Conversus Capital, L.P. (Euronext Amsterdam: CCAP) ("Conversus"), a permanent capital vehicle providing its unitholders long–term capital appreciation through a high–quality, seasoned portfolio of private equity interests, today reported its estimated net asset value (NAV) as of May 31, 2008.
As of May 31, 2008, Conversus had an estimated NAV per unit of $28.23. This represents an increase of 12.9% since Conversus´ initial offering in July 2007 and a decrease of 0.1% since April 30, 2008 after recording a 0.5% dividend. In evaluating financial performance, Conversus also calculates an "adjusted NAV" which represents the NAV from operations. The adjusted NAV adds back unitholder distributions and net share repurchases or issuances. On an adjusted basis, estimated NAV per unit was $28.60 as of May 31, 2008 representing an increase of 14.4% since Conversus´ initial offering and an increase of 0.4% from the April 30, 2008 adjusted NAV per unit of $28.49. Funded assets were $2,158.3 million while unfunded commitments were $945.8 million as of May 31, 2008.
"In May, positive cash flows continued from our seasoned portfolio, and realized gains offset the NAV impact of our second quarter 2008 distribution," commented Bob Long, President and CEO of Conversus Asset Management, LLC. "On the unrealized side, private and public valuations were flat for the month. Our experienced investment team remains actively engaged in sourcing and evaluating attractive new investment opportunities, particularly secondary portfolios. We continue to work towards closing the remaining funds we agreed to purchase from CalPERS."
| Net Asset Value Estimates as of May 31, 2008 (Amounts are unaudited and subject to change) | |||||||||||
| (in millions except per unit data) | |||||||||||
|
| Apr 30, 08 | May 31, 08 | Apr to May | ||||||||
| Estimated NAV of Investments | $ | 2,162.4 | $ | 2,158.3 | (0.2 | ) | |||||
| Cash and Cash Equivalents | 12.8 | 20.3 | 58.6 | ||||||||
| Other Net Assets (Liabilities) | (108.8 | ) | (114.1 | ) | 4.9 | ||||||
| Estimated NAV | $ | 2,066.4 | $ | 2,064.5 | (0.1 | ) | |||||
| Common Units Outstanding | 73.1 | 73.1 | (0.0 | ) | |||||||
| Estimated NAV per Unit | $ | 28.26 | $ | 28.23 | (0.1 | ) | |||||
| Adjusted NAV per Unit | $ | 28.49 | $ | 28.60 | 0.4 | ||||||
Financial Results
Financial highlights for Conversus for the month ended May 31, 2008 are as follows:
- Net unrealized depreciation on investments of $0.3 million
- Net realized gains on investments of $10.9 million
- Investment income of $0.8 million
- Expenses of $4.4 million
- Net increase in net assets from operations of $7.0 million
- Distributions to unitholders recorded of $9.1 million
- Share repurchases of $0.8 million
- Share issuances of $1.0 million
- Net decrease in net assets of $1.9 million
Liquidity and Capital Resources
As of May 31, 2008, Conversus had a cash balance of $20.3 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 through July 2012. As of May 31, 2008, $91.0 million was outstanding under the credit facility.
During the month of May, Conversus funded $11.9 million in capital calls and received $27.3 million in distributions. 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 and purchases of secondary portfolios of funds.
Investment Activity
During the month of May 2008, Conversus closed two commitments totaling $30.0 million to the following funds:
- Lindsay Goldberg III–A, L.P.
- Lone Star Fund VI (U.S.), L.P.
Conversus has also made commitments to two primary funds which have not yet closed. The details of these investments will be disclosed when concluded, to the extent permitted by the general partner. There can be no assurance as to whether these commitments will close or the actual amounts of the commitments that will be accepted, if any.
As announced in February, Conversus entered into a binding agreement with CalPERS, the California Public Employees´ Retirement System, to acquire an attractive portfolio of private equity funds. During March and April, Conversus closed on eight funds in the CalPERS transaction at a transfer price of $94.8 million. In May, Conversus closed on one additional fund at a transfer price of $1.4 million. The remaining funds Conversus has committed to purchase from CalPERS are expected to close in June or the third quarter of 2008.
For a detailed breakdown of Conversus´ Private Equity Portfolio as of May 31, 2008, please visit the Investor Relations portion of Conversus´ website at www.conversus.com and view the following sections: "Reports and Financial Statements" and "Investment Information."
Liquidity Enhancement Activity
During the month of May, a total of 35,000 Conversus units were repurchased pursuant to a Liquidity Enhancement Agreement (the "Agreement") at a total purchase price of $0.8 million, or an average price per unit of $21.79. Over the life of the Agreement, a total of 434,694 units have been repurchased at a total purchase price of approximately $10.1 million, or an average price per unit of $23.31. 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 Distributions
On May 6, 2008, Conversus´ Board of Directors declared a quarterly distribution of $0.125 per unit payable to unitholders of record as of May 30, 2008. The approved distribution represents an annualized yield of 2.3% based on the closing price of Conversus´ units on the declaration date. The distribution will be paid on or about June 16, 2008.
Additional information regarding Conversus´ quarterly distributions and its distribution policy can be found in the Investor Relations portion of Conversus´ website at www.conversus.com under the section "Tax and Distribution Information."
Reinvestment by Oak Hill
On May 8, 2008, Conversus re–issued 43,625 common units, in the form of RDUs, to OHIM Investors, L.P, an affiliate of Oak Hill Investment Management (OHIM). The units were re–issued from the Treasury units on Conversus´ balance sheet and were subscribed to by OHIM in partial fulfillment of OHIM´s obligation to invest at least 25% of its share of the performance allocation paid by Conversus until it has invested a further $25 million in addition to its original investment of $25 million to bring its total investment to $50 million.
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 begins with 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 May 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 of 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 Amsterdam: 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 reinvests 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.
