forsyth global private equity fund november 2007
TRANSCRIPT
Forsyth Global Private Equity Fund
November 2007
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Henry Freeman
• Joined Forsyth Partners in 2004, focusing on
private equity, UK equity and fixed income
• Previously at Goy Harris Cartwright as Senior
Investment Manager, specialising in
alternative investment companies
• Started career at Lloyds Private Banking/Hill
Samuel
• Started in industry in 1998
• BSc in Management Science with Politics
from University of London (Royal Holloway
College)
Forsyth Global Private Equity FundAbout the Fund Manager
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Essentially private equity is an alternative
way of owning a company
What is private equity?
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Benefits
• Works closely with management teams to ensure more efficient
capital structures are in place
• Away from the dividend requirements and short-termist gaze of
the public sector, it allows meaningful strategic and operational
changes to be made that benefit the longer term interests of
the company
• Provides facility to acquire businesses to merge with other
portfolio companies, benefiting from cost efficiencies
• Management’s long term interests are more closely aligned
with the other private equity owners
• Rewards are directly linked to the value created through
buying, building and ultimately selling businesses
What is private equity?
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Common Myths
1. Private equity buy companies on the cheap, strip the assets
and then sell them on for a quick profit
2. Private equity leverages up companies with unsustainable
levels of debt
3. Private equity operates in a shadowy and secret world
Reality (…at least of the type of firms we invest with)
1. Create value for investors by buying at a fair price and building
businesses, not stripping them down
2. Ensure businesses can pay interest payments required based
on the level of earnings the company produces on a deal by
deal basis
3. Maybe true of yesteryear but firms are becoming more open
What is private equity?
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• Private equity funds are generally difficult to access for the
everyday investor
• Like hedge funds, investors face a series of obstacles: lack of
access to funds, size of entry, ability to diversify and lack of
investment expertise
• Moreover, liquidity is extremely restrictive in this arena with
private equity funds commonly implementing long lock-ins in
excess of 3 – 5 years
How to invest in private equity?
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Forsyth Global Private Equity FundProviding the solution
• The Forsyth Global Private Equity Fund offers investors an
opportunity to further diversify their portfolios in an easily
accessible way:
Daily Dealing Professional management with a fund of funds approach Minimum investment of USD10,000/EUR10,000
Forsyth Global Private Equity Fund Investment Process
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Investment Objective
• The investment objective of the Forsyth Global Private Equity Fund Limited is to achieve long term capital growth.
• The Fund aims to achieve its objective by investing principally in listed private equity companies and in private equity related securities.
• These investments may be made directly and through open-ended funds operating in the private equity sector. The Fund may also hold ancillary liquid assets.
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Fund StructureListed Private Equity
• Daily dealing is possible due to investment in listed private
equity funds and companies which are traded on stock markets
• Forsyth Global Private Equity invests directly into listed private
equity funds as well as through open-ended funds and other
private equity related securities
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Fund StructureFund of funds approach
PortfolioMonitoring
ImprovedLiquidity
Geographic andStrategy
Diversification
Diversification in Private Equity
Market
LowerMinimum
Investment
Accessto Top
Managers
Expertiseand
Experience
Fundof
Funds
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Investment methodology Liquidity
• There around 350 to 400 listed private companies/funds globally
• Liquidity issues preclude us from investing in 250 to 300 of
these stocks which brings the universe down to around 100
• We will only invest in stocks with a market capitalisation greater
than USD100m
• We will ensure that average daily volumes are suitable to
ensure we can offer investors into our fund daily liquidity
• We also invest in open-ended funds and other private equity
related securities, again always ensuring we can offer our
investors daily liquidity
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Investment methodology Portfolio implementation
• Meetings are central to fund selection and we see or speak to
managers and brokers on a regular basis to keep ahead of
company developments
• Forsyth Partners is renowned for identifying fund manager
excellence – close relationships are the key
• The same is true of our private equity investing
– Research, due diligence and gaining an intimate
understanding of how the various private equity groups
work is essential and we have developed close
relationships with the various managers as well as brokers
on the listed private equity side
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Investment methodologyInvestment strategy
• In addition to selecting the cream of private equity managers,
we also put a top down tilt on our investment strategy
• We find that the macro matters as much to private equity as it
does to publicly traded equities
• Our views on private equity come from a variety of sources
ensuring a balanced view is taken
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Investment methodologyPortfolio controls
Stock positions
• Core open ended funds will not exceed 20% each
• Core listed private equity companies/funds will not exceed 9%
• Satellite listed stocks will not exceed 5%.
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Investment methodologyThemes
• Listed Private Equity companies that wholly own the
management/advisory company
– Candover plc and SVG Capital
• Why? They earn fee income from the other funds they advise on
in addition to making returns from the quality private equity
investments owned by the companies
• This is growing income as they are both diversifying their fund
management businesses to public equity and hedge fund
mandates
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Investment methodology Core/Satellite Approach
• The core is invested in well managed mainstream funds and
reflects our strategic asset allocation
• The satellite is where our more tactical overweights and
interesting plays come through. For example:
– Emerging market private equity
– Infrastructure
– Private Financing
Forsyth Global Private Equity Fund
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Forsyth Global Private Equity FundPerformance 29 December 2006 to 31 August 2007
All figures calculated in euros. Fund performance on an NAV to NAV basis with gross income reinvested. Past performance should not be viewed as a guide to future performance. The price of shares in each of the Forsyth Funds can go down as well as up and the value of an investment can fluctuate in response to changes in exchange rates. Source Reuter’s Hindsight. Crosby Capital Partners Ltd is authorised and regulated in the conduct of investment business by the Financial Services Authority in the UK.
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Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07
Forsyth Global Private Equity Fund
LPX50 TR
MSCI World TRS&P Listed Private Equity Index
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Forsyth Global Private Equity FundCore Holding Example – Candover Investments plc
• Leading European houseStrong track record and portfolio
• In addition to portfolio of private equity, Candover Investments wholly owns Candover Partners
Receives fee income on all other funds Candover Partners runsA growing fund management business in itself
• Focuses on larger European buyouts
• Has enjoyed successful realisations since purchase
• A good spread of investments by vintage and sector and successful refinancings prior to credit crunch
Largest Holdings:− Ferretti− Gala Group− DX SMS− Dakota, Minnesota & Eastern
Railroad− Hiding Anders
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Purchase
PurchasePurchase
Purchase
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Forsyth Global Private Equity FundSatellite Holding Example – Evolvence India Holdings
• A fund of Indian private equity funds and co-investments
• Experienced locally based team with hands on approach
• Focus on mid-sized companies
• Well diversified by vintage and geography
• Major sectors of investment include:
InfrastuctureEngineering & AutomotiveConstructionTechnologyLife Sciences
Largest Holdings:− GW Capital India Value Fund II− Barings (India) Private Equity Fund II− IL&FS India Leverage Fund− IDFC Private Equity (Mauritius) Fund
II− New York Life IM India Fund II
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1.07
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Purchase
Purchase
Purchase
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• Aims for long term capital growth
• Domiciled in Bermuda
• Launched on 1 December 2006
• Share classes – US dollars and euro
• Fund size USD 26.1 million (31 August 2007)
• Management fee – 1.5% pa
• Daily dealing
• No lockup period
• Minimum investment USD 10,000/EUR 10,000
Forsyth Global Private Equity FundKey terms
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This presentation is by Crosby Capital Partners Ltd, which is authorised andregulated by the Financial Services Authority in the UK, and whichmanages a range of offshore funds (“the Funds”). Application for shares in the Funds can only be made on the basis of the currentProspectuses. The Funds are unregulated collective investmentschemes in the UK and their promotion by authorised persons in theUK is restricted by the Financial Services and Markets Act 2000. Theprice of shares and the income from them can go down as well as upand the value of an investment can fluctuate in response to changes inexchange rates.
Forsyth PartnersRegulatory matters