ir top lugano small & mid cap investor day
TRANSCRIPT
IR Top Lugano Small & Mid Cap Investor Day
21 September 2018
IR Top Lugano Small & Mid Cap Investor Day
Storyline
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Long tradition of Investment Bank and Simple Shareholders’ Composition
Equita Group - Shareholders’ Composition
ManagementLock-up agreements
24-months lock-up for all managers at IPO
Shareholders’ agreement among senior management with lock-up till renewal of the Board (2020)
48-months lock-up for 20 professionals that bought shares at IPO
53,9%
9,5%
36,6%Management
Treasury Shares
Float
IR Top Lugano Small & Mid Cap Investor Day
Independent Investment Banking
3
Diversified and Integrated Business Model, with a Unique Position in the Market
High access to capital markets and independencyFour business lines supported by a well-recognized research team
ST PT
IBAAM
Research Team#1 Research team continuously supporting
the other 4 business lines
InvestmentBanking
Outstandingteam and high
value added products
Sales & TradingLeading Italiantrading floor
Alt. AssetManagementDiversified areasto catch marketopportunities
Proprietary TradingProfitable desk
with limited risk
Fully independent player and absence of conflict of interestlike pure players in Advisory
Deep access to capital markets like global investment banks
IR Top Lugano Small & Mid Cap Investor Day
46%
21%
28%
5%
Sales & Trading Proprietary Trading
Investment Banking Alternative Asset Management
29%
17%
48%
6%
Key Financials
4
€36.7m(+47% vs. 1H 2017)
Net Revenues
€7.6m(+67% vs. 1H 2017)
Net Income TCR
Net Revenues breakdown by business lineKey Figures(as of 30 June 2018)
1H 20181H 2017
25.7%(as of 30 June 2018)
High double-digit growth
High double-digitgrowth
Healthy capital structure with low capital absorption
25.0€ m
36.7€ m
Total AuM
€601m(as of 18 September 2018)
Focus on growthin the Alternative
Asset Management
Companies covered by the Research Team (o/w Italian)
Investments in Private Equity and Private Debt
Capital raised for our clients (both equity and debt)
Active clients in Sales & Trading
6
>300
€1.5bn
166(121)
Professionals and staff136
Snapshot of 1H 2018 Consolidated Results
IR Top Lugano Small & Mid Cap Investor Day
15,4%
12,1%9,9%
7,8%5,6% 5,5% 5,3% 4,3% 4,3% 4,1%
5
Note: (1) Thomson Extel Surveys (based on fee paid; including Mid-Small Caps); (2) Brokered volumes on MTA equities in 1H 2018; source: ASSOSIM.
Trading floor ranked at the top of investors’ surveys, confirming the Equita leading position in Italy. Market share in terms of brokered volumesamong the largest in Italy, overtaken by only large banking groups with significant retail network activities
Sales & Trading
Among the undisputed leaders in italy
More than 20 salesmen constantly in touch with more than 400institutional clients for foreign and Italian stocks all over the world
In the last 3 years:
• ~200 roadshows in Italy and ~200 roadshows abroad
• more than 3,000 institutional investors met
Ranking of Brokers (volumes, third parties on MTA)(2)
BEST BROKER IN ITALYEquity Sales(1)
2°: 20183°: 20172°: 20162°: 20151°: 20141°: 2013
BEST BROKER IN ITALY Trading Execution(1)
2°: 20182°: 20171°: 20161°: 20151°: 20141°: 2013
Leading sales-force in Italy dedicated to institutional investors
Ranking 2013-2018 Extel – All Brokerage Firms; Italy (1)
Evolution of brokered volumes (third parties on MTA)(2)
579
419 460
250 211
2015 2016 2017 1H 2017 1H 2018
CAGR 15-17: (10,8)%
1H’17-18: (15,4)%No. 1 excluding large banking groups with
significant retail network activities
IR Top Lugano Small & Mid Cap Investor Day
Proprietary
Desk
Volatility / Market Making
Specialist & Appointed
Intermediary
Fixed Income
Sales & Trading
RiskArbitrage
Directional
6
Proprietary Trading
1
2
34
5
Services offered and breakdown
Diversified and low-risk proprietary desk, aimed at providing additional returns for the Group with Directional trading, and sustain liquidity andperformance for its clients with Client-Driven & Market Making services
Advisory6
Client-Driven &Market Making
Directional activities based on proprietary tradingstrategies to take advantage of market trends and thatembed, generally, a certain level of risk
Client-Driven activities based on execution of directclient orders with positions closed before Close-of-business (no exposure on Equita books at the end of theday)
Market Making activities based on strategies aimed atsustaining liquidity with bid-ask or only bid positions
Directional
Client-Driven & Market MakingDirectionaltrading
IR Top Lugano Small & Mid Cap Investor Day 7
Investment Banking
“One-stop-shop” approach thanks to a complete range of products and services offered
The largest independent investment bank in Italy, offering a complete range of products and services to institutions and corporates, andgenerating opportunities for the other business lines of the Group
Equity Capital Markets
• IPO• Private Placements• Tender Offers• Rights Issues
Debt Capital Markets
• IG’s bond’s Issues• US private
placements• Retail public
offering• HY bonds
Debt Advisory
• Debt-raising• Selection and
negotiation of preferred funding offers
• Structuring of «self-arranged» club deals
Debt Restructuring
• Debt renegotiation• New money finding• Liquidity crisis
management• Creditors’advisory• Corporate
Restructuring
Corporate Broking e Specialist
• Advisory to BoD• Market
performance analysis/market intelligence
• Target Investors analysis
• Specialist
M&A e Advisory
• Merger• Sell & Buy Side
process• Fairness opinions• Financial Sponsor
Coverage
3 5 7 10 11 13 16 17 20 22 23
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Advisory M&A & Corporate Banking
Financial Institutions
Debt AdvisoryDebt Capital
MarketsFinancial Sponsors
Evolution of services and number of professionals in the last 10 years
IR Top Lugano Small & Mid Cap Investor Day
11
22 20
8
25
16
3
66
7872
41
78
41
20
2013 2014 2015 2016 2017 1H'17 1H'18
CVT (€ bn) # of deals
31
5056 58
46
17
32
381
543 583
829 817
390333
2013 2014 2015 2016 2017 1H'17 1H'18
CVT (€ bn) # of deals
Market trends in Italy
8
Investment Banking (cont’d)
Note: (1) Market trends include IPOs, Convertibles and Follow-on deals. Source: Dealogic; (2) Market trends are made excluding banks/ass. Source: Bondradar; (3) Source: M&A in Italy, KPMG report
Despite decreasing investment banking market volumes, Equita performed very well and improved its positioning in all of the key business areas
DCM (2)ECM (1) M&A (3)
30 2924 22
45
18
9
66
47
3842
67
2720
2013 2014 2015 2016 2017 1H'17 1H'18
CVT (€ bn) # of deals
Selected Equita transactions 1H 2018
FEBRUARY 2018
BOND 3.5% 2018-2025 ISSUE ON MOT
( € 180 mln )
PLACEMENT AGENT AND APPOINTED
BROKER
FEBRUARY 2018
BOND 1.625% 2018-2025
( € 550 mln )
CO – LEAD MANAGER
APRIL 2018
BOND 2.625% 2018-2025 ISSUE ON MOT
( € 165 mln )PLACEMENT AGENT
AND APPOINTED BROKER
IPO(€ 140 mln)
GLOBAL COORDINATOR,
NOMAD AND
SPECIALIST
MARCH 2018
IPO(€ 600 mln)
JOINT
BOOKRUNNER
FEBRUARY 2018
IPO(€ 150 mln)
JOINT GLOBAL
COORDINATOR AND
BOOKRUNNER
MAY 2018
NB AURORA
MAJORITY SALE
FINANCIAL ADVISOR
TO AMBIENTA AND L
CATTERTON
SEP 2018
ACTIVIST CAMPAIGN TO SUPPORT A
MAJORITY BOARD SLATE
FINANCIAL ADVISOR TO
ELLIOTT
MAY 2018
MAJORITY SALE
FINANCIAL ADVISOR TO
THE SHAREHOLDERS IN
THE DISPOSAL OF A
CONTROL STAKE TO
APAX FRANCE
MAR 2018
IR Top Lugano Small & Mid Cap Investor Day
Closed-ended private debt fund(€100m raised)
Investments in debt of Italian mid-size companies with strongcompetitive positions and exportdriven
Asset Under Management evolution
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Alternative Asset Management
Initiatives
A new business line providing traditional portfolio management activities along with innovative private debt and private equity portfoliomanagement activities, catching new market opportunities and diversifying the entire business model of Equita
Private Equity
Portfolio Management Private Debt
Equita PrivateDebt Fund
JV 50%/50% between Equita andPrivate Equity Partners
First Business Combination in 2018with Industrie Chimiche Forestali(ICF)
EPS Equita PEP SPAC 2 with €74mcash to be invested in a secondbusiness combination
Mandate from an Italian bankinggroup
Three lines focused on Italianequities
Management of 3 discretionary accounts
SPACBlueglen Equita Total Return Fund (BETR)
Partnership with Blueglen, aEuropean multi-strategyalternative asset manager
Specific investment strategiesfocused on European credit
Equita as exclusive distributor inItaly
Credit UCITS Fund
292
404 379
66
100100
47
131159
251
358
504 526
2013 2014 2015 2016 2017 YTD 2018
Portfolio Management Private Debt BETR
Note: (1) as of 19 September 2018.
€75m reduction due to the business
combinationwith ICF
2013 2014 2015 2016 2017 YTD 2018(1)
150 75
+
AuM (SPAC)
Breakdown (€m)
131 159 251 358 654 601
Total (€ m)
IR Top Lugano Small & Mid Cap Investor Day 10
Note: (1) Small cap (market cap < €0.5bn), Mid Cap (market cap > €0.5bn and < €2.5bn), Large Cap (market cap > €2.5); (2). Source: Thomson Extel Surveys and Institutional Investor
Research Team
Italian companies covered by the Research Team
Ital
ian
107 108 107117
112117 121
2012 2013 2014 2015 2016 2017 1H 2018
44%
35%
21%
Large Cap
Mid Cap
Small Cap
The Research Team of Equita covers approx. 96% of the Italian market in terms of capitalization
Research Team quality(2)
Thanks to the leading position inEquity Research, Equita confirms its
competitive advantage post MiFID II
# of companies covered Market size covered(1)
Broad coverage of the Italian market, including small and medium companies, with 121 Italian and 45 foreign stocks as of 30 June 2018.Equita constantly recognized among the top Italian teams for the breadth and high quality of its research
Institutional InvestorsItalian Research
Team
1°: 20181°: 20172°: 20161°: 20151°: 20141°: 2013
ExtelCountryAnalysis
2°: 20182°: 20172°: 20162°: 20151°: 20141°: 2013
Extel & Institutional Investors Rankings (2)
Ab
road
+45 foreign stocks covered
(as of 30 June 2018)
IR Top Lugano Small & Mid Cap Investor Day
€ m 2018 2017 Growth
Sales & Trading 10,7 11,4 (6%)
% of revenues 29% 46%
Proprietary trading 6,2 5,3 17%
% of revenues 17% 21%
Investment Banking 17,4 6,9 152%
% of revenues 47% 28%
Alternative Asset Management 2,4 1,3 84%
% of revenues 7% 5%
Net Revenues 36,7 25,0 47%
Personnel costs (1) (17,3) (12,5)
Fixed component (7,6) (6,9)
Other administrative expenses (8,4) (5,6)
Profit before taxes 11,0 6,9 59%
Income taxes (3,5) (2,4)
Net income 7,6 4,5 67%
Cost / Income ratio 70% 72%
ROTE 28% n.a.
TCR 26% 18%
First Half
(1) Net of compensation to directors and statutory auditors
P&L
14
Profit & Loss 1H 2018 vs 1H 2017
Net Revenues growth of +47% in 1H 2018 driven by thepositive performance of all the business lines, except forthe Sales & Trading which, by the way, limited thedecline expected from MiFID II
Personnel Costs increased by +39% in 1H 2018,including the expenses related to the Retail Hubconsolidation since June 2018
Comps/Revenues ratio at 47% (from 50% in 1H 2017) toabsorb part of the non-recurring items in otheradministrative expenses
Other administrative expenses (€8.4m in 1H 2018 vs€5.6m in 1H 2017) increased mainly due to non-recurring costs related to the MTA/STAR listing processand the integration of the Retail Hub
Net Income increased by +67% in 1H 2018, thanks tothe growth in Net Revenues, coupled with less thanproportional growth in Personnel Costs and some taxbenefits which occurred in 1H 2018 (lower IRES andACE)
Comments
IR Top Lugano Small & Mid Cap Investor Day 12
Business diversification
M&A Growth
Dividend distribution of €0.20 per share
Commitments at IPO Achievements to date
Commitments at IPO vs. achievements to dateKey objective to strengthen positioning as leading Italian independent Investment Bank with strong expertise in capital markets and focus onItalian Mid Caps is on track. Total return of +19.3% from IPO to date(1), higher than returns on FTSE MIB (-4.1%) and FTSE Italia STAR (+4.2%)
Attract new talent
Transition to STAR Segment
Dividend of €0.22 per share paid in May
2018, higher than promised at IPO
Number of professionals in strategic areas
grew by 17% (as of 30 June 2018) vs. IPO
(137 vs. 117)
With a simplified shareholding’ structure (1 class
of shares) Equita is now ready for the transition
from AIM Italia to MTA, STAR segment (process
to be completed by the end of 2018)
Acquisition of Retail Hub (Nexi’s Brokerage and Market Making operations)
Note: (1) As of 14 September 2018
IR Top Lugano Small & Mid Cap Investor Day 13
An independent firm with an in-depth knowledge of the Italian and international capital markets
Committed and entrepreneurial management team, with a significant experience in the sector and a long-lasting career within the Company
Outstanding Research Team & Brokerage services, with a leading position in the Italian market
Wide range of Investment Banking services with high growth potential
Successful launch of Alternative Asset Management with further growth opportunities
Diversified business model with a solid financial performance and low capital absorption
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Key Highlights of the Equita Group’s Equity Story
Equita Group S.p.A. - Via Turati,9-20121 Milano Tel +39 02 6204.1 - Fax +39 02 29001208/1202
[email protected] - www.equitagroup.it