Portfolio Report for the Financial Year 2007/2008
Allocation by Investment Category1
The Period in Review Private Equity Holding AG is pleased to report a comprehensive net gain of EUR 28.4 million for the financial year ending March 31, 2008; EUR 8.9 million thereof is attributable to the last quarter. As of March 31, 2008, the fair value per share stood at EUR 53.08. This represents an increase of EUR 7.42 or 16% compared to March 31, 2007 and EUR 2.39 or 5% compared to December 31, 2007. As of March 31, 2008, total long-term assets amount to EUR 161.3 million (December 31, 2007: EUR 153.1 million). In the financial year 2007/2008, the Company received total distributions of EUR 39.5 million from financial assets available for sale and loans and EUR 33.0 million from the Earn-out.
Europe 19%
Special Situation Funds 10% Direct Buyout 2%
Venture Funds 19%
Earn-out Buyout 24%
Earn-out Venture 5%
Direct & Loans Venture 8%
Buyout Funds 32%
Allocation by Geography2
Israel 4% Earnout US 16%
Since the beginning of the financial year (April 1, 2007), the Company’s current assets increased from EUR 14.3 million to EUR 55.4 million. This is a sufficient amount to finance, over time, the Company’s unfunded commitments of EUR 84.6 million as at March 31.
US 26% Earnout Europe 35%
Fund Investments Diversification of the Fund Portfolio by Vintage Year3
27% 23%
17%
As of March 31, 2008, the fair value of the fund portfolio (excluding the earn-out position) stood at EUR 65.5 million, (December 31, 2007: EUR 67.3 million), with positive net value adjustments of EUR 9.7 million recorded on the portfolio. Since April 1, 2007, distributions from the fund portfolio amounted to EUR 37.7 million and capital calls totalled EUR 20.9 million. Noteworthy portfolio events in the past two quarters included the following:
10% 8% 6% 4% 3% 0% 0% 2% 0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
– In March 2008, Private Equity Holding AG committed USD 7.5 million to ABRY Partners VI. ABRY Partners is one of the most experienced media investment firms in North America, with a highly stable investment team, focusing on the US media sector. The fund’s strategy is to make control buyouts of mid-market companies active in the media, communication and information sector in North America. On March 14, 2008, the fund held its final closing at its hard cap of USD 1.35 billion. The fund recently announced the acquisition of Hosted Solutions. Headquartered in North Carolina, this company is a leading operator of data centers and its facilities are used to house mission-critical computer systems and applications for its customers. – In Q4 2007, ALPHA CEE II L.P. participated, through its portfolio funds, in the acquisitions of, inter alia, GTS Cen-
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Based on fair values plus unfunded commitments (basis: total long-term assets) Based on fair values of the underlying companies (basis: total financial assets for sale, loans & earn-out) Based on fair values and unfunded commitments of the fund investments, excl. earn-out portfolio
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Portfolio Report for the Financial Year 2007/2008
tral Europe, a company operating a group of alternative telecom service providers in the CEE region, Novaturas, the largest tour operator in the Baltic States, URSA Bank, one of the largest retail banks in the Eastern part of Russia, and SAD, a Polish value added distributor of Apple branded IT products. The fund further closed a direct investment in Elmarco, a Czech engineering company which has developed a world-leading technology for nanofibre production. – In Q1 2008, Avista Capital Partners acquired Lantheus Medical Imaging, a leading supplier of radiopharmaceuticals and contrast agents for nuclear and ultrasound-based cardiovascular diagnostic imaging procedures and NAMIC/VA, a leading manufacturer and distributor of single use fluid management and venous access medical devices. – In Q4 2007, Carmel Software Fund completed three follow-on investments in: i) Red Bend, active in Wireline/ Wireless software distribution solutions for resource-constrained channels, ii) cVidya Networks, a company active in revenue assurance and profit maximization solutions for the communication sector, and iii) Proficiency, a collaboration gateway enabling manufacturers and suppliers to seamlessly share product design information. – In Q1 2008, Carmel Software Fund announced its investment in Axerra Networks, a provider of solutions for IP migration primarily for the mobile backhaul. – In Q4 2007, DB Secondary Opportunities Fund C committed to RBS Special Opportunities Fund, which was formed to purchase a portfolio of 20 equity and equity-linked investments from the Royal Bank of Scotland and to pursue further similar investments. – In Q1 2008, Industri Kapital 2007 Fund acquired Groupe Etanco, the French leader in the design, manufacturing and distribution of building fastener and fixing systems. – In Q4 2007, Institutional Venture Partners XI (“IVP XI”) announced the acquisition of LoopNet, the largest online commercial real estate listing service in the United States. The fund further made follow-on investments in i) Limelight Networks, a high-performance content delivery network for digital media, ii) CafePress.com, a leading online marketplace, and iii) LiveOps, one of the fastest growing providers of outsourced agent services and hosted contact center technology. In December 2007, portfolio company Quigo Technologies, a leading provider of contextual adserving technologies and search engine marketing solutions, was sold to AOL for USD 340 million. AOL purchased the business in order to support its ad force and make it more competitive with Google and Yahoo. In Q1 2008, portfolio company MySQL, the developer of the world's most
popular open source database, was sold to Sun Microsystems for USD 1 billion. – In Q4 2007, Institutional Venture Partners XII made three new investments in i) LoopNet, the largest online commercial real estate listing service in the United States, ii) MotoSport, a multi-channel supplier of motorcycle parts, accessories and apparel, and iii) Veraz Networks, a global provider of Internet protocol softswitches, media gateways, and digital compression products. – OCM Opportunities Fund VII is approximately half way through deploying its capital, having initially pursued opportunistic investments, and lately more directed investment themes such as investments in leveraged loans and senior loans from banks. The portfolio also contains value investments with depressed prices but solid, recession resistant, cash generative businesses. – In Q4 2007, Warburg Pincus Private Equity X made new investments mainly in: i) Integra Telecom, a provider of voice, data and Internet communications to business and carrier customers in the Western US, ii) Havells India, a publicly traded manufacturer and distributor of electrical products in India, iii) Centrum, a Czech Internet portal company, and iv) Spectraseis, a pioneer of a new technology of oil and gas exploration. – In Q1 2008, Warburg Pincus Private Equity X invested, among others, in: i) Armonk, a New York-based bond insurer, ii) Bausch & Lomb a leading global developer, manufacturer and marketer of ophthalmic products, iii) Antero Entities, an exploration and production company focused on acquiring and developing non-conventional natural gas properties in the Mid-Continent and Rocky Mountain Regions of the US, iv) Adlens Beacon, an early stage company seeking to commercialize adjustable lens technology for the over-the-counter reading glass market, and v) Coyote Logistics, a provider of truckload brokerage services with operations in North America and Europe. – In March 2008, WL Ross Recovery Fund IV acquired Assured Guaranty. The company provides credit enhancement products to the public finance, structured finance and international finance markets.
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Portfolio Report for the Financial Year 2007/2008
Direct Investments The fair value of the direct portfolio (incl. loans) stood at EUR 23.4 million as of March 31, 2008 (December 31, 2007: EUR 27.4 million). During the financial year 2007/2008, negative net value adjustments of EUR 6.6 million were recorded. Noteworthy portfolio events in the past quarter included the following: – In March 2008, CyDex filed for IPO and proposed to raise up to USD 50 million. CyDex is a specialty pharmaceutical company focused on the development and commercialization of drugs specifically designed to address limitations of current therapies in selected established markets. – During Q1 2008, the lead cancer compound of EpiCept, a US pharmaceutical company focused on the pain market, failed to secure approval from the central European drug board. This led to a sharp drop in the stock price. The company has further data from other drugs in the pipeline, which will be due in April 2008.
Earn-Out As of March 31, 2008, the fair value of the Earn-out shown on the Balance Sheet amounts to EUR 72.4 million (December 31, 2007: EUR 58.5 million). The increase of the balance sheet position in Earn-out by EUR 14 million is a result of an increase of EUR 17.6 million in the valuation of the Earnout, due to the change in valuation of the underlying portfolio in Q4 2007 and Earn-out payments received by the Company in Q1 2008 from CSFB Strategic Partners Holding II in cash of EUR 3.7 million. The increase in the total value of the Earn-out of EUR 17.6 million was booked through the income statement. The value of the Earn-out is adjusted at the end of every quarter.
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