Jpel Priv Eqty Regulatory News (JPEL)

10 Aug 2007 16:42

Bear Stearns Private Equity Limited10 August 2007 RNS Regulatory Announcement Bear Stearns Private Equity Limited ("BSPEL") 30 June 2007 Quarter End Review Objective To maximize capital appreciation for equity shareholders through theconstruction of a diversified portfolio of global private equity limitedpartnership interests while providing ZDP shareholders with a predeterminedfinal capital entitlement. Launched - 30 June 2005 Company Summary Equity Shares Zero Dividend Packaged Units Preference SharesNet Asset Value ("NAV") US$1.55 47.81p US$2.51per shareNo. of shares in issue 290.03 mm 59.48 mm -Currency of Quotation US$ £ 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 30 June 2007 Company Description Bear Stearns Private Equity Limited ("BSPEL" or the "Company") is a London StockExchange-listed, Guernsey-registered, closed-end investment company whichprimarily uses a fund-of-funds approach to gain exposure to the private equityasset class. The Company invests in private equity funds by acquiring limited partnershipinterests in the secondary market and by making commitments to newly formedprivate equity funds. In addition, BSPEL makes direct investments in individualcompanies by co-investing alongside individual private equity sponsors. TheCompany diversifies its investments by manager, investment strategy, industry,geography, asset class and vintage year. The Company employs an enhanced cash management strategy for capital awaitinginvestment in private equity assets, which may include investments in fixedincome instruments, money market accounts, bank deposits, bank loans, hedgefunds and other instruments. The Company's capital structure consists of two classes of shares: Equity Sharesand Zero Dividend Preference ("ZDP") Shares. The Company aims to provide Equityshareholders with geared exposure to a private equity fund portfolio and toprovide ZDP shareholders with a predetermined final capital entitlement(although not guaranteed). Manager's Comments Equity NAV increased 30.3% for the year ended 30 June 2007. Fourth Quarter Highlights • Significant Annual NAV Growth. BSPEL's unaudited net asset value ("NAV") per Equity Share increased 30.3% to a record $1.55 for the fiscal year ending 30 June 2007. The total represented a $0.36 increase over fiscal 2006 NAV of $1.19 per share • Strong Quarterly Private Equity Performance. For the quarter, the private equity portfolio increased 8.8%. Due to the successful follow-on equity offering completed in April, the increased outstanding cash balance tempered NAV per share growth to a more moderate 3.3% (cash on hand following the offering represented 66% of total NAV). The NAV of the ZDP Shares also rose during the quarter, increasing to 47.81p • Accelerated Investment Pace. Overall, the Company has maintained a strong investment pace since the completion of the April equity offering, having committed approximately $117.6 million with $66.7 million in invested capital during the quarter • Further Investment Diversification. The Company continues to diversify its global portfolio by manager, investment strategy, industry, geography, asset class and vintage year. At the end of June, the underlying portfolio contained exposure to more than 900 companies worldwide across 67 private equity funds and 6 co-investments Company Highlights • No Negative Quarter Since Inception. With the most recent increase in NAV, the Company has continually provided positive returns on invested capital in each quarter since inception. The Company's NAV has increased an aggregate 52% since inception in June 2005 • Repositioned Private Equity Portfolio. The Company continues to reposition the portfolio to take advantage of changing market conditions: • European Expansion. For the second consecutive quarter, the Company has lowered its relative exposure in the U.S. with Europe now representing the largest geographical position in the private equity portfolio at 54% of total fund-level NAV • Special Situations. The Company greatly expanded its position in the mezzanine and distressed private equity market in the quarter. Approximately 24% of BSPEL's portfolio is now represented by strategies that may benefit from a capital markets correction and the subsequent re-pricing of leveraged loans • Limited Large Cap Buyout Exposure. The Company typically focuses on investing in lower middle market companies that require less aggregate debt financing; the Manager believes these companies will be less impacted by current debt market uncertainties • No Sub-prime Exposure. BSPEL has no sub-prime mortgage exposure. BSPEL has no direct exposure to the U.S. sub-prime mortgage market and to its knowledge, its private equity holdings have no indirect exposure to this market Data as at 30 June 2007 Fund Level - Investment Strategy* Special Situations 24%Leveraged Buyout 53%Venture Capital 15%Real Estate 8% Fund Level - Vintage Year* 1997 2.3% 1998 0.2% 1999 5.4% 2000 10.8% 2001 20.1% 2002 5.2% 2003 5.1% 2005 21.0% 2006 19.8% 2007 10.1% Fund Level - Geography* US 38% Europe 54% Other 8% \* The diversification charts are based on Net Asset Value as of 30 June 2007 anduse fund-level values. In addition, they include 20 private equity fundinterests indirectly owned through the purchase of secondary interests inPrivate Equity Access Fund II Ltd and BoS Mezzanine Partners Fund, L.P. Leveraged Buyout category includes co-investments.Source: Manager. Company Level - Industry Diversification** Industrial 23%Media 7%Healthcare 5%Real Estate 9%Retail 8%Technology 12%Leisure & Gaming 2%Business Services 6%Communications 5%Consumer Goods 12%Energy 7%Financial Services 4% Company Level - Geography** Europe 57%North America 34%Other 9% ** The diversification charts above are based on Net Asset Value as of 30 June2007 and use underlying company-level values. In addition, they include 20private equity fund interests indirectly owned through the purchase of secondaryinterests in Private Equity Access Fund II Ltd and BoS Mezzanine Partners Fund,L.P.; BoS company-level exposure includes estimated pro rated fund-levelleverage Source: Manager. Investment Activity During the quarter, the Company committed approximately $117.6 million to elevenprivate equity and mezzanine funds and one co-investment. A substantial portionof committed capital was to secondary positions in European mezzanine privateequity funds. In addition, the company continued to allocate most of itsinvestments to non-U.S. opportunities, particularly in Europe. Secondary Commitments The bulk of the assets invested in the quarter were secondary purchases,reflecting BSPEL's continued emphasis on obtaining attractive, seasoned assetswith experienced private equity fund managers. The Company acquired secondaryinterests totalling $93.9 million in commitments, representing almost 80% of allcapital committed in the quarter. The Company committed €58.5 million alongsidethe Bank of Scotland to invest in a €233 million portfolio of eight seasonedEuropean private equity mezzanine funds. The investment was 50% funded atclosing and was pre-arranged to coincide with the Company's April capital raise. In addition, the Company committed €10.1 million to Omega Fund III, L.P., afully-drawn Switzerland-based fund focused on healthcare venture capitalinvestments throughout Western Europe and the U.S. Co-Investments The Company made its sixth co-investment since inception, allocating Y675.4million ($5.5 million) to Arysta LifeScience Corporation, a Tokyo-based companyand the tenth largest agrochemical company in the world by revenues. Arystarepresented an opportunity to invest in a fast-growing, well-managed company atan attractive valuation. The Company made the investment alongside OlympusCapital Holdings Asia, a pan-Asian private equity fund manager. Primary Commitments BSPEL continues to make limited primary fund commitments. The Company invested$17.0 million in Avista Capital Partners, L.P., a "funded primary" opportunitytargeting growth-oriented energy, healthcare and media companies. BSPEL's onlyother primary activity during the quarter was a €2.1 million commitment toWellington Partners Ventures III GMBH & CO.KG (B). Consistent with the generalstrategy of the Company, this commitment was made in combination with an earliersecondary purchase in a previous fund managed by Wellington Partners.Wellington focuses on lower middle market investments in the informationtechnology and life sciences sectors primarily in German-speaking Europe. Market Outlook With the potential of an extended credit crunch currently hanging over the debtcapital markets, the near-term outlook for private equity has been somewhataltered. The Company believes that its investment strategy continues toposition BSPEL to thrive in any market environment for a number of key reasons: • Emphasis on Diversification. The Company is well-diversified by investment strategy, vintage year, fund manager and geography. The underlying portfolio contains exposure to more than 900 companies worldwide through 67 funds and 6 co-investments • Secondary Strategy. BSPEL believes that its secondary market investment strategy will benefit from an increase in distressed private equity sellers created by current debt capital market conditions • Focus on Value Investing. BSPEL focuses on lower middle market companies whose returns are predicated more on operational improvements and less on debt market liquidity • Distressed and Special Situations Exposure. With value investing as a cornerstone to BSPEL's strategy, a growing portion of the portfolio may benefit from a correction in the capital markets and the subsequent re-pricing of leveraged loans Contacts - Investment ManagerTroy DuncanUS (212) 272-9959tduncan@bear.com Rosemary DeRiseUS (212) 272-8756rderise@bear.com Bear Stearns Asset Management LimitedAuthorized and Regulated by FSA45 Old Bond StreetLondon W1S 4QT UK Bear Stearns Asset Management Inc.237 Park Avenue, 7th FloorNew 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 150 separate private equity funds with totalcommitments exceeding US $1.7 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 15,000 individuals andhas 19 offices worldwide. The Bear Stearns Companies Inc. had approximately US $75.1 billion in totalcapital as at 31 May 2007, making it the seventh largest securities firm interms of total capital. Board of DirectorsChairmanTrevor Ash (Guernsey Resident) MembersJohn Loudon (UK Resident)Paul Adam Sanabria (US Resident)Christopher Paul Spencer (Guernsey Resident) All of whom may be contacted throughHSBC Private Banking BuildingRue du PreSt. Peter PortGuernsey GY1 1LU SECRETARY, ADMINISTRATOR ANDREGISTERED OFFICEHSBC Management (Guernsey) LimitedHSBC Private Banking BuildingRue du PreSt. Peter PortGuernsey GY1 1LU 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(Financial Promotion) Order 2005, being intermediate investors and marketcounter-parties 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 unauthorized. 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 Authorized 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 intermediate customers or market 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) 2007 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. This information is provided by RNS The company news service from the London Stock Exchange