Conversus Capital, L.P. (Euronext Amsterdam: CCAP) ("Conversus"
or the "Company"), a
permanent capital vehicle providing its unitholders long-term capital
appreciation through a high-quality, seasoned portfolio of private
equity interests, today reported its financial results for the quarter
ended December 31, 2007 and for the period from its inception on July 6
2007 through December 31, 2007.
As of December 31, 2007, Conversus had a net asset value ("NAV")
of $2,106.3 million, or $28.73 per unit. This represents an increase in
NAV per unit of approximately 14.9% since Conversus´
initial offering in July 2007 and an increase of approximately 3.8%
since September 30, 2007. The December 31, 2007 NAV is net of a $0.125
per unit distribution paid to unitholders in December 2007. Funded
assets were $2,107.8 million while unfunded commitments were $818.6
million as of December 31, 2007.a
"Our mission is to deliver liquid access to
top-tier private equity while steadily building NAV over time,"
commented Bob Long, President and CEO of Conversus Asset Management
LLC. "In 2007, we achieved substantial
success in our mission. The exceptional quality of our portfolio drove
strong NAV growth and substantial realizations. We have been well
received by the private equity community, particularly the top-tier
general partners with whom we invest. These general partners recognize
the benefits of a limited partner with a large and growing permanent
capital base dedicated to private equity. Through these relationships
we have maintained an active investment pace, successfully executing our
strategy of reinvesting the proceeds of our mature and cash flowing
portfolio through commitments to new primary funds, buying existing
funds on the secondary market and making direct co-investments. During
the fourth quarter of 2007, we increased our exposure outside the U.S.
through commitments to top-tier managers and focused on special
situation opportunities."
a Conversus´
estimated NAV as of December 31, 2007, was initially reported as
$2,048.5 million, or $27.95 per unit, in Conversus´
monthly report on January 10, 2008 based upon the information available
at that time.
Results of Operations
Operating results highlights for Conversus for the quarter ended
December 31, 2007 are as follows:
Net unrealized appreciation on investments of $75.1 million
Net realized gains on investments of $32.4 million
Total investment income of $3.4 million
Total expenses of $25.5 million
Net increase in net assets of $85.4 million
Operating results highlights for Conversus for the period July 6, 2007
through December 31, 2007 are as follows:
Net unrealized appreciation on investments of $240.0 million
Net realized gains on investments of $103.6 million
Total investment income of $9.2 million
Total expenses of $63.3 million
Net increase in net assets of $289.5 million
Liquidity and Capital Resources
As of December 31, 2007, Conversus had a cash balance of $44.1 million.
In addition to using the positive cash flows from the existing portfolio
to meet liquidity needs, Conversus has a $650.0 million credit facility
available which is committed for five years. As of December 31, 2007
$26.0 million under this facility was outstanding.
For the period July 6, 2007 through December 31, 2007, Conversus funded
$143.9 million in capital calls and received $355.2 million in
distributions related to investments. These cash flows exclude capital
calls for management fees and other expenses paid to the funds in which
Conversus is invested, distributions of unused capital that was
previously called, the funding of direct co-investments and the purchase
of secondary portfolios of funds.
Investment Activity
For the quarter ended December 31, 2007, Conversus:
Closed eight primary fund commitments totaling $134.5 million in the
following funds:
= = = = = = = = = = =
--
Asia Alternatives Capital Partners II, L.P.;
- - - - - -
--
Avenue Special Situations Fund V, L.P.;
- - - - - -
--
Bain Capital X, L.P.;
- - - - - -
--
Bruckmann, Rosser, Sherrill & Co III, L.P.;
- - - - - -
--
Crestview Partners II, L.P.;
- - - - - -
--
Index Ventures Growth I, L.P.;
- - - - - -
--
Nautic Partners VI-A, L.P.; and
- - - - - -
--
TCV VII, L.P.
- - - - - -
Closed its first secondary portfolio of funds, which was purchased at
a discount to NAV; and
Closed two direct co-investments totaling $35.0 million.
During the period July 6, 2007 through December 31, 2007, Conversus:
Completed the acquisition of the initial portfolio from Bank of
America which was comprised of 168 funds acquired at an aggregate
purchase price of $1.917 billion;
Closed 16 primary fund commitments totaling $360.5 million;
Closed its first secondary portfolio of funds, which was purchased at
a discount to NAV; and
Closed on three direct co-investments totaling $60.0 million.
In the first quarter of 2008, Conversus closed $70.0 million in
commitments to two primary funds and completed the acquisition in
January of a secondary portfolio of funds comprised primarily of
European buy-out exposure. In March and April, Conversus closed on the
purchase of more than half of a substantial portfolio that significantly
increases its exposure to special situation assets, with the remainder
expected to close in the second or third quarter of 2008.
March 31, 2008 NAV
As of March 31, 2008, Conversus had an estimated NAV of $2,019.6
million, or $27.61 per unit as reported on April 10, 2008. The March
estimated NAV is net of two quarterly distributions of $0.125 per unit
each paid to unitholders in December 2007 and March 2008. The March
estimated NAV represents an increase in estimated NAV per unit of
approximately 10.4% since Conversus´ initial
offering in July 2007 and a decrease of approximately 3.9% since
December 31, 2007. The decrease in estimated NAV from December 31, 2007
to March 31, 2008 can be primarily attributed to unrealized losses in
the public portion of the portfolio. Given the maturity of Conversus´
portfolio, approximately 20% of the underlying investment NAV is
comprised of public securities positions, which Conversus marks to
market on a monthly basis as further discussed in the Valuation and
Reporting Policies section below. The private holdings in Conversus´
portfolio experienced solid net gains of $48.7 million in the first
quarter of 2008. Of this amount, $24.2 million represented net realized
gains while $24.5 million represented net unrealized gains and included
the impact of the secondary purchases during the quarter.
Conversus will provide more details on its estimated March 31, 2008 NAV
and its first quarter 2008 financial results in a press release on May
8, 2008. Conversus´ estimated NAV as of March
31, 2008 and the financial results for the quarter ended March 31, 2008
are subject to change and may be adjusted in the quarterly financial
report to be filed on or about May 30, 2008.
Investment Manager´s Comments
Over the last several months, the public markets have experienced
unprecedented volatility and a dramatic contraction in the availability
of leverage. As a result, overall activity levels for private equity
investing have been reduced. However, private equity has historically
prospered in these periods of market dislocations, as private equity
firms excel at getting paid for providing liquidity and certainty of
execution when both are in short supply. Conversus continues to believe
the long-term prospects for investment returns in private equity remain
bright.
Taking advantage of the opportunities it perceives in the current
market, Conversus has continued to invest with the best general
partners, most of whom have proven their ability to generate returns
across all phases of an economic cycle. Today, these general partners
are nimble, putting capital to work in moderate sized transactions where
debt is available, in growth equity and minority investments that do not
require substantial leverage, in PIPES, and in distressed and special
situations.
Current market conditions are presenting attractive opportunities in the
secondary market for fund investors. Sellers have increasingly used
secondaries as a portfolio management tool to re-balance their asset
allocation in light of lower public security values, to create liquidity
or to streamline general partner relationships. Conversus uses
secondaries to acquire assets at attractive prices and to complement its
existing portfolio. Secondaries also help Conversus remain invested on
the upswing of the J-curve, one of its key goals. Conversus will
continue to leverage its investment team´s
expertise and deep relationships within the industry, as well as its
liquid balance sheet, to source, negotiate and acquire assets on
attractive terms that maintain its position on the upswing of the
J-curve.
Liquidity Enhancement Activity
During the month of December 2007, Conversus began executing
transactions in its own units under a Liquidity Enhancement Agreement
(the "Agreement")
with ABN AMRO. For the month of December, a total of 202,055 units were
purchased pursuant to the Agreement at a total purchase price of
approximately $4.8 million, or an average price per unit of
approximately $23.93. This represents a 16.7% discount to the NAV of
$28.73 per unit as of December 31, 2007. The repurchased units are held
on Conversus´ balance sheet as Treasury
units. As it deems appropriate, Conversus expects to continue to
repurchase its units pursuant to the Agreement at attractive prices
relative to NAV.
Quarterly Distribution
In December 2007, Conversus paid a distribution of $0.125 per unit to
unitholders of record as of November 30, 2007, representing an
annualized yield of approximately 2.1% based on the closing price at the
declaration date. Additional information regarding Conversus´
distribution policy can be found in the Investor Relations section of
the Company´s website at www.conversus.com.
Annual Financial Report
Conversus will post its Annual Report as of December 31, 2007 shortly
following the issuance of this release. To access the Annual Report
please visit the Investor Relations portion of the Company´s
website at www.conversus.com
under the heading of Reports and Financial Statements.
Earnings Call and Webcast
Conversus will discuss its financial results for the quarter ended
December 31, 2007, for the period from its inception on July 6, 2007
through December 31, 2007 and for the quarter ended March 31, 2008 on a
teleconference to be broadcast live on the Internet Thursday, May 8, at
6:30 p.m. CEST (Amsterdam) / 5:30 p.m. GMT (Guernsey/London) / 12:30
p.m. EDT (New York City). A webcast (listen only) of the teleconference
can be accessed via the Investor Relations section of Conversus´
website at www.conversus.com
under the heading of Webcasts & Presentations.
Valuation and Reporting Policies
Conversus carries investments on its books at fair value in accordance
with generally accepted accounting principles in the United States (U.S.
GAAP). Conversus uses the best information it has available to estimate
fair value. Fair value for private equity interests is based on the most
recent financial information provided by the general partners, adjusted
for subsequent transactions, such as calls or distributions, as well as
other information judged to be reliable that indicates valuation
changes, including realizations and other portfolio company events. The
value of any public security known to be owned by the funds based on the
most recent information reported to us by the general partners has been
marked to market as of December 31, 2007 and March 31, 2008 and a
discount has been applied to such securities based on an estimate of the
discount applied by the general partners in calculating NAV.
Conversus will issue quarterly financial reports as of March 31, June 30
and September 30 as well as an annual financial report as of December 31
each year. These reports will include financial statements prepared in
accordance with U.S. GAAP. Conversus is required to consider, and will
consider, all known material information in preparing such financial
statements, including information that may become known subsequent to
the issuance of each monthly report. Accordingly, amounts included in
the quarterly and annual financial statements may differ from amounts
included in the monthly NAV reports.
About Conversus Capital
Conversus Capital, L.P. (Euronext: CCAP) ("Conversus")
is the largest publicly traded portfolio of third party private equity
funds. It is a permanent capital vehicle providing its unitholders
long-term capital appreciation through a portfolio of high-quality
seasoned private equity interests. Conversus´
objective is to provide unitholders with immediate exposure to a
diversified portfolio of private equity assets, access to best-in-class
general partners and consistent NAV growth that outperforms the public
markets. Conversus will reinvest the distributions from its current
investments in primary fund commitments, secondary fund purchases and
direct co-investments. Conversus Asset Management, LLC ("CAM")
an independent asset manager, implements Conversus´
investment policies and carries out the day to day operations of
Conversus pursuant to a services agreement. CAM leverages the platforms
of Bank of America and Oak Hill, its primary owners, in sourcing
investments for the benefit of Conversus.
Legal Disclaimer
These materials are not an offer for sale of securities in the United
States. Securities may not be sold in the United States absent
registration with the U.S. Securities and Exchange Commission or an
exemption from registration under the U.S. Securities Act of 1933, as
amended. Conversus is not a registered investment company under
the U.S. Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the resale of Conversus
securities in the United States or to U.S. persons that are not
qualified purchasers as defined in the Investment Company Act is
prohibited. Conversus does not intend to register any offering in the
United States or to conduct a public offering of its securities in the
United States.
Forward-Looking Statements
These materials may contain certain forward-looking statements with
respect to the financial condition, results of operations, liquidity
investments, business, net asset value and prospects of Conversus. By
their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future, and there are many factors that could cause actual
results and developments to differ materially from those expressed or
implied by these forward-looking statements. Conversus does not
undertake to update any of these forward-looking statements. Past
performance is not necessarily indicative of future results.
EXCERPTS FROM CONVERSUS´ COMBINED
FINANCIAL STATEMENTS FOLLOW
= = = = = = = = = = =
Combined Statement of Net Assets
As of December 31, 2007
(Amounts in US$000´s except for per
unit amount)
(Audited)
- - - - - -
- - - - - -
Assets
- - - - - -
- - - - - -
Investments, at fair value (cost $1,867,842)
$
2,107,793
- - - - - -
Cash and cash equivalents
44,140
- - - - - -
Receivables and prepaid expenses
1,508
- - - - - -
Total Assets
2,153,441
- - - - - -
- - - - - -
Liabilities
- - - - - -
- - - - - -
Management fees payable
6,292
- - - - - -
Performance fees payable
9,491
- - - - - -
Notes and interest payable
26,329
- - - - - -
Other
4,985
- - - - - -
Total Liabilities
47,097
- - - - - -
- - - - - -
NET ASSETS
$
2,106,344
- - - - - -
- - - - - -
Net Assets consist of:
- - - - - -
- - - - - -
General Partner´s capital
$
-
- - - - - -
Limited Partners´ capital (73,504,491 units issued; 73,302,436 units
outstanding)
2,111,180
- - - - - -
Treasury units (202,055 units)
(4,836
)
- - - - - -
- - - - - -
NET ASSETS
$
2,106,344
- - - - - -
- - - - - -
NET ASSET VALUE PER UNIT OUTSTANDING
$
28.73
- - - - - -
= = = = = = = = = = =
Combined Statement of Operations
For the period from July 6, 2007 (commencement of operations)
through December 31, 2007
(Amounts in US$000´s except for per
unit amount)
(Audited)
- - - - - -
- - - - - -
Investment Income
- - - - - -
- - - - - -
Dividends
$
5,533
- - - - - -
Interest and other income
3,689
- - - - - -
Total Investment Income
9,222
- - - - - -
- - - - - -
Expenses
- - - - - -
- - - - - -
Fund fees and expenses
6,849
- - - - - -
Management fees
12,105
- - - - - -
Performance fees
31,430
- - - - - -
Organizational costs
4,623
- - - - - -
Other general and administrative expenses
8,304
- - - - - -
Total Expenses
63,311
- - - - - -
- - - - - -
Net Investment Loss
(54,089
)
- - - - - -
- - - - - -
Net Realized Gains and Net Unrealized Appreciation on Investments
- - - - - -
- - - - - -
Net realized gains on investments
103,614
- - - - - -
Net change in unrealized appreciation on investments
239,951
- - - - - -
Net Realized and Change in Net Unrealized Appreciation on
Investments
343,565
- - - - - -
- - - - - -
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$
289,476
- - - - - -
- - - - - -
EARNINGS PER UNIT
$
3.94
- - - - - -
= = = = = = = = = = =
Combined Condensed Schedule of Investments
As of December 31, 2007
(Amounts in US$000´s)
(Audited)
- - - - - -
- - - - - -
Cost
Fair Value
% of Net Assets
Unfunded Commitment
- - - - - -
FUND INVESTMENTS
Unfunded
- - - - - -
US
- - - - - -
Buyout & Special Situation
$
1,390,457
$
1,564,282
74.27
%
$
643,800
- - - - - -
Venture Capital
266,138
297,758
14.14
87,670
- - - - - -
Total U.S.
1,656,595
1,862,040
88.40
731,470
- - - - - -
- - - - - -
Non-US
- - - - - -
Buyout & Special Situation
146,268
180,409
8.57
83,864
- - - - - -
Venture Capital
-
-
0.00
3,282
- - - - - -
Total Non-US
146,268
180,409
8.57
87,146
- - - - - -
- - - - - -
Total Fund Investments
1,802,863
2,042,449
96.97
818,616
- - - - - -
- - - - - -
DIRECT INVESTMENTS (1)
- - - - - -
Direct Co-Investments
- - - - - -
US
- - - - - -
Industrials
35,000
35,769
1.70
-
- - - - - -
Telecommunication Services
25,000
25,000
1.19
-
- - - - - -
- - - - - -
Publicly Traded Securities (2)
- - - - - -
US
- - - - - -
Health Care
815
804
0.04
-
- - - - - -
Industrials
1,086
1,039
0.05
-
- - - - - -
Information Technology
785
632
0.03
-
- - - - - -
Materials
563
515
0.02
-
- - - - - -
Telecommunication Services
1,730
1,585
0.08
-
- - - - - -
- - - - - -
Total Direct Investments
64,979
65,344
3.10
-
- - - - - -
- - - - - -
TOTAL
$
1,867,842
$
2,107,793
100.07
%
$
818,616
- - - - - -
- - - - - -
(1) Industry classifications are based on
the North American Industry Classification System ("NAICS")
- - - - - -
- - - - - -
(2) Publicly traded securities represent
equity security distributions from fund investments
- - - - - -
= = = = = = = = = = =
Combined Condensed Schedule of Investments
As of December 31, 2007
(Amounts in US$000´s)
(Audited)
- - - - - -
- - - - - -
Industry (1)
Fair Value
% of Total Net Assets
- - - - - -
- - - - - -
Industrials
$
372,410
17.68
%
- - - - - -
Consumer Discretionary
330,817
15.71
- - - - - -
Information Technology
272,579
12.94
- - - - - -
Health Care
219,055
10.40
- - - - - -
Telecommunication Services
206,868
9.82
- - - - - -
Financials
170,643
8.10
- - - - - -
Media
168,194
7.99
- - - - - -
Materials
137,801
6.54
- - - - - -
Consumer Staples
83,726
3.97
- - - - - -
Other Industries
107,972
5.13
- - - - - -
Other (Net other assets held by underlying funds)
37,728
1.79
- - - - - -
- - - - - -
TOTAL
$
2,107,793
100.07
%
- - - - - -
- - - - - -
- - - - - -
(1) Industry classification of
investments is determined at the individual portfolio company
level for private equity fund investments, direct co-investments
and publicly traded securities and is based on the NAICS.
- - - - - -
