Spencer (Guernsey Resident) All of whom may be contacted throughSt Martin's HouseLe BordageSt. Peter PortGuernsey GY1 4AU SECRETARY, ADMINISTRATOR ANDREGISTERED OFFICE HSBC Management (Guernsey) LimitedSt Martin's HouseLe BordageSt. Peter PortGuernsey GY1 4AU AUDITORKPMG Channel Islands Limited2 Grange PlacePO Box 235St. Peter PortGuernsey GY1 4LD SOLICITORHerbert Smith LLPExchange HousePrimrose StreetLondon EC2A 2HS UK REGISTRARCapita IRG (CI) Limited1 Le Truchot, 2nd FloorSt. Peter PortGuernsey GY1 4AE This document may only be issued to or passed on to persons to whom it may belawfully communicated pursuant to the Financial Services and Markets Act 2000(Financial Promotion) Order 2005, or otherwise only to professional clients andeligible counterparties and should not be used for the purpose of an offer orsolicitation in any jurisdiction or in any circumstances in which such offer orsolicitation is unlawful or unauthorised. In addition, this document may not begiven to a U.S. citizen or resident who is not a "Qualified Purchaser" withinthe meaning of the U.S. securities laws. This document is issued on behalf of BSPEL and has been approved by Bear StearnsAsset Management Limited, which is Authorised and Regulated by the FinancialServices Authority ("FSA") in the United Kingdom. The information in thisdocument is provided solely for information, does not constitute investmentadvice or personal investment recommendations, and is neither an offer to buy orsell, nor a solicitation to buy or sell, any investments or units or shares inBSPEL. To the extent that this document is issued in the United Kingdom, it isbeing issued to persons who are professional clients or eligible counterpartiesfor the purposes of the FSA's rules. Past performance is not necessarily aguide to future performance. Some information contained in this document may have been received from thirdparty or publicly available sources that we believe to be reliable. We have notverified any such information and assume no responsibility for the accuracy orcompleteness thereof. The information stated and opinions expressed constitutebest judgment at the time of publication, and are subject to change withoutprior notification. The price of units or shares (and the income from them) cango down as well as up and may be affected by changes in rates of exchange. Aninvestor may not receive back the amount invested. Current tax levels andreliefs are liable to change and their value will depend on individualcircumstances. The market prices of units and shares in BSPEL do notnecessarily reflect their underlying net asset value. (c) 2008 Bear Stearns Asset Management Limited. All rights reserved. Noinformation in this document may be reproduced or distributed in whole or inpart without the express written prior consent of Bear Stearns Asset ManagementLimited. END This information is provided by RNS The company news service from the London Stock Exchange