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 September 30, 2008.
As of September 30, 2008, Conversus had an estimated NAV per unit of $26.48. This represents a decrease of 2.9% since August 31, 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 since inception. On an adjusted basis, estimated NAV per unit was $26.96 as of September 30, 2008 representing a decrease of 2.8% from the August 31, 2008 adjusted NAV per unit of $27.74. Funded assets were $2,105.7 million while unfunded commitments were $868.4 million as of September 30, 2008.
"During the month of September, our mature portfolio continued to contribute positive net cash flows and realized gains while our NAV movement was dominated by the declining public markets," commented Bob Long, President and CEO of Conversus Asset Management, LLC. "The current global market environment is quite challenging; however, we believe it presents substantial opportunities, particularly in the secondary market. We intend to continue investing through the cycle and believe that Conversus is built to take advantage of current market opportunities."
Realized gains were $4.0 million in September while unrealized losses in Conversus´ private holdings totaled $16.7 million. The unrealized losses included reversals of previously recorded unrealized gains of $5.7 and a write down of $5.0 million in one direct co–investment.
The public equity securities in Conversus´ portfolio experienced unrealized losses of $39.5 million. As a partial offset, Conversus recorded an unrealized gain of $6.8 million relating to the $75.0 million notional swap intended to hedge a portion of the public equity exposure in its portfolio.
Unrealized currency losses totaled $3.8 million in Conversus´ private holdings and $2.6 million in its public equity securities.
As of September 30, 2008, 74% of the investment NAV was comprised of private holdings valued based on June 30, 2008 general partner statements, 4% represented private holdings valued based on general partner statements as of other dates and 3% was comprised of direct co–investments valued as of September 30, 2008. A further 15% of the investment NAV was comprised of public equity securities which were marked to market as of September 30 as further described below in Valuation and Reporting Policies.
Net Asset Value Estimates as of September 30, 2008
(Amounts are unaudited and subject to change)
| (in millions except per unit data) | September 30, 2008 | August 31, 2008 | August to September % Change | ||||||||
| Estimated NAV of Investments | $ | 2,105.7 | $ | 2,155.7 | (2.3 | ) | |||||
| Cash and Cash Equivalents | 56.8 | 9.0 | 531.1 | ||||||||
| Other Net Assets (Liabilities) | (229.3 | ) | (173.3 | ) | 32.3 | ||||||
| Estimated NAV | $ | 1,933.2 | $ | 1,991.4 | (2.9 | ) | |||||
| Common Units Outstanding | 73.0 | 73.1 | (0.1 | ) | |||||||
| Estimated NAV per Unit | $ | 26.48 | $ | 27.26 | (2.9 | ) | |||||
| Adjusted NAV per Unit | $ | 26.96 | $ | 27.74 | (2.8 | ) | |||||
Financial Results
Financial highlights for Conversus for the month ended September 30, 2008 are as follows:
- Net unrealized depreciation on investments of $49.4 million
- Net realized gains on investments of $4.0 million
- Net unrealized currency losses of $6.4 million
- Investment income of $0.6 million
- Expenses of $5.8 million
- Net decrease in net assets from operations of $57.0 million
- Share repurchases of $1.2 million
- Net decrease in net assets of $58.2 million
Liquidity and Capital Resources
As of September 30, 2008, Conversus had a cash balance of $56.8 million. During the month of September, Conversus received $29.8 million in distributions and funded $27.5 million in capital calls. In addition to using 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 September 30, 2008, a principal balance of $206.0 million was outstanding under the credit facility.
Investment Activity
During the month of September 2008, Conversus closed one commitment of $10.0 million to a primary fund.
Conversus has committed to purchase one secondary portfolio of funds and made two commitments to primary funds which have not yet closed. Details for these investments will be disclosed when they are concluded, to the extent permitted by the general partners. 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.
For a detailed breakdown of Conversus´ Private Equity Portfolio as of September 30, 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 September, a total of 51,044 Conversus units were repurchased pursuant to a Liquidity Enhancement Agreement (the "Agreement") at a total purchase price of $1.2 million, or an average price per unit of $22.76. Over the life of the Agreement, a total of 565,822 units have been repurchased at a total purchase price of approximately $13.2 million, or an average price per unit of $23.30. 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.
Joint Corporate Broker Appointments
On September 2, 2008, Conversus announced the appointments of RBS Hoare Govett Limited ("RBS") and JPMorgan Cazenove Limited ("JPMC") as joint corporate brokers to Conversus. In their role as corporate brokers, both RBS and JPMC will provide Conversus with strategic advice, sales support and assistance in accessing and communicating with the financial markets.
Conference Call
Conversus will hold a conference call on November 5, 2008 to discuss its financial results for the nine months and quarter ended September 30, 2008. Details of the conference call will be provided approximately two weeks prior to the call.
Financial Report
Conversus will file its Financial Report for the nine months and quarter ended September 30, 2008 by November 28, 2008. The report will be posted to the Conversus website at that time. Conversus´ estimated NAV as of September 30, 2008 and the financial results for the nine months and quarter ended September 30, 2008 are subject to change and may be adjusted in the Financial Report. To access the Financial Report, please visit the Investor Relations portion of the Company´s website at www.conversus.com under the heading of "Reports and Financial Statements."
Valuation and Reporting Policies
Conversus carries investments on its books at fair value in accordance with accounting principles generally accepted 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 September 30, 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.
