capman plc’s annual general meeting...
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CapMan Plc’s Annual General Meeting 2008
Heikki Westerlund, CEO, Senior Partner27 March 2008
CapMan Plc’s Annual General Meeting 2008 27 March 20082
Contents
CapMan today• Market update• Year 2007• Year 2008• Future outlook
CapMan Plc’s Annual General Meeting 2008 • 27 March 20083
CapMan – the Nordic alternative asset manager
* CapMan owns 35% of affiliated company Access Capital Partners.
Full Nordic presence and market coverage• Established in 1989• Offices in Helsinki, Stockholm, Copenhagen and Oslo• Listed on Helsinki Stock Exchange since 2001Unique listed alternative asset manager • Manages specialised third party private equity,
venture capital and real estate funds• Dedicated teams in each investment areaFunds under management approx. €3.9 billion • Assets managed/advised by Access Capital
Partners approx. €2.5 billion*
CapMan Plc’s Annual General Meeting 2008 • 27 March 20084
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
90-93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 01/08
Strong growth in capital under management
Real Estate fundsLife Science fundsTechnology fundsMezzanine fundsBuyout funds
MBO LISTINGDomestic partnership Nordic presence and fundsCapital under
mgmt, M€
CapMan Plc’s Annual General Meeting 2008 27 March 20085
Growth strategy
• CapMan’s strategy is to exploit growth opportunities within the alternative asset class.
• In addition to CapMan’s existing business lines (Private Equity and Real Estate) the alternative asset class includes, among others, infrastructure investment, forestry investment and active public market funds.
• CapMan is at present exploring opportunities to expand geographically into Russia and to establish a fund investing in public markets based on CapMan’s value creation expertise. We aim to concretise the projects during 2008.
CapMan Plc’s Annual General Meeting 2008 27 March 20086
Contents
• CapMan today
Market update• Year 2007• Year 2008• Future outlook
CapMan Plc’s Annual General Meeting 2008 27 March 20087
European private equity fundraising activity decreased from record year 2006 – investment activity stable
48
40
28 27 28
72
112
74
35
2428 29
37
47
71 68
913 11 14
20
3033
23
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007E
Fundraising Investments Divestments
€bn
Source: EVCA
European private equity activity in 2007 – preliminary data
CapMan Plc’s Annual General Meeting 2008 27 March 20088
193
339 382456
549 591
51
65117
140
132171
5
5
4
9
2313
0
100
200
300
400
500
600
700
800
2002 2003 2004 2005 2006 2007E
<M€160 M€160 - €1.65bn €1.65bn+
8 13 16 21 24 2728
3553
72 61
92
1413
12
25
8451
0
25
50
75
100
125
150
175
200
2002 2003 2004 2005 2006 2007E
<M€160 M€160 - €1.65bn €1.65 bn+
Remarkable growth in European middle market buyout activity in 2007
Source: unquote’’ Private Equity Barometer, compiled by Incisive Media
Deal value by size range Number of deals by size range
• Mega deals disappeared from European buyout market in the fourth quarter –decrease also in middle market deal activity
• Steady increase in deals below €160 million also in the year-end
92
132
61
17151% increase 30% increase
€bn #
CapMan Plc’s Annual General Meeting 2008 27 March 20089
Finnish real estate market activity stabilized
64%53%
0
1
2
3
4
5
6
2001 2002 2003 2004 2005 2006 2007
Domestic International
Source: KTI
• Total deal value increased to €5.7bn in 2007• 64% of the transactions completed in 2007 done by international investors
€bn
Deal value development in Finnish commercial property market
CapMan Plc’s Annual General Meeting 2008 27 March 200810
Contents
• CapMan today• Market update
Year 2007• Year 2008• Future outlook
CapMan Plc’s Annual General Meeting 2008 • 27 March 200811
Nordic deal flow in 2007
%A1%A2%A3By team
418
100
229
89
418
176
55
114
73
A3
100%
24%
55%
21%
100%
42%
13%
27%
17%
%
43
6
13
24
43
14
7
16
6
A2
100%
14%
30%
56%
100%
33%
16%
37%
14%
%
100%20Total
35%7Technology
20%4Norway
50%10Buyout
100%20Total
15%3Life Science
20%4Sweden
55%11Finland
5%1Denmark
%A1By country 17%
27%
13%
42%
DenmarkFinlandNorwaySweden
21%
55%
24%
BuyoutTechnologyLife Science
In addition, CapMan Real Estate has analysed around 140 investment opportunities.
CapMan Plc’s Annual General Meeting 2008 27 March 200812
New portfolio company investments in 2007
Komas Oy, Buyout, Finland
Skandia Autologistics,Buyout, Finland
Walki GroupBuyout, Finland
Mirasys OyTechnology, Finland
Novintel OyTechnology, Finland
IT 2 Treasury SolutionsTechnology, Denmark
Movial OyTechnology, Finland
KMW Energi AB,Technology, Sweden
Nacka Närsjukhus ProximaAB Buyout and Life Science, Sweden
Curato AS Buyout and Life Science, Norway
Mawell Oy,Technology and Life Science, Finland
Varesvuo Partners Oy Buyout, Finland
Barnebygg Group Buyout, Norway
CapMan Plc’s Annual General Meeting 2008 27 March 200813
New real estate investments in 2007
Kalevankatu 20, Helsinki
Kasarmikatu 4, Hämeenlinna
Parolantie 104, Hämeenlinna
Viinikankatu 49,Tampere
Malminkaari 9, Helsinki
Lönnrotinkatu 20, Helsinki
Mastola LogisticsCentre, Vantaa
Skanssi ShoppingCentre, Turku
Hankasuontie 3, Helsinki
Ylistönmäentie 33, Jyväskylä
Elimäenkatu 9A and 9B, Helsinki
Ludviginkatu 3–5, Helsinki
TokmanniLogistics Centre,Mäntsälä
EntresseShopping Centre, Espoo
Kristiinankatu 3–5, Turku
Yliopistonkatu 22, Turku
Investment announced
CapMan Plc’s Annual General Meeting 2008 27 March 200814
Exits in 2007
Distocraft Oy, Technology, Finland
Announced/partial exitsMoventas Oy Buyout, Finland
Sale of CapMan Real Estate I portfolio(22 real estates)
SysOpenDigia Plc(ex-Sentera Plcj), Technology, Finland
LindPlast A/S Buyout, Denmark
Synerco AB Buyout, Sweden
Secgo Sofware Oy Technology, Finland
MediaNorth Oy Technology, Finland
Hantro, Technology, Finland
Avitec Oy Technology, Finland
Copterline Oy Buyout, Finland
Affecto Oyj, Technology, Finland
Savcor Oy Buyout, Finland
Solid Information Technology Oy, Technology, Finland
CapMan Plc’s Annual General Meeting 2008 27 March 200815
Fundraising in 2007
• 18% growth in capital under management• Final closing of three funds
– CapMan Technology 2007 at a level of €142.3 million – CapMan Life Science IV at a level of €54 million– CapMan RE II at a level of €600 million of which 25% is equity and 75%
senior loan
Continued support from Nordic investors in fundraisingAmbition to further internationalise the investor base
CapMan Plc’s Annual General Meeting 2008 27 March 200816
Financial objectives
Proposal of the Board of Directors for 2007 dividend €0.16 which equals to 67%of the net profit
Pay-out ratio at least 50% of the net profitDividend policy
Return on equity 39%
Buyout 2002 net IRR 21%Technology 2002 net IRR 0.3%Real estate 2005 net IRR 28%
Return on equity over 25%
Equity fund performance above 15% net IRR to fund investors per annum
Profitability
36% of CapMan Plc’s fund investments financed with debt financing* Gearing -27.5%
Equity ratio 58%
Finance 50% of CapMan Plc’s future fund investments with debt financing
Equity ratio at least 50%
Capital structure
18% growth from 31 December 2006(27% growth already achieved in 2008)Average capital growth of funds under
management at least 15% per annumGrowth
Status as at 31 December 2007Objective
*Debt financing as a percentage of CapMan’s fund investments at fair value..
CapMan Plc’s Annual General Meeting 2008 27 March 200817
Components of income and operating costs
24.62.1
23.6 0.8 0.55.7 0.2
1.1 1.9
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Management fees Income from real estate consultingCarried interest Other operating incomeIncome from fund investments, realised Fair value gains and losses of investmentsOther income Operating expenses
Share of associated companies result
27.7
Turnover €51.6 million
Operating profit €29.8 million
Pre-tax profit in €32.7 million
Total effect of own investments €6.2 million
Minority interest €7.6 million
Share of equity holders’ of the Company €16.0 million
(31 Dec 2007, M€)
Financial income and expenses
CapMan Plc’s Annual General Meeting 2008 27 March 200818
Income statement, IFRS
29,75915,626Operating profit
-11,783-11,958Other operating expenses
5,6963,549Fair value gains / losses of investments
977
11,455
12,432
-4,893
17,325
1,279
420
-726
-13,958687
38,032
1-12/2006
1,070Financial income and expenses
-581Depreciation and amortisation
24,235Profit for the financial year
5,615
18,620
-8,509
32,744
1,915
-15,381236
51,572
1-12/2007
Equity holders of the company
Profit before taxes
Income taxes
€1,000
Minority interest
Attributable to:
Share of associated companies' result
Personnel expenses
Other operating incomeTurnover
CapMan Plc’s Annual General Meeting 2008 27 March 200819
Balance sheet – Assets, IFRS
44,23033,122Investments in funds
42,43522,43719,74114,137Cash and bank
3,4072,860Investments in associated companies
Investments at fair value through profit and loss
79,560
2,779
5,521
57,123231
13,835848
7104,845
672
31.12.2006
16,191Receivables
1,001Other intangible assets
Current assets
117,353
14,8577,837
74,9183,547
878
4,845819
31.12.2007
Other financial assets at fair value through profit and loss
€1,000
TOTAL ASSETS
Trade and other receivables
Deferred income tax assets
Other financial assets
Goodwill
Tangible assetsNon-current assets
CapMan Plc’s Annual General Meeting 2008 27 March 200820
Balance sheet – Total equity and liabilities, IFRS
8,018596Current income tax liabilities01,944Interest-bearing loans and borrowings
29,3749,94949,80922,613Total liabilities
Current liabilities
67,51056,348
Non-current liabilities
21,3567,409Trade and other payables
20,43512,664701430Other liabilities
133316Translation difference24,67615,074Retained earnings
79,560
10,0002,234
56,947599
1,21838,968
772
31.12.2006
2,961Other reserves
67,544Total equity
117,353
16,0003,734
34
38,968772
31.12.2007
Interest-bearing loans
Minority interest
€1,000
TOTAL EQUITY AND LIABILITIES
Deferred income tax liabilities
Share premium accountShare capital
Capital attributable the Company's equity holders
CapMan Plc’s Annual General Meeting 2008 27 March 200821
Key figures
98
71.6
29.9
23.4
9.3
80.0
0.12
0.74
0.15
0.15
2006IFRS
87
85.8
20.2
14.8
5.3
78.0
0.07
0.64
0.09
0.09
2005IFRS
110
57.6
44.2
38.9
-
67.0
0.16
0.86
0.24
0.24
2007IFRS
88.893.6Equity ratio, %
4,53.7Dividends paid, €11.12.3Return on equity, %
74
18.9
94.4
0.06
0.60
0.06
0.06
2004IFRS
2003FAS
Personnel (at the end of the year)
Return on investment, %
Dividend / result, %*Dividend / share, €*Shareholders’ equity / share, €Diluted, €Earnings per share, €
71
4.9
327.0
0.05
0.61
0.02
0.02
* Proposal of the Board of Directors for 2007.
CapMan Plc’s Annual General Meeting 2008 27 March 200822
CapMan’s ownership
35%
36%
29%
CapMan Partners B.V. and employee shareholders
Nominee registered and foreign shareholders
Other owners
• Nominee registered owners at the end of 2007 included funds managed by several international investors
– Dunedin Enterprise Investment Trust Plc, Explora Capital Management ASA, Legg Mason Inc, Partners Group, Sjunde AP-fonden, Royce & Associates and Troy Asset Management
– In addition Barwon Investment Partners, C Brooke Investment Partners Ltd. and Hermes Investment Management managed CapMan shares on behalf of discretionary clients
• According to the information received from the investors, the aggregate holding of these entities was slightly above 20 per cent of the shares
31 December 2007
CapMan Plc’s Annual General Meeting 2008 27 March 200823
37%
24%
39%
Current 14 Senior Partners
CapMan Partners B.V.
Other owners
28%
6%66%
Current 14 Senior Partners
CapMan Partners B.V.
Other owners
All Senior Partners shareholders of CapMan Plc
Senior Partners
• CapMan Partners B.V. form the second largest shareholder and thelargest user of voting rights
Ownership of CapMan Plc(by shares)
Ownership of CapMan Plc(by voting rights)
31 December 2007
CapMan Plc’s Annual General Meeting 2008 27 March 200824
Contents
• CapMan today• Market update• Year2007
Year 2008• Future outlook
CapMan Plc’s Annual General Meeting 2008 27 March 200825
Growth continued in the beginning of 2008
• Substantial 27% growth in funds under management– CapMan Hotels RE fund established at a level of €835 million on 18
January. Fundraising continues with maximum fund size €1.1 billion.– Final closing of CapMan Technology 2007 at a level of €142.3 million
on 23 January.
• Acquisition of 39 hotel properties closed in 29 February• Three new buyout investments announced
– Varesvuo Partners Oy (TV content production)– Barnebygg Group (provider of day care services)– Cargo Partner Group AS (logistics)
CapMan Plc’s Annual General Meeting 2008 27 March 200826 2602/10/2007
• 38 hotels in Finland and 1 in Sweden
• 6,477 hotel rooms in 2007• Well-known hotel chains as
tenants• Restel Group• Sokotel• Scandic
HelsinkiCrowne Plaza Helsinki (349)
Sokos Hotel Pasila (178)Palace Linna (48)
Sokos Hotel Albert (95)
TurkuHoliday Inn Turku (199) Scandic Turku Plaza (117)
RaumaCumulus Rauma (103)
TampereCumulus Koskikatu (230)Holiday Inn Tampere (135)Holiday Club Tampere (92)
Cumulus Pinja (60)
VaasaRadisson SAS Vaasa (285)
Rantasipi Tropiclandia (184)
SeinäjokiCumulus Seinäjoki (71)
HyvinkääRantasipi Sveitsi (194)
KuusamoRantasipi Rukahovi (180)
Holiday Club Kuusamon Tropiikki (125)
RovaniemiCumulus Rovaniemi (64)
Rantasipi Pohjanhovi (215)Scandic Rovaniemi (167)
NokiaRantasipi Eden (204)
InariHoliday Club Saariselkä (139)
KemiCumulus Kemi (184)
OuluHoliday Inn Oulu (154)
Cumulus Oulu (207)Holiday Club Oulun Eden (169)
KuopioCumulus Kuopio (141)
JyväskyläRantasipi Laajavuori (175)Cumulus Jyväskylä (203)
JoutsaRantasipi Joutsenlampi (42)
HämeenlinnaRantasipi Aulanko (246)
Cumulus Hämeenlinna (100)Sokos Hotel Vaakuna (123)
KotkaSokos Hotel Seurahuone (128)
VantaaCumulus Airport (278)Ramada Airport (292)
Holiday Inn Garden Court (284)
SotkamoHoliday Club Katinkulta (116)
Acquired hotels on a map
Åre, SwedenHoliday Club Åre
Palace Hotels
CapMan Plc’s Annual General Meeting 2008 27 March 200827
Contents
• CapMan today• Market update• Year 2007• Year 2008
Future outlook
CapMan Plc’s Annual General Meeting 2008 • 27 March 200828
Future outlook
• Management fees and returns on real estate consulting operations cover CapMan’s fixed expenses.
• The Group’s result for 2008 will depend on how many new exits are made by funds already generating carried interest; on whether new funds transfer to carry; and on how the value of investments develops in those funds in which CapMan is a substantial investor.
• According to our understanding CapMan Equity VII A, B and Sweden funds, Finnventure Fund IV and Finnmezzanine III A and B funds will begin to generate carry during 2008 and 2009. The funds have several exitprocesses underway.
• We expect that our portfolio companies and real estate assets will develop favourably in 2008. However the prevailing unstable situation in financial markets may reflect, as a result of the changes in listed peers’ valuations, on the fair value of the funds’ investment targets and hence also reflect on the fair value of the Group’s fund investments in 2008.