Jpel Priv Eqty Regulatory News (JPEL)

8 Nov 2007 16:23

Bear Stearns Private Equity Limited08 November 2007 Bear Stearns Private Equity Limited ("BSPEL")30 September 2007 Quarter End Review Objective To maximize capital growth for equity shareholders by investing primarily inprivate equity limited partnership interests and to provide ZDP Shareholderswith a predetermined final capital entitlement (although not guaranteed). Launched - 30 June 2005 Company Summary Equity Shares Zero Dividend Packaged Units Preference Shares Net Asset Value ("NAV") US$1.65 48.65p US$2.65per shareNo. of shares in issue 285.30 mm 59.47 mm -Currency of Quotation US$ £ 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 30 September 2007 Company Description Bear Stearns Private Equity Limited ("BSPEL" or the "Company") is aLondon-quoted, 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 making commitments to newly formed privateequity funds. In addition, BSPEL makes direct investments in individualcompanies by co-investing with individual private equity sponsors. The Companydiversifies its investments by manager, industry, geography, asset class, stageand 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, hedgefund-of-funds and other instruments. The Company's capital structure consists of two classes of shares: Equity Sharesand Zero Dividend Preference Shares ("ZDP Shares"). The Company aims to provideEquity shareholders with geared exposure to a private equity fund portfolio andto provide ZDP shareholders with a predetermined final capital entitlement(although not guaranteed). Manager's Comments Performance Through 30 September 2007NAV of the Equity Shares has grown 61.8% since BSPEL's inception on 30 June2005. The Company's unaudited net asset value ("NAV") per Equity Share increased from$1.55 at the beginning of the quarter to $1.65 at the end of the quarter,representing an increase in NAV of approximately 6.5% for the quarter. Thegrowth over the audited 30 June 2007 NAV of $1.60 was 3.1%(1). The unauditedNAV of the ZDP Shares also rose during the quarter, improving from 47.81p pershare to 48.65p per share. BSPEL's strong investment pace resulted in capitalcalls during the quarter of $36.2 million, which outweighed the $18.7 million ofdistributions from fund investments received over the same period. Through the period, BSPEL's investment portfolio continued to benefit fromhealthy distribution activity and increases in the valuation of several limitedpartnership interests. The dollar's noticeable decline against the Euro andSterling also enhanced the quarterly performance, as 53.5% of BSPEL'sinvestments are held in non-US currencies. Market uncertainty generated additional volatility in the Company's share priceduring the period, but prices ultimately closed at a discount to NAV that is inline with BSPEL's publicly traded peers. The Equity Shares closed at $1.45 pershare versus a quarter-end reported NAV of $1.55 per share. The ZDP sharesended the period trading at 47.75p per share versus a reported NAV of 48.58p pershare. (1) A fiscal year end audit resulted in the upward revaluation of severalprivate equity assets. This increase generated additional value in the privateequity portfolio value and resulted in a Net Asset Value per equity share of$1.60 as at 30 June 2007. Data as at 30 September 2007 Summary of Portfolio as at 30 September 2007 Number of Funds 71 Buyout Funds 37 Venture Funds 14 Real Estate Funds 6 Special Situations 14 U.S. Funds 38 Non-U.S. Funds 33 Co-investments 7 Source: Manager Fund total includes 20 private equity fund interests indirectly owned throughthe purchase of secondary interests in Private Equity Access Fund II Ltd and BoSMezzanine Partners Fund, L.P. Balance Sheet Information as at 30 September 2007 Investments at Market Value US$323.9 mm Bank Deposits US$197.0 mm Net Asset Value US$528.7 mm Source: Manager Fund Level - Investment Strategy*Leveraged Buyout 56.2%Special Situations 25.9%Venture Capital 12.5%Real Estate 5.4% Fund Level - Investment Type*Secondary 64.7%Co-Investments 15.6%Funded Primary 11.1%Primary 8.6% Company Level - Vintage Year* 1998 0.4% 1999 1.0% 2000 8.5% 2001 2.6% 2002 4.2% 2003 8.3% 2004 13.1% 2005 25.7% 2006 26.4% 2007 9.8% Company Level - Geography* Europe 47.0% North America 37.9% Asia 10.8% Other 4.3% Company Level - Industry Diversification*Industrial 25.6%Media 14.5%Consumer Goods 10.6%Technology 9.0%Energy 7.4%Real Estate 7.3%Healthcare 6.4%Retail 5.8%Business Services 5.7%Communications 3.6%Financial Services 3.0%Leisure & Gaming 1.1% * The diversification charts are based on Net Asset Value as at 30 September2007 and use underlying company-level and fund-level values. In addition, theyinclude 20 private equity fund interests indirectly owned through the purchaseof secondary interests in Private Equity Access Fund II Ltd and BoS MezzaninePartners Fund, L.P.; BoS company-level exposure includes estimated pro ratedfund-level leverage.Leveraged Buyout category includes co-investments. Source: Manager. Investment Activity During the quarter, the Company committed approximately $112.2 million tointerests in seven investments, including five private equity funds, oneco-investment, and one add-on to an existing fund investment. Several of theseinvestments were highly invested at the time of purchase, resulting in $55.6million drawn (49.5% of new commitments) at quarter end. Secondary Commitments The Company acquired secondary interests in two fund vehicles, representingtotal commitments of approximately $23.9 million. The Company committed $12.4million to Clearwater Capital Partners Fund I, L.P., a fund focused on Asianprivate equity and debt instruments. BSPEL previously invested in a similarfund managed by Clearwater. In addition, the Company acquired commitments ofapproximately £5.4 million in Esprit Capital I Fund, a UK based venture capitalfund that invests across Europe. BSPEL previously invested in this fund, andsecured the additional interest through a stapled transaction completed inAugust 2007. Co-Investments The Company made one co-investment during the quarter, investing into one ofGermany's largest cable companies that primarily serves the urban market. BSPELcompleted its €19.1 million investment through Hunter Acquisition Limited, whichacquired an interest in the cable company through a secondary purchase from anexisting investor. BSPEL will syndicate out a portion of this investment in thecoming quarter and retain a €16.0 million position. Primary Commitments The Company made four primary commitments during the quarter, three of whichwere 'funded primary' investments with significant amounts of capital alreadydrawn. BSPEL's funded primary investments consisted of a $25.0 millioncommitment to Olympus Capital Asia III, L.P., a fund that invests in middlemarket companies throughout Asia, and a $25.0 million commitment to AIG HighstarCapital III Prism Fund, L.P., a fund that invests in infrastructure relatedassets and businesses. The Company's third funded primary commitment was $6.5million to Gridiron Capital Fund, L.P., a fund that invests in smaller,middle-market U.S. companies. In addition, the Company made a €5.0 millionprimary commitment to Realza Capital Fondo FCR, a Spanish fund focused on smallto mid-sized buyout transactions in Spain. These primary investments wereapproximately 27% drawn at quarter end. Market Commentary The quarter ended 30 September proved to be an eventful one for private equity.A credit crunch hindered large scale buyout financing and filtered through theindustry, causing many investors to reevaluate their current positions andinvestment objectives. The Managers believe that the recent market fluctuationshave generated strong deal flow in the secondary market as sellers areincreasingly impacted by liquidity issues or a desire to reduce private equityexposure. Against the backdrop of a market correction, BSPEL continued to focuson opportunistic, value investing in a variety of industries and regions, andproduced its ninth consecutive quarter of positive returns. Bi-Annual Redemption Facility On 10 August 2007, the Company announced that it had redeemed 3,597,890 EquityShares at a price of $1.55 per share and 3,375 Zero Dividend Preference Sharesat a price of 47.81p per share. Following the redemption, BSPEL had 286,428,356Equity Shares and 59,471,659 Zero Dividend Preference Shares in issue. On a 12 October 2007 Board of Directors meeting, the Board accepted theresignation of Mr. Paul Sanabria and appointed Mr. Troy Duncan as an executivedirector of the Company. Mr. Duncan, a US resident, is a Managing Director atBear Stearns Asset Management Inc. Company Actions Following a Board of Directors meeting, the Company enacted a share buybackprogram. From 17 August through 24 August, the Company cancelled 1,130,000shares at a total cost of approximately $1.56 million. Following the conclusionof the buyback period, there were 285,298,356 Equity Shares outstanding. Contacts - Investment Manager Troy DuncanUS (212) 272-9959tduncan@bear.com Rosemary DeRiseUS (212) 272-8756rderise@bear.com Bear Stearns Asset Management Limited Authorized 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 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 15,000 individuals andhas 19 offices worldwide. The Bear Stearns Companies Inc. had approximately US $78.2 billion in totalcapital as at 31 August 2007, making among the top ten largest US securitiesfirms 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 throughHSBC Private Banking BuildingRue du PreSt. Peter PortGuernsey GY1 1LU SECRETARY, ADMINISTRATOR ANDREGISTERED OFFICE HSBC 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 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 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 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) 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. END This information is provided by RNS The company news service from the London Stock Exchange