Pioneer Capital Partners
An expansion stage value investor
Is there investable growth in New Zealand?
How do we access it?
Eriksens Conference
25 September 2012
Confidential
1
Start with what we know – the NZX
NZX profile
Financial profile
108
NZX All
Remove:
- Finance-related companies
- Investment companies
- Property trusts
80
Operating Companies
Select:
- Companies with three
year revenue CAGR
greater than 15%
16
Growth Companies
1. Trimmed average (90% of population), even weighted, all growth is 3-year historic CAGR, EBIT is normalised.
Source: NZX and Reuters Knowledge (20 September 2012)
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Positive EBIT (#)
Average revenue1
Average EBIT1
Average revenue growth1
Average EBIT growth1
EV/EBIT1
59
$173m
$13m
5%
9%
11.3x
Positive EBIT (#)
Average revenue1
Average EBIT1
Average revenue growth1
Average EBIT growth1
EV/EBIT1
12
$61m
$7m
28%
31%
12.9x
What the rest of the economy looks like – Private Capital
NZ Productive Assets
NZ Industrial Base1
Income
EBIT
$485bn
$55bn
NZ Manufacturing1
Income
EBIT
$89bn
$4.5bn
NZX OpCos2
Income
EBIT
Valuations (bn)3
Ent. Val. $695 (13x EBIT)
Debt
$241 (2.8x cover)
Equity $454
Ent. Val. $47 (10x EBIT)
Debt
$14 (3.8x cover)
Equity $33
Ent. Val. $65 (14x EBIT)
Debt
$16
Equity $49
$44bn
$4.5bn
Notes:
1.
Annual Enterprise Survey, Department of Statistics, 2010. Exc. ‘Financial and insurance services’
2.
Reuters, operating companies only
3.
Data for AES companies is book value, data from NZX companies from NZX
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Looking for growth – Manufacturing as an example
Revenue Growth 2009 to 2012
11%
12%
10%
8%
7%
8%
6%
Growth
6%
4%
2%
1%
0%
-2%
-4%
-6%
-5%
-5%
-8%
2009
2010
NZX
2011
Manufacturing
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2012
Equity funding New Zealand
Equity Inflows p.a.
Private Capital1
Early-stage
Mid-market
Large PE
$50m
$130m
$300m
Trade (M&A)3
NZ Target
$1,608m
NZ Productive Assets
NZ Industrial Base4
Income
EBIT
$485bn
$55bn
NZ Manufacturing4
Income
EBIT
$89bn
$4.5bn
Other - Huge
Public (NZX)2
IPO
Sec.
Other
$112m
$760m
$460m
NZX OpCos5
Income
EBIT
$44bn
$4.5bn
Notes:
1.
NZ Private Equity and Venture Capital Monitor ; 5-year average to Dec 2011
2.
UBS estimates, company filings; 5-year average to Dec 2011
3.
Thomson Reuters; 5-year average to Dec 2011
4.
Annual Enterprise Survey, Department of Statistics, 2010. Exc. ‘Financial and insurance services’
5.
Reuters, operating companies only
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Gross realised returns – Private Capital is showing promise
 Method:
– 1994 to 2010 – 16 years
– $675m invested into 74 companies, majority of investments were mid-market
– 11 Fund managers – essentially the population
 Results:
– Pooled IRR of 26.8% p.a.1, 2.13x MM (Gross)
– Six investments were >5x MM; 5 went into receivership
– Strong performance throughout period of study, best was 2000 to 2008
1. Excludes two biggest investments, both LBO, that skew results (otherwise pooled IRR of 33.6%)
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Private Equity Access Points
Manager
Latest Fund Size
When Raised
Direct capital
$325m
Feb 2009
Maui
$250m
May 2012
Pencarrow
$82m1
open
Pioneer
$70m2
Apr 2007
Knox
$60m3
From 2007
Waterman
$83m
Aug 2011
1. Pencarrow achieved a first close on 30Nov 2011 and is seeking to raise $100m-$150m with a final close expected late 2012
2. Pioneer will launch a new fund Q4 2012 with a target of $100m
3. Konx has launched a new fund with a target $100-125m
Confidential
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Investment mandate is important
Mature
(Buy-out)
Revenue
Cash Flow Positive
250+
50
Expansion
Early
0
Global
Technology
Domestic
Markets
Traditional
Sectors
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Thank you
Confidential
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Gross realised returns - analysis
NZ PE gross realised return over time periods
3.5
Gross Return Multiple (x)
3.0
3.1
2.8
2.5
2.0
1.5
1.9
1.8
1.0
0.5
-
1994-2000
2000-2004
2004-2008
Source: New Zealand Venture Investment Fund
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2008-
Gross realised returns – analysis (cont.)
NZ PE gross realised return distribution 1994 to 2010
30
Realised Investments
25
24
20
15
10
15
13
9
7
5
6
<0.5x
0.5x-1x
1x-2x
2x-3x
Source: New Zealand Venture Investment Fund
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3x-5x
>5x
Market activity – Mid Market
NZ mid-market activity 2003 to 2011
Investment / Divestment (NZ$m)
300
250
200
150
100
50
0
FY03
FY04
FY05
Investments
FY06
FY07
Divestments
FY09
FY10
Average investment across all periods
Source: New Zealand Private Equity and Venture Capital Monitor
Confidential
FY08
12
FY11
Market activity – LBO
NZ LBO activity 2003 to 2011
500
450
1000
400
350
800
300
600
250
200
400
150
100
200
50
0
0
FY03
FY04
FY05
Investments
FY06
FY07
FY08
Divestments
FY10
Average investment deal size (NZ$m)
Source: New Zealand Private Equity and Venture Capital Monitor
Confidential
FY09
13
FY11
Deal size (NZ$m)
Investment / divestment (NZ$m)
1200