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Pioneer Capital Partners An expansion stage value investor

Pioneer Capital Partners An expansion stage value investor. Is there investable growth in New Zealand? How do we access it? Eriksens Conference 25 September 2012. Start with what we know – the NZX. NZX profile. Financial profile. 108 NZX All. Remove: Finance-related companies

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Pioneer Capital Partners An expansion stage value investor

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  1. Pioneer Capital PartnersAn expansion stage value investor Is there investable growth in New Zealand? How do we access it? Eriksens Conference 25 September 2012

  2. Start with what we know – the NZX NZX profile Financial profile 108 NZX All • Remove: • Finance-related companies • Investment companies • Property trusts 80 Operating Companies • Select: • Companies with three year revenue CAGR greater than 15% 16 Growth Companies 1. Trimmed average (90% of population), even weighted, all growth is 3-year historic CAGR, EBIT is normalised. Source: NZX and Reuters Knowledge (20 September 2012)

  3. What the rest of the economy looks like – Private Capital NZ Productive Assets Valuations (bn)3 NZ Industrial Base1 Income $485bn EBIT $55bn Ent. Val. $695 (13x EBIT) Debt $241 (2.8x cover) Equity $454 NZ Manufacturing1 Income $89bn EBIT $4.5bn Ent. Val. $47 (10x EBIT) Debt $14 (3.8x cover) Equity $33 NZX OpCos2 Income $44bn EBIT $4.5bn Ent. Val. $65 (14x EBIT) Debt $16 Equity $49 Notes: Annual Enterprise Survey, Department of Statistics, 2010. Exc. ‘Financial and insurance services’ Reuters, operating companies only Data for AES companies is book value, data from NZX companies from NZX

  4. Looking for growth – Manufacturing as an example Revenue Growth 2009 to 2012

  5. Equity funding New Zealand Equity Inflows p.a. NZ Productive Assets NZ Industrial Base4 Income $485bn EBIT $55bn Private Capital1 Early-stage $50m Mid-market $130m Large PE $300m NZ Manufacturing4 Income $89bn EBIT $4.5bn Trade (M&A)3 NZ Target $1,608m Other - Huge Public (NZX)2 IPO $112m Sec. $760m Other $460m NZX OpCos5 Income $44bn EBIT $4.5bn Notes: NZ Private Equity and Venture Capital Monitor ; 5-year average to Dec 2011 UBS estimates, company filings; 5-year average to Dec 2011 Thomson Reuters; 5-year average to Dec 2011 Annual Enterprise Survey, Department of Statistics, 2010. Exc. ‘Financial and insurance services’ Reuters, operating companies only

  6. Gross realised returns – Private Capital is showing promise • Method: • 1994 to 2010 – 16 years • $675m invested into 74 companies, majority of investments were mid-market • 11 Fund managers – essentially the population • Results: • Pooled IRR of 26.8% p.a.1, 2.13x MM (Gross) • Six investments were >5x MM; 5 went into receivership • Strong performance throughout period of study, best was 2000 to 2008 1. Excludes two biggest investments, both LBO, that skew results (otherwise pooled IRR of 33.6%)

  7. Private Equity Access Points Pencarrow achieved a first close on 30Nov 2011 and is seeking to raise $100m-$150m with a final close expected late 2012 Pioneer will launch a new fund Q4 2012 with a target of $100m Konx has launched a new fund with a target $100-125m

  8. Investment mandate is important

  9. Thank you

  10. Gross realised returns - analysis NZ PE gross realised return over time periods Source: New Zealand Venture Investment Fund

  11. Gross realised returns – analysis (cont.) NZ PE gross realised return distribution 1994 to 2010 Source: New Zealand Venture Investment Fund

  12. Market activity – Mid Market NZ mid-market activity 2003 to 2011 Source: New Zealand Private Equity and Venture Capital Monitor

  13. Market activity – LBO NZ LBO activity 2003 to 2011 Source: New Zealand Private Equity and Venture Capital Monitor

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