J.P. Morgan Private Equity Limited (“JPEL”)

J.P. Morgan Private Equity Limited (“JPEL”)
30 April 2014 - Month End Review
Professional Investors Only – Not For Public Distribution
Company Description
J.P. Morgan Private Equity Limited (“JPEL” or the “Company”) is a Guernsey registered and incorporated, London Stock Exchange-listed, closed-ended
investment company (LSE: JPEL, JPZZ, JPSZ). JPEL’s primary strategy is to acquire secondary market portfolios of direct fund investments, significantly
invested partnership interests and partially drawn commitments, in order to accelerate NAV development. JPEL employs an opportunistic, deep value private
equity investment strategy and focuses on value-oriented investments with potential for early return of capital. The Company’s capital structure consists of
three classes of shares: Equity Shares and two classes of Zero Dividend Preference Shares due 2015 and 2017, respectively.
Balance Sheet Information
Summary at 30 April 2014
Investments at Market Value
Zero Dividend
Share 2015
Zero Dividend
Share 2017
No. of shares in issue
346.38 mm
67.08 mm
30.41 mm
57.90 mm
Currency of Quotation
£ Sterling
£ Sterling
Net Asset Value (“NAV”)
per share
($ in mm)
Cash & Equivalents
Total Assets
Total Liabilities
Total Net Asset Value (NAV)
2015 ZDP NAV
2017 ZDP NAV
US$ Equity NAV
Undrawn Credit Facility
Unfunded Commitments
Private Equity + Cash / Unfunded
Portfolio Update
JPEL’s NAV per US$ Equity Share remained at $1.11 during the month of April. Approximately 97% of JPEL’s April NAV is from underlying sponsor reports dated 31 December
2013 or later.
JPEL's portfolio continues generate significant distributions in 2014, which have permitted the Company to pay down €20 million of debt from its credit facility with Lloyds in May.
Despite investing approximately $50 million in four new deals in the past few months, and pro forma for several large distributions in May, JPEL has reached a level where net debt
has been substantially reduced to approximately $5 million. Including the 2015 and 2017 ZDP shares, JPEL’s pro forma total leverage ratio is approximately 28%.1
During April, JPEL received distributions of approximately $1.5 million and capital calls of $0.5 million. In the first four months of 2014, the Company has received approximately $33
million of distributions followed by a large distribution from Deutsche Annington Immobilien Group (“DAIG”) in May for an additional €11.8 million. Also during the month of May,
JPEL moved nearly $11.0 million in cash generated from underlying portfolio distributions held in its BMML subsidiary up to the JPEL Company level. Including the distributions from
DAIG and BMML, JPEL has received approximately $50 million of distributions in 2014.
On 16 May 2014, JPEL received a cash dividend of €1.2 million from its investment in DAIG. Several days later, on 20 May 2014, the managers of DAIG, which is JPEL’s largest
company holding, conducted a distribution in kind to shareholders at a price of €20.69 per share (less carried interest attributed to the manager Terra Firma). As a result, JPEL
received approximately 2.4 million shares of DAIG. In conjunction with this distribution of shares, JPEL participated alongside other investors in a block trade. JPEL sold 25% of its
position in DAIG at €19.50, resulting in cash proceeds of approximately €11.8 million. Based on DAIG’s trading price at 30 May 2014 of €21.59, this transaction will have a slightly
positive impact on JPEL’s holding value. After the block trade, JPEL holds approximately 1.8 million shares of DAIG.
Prior to the DAIG distribution in kind, JPEL’s investment was valued based on the most recent report received from Terra Firma, which valued DAIG at approximately €19 per share.
JPEL initially gained exposure to DAIG in 2006 through a €1.4 million investment in TFDA. In 2008, JPEL purchased a larger investment in the same co-investment vehicle at a
substantial discount to the prevailing NAV at that time. Based on the sale price of €19.50 per share value, JPEL's investment in TFDA generated approximately 2.76x JPEL’s cost
and a 25.6% IRR.
JPEL’s Managers continue to emphasize new investments. During the month of April, JPEL’s Managers entered in to a non-binding letter of intent for a potential new secondary
direct investment and are currently engaged in active due diligence on the potential investment opportunity.
ZDP Performance
In April, the NAV per share for the Company's 2015 ZDP Shares increased 0.7% to 76.84p and the 2017 ZDP Shares increased 0.7% to 80.53p. The price of JPEL’s 2015 ZDP
Shares increased 0.2% to 82.88p and the 2017 ZDP Shares increased 1.5% to 93.75p during the month.
Source: J.P. Morgan Asset Management. Past performance is not indicative of future performance. Performance returns shown can increase or decrease due to currency fluctuations.
1. Total leverage ratio is defined as total debt drawn under JPEL’s credit facility plus accreted value of the 2015 and 2017 ZDP Shares divided by total assets. As at 30 April 2014. Pro forma for the following events that occurred in May
2014: repayment of €20 million of debt from JPEL’s credit facility, dividend of €1.2 million from DAIG, €11.8 million from DAIG and $11.0 million in cash generated from underlying portfolio distributions held in its BMML subsidiary. Net
debt refers to the amount drawn under the Lloyds credit facility less cash.
Publication Date: 9 June 2014
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J.P. Morgan Private Equity Limited (“JPEL”)
30 April 2014 - Month End Review
Professional Investors Only – Not For Public Distribution
Portfolio Summary at 30 April 2014
JPEL’s portfolio is comprised of 100 fund interests, 11 co-investments and five fund of funds that include over 800 companies. As a secondary investor, JPEL's
portfolio is heavily weighted towards funded investments, which comprise approximately 91%1 of the portfolio. In addition, the Managers place an emphasis on
investing in small to medium sized buyout funds, which tend to utilize lower leverage and purchase multiples; these funds represent approximately 52% of the
Portfolio Level – Currency2
1% 3%
Portfolio Level – Investment Strategy2,3
Portfolio Level – Buyout Type2
Real Estate
1% 1%
1. Includes secondary investments, co-investments and funded primary investments.
2. The diversification charts above are based on private equity fair market value as at 30 April 2014 and use underlying fund-level values. Fund classifications for buyout strategy is based on total fund commitments: Small: $0 - $500
million; Medium: $500 - $2,000 million; Large: $2,000 million - $5,000 million; Mega: over $5,000 million. Co-investments allocated by size of underlying sponsor fund.
3. Special situations includes mezzanine, debt, turnaround and distressed investment strategies.
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Key considerations, risks and investment information for Private Equity Investors
Investments in private equity are speculative and involve significant risks. The environment for private equity investments is volatile, and an investor should only invest if the investor can withstand a total
loss of investment. In considering the performance information contained herein, prospective investors should bear in mind that past performance is not indicative of future results. Private equity
investments are not usually liquid and may be difficult to value.
Key considerations for private equity investors include but are not limited to: private equity is an illiquid asset class; there are typically no redemption features within a traditional private equity fund;
traditional private equity fund investments are “locked up” for the duration of the partnership; private equity investments typically involve a long term time horizon; private equity funds may have
investment periods that extend 6 years and terms of 12+ years; private equity is a speculative investments and there are no global disclosure standards or capital protection.
This document may only be issued to or passed on to persons to whom it may be lawfully communicated pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2007, or
otherwise only to professional clients and eligible counterparties. This document should not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer
or solicitation is unlawful or unauthorised. In addition, this document may not be given to a U.S. citizen or resident who is not a "Qualified Purchaser" or “Accredited Investor” within the meaning of the
U.S. securities laws.
This document is issued on behalf of JPEL and has been approved by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority ("FCA") in the
United Kingdom. The information in this document is provided solely for information, does not constitute investment advice or personal investment recommendations, and is neither an offer to buy or sell,
nor a solicitation to buy or sell, any investments or units or shares in JPEL. To the extent that this document is issued in the United Kingdom, it is being issued to persons who are professional clients or
eligible counterparties for the purposes of the FCA's rules. Past performance is not necessarily a guide to future performance.
Some information contained in this document may have been received from third party or publicly available sources that we believe to be reliable. We have not verified any such information and assume no
responsibility for the accuracy or completeness thereof. The information stated and opinions expressed constitute best judgment at the time of publication, and are subject to change without prior
notification. The price of units or shares (and the income from them) can go down as well as up and may be affected by changes in rates of exchange. An investor may not receive back the amount invested.
Current tax levels and reliefs are liable to change and their value will depend on individual circumstances. The market prices of units and shares in JPEL do not necessarily reflect their underlying net asset
© 2014 Bear Stearns Asset Management Inc. All rights reserved. No information in this document may be reproduced or distributed in whole or in part without the express written prior consent of Bear
Stearns Asset Management, Inc. , JF International Management Inc. Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP. This document is valid
until July 2014.
Publication Date: 9 June 2014
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