Jpel Priv Eqty Regulatory News (JPEL)

17 Jan 2007 16:06

Bear Stearns Private Equity Limited17 January 2007 Bear Stearns Private Equity Limited ("BSPEL") 31 December 2006 Quarter End Review Objective To maximize capital growth for ordinary 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 Ordinary Share Zero Dividend Preference Share Packaged UnitsNet Asset Value ("NAV") US$1.45 46.15p US$2.35per shareNo. of shares in issue 95.81 mm 59.48 mm -Currency of Quotation US$ £ 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 of 31 December 2006 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 31 December 2006 The Company's unaudited net asset value (NAV) per Equity Share rose from $1.27at the beginning of the quarter to $1.45 at the end of the quarter. Thisrepresents an increase in NAV of approximately 14.2% for the quarter. Theunaudited NAV of the ZDP Shares also rose during the quarter, improving from45.34p per share to 46.15p per share. Overall, private equity cash flows werebalanced as capital calls slightly outpaced distributions, approximately $11.7mm and $10.6 mm, respectively. The Company's investment portfolio continued to benefit from a combination ofdistribution activity as well as uplifts in the valuation of many of the limitedpartnership interests. Other factors positively impacting the Equity Shares NAVthis quarter included the (i) increased size of the private equity portfolio asa percentage of total assets, (ii) utilization of leverage provided by ZDPshares, and (iii) appreciation of sterling and euros against the dollar. The Company's Equity Shares and ZDP Shares closed the quarter trading at slightpremiums to quarter-end NAVs. The Equity Shares closed at $1.27 per shareversus a quarter-end reported NAV of $1.26 per share. The ZDP shares closed at48.50p per share versus a reported NAV of 46.15p. Data as at 31 December 2006 Summary of Portfolio as of 31 December 2006 Number of Funds 53 Buyout Funds 31 Venture Funds 11 Real Estate Funds 6 Debt Strategies 5 U.S. Funds 33 Non-U.S. Funds 20 Co-investments 4 Source: Manager. Fund total includes 12 private equity fund interests indirectly owned throughpurchase of a $24 million secondary interest in Private Equity Access Fund IILLC. Balance Sheet Information as of 31 December 2006 Investments at Market Value US$159.9 mm Bank Deposits 34.5 mm Net Asset Value USD$192.5 mm Totals are not adjusted for the pending redemption of 7,628,577 Equity sharespursuant to the optional bi-annual redemption facility. This redemption shalltake place on 18 January 2007. Fund Level - Investment Strategy* Debt Strategies 6%Leveraged Buyout 71%Venture Capital 14%Real Estate 9% Fund Level - Vintage Year* 1997 3.8% 1998 0.4% 1999 9.2% 2000 15.3% 2001 35.1% 2002 5.7% 2003 7.0% 2005 11.2% 2006 12.4% Fund Level - Geography* US 51% Europe 41% Other 8% \* The data is based on Net Asset Value as of 31 December 2006 and use fund-levelvalues. In addition, it includes 12 private equity fund interests indirectlyowned through the purchase of a $24 million secondary interest in Private EquityAccess Fund II LLC.Leveraged Buyout category includes co-investments. Source: Manager. Industry Diversification** Industrial 27%Media 6%Healthcare 5%Real Estate 11%Retail 12%Technology 12%Leisure & Gaming 1%Business Services 4%Communications 4%Consumer Goods 8%Energy 6%Financial Services 4% Company Level - Geography** Europe 41%North America 48%Other 11% ** The diversification charts above are based on Net Asset Value as of 31December 2006 and use underlying company-level values. In addition, theyinclude the underlying companies included in 12 private equity fund interestsindirectly owned through the purchase of a $24 million secondary interest inPrivate Equity Access Fund II LLC. Source: Manager. Investment Activity During the quarter, the Company committed approximately $33.2 million tointerests in five private equity funds and one co-investment. Many of theseinterests were substantially funded at the time of purchase; on a blended basis,approximately 53% of total commitments made during the quarter were drawn atclosing. Secondary Commitments The Company acquired secondary interests in three fund vehicles, representingtotal commitments of approximately $21.5 million. The Company committed €8million to Argan Capital Fund I, a pan-European firm focused on middle marketbuyout transactions. In addition, the Company invested $2.5 million inClearwater Capital Partners Opportunities Fund, L.P., a fund focused oninvesting in distressed assets and other special situations in Asia. This isthe Company's first investment in a fund dedicated to Asia. Finally, theCompany committed approximately £4.5 million to Esprit Capital I Fund, a UKbased venture capital fund that invests on a pan-European basis. These threeinterests reflect the Company's continued emphasis on purchasing seasoned assetswith experienced private equity fund managers. Primary Commitments The Company made two primary commitments during the quarter; $5.7 million toStrategic Value Global Opportunities Fund I-A and $3.7 million to Main StreetFund II. In both instances, these commitments were made in combination withsecondary purchases of interests in previous funds (both of these secondarytransactions closed during the quarter ended 30 September 2006). StrategicValue Partners focuses on investing in a wide range of distressed andundervalued assets. Although the fund invests on a global basis, the majority ofassets are likely to be allocated to the European market, with an emphasis onGerman opportunities. Main Street Partners focuses on small expansion capitaland buyout transactions in the North Eastern region of the United States. Co-Investments The Company made its fourth co-investment since inception, allocating $2.2million to Freescale Semiconductor, Inc. Freescale is a global leader in thedesign and manufacture of embedded semiconductors for wireless, networking,automotive, consumer and industrial markets. Freescale is based in Austin,Texas, and has design, research and development, manufacturing or salesoperations in more than 30 countries. Freescale is one of the world's largestsemiconductor companies with 2005 sales of $5.8 billion. The Company co-invested in this transaction alongside The Blackstone Group. Theother lead investors in the transaction included The Carlyle Group, PermiraFunds, and Texas Pacific Group. Optional Bi-Annual Redemption Facility At the Company's board meeting held on 27 October 2006, the Board of Directorsconsidered the appropriateness of offering shareholders the opportunity toparticipate in the bi-annual redemption facility, whereby shareholders couldredeem shares at the NAV as of the last day of December 2006. The Directorsresolved to give shareholders, if they so wished, the opportunity to redeem upto 15% of each class of the Company in issue on 31 December 2006. The notice to shareholders regarding the optional bi-annual redemption policywas published on 31 October 2006. None of the ZDP shareholders elected toredeem shares. Of the 95,787,049 Equity Shares outstanding as of 31 December2006, 7,628,577 elected by their shareholders to be redeemed. Company Actions On 11 December 2006, the Company issued notices of (i) a Separate GeneralMeeting of ZDP Shareholders and (ii) Extraordinary General Meeting to considerproposals from the Board of Directors for the capital reorganisation of theCompany in order to convert the Company from its current split capital structureinto a conventional investment company. In addition, the Board proposedamendments to the borrowing and over-commitment policies, the managementagreement and the adoption of a new articles of Associating On 11 January 2007, the Company announced that, due to a change incircumstances, the general meetings convened to consider proposals for a capitalreorganisation of the Company were adjourned. Accordingly the resolutions werenot put before shareholders. Contacts - Investment Manager Troy Duncan US (212) 272-9959 tduncan@bear.com Rosemary DeRise US (212) 272-8756 rderise@bear.com Bear Stearns Asset Management Limited Authorized and Regulated by FSA45 Old Bond StreetLondon W1S 4QT UK Bear Stearns Asset Management Inc.383 Madison AvenueNew York, NY 10179 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 100 separate private equity funds with totalcommitments exceeding US$1 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 13,000 individuals andhas 19 offices worldwide. The Bear Stearns Companies Inc. had approximately US$61.9 billion in totalcapital as of 31 August 2006, making it the seventh largest securities firm interms of total capital. Board of Directors ChairmanTrevor Ash (Guernsey Resident) Members John 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 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(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. END This information is provided by RNS The company news service from the London Stock Exchange