Private Equity Presentation

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AN INTRODUCTION TO PRIVATE EQUITY www.lloydbancaire.com

Transcript of Private Equity Presentation

 AN  INTRODUCTION  TO  PRIVATE  EQUITY  

www.lloydbancaire.com  

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Essen%ally  private  equity  is  an  alterna%ve    way  of  owning  a  company  

What  is  private  equity?    

Private  Equity  is  not  necessarily  a  cure-­‐all  soluIon  to  company  ownership.  It  is  merely  an  alternaIve  to  public  company  ownership  (buying  shares  in  companies  through  the  stock  market).  But  it’s  aPracted  a  lot  of  interest  and  a  lot  of  capital  in  recent  years,  driven  especially  by  benign  market  condiIons  and  accessible  and  affordable  credit.  

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Benefits  •  Works  closely  with  management  teams  to  ensure  more  efficient  capital  

structures  are  in  place  •  Away  from  the  dividend  requirements  and  short-­‐termist  gaze  of  the  public  

sector,  it  allows  meaningful  strategic  and  operaIonal  changes  to  be  made  that  benefit  the  longer  term  interests  of  the  company  

•  Provides  facility  to  acquire  businesses  to  merge  with  other  porXolio  companies,  benefiIng  from  cost  efficiencies  

•  Management’s  long  term  interests  are  more  closely  aligned    with  the  other  private  equity  owners  

•  Rewards  are  directly  linked  to  the  value  created  through    buying,  building  and  ulImately  selling  businesses  

What  is  private  equity?  

-­‐ Many  companies  sIll  have  “lazy”  balance  sheets  with  inadequate  gearing  to  enhance  returns  (although  we  are  very  aware  of  potenIal  excessive  leverage  –  something  we  will  address  later)  -­‐ Real  change  can  be  brought  about  for  the  long  term,  making  the  company  more  compeIIve,  eg  moving  into  new  markets.  This  involves  investment  for  the  long  term  which  publicly  traded  companies  are  o^en  punished  for  because  it  involves  a  degree  of  uncertainty.  An  example  of  this  would  be  the  KKR’s  recent  purchase  of  Alliance  Boots  in  the  UK.  KKR  are  looking  at  expanding  the  business,  in  parIcular  moving  into  new  markets  globally  as  the  firm  is  currently  more  UK  and  European  focused.  

Common  Myths  and  the  Reality    (…at  least  of  the  type  of  firms  we  invest  with)  1.  Private  equity  buys  companies  on  the  cheap,  strips  the  assets  and  then  sells  them  on  

for  a  quick  profit    Creates  value  for  investors  by  buying  at  a  fair  price  and  building  businesses,  not  stripping  them  down  

2.  Private  equity  leverages  up  companies  with  unsustainable  levels  of  debt    Ensures  businesses  can  pay  interest  payments  required  based  on  the  level  of  earnings  the  company  produces  on  a  deal  by  deal  basis  

3.  Private  equity  operates  in  a  shadowy  and  secret  world    Maybe  true  of  yesteryear  but  firms  are  becoming  more  open  

What  is  private  equity?  

1.  When  buying  a  public  company  private  equity  bids  are  generally  at  a  premium  to  the  recent  share  prices  of  a  company  (eg  Blackstone’s  purchase  of  Hilton  Hotels  represented  a  31.7%  premium  to  the  previous  night’s  closing  share  price).  Private  equity  is  now  more  interested  in  building  strong  companies  as  that  increases  the  potenIal  value  they  can  sell  them  on  for  a^er  5  to  7  years.  KKR  actually  has  an  in-­‐house  management  consultancy  firm  in  order  to  help  management  in  bePering  its  company.  

2.  We  will  cover  this  point  further  on,  although  it  should  be  noted  that  while  leverage  has  certainly  been  creeping  up  it  is  nowhere  near  the  heights  it  got  to  in  the  1980s  and  every  deals  leverage  is  assessed  on  a  case  by  case  basis  so  that  those  companies  with  more  definable  and  reliable  income  streams,  for  example  infrastructure  based  companies,  will  be  more  leveraged  than  companies  with  more  volaIle  cash  flows.  

3.  In  invesIng  in  this  space,  it  is  important  to  build  relaIonships  with  the  private  equity  firms  in  order  to  understand  how  they  operate  and  what  they  are  doing  –  relaIonships  are  key!  I  tend  to  think  that    Private  equity  firms  are  probably  where  hedge  funds  were  around  5  to  10  years  ago  in  terms  of  transparency  and  communicaIon.  This  is  changing  and  with  such  recent  media  exposure  they  are  also  quickly  learning  the  importance  of  starIng  a  dialogue  with  all  stakeholders  of  a  business,  whether  it  is  their  fund  investors,  employees,  trade  unions,  governments  or  the  media  itself.    

   

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•  Buy  Outs/Buy  Ins:  either  providing  the  capital  to  enable  current  operaIng  management  to  acquire  an  exisIng  business  or  enabling  an  external  manager  to  buy  into  a  company  

•  Venture  Capital:  investments  made  at  an  early  stage  in  a  company’s  life  •  Development  Capital:  financing  provided  for  the  growth  or  expansion  of  a  company  •  Mezzanine  Debt:  typically  debt  capital  giving  the  lender  rights  to  convert  to  an  

ownership  or  equity  interest  if  the  loan  is  not    paid  back  in  Ime  and  in  full  

What  is  private  equity?  Categories  of  investment  

Private equity broadly refers to equity investment in companies that are not traded on public stock markets

• Buyouts  o^en  take  controlling  posiIons  in  companies  and  work  with  the  management  teams  to  build  significant  value.    These  are  what  we  have  been  hearing  so  much  of  in  the  press  over  the  last  few  years    Other  frequently  used  terms  include  Leveraged  Buyout.  

• Venture  Capital  was  on  everyone’s  lips  during  the  tech  and  internet  boom  of  the  late  1990s.      This  is  the  highest  risk  area  as  you  are  backing  untried  companies  and  someImes  untried  managers,  but  can  lead  to  excepIonal  returns  if  they  get  it  right,  a^er  all  this  is  how  Google  and  YouTube  

started!  • Development,  Expansion  or  Growth  Capital  is  an  intermediate  financing  stage  enabling  a  company  to  conInue  to  grow,  launch  new  products  or  expand  in  to  new  regions.  • Mezzanine  Debt  is  a  lower  risk  form  of  private  financing.  It  is  a  hybrid  financial  instrument  o^en  employed  in  buyouts  and  other  private  equity  transacIons.  In  a  company’s  capital  structure,  mezzanine  is  subordinated  to  senior  debt,  but  ranks  ahead  of  equity.  It  carries  a  higher  rate  of  interest  than  senior  debt,  and  may  be  bundled  with  an  equity  parIcipaIon  such  as  warrants  or  common  stock.  Mezzanine  securiIes  can  be  designed  to  meet  a  broad  range  of  financing  needs  and  risk/return  targets  by  combining  various  structural  features.  For  example,  interest  payments  can  be  broken  down  into  current  coupons,  which  are  paid  on  a  periodic  basis,  and  accrued  or  “payment-­‐in-­‐kind”  interest,  which  is  added  to  the  principal  amount  of  the  loan.  ConIngent  coupons  can  link  interest  payments  to  the  fulfilment  of  operaIonal  milestones  or  other  condiIons.    

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Private  equity  Outperformed  other  key  asset  classes  over  last  five  years  

30 August 2002 to 31 August 2007. All Figures in USD.

Source: Reuter’s Hindsight

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Aug-02 Feb-03 Aug-03 Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07

LPX50

MSCI World

Lehman Global Aggregate Bond

Credit Suisse/Tremont Hedge Fund

Private  equity  firms  have  demonstrated  the  ability  to  outperform  other  asset  classes  over  the  medium  to  long  term  The  LPX50  is  an  index  of  listed  private  equity  funds  

 

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•  The  asset  class  has  grown  rapidly  in  recent  years,  with  esImated  global  commitments  increasing  from  USD18  billion  in  1990  to  around  USD365  billion  in  2006    

•  Record  breaking  deals  over  the  last  year  –  HCA,  Equity  Office,  TXU  

•  These  mega-­‐deals  topped  previous  record  of  KKR’s  USD31.3  billion  buy  out  of  RJR  Nabisco  in  1989  

     

Growth  of  private  equity  

Source: Private Equity Intelligence; Financial News – Private Equity News

Record  breaking  amount  of  capital  at  firm’s  disposal  is  allowing  firms  to  undertake  transacIons  of  a  size  and  complexity  that  was  inconceivable  a  few  years  ago  HCA  =  Hospitals  and  Healthcare  in  the  US  Equity  Office  ProperIes  =  US  largest  office  landlord  TXU  =  Major  energy  company  

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•  Problems  arose  in  higher  risk  credit  markets  causing  a  serious  mispricing  of  risk.  •  Risk  Repricing  

 –  Credit  spreads  widening    –  Significant  backlog  of  loans  to  be  cleared      –  Further  corporate  acIvity  is  halted  unIl  backlog  is  cleared    –  Fewer  buyouts  (parIcularly  the  larger  ones)    –  Refinancing's  limited  and  exits  may  take  longer  than  recent  Imes  

 

What  the  credit  crunch  means  for  private  equity  

Moving  onto  more  current  issues…      Following  the  recent  turmoil  concerning  the  credit  markets  it  comes  as  no  surprise  that  there  has  been  a  significant  impact  on  the  private  equity  scene.  The  problems  iniIally  arose  in  the  higher  risk  areas  of  the  credit  markets  that  had  enjoyed  a  boom  period  causing  a  serious  mispricing  of  risk.  The  severe  collapse  in  US  subprime  mortgages  was  the  catalyst  for  the  crisis  but  many  other  parts  of  the  credit  and  derivaIves  markets  could  also  have  been  a  described  as  an  accident  waiIng  to  happen.    The  problems  spread  like  wildfire  with  many  investors  becoming  forced  sellers  in  desperate  aPempts  to  unwind  gearing.  A  liquidity  squeeze  ensued  with  any  selling  that  occurred  taking  place  in  a  virtual  vacuum.  Other  assets  had  to  be  sold,  causing  problems  throughout  the  loan  and  credit  markets.    As  well  as  causing  a  widening  of  credit  spreads,  the  squeeze  has  le^  the  investment  and  commercial  banks  with  a  significant  backlog  of  unsyndicated  loans/debt  following  agreements  to  fund  the  many  private  equity  deals  that  have  taken  place  recently.    As  a  result  there  have  been  fewer  buy  outs  by  private  equity  firms,  in  parIcular  larger  ones,  as  banks  will  not  put  up  the  financing  for  these  deals  unIl  they  have  cleared  the  backlog.  This  could  take  some  Ime  and  we  will  therefore  see  a  significant  slowdown  in  the  number  and  size  of  new  buyouts  going  forward.  The  problems  have  also  limited  the  ability  for  private  equity  firms  to  realise  further  gains  through  refinancings  and  full  realisaIons  and  exits  will  ulImately  take  longer,  reverIng  to  the  more  usual  5  to  7  year  investment  periods  rather  than  the  3  to  5  year  Ime  horizons  of  recent  Imes  

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•  Private  equity  firms  can  no  longer  rely  on  just  cheap  debt    –  Think  innovaIvely  

 •  Leverage  is  sIll  available  (selecIvely!)  

 –  Small  to  mid  sized  deals  can  sIll  be  done    •  What  of  deals  agreed  prior  to  the  “crunch”?  

 –  Not  so  much  of  an  issue  for  the  private  equity  investors  

What  the  credit  crunch  means  for  private  equity  

• As  some  of  the  more  opportunisIc  firms  have  been  –  invest  with  the  best  –  those  that  acIvely  get  involved  with  restructurings,  transform  businesses,  invest  in  businesses.  Think  innovaIvely  about  puxng  businesses  together  (eg  Saga/AA;  ProSieben  Sat/SBS  –  both  Permira  have  been  involved  in).  • Depending  on  the  quality  of  the  company  –  again  invest  with  the  best  –  deals  can  sIll  be  done  in  the  small  and  mid  sized  space  where  the  amount  of  leverage  is  not  as  onerous.  Even  significant  amounts  (very  selecIvely)  can  be  raised  as  was  seen  at  the  end  of  August  when  Rio  Tinto  (albeit  not  private  equity)  was  successful  in  raising  $40bn  in  loans  to  finance  its  purchase  of  Alcan.  The  syndicaIon  received  strong  support  and  was  more  than  a  third  oversubscribed  despite  the  market  condiIons.  • The  liabiliIes  of  deals  with  financing  agreed  lie  largely  with  the  investment  banks  and  not  with  the  private  equity  firms  or  investors.  Some  banks  have  been  puxng  pressure  on  private  equity  houses  to  walk  away  from  previously  agreed  deals.  One  such  was  the  KKR  and  TPG  led  buyout  of  TXU,  where  a  consorIum  of  the  lending  banks  offered  $1bn  to  the  private  equity  groups  to  abandon  the  deal  in  September.  This  offer  was  turned  down  and  the  deal  to  buy  TXU  has  been  given  the  go  ahead  by  shareholders.    

 

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•  2005  and  2006  are  considered  vintage  years  for  the  sector,  so  has  a  peak  in  the  cycle  been  reached?  

 •  Many  of  the  factors  behind  the  sector’s  success  in  the  last  two  years  sIll  apply:  

 –  company  balance  sheets  remain  healthy    –  further  global  economic  growth  is  forecast      –  equity  valuaIons  sIll  not  expensive  on  a  historical  earnings    basis  

 •  OpportuniIes  can  now  be  found  in  other  parts  of  the  capital  structure    

Private  Equity  –  post  credit  crunch  

In  LB’s  opinion  not  at  peak  –  While  equity  markets  may  not  be  as  cheap  as  four  years  ago,  they  are  sIll  not  expensive  on  a  historic  earnings  basis.    There  are  sIll  opportuniIes  for  private  equity  to  buy  solid,  growing  companies  with  visible  earnings  at  fair  prices,  using  leverage  to  make  balance  sheets  more  efficient.  

 

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The  extent  of  leverage  Level  of  gearing  •  The  amount  of  debt  being  put  into  

buyouts  has  been  increasing  

BUT    •  It  is  not  near  the  highs  of  the  1980s  

– 1987  debt  to  equity  raIo  –  93:7  – 2006  debt  to  equity  raIo  –  70:30  

•  Interest  coverage  has  improved  •  Interest  rates  are  sIll  historically  low  

Debt  has  undoubtedly  been  cheap  and  we  would  be  blaming  the  private  equity  industry  if  they  had  not  been  making  use  of  leverage  over  the  last  three  years.    The  best  managers  will  undoubtedly  want  to  raise  further  funds  in  the  future  and  will  therefore  not  compromise  their  approach  for  the  short-­‐term.    

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 •  Avoid  private  equity  firms  involved  in  over  aggressive/unrealisIc  leverage  and  

those  paying  too  much  for  companies  

•  Get  a  greater  understanding  of  the  whole  market    •  From  the  lenders  point  of  view  –  fixed  income  fund  managers  •  From  sellers  point  of  view  –  public  equity  fund  managers  

•  A  diversified  approach  is  all  important    

Invest  with  the  best  –  and  know  the  market  

• It  is  important  to  invest  with  those  firms  that  have  solid  track  records  and  can  exhibit  a  great  understanding  of  the  parIcular  market  they  operate  in.  They  should  not  be  over  aggressive  in  their  targets  as  this  increases  risk  and  similarly  should  not  overpay  for  assets,  instead  staying  disciplined  and  not  afraid  of  walking  away  from  deals  (for  example  KKR  walked  from  the  buyout  of  US  hi  fi  firm  Haman  Kardon  in  September  –  this  was  not  to  do  with  current  markets  issues  but  the  company  itself).  Don’t  be  too  opportunisIc!  The  solid  companies  will  always  have  an  eye  on  the  next  fund  raising.  

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 Core  Holding  Example  –  Candover  Investments  plc  

•  Leading  European  house  – Strong  track  record  and  porXolio  

•  In  addiIon  to  porXolio  of  private  equity,  Candover  Investments  wholly  owns  Candover  Partners  – Receives  fee  income  on  all  other  funds  Candover  Partners  runs  – A  growing  fund  management  business  in  itself  

•  Focuses  on  larger  European  buyouts  

•  Has  enjoyed  successful  realisaIons  since  purchase  

•  A  good  spread  of  investments  by  vintage  and  sector  and  successful  refinancings  prior  to  credit  crunch  

Largest Holdings: −  Ferretti −  Gala Group −  DX SMS −  Dakota, Minnesota & Eastern Railroad −  Hiding Anders

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20

21

22

23

04/12/06

04/01/07

04/02/07

04/03/07

04/04/07

04/05/07

04/06/07

04/07/07

04/08/07

04/09/07

04/10/07

Purchase

PurchasePurchase

Purchase

Candover  is  a  very  well  run  private  equity  house  with  investment  predominantly  in  European  buyouts  managed  by  its  wholly  owned  subsidiary  Candover  Partners.  In  addiIon  to  running  Candover  Investments,  Candover  Partners  raises  substanIal  funds  for  buyout  investment  from  third  parIes  such  as  pension  funds,  insurance  companies,  endowments,  chariIes  and  other  professional  investors.  The  fee  income  from  these  other  funds  is  ulImately  aPributable  to  Candover  Investments,  providing  a  nice  fillip  to  the  fund  returns.  The  fund  published  good  interim  results  in  September  2007,  ahead  of  most  analyst  expectaIons,  having  had  a  strong  year  of  successful  realisaIons  including  a  post  results  unexpected  realisaIon  of  its  investment  in  the  Dakota,  Minnesota  &  Eastern  Railroad  CorporaIon  (DM&E).  The  ralisaIon,  at  a  significant  mark-­‐up  to  its  last  valuaIon  at  the  end  of  2006,  includes  significant  potenIal  conIngent  payments  should  certain  targets  be  met.  Candover  will  receive  an  iniIal  GBP27.4mfor  its  stake  in  DM&E  and  could  receive  up  to  a  further  USD80m  from  the  conIngent  payment.  The  Candover  stake  was  valued  at  GBP15.5m  at  the  end  of  last  year.  The  shares  currently  trade  on  a  discount  to  net  assets,  despite  having  enjoyed  good  performance  and  with  a  long  an  enviable  track  record  in  the  private  equity  world  we  see  further  value  coming  from  this  investment.  Candover  Investments  plc  is  a  good  example  of  our  “invest  with  the  best  tried  and  tested  managers”  philosophy.    

14  

 Satellite  Holding  Example  –  Evolvence  India  Holdings  

•  A  fund  of  Indian  private  equity  funds  and  co-­‐investments  

•  Experienced  locally  based  team  with  hands  on  approach  

•  Focus  on  mid-­‐sized  companies  

•  Well  diversified  by  vintage  and  geography  

•  Major  sectors  of  investment  include:  – Infrastucture  – Engineering  &  AutomoIve  – ConstrucIon  – Technology  – Life  Sciences  

Largest Holdings: −  GW Capital India Value Fund II −  Barings (India) Private Equity Fund II −  IL&FS India Leverage Fund −  IDFC Private Equity (Mauritius) Fund II −  New York Life IM India Fund II

0.99

1.01

1.03

1.05

1.07

1.09

1.11

22/03/07

05/04/07

19/04/07

03/05/07

17/05/07

31/05/07

14/06/07

28/06/07

12/07/07

26/07/07

09/08/07

23/08/07

06/09/07

20/09/07

04/10/07

Purchase

Purchase

Purchase

On  the  ground  presence  in  New  Delhi  with  an  eight  member  strong  team  that  has  vast  investment  and  operaIonal  experience  in  the  Indian  marketplace.    

 A  hands  on  approach  with  representaIon  on  the  Investment  CommiPee  of  three  out  of  the  six  underlying  funds  and  

Advisory  Board  seats  in  two  other  underlying  funds.        The  Fund  believes  the  “sweet  spot”  for  the  Indian  Private  Equity  space  over  the  next  couple  of  years  lies  with  Fund  

Managers  who  target  the  mid-­‐market  transacIons,  i.e.  transacIons  in  the  range  of  US$  10  to  30  million.    

By  geography  –  underlying  funds  have  parIcular  strengths  in  major  business  locaIons  such  as  New  Delhi  (North  India),  Mumbai  (West  India)  and  Bangalore  (South  India)    

 To  take  advantage  of  the  opportuniIes  in  a  diversified  manner,  EIF  has  selected  few  Fund  Managers  with  solid  track  record  in  that  market  segment  and  aligned  with  them.  In  addiIon,  a  well-­‐qualified  research  team  provides  preliminary  market,  investment  and  economic  analysis  on  focus  sectors  for  the  Fund.    

Also  a  good  example  of  how  we  work  together  within  the  research  and  investment  team  at  Lloyd  Bancaire  Partners  as  I  was  able  to  uIlise  our  Jack  Aldhous,  who  runs  our  India  OpportuniIes  Fund  to  assist  on  views  and  due  diligence  with  her  network  of  contacts  in  India.  

 Consolidated  ConstrucIon  ConsorIum  Ltd.  

South  India’s  leading  construcIon  contractor  with  a  significant  corporate  porXolio    High  growth  sector,  strong  track  record  of  growth,  technocrat  and  professional  management,  high  

quality  clients  and  projects,  strong  order  book,  aPracIve  valuaIons  and  exit  visibility  Expected  to  be  listed  on  the  Indian  Bourses  in  a  few  days  at  over  3.5  x  of  invested  capital    

Zylog  Systems  Ltd.  IT  Services  company  with  about  35%  of  revenues  from  Value  –Added-­‐  Reselling  High  growth  sector,  strong  growth  track  record  ,  EBITDA  expansion  possibility,  very  aPracIve  valuaIons  

and  exit  visibility  The  company  was  recently  listed  on  the  Indian  stock  exchanges  and  is  currently  trading  at  1.3x  of  

invested  capital    Emaar  MGF  Land  Pvt.  Ltd.  

Amongst  the  three  largest  real  estate  developers  in  India.  A  JV  with  Emaar  properIes-­‐  one  of  the  largest  real  estate  developers  in  the  world  

Experienced  Management  and  Promoters,  aPracIve  sector  outlook,  reputable  JV  partner  Red  herring  prospectus  filed.  IPO  is  expected  by  Q1,  2008    

Koutons  Retail  India  Pvt.  Ltd.    Amongst  the  leading  value  retailers  in  apparels  with  a  pan-­‐India  presence  Experienced  Management  and  Promoters,  aPracIve  sector  outlook  Expected  to  be  listed  on  the  Indian  Bourses  in  a  few  days  at  over  1.75  x  of  invested  capital    

Shriram  EPC  Ltd.    A  leading  Engineering,  Procurement  and  ConstrucIon  (EPC)  company    Excellent  track  record,  aPracIve  outlook  for    Infra,  Robust  order  book  Red  herring  prospectus  filed.  IPO  is  expected  by  Q1,  2008.    

RSB  Group    (New  Investments)  Invested  in  a    leading  auto  ancillary  group  with  a  diversified  product  porXolio  and  a  blue  chip  clientele  Experienced  Management  and  Promoters,  aPracIve  sector  outlook,  Valuable  JV    alliances  

On  the  ground  presence  in  New  Delhi  with  an  eight  member  strong  team  that  has  vast  investment  and  operaIonal  experience  in  the  Indian  marketplace.      A  hands  on  approach  with  representaIon  on  the  Investment  CommiPee  of  three  out  of  the  six  underlying  funds  and  Advisory  Board  seats  in  two  other  underlying  funds.        The  Fund  believes  the  “sweet  spot”  for  the  Indian  Private  Equity  space  over  the  next  couple  of  years  lies  with  Fund  Managers  who  target  the  mid-­‐market  transacIons,  i.e.  

transacIons  in  the  range  of  US$  10  to  30  million.    

By  geography  –  underlying  funds  have  parIcular  strengths  in  major  business  locaIons  such  as  New  Delhi  (North  India),  Mumbai  (West  India)  and  Bangalore  (South  India)      

To  take  advantage  of  the  opportuniIes  in  a  diversified  manner,  EIF  has  selected  few  Fund  Managers  with  solid  track  record  in  that  market  segment  and  aligned  with  them.  In  addiIon,  a  well-­‐qualified  research  team  provides  preliminary  market,  investment  and  economic  analysis  on  focus  sectors  for  the  Fund.    

Also  a  good  example  of  how  we  work  together  within  the  research  and  investment  team  at  Lloyd  Bancaire  Partners  as  I  was  able  to  uIlise  our  Jack  Aldhous,  who  runs  our  India  OpportuniIes  Fund  to  assist  on  views  and  due  diligence  with  her  network  of  contacts  in  India.  

 Consolidated  ConstrucIon  ConsorIum  Ltd.  

South  India’s  leading  construcIon  contractor  with  a  significant  corporate  porXolio    High  growth  sector,  strong  track  record  of  growth,  technocrat  and  professional  management,  high  quality  clients  and  projects,  strong  order  book,  

aPracIve  valuaIons  and  exit  visibility  Expected  to  be  listed  on  the  Indian  Bourses  in  a  few  days  at  over  3.5  x  of  invested  capital    

Zylog  Systems  Ltd.  IT  Services  company  with  about  35%  of  revenues  from  Value  –Added-­‐  Reselling  High  growth  sector,  strong  growth  track  record  ,  EBITDA  expansion  possibility,  very  aPracIve  valuaIons  and  exit  visibility  The  company  was  recently  listed  on  the  Indian  stock  exchanges  and  is  currently  trading  at  1.3x  of  invested  capital  

 Emaar  MGF  Land  Pvt.  Ltd.  

Amongst  the  three  largest  real  estate  developers  in  India.  A  JV  with  Emaar  properIes-­‐  one  of  the  largest  real  estate  developers  in  the  world  Experienced  Management  and  Promoters,  aPracIve  sector  outlook,  reputable  JV  partner  Red  herring  prospectus  filed.  IPO  is  expected  by  Q1,  2008    

Koutons  Retail  India  Pvt.  Ltd.    Amongst  the  leading  value  retailers  in  apparels  with  a  pan-­‐India  presence  Experienced  Management  and  Promoters,  aPracIve  sector  outlook  Expected  to  be  listed  on  the  Indian  Bourses  in  a  few  days  at  over  1.75  x  of  invested  capital    

Shriram  EPC  Ltd.    A  leading  Engineering,  Procurement  and  ConstrucIon  (EPC)  company    Excellent  track  record,  aPracIve  outlook  for    Infra,  Robust  order  book  Red  herring  prospectus  filed.  IPO  is  expected  by  Q1,  2008.    

RSB  Group    (New  Investments)  Invested  in  a    leading  auto  ancillary  group  with  a  diversified  product  porXolio  and  a  blue  chip  clientele  Experienced  Management  and  Promoters,  aPracIve  sector  outlook,  Valuable  JV    alliances  

16  

•  Private  equity  funds  are  generally  difficult  to  access  for  the  everyday  investor  

•  Like  hedge  funds,  investors  face  a  series  of  obstacles:  lack  of  access  to  funds,  size  of  entry,  ability  to  diversify  and  lack  of  investment  experIse    

•  Moreover,  liquidity  is  extremely  restricIve  in  this  arena  with  private  equity  funds  commonly  implemenIng  long  lock-­‐ins  in  excess  of  3  –  5  years  

How  to  invest  in  private  equity?  

• Like  hedge  funds  private  equity  funds  are  generally  less  regulated  than  ordinary  mutual  funds  and  therefore  can’t  adverIse  or  promote  themselves    • They  are  almost  inaccessible  for  everyday  investors  • And  in  our  seminar  I’ll  explain  Lloyd  Bancaire’s  investment  approach  to  private  equity  

17