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 July 31, 2008.
As of July 31, 2008, Conversus had an estimated NAV per unit of $27.51. This represents a decrease of 0.5% since June 30, 2008. 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. On an adjusted basis, estimated NAV per unit was $27.87 as of July 31, 2008 representing a decrease of 0.5% from the June 30, 2008 adjusted NAV per unit of $28.00. Funded assets were $2,164.8 million while unfunded commitments were $902.9 million as of July 31, 2008.
"During the month of July, the General Partners with whom we invest were active in putting capital to work, as the credit market dislocation has provided attractive new investment opportunities," commented Bob Long, President and CEO of Conversus Asset Management, LLC. "Additionally, we completed the final fund acquisition in the CalPERS secondary transaction during the month. In line with our commitment to enhance shareholder value, we engaged ABN AMRO Bank to act as our Liquidity Provider and continued to buy back Conversus units under our Liquidity Enhancement Policy."
Realized gains were $11.9 million in July and were partially offset by unrealized losses in Conversus´ private holdings. Of these realized gains, $5.6 million were recorded as unrealized gains in prior periods. Weakness in the global public equity markets continued to be a factor in the overall portfolio performance during July with public securities in Conversus´ portfolio experiencing unrealized losses of $3.6 million. Given the maturity of Conversus´ portfolio, approximately 17% of the underlying fund investment NAV is comprised of public equity securities, which Conversus marks to market on a monthly basis as further described below in Valuation and Reporting Policies.
| Net Asset Value Estimates as of July 31, 2008 | ||||||
| (Amounts are unaudited and subject to change) | ||||||
| (in millions except per unit data) | July 31, 2008 | June 30, 2008 | June to July % Change | |||
| Estimated NAV of Investments | $2,164.8 | $2,132.3 | 1.5 | |||
| Cash and Cash Equivalents | 5.6 | 7.0 | (20.0) | |||
| Other Net Assets (Liabilities) | (159.0) | (117.9) | 34.9 | |||
| Estimated NAV | $2,011.4 | $2,021.4 | (0.5) | |||
| Common Units Outstanding | 73.1 | 73.1 | (0.0) | |||
| Estimated NAV per Unit | $27.51 | $27.64 | (0.5) | |||
| Adjusted NAV per Unit | $27.87 | $28.00 | (0.5) | |||
Financial Results
Financial highlights for Conversus for the month ended July 31, 2008 are as follows:
- Net unrealized depreciation on investments of $15.4 million
- Net realized gains on investments of $11.9 million
- Investment income of $1.8 million
- Expenses of $8.0 million
- Net decrease in net assets from operations of $9.7 million
- Share repurchases of $0.3 million
- Net decrease in net assets of $10.0 million
Liquidity and Capital Resources
As of July 31, 2008, Conversus had a cash balance of $5.6 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 July 31, 2008, a principal balance of $141.0 million was outstanding under the credit facility.
During the month of July, Conversus funded $45.7 million in capital calls and received $26.8 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
Conversus has made one commitment to a primary fund which has not yet closed. The details of this investment will be disclosed when concluded, to the extent permitted by the general partner. There can be no assurance as to whether this commitment will close or the actual amount of the commitment 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. Prior to July, Conversus had closed on ten funds in the CalPERS transaction at a transfer price of $105.7 million. The final fund Conversus committed to purchase from CalPERS closed on July 3 at a transfer price of $19.3 million bringing the total transfer price for all funds in the CalPERS transaction to $125.0 million.
For a detailed breakdown of Conversus´ Private Equity Portfolio as of July 31, 2008, please visit the Investor Relations section of Conversus´ website at www.conversus.com and view the following headings: "Reports and Financial Statements" and "Investment Information."
Liquidity Enhancement Activity
During the month of July, a total of 11,855 Conversus units were repurchased pursuant to a Liquidity Enhancement Agreement (the "Agreement") at a total purchase price of $0.3 million, or an average price per unit of $23.58. Over the life of the Agreement, a total of 456,549 units have been repurchased at a total purchase price of approximately $10.6 million, or an average price per unit of $23.29. 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.
Liquidity Provider Agreement
On July 15, 2008, Conversus announced that it had engaged ABN AMRO Bank N.V. ("ABN AMRO") to act as Liquidity Provider to render brokerage services with respect to Conversus´ common units listed on Euronext Amsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V. ("Euronext"). Under the engagement, ABN AMRO will act as Conversus´ Liquidity Provider on Euronext whereby it will issue a continuous quote in the order book, in compliance with the applicable provisions of the Euronext Rule Books. ABN AMRO´s engagement as Liquidity Provider comes in addition to the appointment by Conversus of ABN AMRO Bank N.V. London Branch under a liquidity enhancement policy as announced on November 29, 2007.
Quarterly Distributions
On August 5, 2008, Conversus´ Board of Directors declared a quarterly distribution of $0.125 per unit payable to unitholders of record as of August 29, 2008. The approved distribution represents an annualized yield of 2.2% based on the closing price of Conversus´ units on the declaration date. The distribution will be paid on or about September 22, 2008. This represents the fourth distribution paid since Conversus´ inception.
Additional information regarding Conversus´ quarterly distributions and its distribution policy can be found in the Investor Relations section of Conversus´ website at www.conversus.com under the heading "Tax and Distribution Information."
Financial Report
Conversus will file its Financial Report for the six months and quarter ended June 30, 2008, by August 29, 2008. The report will be posted to the Conversus website at that time. To access the Financial Report, please visit the Investor Relations section of the Company´s website at www.conversus.com under the heading of "Reports and Financial Statements."
Conversus´ estimated NAV as of June 30, 2008 and the financial results for the six months and quarter ended June 30, 2008 are subject to change and may be adjusted in the Financial Report to be filed by August 29, 2008.
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 equity 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 July 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.
