18 February 2008, 17:45
Private Equity Inv: Interim Management Statement
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Private Equity Investor Plc
Interim Management Statement - 3 Months to 31 December 2007
Investment Objective
The Company was launched in February 2000 and provides both private and
institutional investors with a means to participate in specialist venture funds
in the USA, a category of funds that is not otherwise accessible to many
investors.
The Company's objective is to achieve a substantial capital appreciation for
shareholders over the long term. The Company's policy has been to invest in
high quality venture capital funds, managed by several different management
groups, focused on various stages of growth from early stage to pre-IPO, so as
to obtain exposure to a diversified underlying portfolio of investments in
unlisted companies in the IT and other technology sectors. Such funds have been
selected with regard to the experience and track record of the managers, their
investment strategy and their strength and quality of deal flow.
Financial Highlights
31 March 2002 = 100%
To 31 To 31 To 31 To 31 To 31 To 31 To 31
December July March March March March March
2007 2007 2006 2005 2004 2003
2007
Shareprice 120.04% 132.34% 133.93% 131.27% 83.07% 79.30% 69.98%
*
NASDAQ 143.73% 140.45% 131.23% 126.79% 108.47% 108.07% 72.68%
Composite
($)
*Ordinary share total return with dividends reinvested
Financial Position
As at 31 December As at 30 September
2007* 2007
Net assets and shareholders funds £75,358,000 £85,756,000
Net assets per ordinary share 176.39p 171.51p
Net assets and shareholder' funds $150,008,000 $174,714,000
in US $
Net assets per ordinary share in US 351.11c 349.43c
cents
Mid-market price per ordinary share 149.50p 155.00p
Discount to NAV 15.24% 9.63%
Exchange rate (US$ / £) 1.9906 2.03735
Figures exclude current period revenue/(deficit)
*December figures after repurchase of shares by tender in December 2007
LP Portfolio Revaluations
As at 31 December 2007 the Company's NAV included re-valuations by the Limited
Partnerships at the following dates:
APV Technology Partners III 30 September 2007
Bay III 30 September 2007
Crescendo IV 30 September 2007
Dawntreader Fund II 30 September 2007
Draper Fisher Jurvetson ePlanet Ventures 30 September 2007
Draper Fisher Jurvetson Fund VI 30 September 2007
Draper Fisher Jurvetson Fund VII 30 September 2007
Draper Fisher Jurvetson Gotham Venture Fund 30 September 2007
Focus Ventures II 30 September 2007
Francisco Partners II 30 September 2007
Institutional Venture Partners XII Book cost
New Enterprise Associates 9 30 September 2007
New Enterprise Associates 10 30 September 2007
New Enterprise Associates 12 30 September 2007
Oak Investment Partners X 30 September 2007
Sprout Capital IX 30 September 2007
TCV IV 30 September 2007
Vanguard VII 30 September 2007
Vantagepoint Venture Partners IV 30 September 2007
Vantagepoint 2006 Fund 30 September 2007
Vector Capital IV 30 September 2007
Zone Ventures Fund II Annex 30 September 2007
Zone Ventures Fund II 30 September 2007
Material Events
Tender Offer
On 12 November 2007, shareholders were sent a circular giving details of the
Company's proposal to make a Tender Offer to shareholders to purchase shares
with a value of £12.5 million. An Extraordinary General Meeting was held on 7
December 2007 at which shareholders approved a resolution allowing the Company
to purchase shares under the Tender Offer. The Tender Offer was completed on 13
December 2007 with a total of 7,276,592 shares being repurchased by the Company
for cancellation at the Tender Price of 171.7818 pence per share. Following
settlement of the Tender Offer, which was made on 18 December 2007, there are
now 42,723,408 shares in issue. It is the Company's intention periodically to
distribute surplus funds to shareholders.
Material Transactions
During the three months to 31 December 2007 the Company received cash and
shares from its Limited Partner holdings with a value of $9,453,707 and Limited
Partnerships drew down $1,813,431. During the period, three of the Company's
underlying portfolio companies undertook IPO's: Entropic Communications (Focus
Ventures II), Neutral Tandem (NEA 10) and Compellent Technologies (Crescendo
IV).
On 5 February 2008, the Company announced that it had received a cash
distribution from one of its Limited Partnerships, Focus Ventures II, following
the acquisition of EqualLogic by Dell for a total of $1.4 billion (the largest
all-cash M&A exit for a venture-backed IT company to date, according to Venture
Source). As a result, PEI received $7,178,780 and this resulted in an increase
in the Company's NAV of 15.35cents per share. This equated to an increase of
7.80p per share, based on the exchange rate at the close of business on 1
February 2008 of $1.96865.
Outlook
The circular to shareholders regarding the Tender Offer and the subsequent
Chairman's Statement, contained in the preliminary announcement of interim
results released on 30 November 2007, set out the Company's intentions with
regard to the future direction of the business and explained the role of
Campton Group, Inc ("Campton"). The Company's intention is: to meet any
outstanding drawdowns in respect of the portfolio of funds to which commitments
were made in its early years and which are principally of the 1999 and 2000
vintages ; to continue to collect distributions from these funds; and to make
periodic further returns of capital to shareholders. The Company, however
intends to retain up to $40 million of capital to develop the Campton business.
The Company has invested in Campton, which advises the Company on its existing
portfolio, on terms that include the right to acquire a controlling
shareholding. Campton intends to develop a fund of funds management and
advisory business that may provide its services both to the Company and to
third parties.
While the business of Campton is being developed the Company has made a number
of commitments to highly regarded venture capital funds with the intention of
transferring these "warehoused" investments to a new fund of funds vehicle to
be raised by Campton with the Company's financial support. Providing that
Campton is successful in its fund raising activities, PEI will be reimbursed
for its contribution to the fund's launch costs and will recover the cost of
any subscriptions to the warehoused funds, together with recompense for its
holding costs. The Company believes that these warehoused commitments will be
the cornerstone of a new fund of funds and that the Company will benefit from
this through the development of Campton's fund management business in which it
will have a significant interest.
Peter Dicks
Chairman
18 February 2008
END</pre>
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