Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
PrivateEquityFunds
November2012
Agenda
PrivateEquity
Definition andClassification TheInvestment Process Exit
CaseStudy
PrivateEquity:Definition
Acquisitionofmajorityandminoritystakesinthesharecapital offinancialand(mainly)industrial companies Theobjectiveistoinvesttosupportacompanyatdifferentstagesofitslifecycle,injectingcapital andmanagerialskillstocreateavaluehigherthantheinitialinvestmentcost Investmentscanbemadeintwoways: Usingthebuyersowncapital,or Creatingaclosedendfundfinancedbyinvestorsandmanagedbyaspecialistteam, i.e.a privateequityfund Aprivateequityfundisaninvestmentvehiclethatrealizesbetween720investmentsduringits existence(512years) Investmentsatdifferentdevelopmentstagesofacompany: Venture/StartUp/SeedCapital:earlystage ExpansionFinancing:growthstage ReplacementCapital:torestructure/changetheshareholderbase,typically: o LeveragedBuyOut:acquisitionwithlargeuseofdebt o ManagementBuyOut/In:acquisitionbyexternalorinternalmanagerswithlargeuse ofdebt Turnaround:fixingcorporatecrisis
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PrivateEquity:Classification
Investmentswithmediumlonghorizonrealisedbyprincipalsorclosedendfunds Theobjectiveistorealiseaperformanceof1530%ofInternalRateofReturn(IRR)bybuyingand, fewyearslater,sellingastakeinatargetcompany
Businesscycleofthetargetcompany
Earlystagefinancing(seed capital/startup):createa newcompany Expansioncapital:realise developmentprojectswithan internalorexternalgrowth Replacementcapital/buy out/bridge:changethe corporateownership/financial structure Turnaround:execute restructuringandrecovering ofacompany Private Equity Venture Capital
Investments
Majorityinvestments(industrialrationale)
Investors handsoninvolvementinthe operationalmanagement,alsothrough trustedmanagementteams Noconstraintsforextraordinarytransactions Exitusuallyviathesaleofthecompany
Minorityinvestments(financialrationale)
Agreementbetweenthemajorityshareholder andtheindustrialpartnerto: Disciplinethecompanysgovernance Setthebusinessplanstargets Formalizetheexitparameters
PrivateEquity:Classification
PrivateEquitycombinesthetypicalactivityoffinancialintermediaries,realisedbyacquiring participationsandtakingcapitalrisk
Advantages/Objectivesofthetargetcompany Privateequitytransactionsareawayfor privatecompaniestoaccessthe financial/capitalmarkets,astheyallowto: Gainaccesstonewfinancialresources, managerialskills,knowhowandalarge networkofrelationshipstoeffectively implementtheirstrategies Increasetheliquidityofthecompanysshare capital Developinternalmanagerialstrengths Helpthegenerationaltransition Increasethecompanysvisibilityonthe market
Instruments Traditionalsituations Startupsandspinoffs Expansioncapital MBOs andLBOs BridgefinancingforIPO Complexsituations Extrajudicial/corporate/debt restructuringofcompanieswith insolvency,leverageorliquidityproblems (eg,debtforequityswaps) Turnaround:capitalaimedatfinancing companiesintroublestorecoverlost competitivenessandtofixtough,butnot final,situations
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PrivateEquity:Classification
SeedCapital Investmentinanentrepreneurialideaor venture Principalfeatures: Highlyspecialisedinvestors Highriskofprojectfailure Seedinmanysituations,ofwhichonly fewwillusuallysucceed StartUp Aproduct/serviceisalreadyexisting (prototype),butitscommercial effectivenesshasnotbeentestedyet Principalfeatures: Highlyspecialisedinvestors Highriskofprojectfailure
Early stage
PrivateEquity:Organization
LegalStructure: Limitedpartnerships(sponsoredbyPEfirms) PEfirmsaresmallorganizations(averaging10professionals)whoserveasthe GeneralPartners(GP)forPEfunds Investors: Pensionfunds,banks,insurancecompanies,foundations Committoinvestoveracertainnumberofyears Fees: ManagementFee:TypicalarrangementisforLPstopayasetpercentageof committedcapitaleveryyear,mostcommonly2% Sometimesthefeeisconstantovertime,sometimesitdropsafterthefirstfive years CarriedInterest(Carry):Thebasicideaissimple:ifthecommittedcapitalis100 ml.andtotalexitproceedsare200ml.,thetotalprofitis100ml.A20%carried interestwouldproduce20ml.Thestandardcarriedinterestisindeed20% Timing:5yearinvestmentperiod,10yearfundhorizon PriorityReturn,Clawback
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PrivateEquityClassification:Summary
InvestmentType Earlystage Spinoff Expansion/ Development Replacement/ Buyout Bridgefinancing Turnaround Extrajudicialrestructuring Specialsituationfunds Industryfunds Operator Venturecapitalist Generalistfund Generalistfund Countryfund Industryfund Generalistfund
PrivateEquity:LeverageImpact
P=200 150
P=200 110
E
P D=150 100 P D=110 110vs 10 100 10 50 Return11x 150vs. 50 Return3x
90 50 D D 50
90
PrivateEquity:Classification
Turnaround Theobjectiveofturnaroundinvestmentsistorestructureacompanyinacritical state,viaextraordinaryoperationsthatprovide: Financialresources Financialdiscipline Managerialskillsandknowhow Synergies Challenges: Managerialexpertiseisrequired Potentialconflictofinterestsandnegotiationswiththestakeholdersinvolved (existingshareholders,lenders,unions,management)
Inturnaroundsituations,theprivateequityfundassumescontrolofthecompany throughdirectmanagementoftherestructuringprocess
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Turnaround:StrategicAlternativesinManagingaCompanyinCrisis
Temporarycrisis:e.g., Usuallyaninvestmentbankandalawfirmactasadvisors causedbyliquidity Debt/EquitySwap shortage,thenrescue planisfeasible Success DebtRenegotiation Structuralcrisis:ifthe Writeoffofpartofthe fairvalueoftheassets Extrajudicial loansbythebanks issignificantlylower Not Liquidation thantheliabilities, Success Restructuring thenliquidation Oncethecrisis becomesevident,the companyandits Bankruptcy/Liquidation Company Judicial inastate lendershaveto: ofcrisis agreeona restructuringplan L= Valueofthecompanyintheevent oftenappoint ofliquidation consultants Merger V= Valueofthecompanyafter restructuring lookforalternative L>V Liquidation capitalsources, L<V Restructuring suchasprivate Liquidation L=V Indifferent equityfunds
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Turnaround:StrategicAlternativesinManagingaCompanyinCrisis
InjectionofNewCapital/Resources Original Founder/ Ownership
Injection of capital by the original owners represents one of thefirstoptions Lack of commitment of capital by the original owners could makeitdifficulttopursuearestructuringplan A second alternative is a direct involvement of the lenders in thetarget companyscapital, througha debtequityswap, i.e. thetransformationofloansintoastakeinthecompany From an accounting point of view, the effect is an increase in the companys equity and a reduction in its debt, without changingitscashposition This alternative could result in extreme cases and depending on the level of leverage in the banks taking over thecompany.Thisisusuallyanoptionnotfavouredbybanks
Lending Banks
Anotheralternativeistheentryofathirdpartyinvestor,either:
ThirdParty Investors
Turnaround:StrategicAlternativesinManagingaCompanyinCrisis
KeyElementsoftheRestructuringPlan
Short/mediumtermforecast(e.g.,volumes,sales,GOP) keyelementsofthebusinessplan
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Turnaround:StrategicAlternativesinManagingaCompanyinCrisis
KeyElementsoftheRestructuringPlan
Actionstoreestablishanappropriatefinancialstructureofthecompany:
Setnewtermstoremunerateandrepaytheoutstandingdebt Definetheoptionstoprovidethecompanywithnewresourcesinorderto(i)continuethe ordinarybusinessactivity,and(ii)pursuenewprojects
Debtrenegotiationcanbeachievedwiththefollowing:
Extendmaturitiesanddefinenewrepaymentschedule(generallybetween3 8years) Lenderstowriteoffpartofcapital/interests Lower ranking in repayment however, senior ranking to certain lenders (e.g., new investors) datio in solutum, i.e. agreement to transfer the ownership of assets/rights in place of a loanrepayment Debt/equityswap Replaceoutstandingbondswithanewbondissue Sweeten writeoffs of part of the capital / interests by offering warrants and/or convertiblebonds
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Agenda
PrivateEquity
Definition andClassification TheInvestment Process Exit
CaseStudy
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ProcessofaPrivateEquityInvestment
Theprocessofaprivateequityinvestmentconsistsofthefollowingactivities: Identification of Opportunities /Dealsourcing Apotentialdealcanbesourcedthroughtheshareholdersofthetargetcompany,whoapproachesthe privateequityfund,orabrokerwhowilltrytobringbothpartiestoclosethedeal Alternatively,theprivateequityfundcanapproachcompanieswhoareexpandingandwishtogrowfurther Structuring andExecution Thebusinessduediligenceisperformedbytheprivateequityteamondifferentareas/potentialofthe company.Auditorsandconsultantsareappointedtoconductthefinancial, taxandlegalduediligence Thepartiesandtheirlegaladvisorsnegotiatetheagreements PostAcquisition Management Themanagementteamappointedbytheprivateequityfundclosely monitorsthecompanysperformance, fromanoperationalandfinancialpointofview,benchmarkingit againsttheoriginalbusinessplan Thenewshareholderusuallydrivesimprovementsinmanyareasofthecompany,suchasoperations, corporategovernance,financialstructure/disciplineandgeneral reporting Exit ExecutedviaIPO,atradesaleoraBuyBackbytheoriginalowners Afterexitingthetargetcompany,theprivateequityfundreturnstoinvestorsthecapitalinvestedwiththe profitearned
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StructuringaPrivateEquityInvestment
TheobjectiveofaPrivateEquityinvestoristomaximizethecapitalinvestedinthecompany throughanincreaseinitsvalue.ThetargetIRR isusually1530%
Principalstagesoftheinvestmentprocess
Identifytheinvestmentopportunity:analysisbasedonthebusinessmodelofthecompany,the attractivenessofreferencemarket/industry,thefuturepotentialandtheexitopportunitiesinthe mediumterm
Objectives Growthpotentialofthereferencemarket Profitabilitydrivers Preliminarycompanysvaluation Exitprospects
FinancialAnalysis:
Sales,historicalandexpectedgrowth Coststructureandoperatingprofitability/margins Capitalabsorption Financialsituationandleveragepotential
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StructuringaPrivateEquityInvestment
Principalstagesoftheinvestmentprocess
BusinessPlan Mainbasetoassesstheexpectedvaluecreation Setthemediumlongtermobjectivesofthecompany,itscompetitivepositioning andstrategies,the developmentofthefinancialstructure/economicresults Valuation Basedondifferentmethodologies(e.g.tradingcomparables,prepaids andDCF) Sensitivityanalysisisperformedonthebusinessplansmainassumptions DueDiligence Analysisconductedtoreviewthecompanysdataandinformationandtoidentifypotentialareasof riskandvaluecreation Usuallyfocusedonthefinancialaccounts,managementcontrol,legalandtaxrisk Agreements Thelegaladvisorsprepareandnegotiateallthedocumentsneededforthetransaction(e.g. ConfidentialityAgreement,MemorandumofUnderstanding,SharePurchaseAgreement) Governance Definethecompanysdecisional,reportingandmanagementprocesses Regulatetherelationsbetweentheprivateequityinvestorandtheothershareholders
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Agenda
PrivateEquity
Definition andClassification TheInvestment Process Exit
CaseStudy
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ValueCreationinaPrivateEquityInvestment
ThevaluecreationisalwaysmeasuredintermsofIRR ortimestheinitialcost Leversofthevaluearethefollowing: entryprice expectationsontheexitprice investmentduration thevaluecreationpotential Theseaspectsreflect: theeconomicresults thepotentialmarket thecompanysattractiveness themultiplevaluesatthetimeoftheexit
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ExitfromaPrivateEquityInvestment
Exit Keyisthechoiceoftheexitstimingandmethodinordertomaximizethereturnonthe investedcapital: IPO:floatationofthetargetcompany Tradesale:saletoathirdparty,generallyanindustrialbuyer Buyback: repurchasebytheoriginalfounder Putoption:givestheprivateequityinvestortherighttosellinthefuture Secondarybuyoutoreplacement:saletoanotherprivateequityinvestor Writeoff:followingavaluereductionoftheshareholdinginthetargetcompany
EXIT
Industrial Industrial
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Agenda
PrivateEquity
Definition andClassification TheInvestment Process Exit
CaseStudy:Banca Profilo
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Autumn2008:TheGlobalFinancialEarthquake
320
300
280
260
6-Oct-08 Fortis carve up Rescue package for HRE 6.0 bn Govt recap of Dexia
8-Oct-08 Central banks rate cuts UK Govt announces UK bank recapitalisation Iceland takes control of Glitnir and Landsbanki 9-Oct-08 Icelandic FSA takes over Kaupthing's operations
240
16-Sep-08 AIG bailout 7-Oct-08 6.6 bn UniCredit capital increase 13-Oct-08 Eurozone Govts announce action plan 37 bn Govt. recap of UK banks MUFJ / MS close
30-set 02-ott 06-ott 08-ott
220
200
180
29-Sep-08 Congress fails to pass TARP Fed expands liquidity programs Citi / Wachovia B&B nationalized Government support to Fortis, HRE and Glitnir
DJ EU Stoxx Banks
Source
Bankruptcies GovernmentInterventions
Recapitalizations Mergers
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1996 ( bn)
Top10marketcap:225 bn
1.UBS 2.Allianz 3.HBOS 4.HSBC 5.CS 6.Barclays 7.ING 8.CA 9.AXA 10.SocGen
2007 ( bn)
Top10marketcap:896 bn 50 35 33 33 15 15 15
1.HSBC 2.UCI 3.UBS 4.RBS 5.BNP 6.Santander 7.ING 8.IntesaSP 9.SocGen 10.Barclays
2008 ( bn)
Top10marketcap:407 bn 161 99 93 89 87 84 73 73 69 68
1.HSBC 2.BNP 3.Santander 4.UBS 5.IntesaSP 6.BBVA 7.CS 8.UCI 9.SocGen 10.CA
116 49 48 35 32 31 30 23 21 20
12 9 8
Average:22.5bn
+298%
Average:89.6bn
54%
Average:40.7bn
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BancaProfilo:Overview
Founded 21 years ago, Banca Profilo is a private banking and brokerage boutique, headquartered in Milan TheBanksmainactivitiesare: PrivateBanking:performedthrough9branches mostlylocatedinthewealthyareasofNorthern Italy,andbyitsSwiss60%ownedsubsidiary Socit Bancaire Prive (SBP)inGeneva.The GroupsFuM amountedto1.5bn asof31/12/08 CapitalMarketsandBrokerage:oneofthelargest domesticplayersinequityandfixedincome products ProprietaryTrading:centeredona897mln bond andsecuritiesportfolioanda1bn derivatives portfolioasof31/12/08,bothintheprocessof beingdownsized AssetManagement:managedaccounts Investment and Merchant Banking: performed by Profilo Merchant, focusing on SMEs and private equity In 2008 the Bank reported a consolidated loss of 78 mln, mainly resulting from the negative performance ofitsproprietarytradingactivities
KeyFinancialData( mln)
31/12/07(1) 31/12/08 (13.0) (52.3) (77.9) 2,363 1,632 29 1,494 194 1H09 23.9 3.7 9M 09 33.3 3.8
BancaProfiloGroupStructure
P&L
TotalIncome OperatingIncome NetIncome (Loss) 59.0 17.2 10.6 2,402 1,755 115 2,386 208
BalanceSheet
TotalAssets TradingAssets ShareholdersEquity
OtherData
FuM Employees
(1) 2007P&Lfigures donotincludeSBP
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CompletedtheFirstPhaseoftheTurnaround
TimetableandMainAchievements
January09 Feb.09 March09 April09 May09 June09 July09 August09 Sept.09 October09 November09
19/02
27/03
5/10 Rightsissue
Restructuring Planapproved
Firsteveracquisitionofcontrolofa bankbyaprivateequityfundinEurope Received5regulatoryauthorizations within3months(ie,BankofItaly, Consob,ItalianAntitrust,FINMA,FSA) Noloss ofPrivateBankersandincrease offundsundermanagement (+5%in6 months)
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Restructuring
Phase1
Downscaleofproprietarytradingactivityandrestructuring/runoffofcurrentportfoliosthrough:
Growth/ ValueCreation
Phase2
Growrevenues:
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1)CapitalStrengthening
RecapitalizationStructure Tier1Ratio
>25% Amongthe highestin Europe
Capitalincreaseofupto110mln 30mln viaarightsissue fully underwrittenbythemarketon 5/11/2009 80mln withoutpreemptiverights,of which70mln alreadyunderwrittenby Arepo BPon6/7/2009and10mln to beallocatedbyyearend
Shareholders EquityEvolution
2007ConsolidatedShareholders'Equity 2008NetLoss o/wNetTradingLosses o/wGoodwillwriteoff o/wProvisions 2008ConsolidatedShareholders'Equity 20099MOrdinaryChanges SatorCapitalIncrease(6/07/09) RightIssues(5/11/09) 20099MConsolidatedShareholders'EquityPF mln 115,5 (77,9) (49,6) (15,0) (9,4) 29,5 3,9 70,0 29,8 133,2
23.6%
10.2% 6.1%
2007
2008
09/09PF
2009F
ShareholderStructurePostCapitalIncrease
ReferenceShareholders 18.5% Arepo BP S.p.A. 55.8%
Market 25.7%
CapitalstructuresignificantlystrengthenedtolevelsofexcellencebyEuropeanstandards
*Aftertheallocationoftheadditional10mln,Arepo BPsshareholdingwillbedilutedto52%
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2)RenewalofManagementandOrganization
NewOrganization
142
Internal Audit Communication s Chairman M. Arpe Board of Directors Compliance CEO F. Candeli GM N. Angileri
PersonnelTurnover
18 21 145
Savings:
Legal HR
1.9mln
Investments: 2.1mln
Private Banking (R. Lagorio) Client Relations Family Office Central Office - Milan - R. Emilia - Brescia- Genoa - Rome - Forl - Turin - Pistoia
Products and Services (P. Moia) Asset Management Advisory Wealth Planning Credits
Finance (C. Marino, L. Barone) Treasury & FX Markets Sales & Trading
Headcountat 01/01/09
Dismissals
Hirings
HeadcountYTD
NewOngoingProjects
Complete review of Management Control in terms ofmodelandmetrics,supportedbynewITsystems Overhaul of Risk Management in terms of model andsystem,to guaranteefullcontrolofrisks Riskbasedreviewofoperatingprocesses Development of FrontEnd systems to support the commercialnetwork
Strongorganizationaldrivethroughinvestmentsin people,systemsandprojects
New Hirings
New Responsibiliti es
Appointednewmanagementteam,streamlinedorganizationoftheBank
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3)SignificantReductionofFinancialAssetsandRebalanceofFunding
FinancialAssetDevelopment
Securities&CDSPortfolios( mln) VAR(99%,10days mln)
52% 1,225 700 586 6.7 3.9 2.7 60% 879 717 474 7x
FundingDevelopment
Funding( mln)
46% 30x
FinancialLeverage
87%
4x
12/08
06/09
09/09
12/08
06/09
09/09
12/08
06/09
09/09
12/08
06/09PF* 09/09PF*
Averagematurityfunding: >30days(+36%vs.2008)
Reducedpositionsinexoticsecurities(75%YTD)
Rebalancedfinancialstructure
Exposuretointerestrateseffectivelydowntozero Reducednetexposuretoderivates(77%YTD)
Createdliquidityreserves Extendedmaturities
Deleveragingprocesstobecompletedby2009withadditionaldisposals
*Ittakesintoaccountthecapitalincreaseunderwrittenon06/07/09and5/10/09
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FeaturesoftheItalianPrivateBankingMarketToday:theGoodNews
Underdevelopedmarket vs.therestofEurope,polarized betweenlargecommercialbanksandfewnicheplayers Hugegrowthpotentialswithfewclientsservedby specializedoperators Attractivemomentumasaresultofpressureonoffshore markets,despitethecyclicaldownturnsufferedin20072008 Consolidatedtrendofrepatriationofcapitals Concentratedmarketintermsofnumberofclientsand geography Abroaddistributionnetworkisnotaprerequisiteforthe business Negativecurrentsituation formanyplayersduetothe internationalcontext(e.g.,SwissandUSbanks) Independentandfocusedplayersfavoredbythemarket environment
30% 5%
Above10 mln 5 10mln 15mln 0.5 1
ExpectedMarketEvolution
+4% +10.2%
bn 80 4
80 4
836 83 6
WealthConcentration
No.of Households Assets
Thecombinationofstructuralandcyclicalelementscreatessignificantgrowthopportunities, particularlyforaspecializedplayerwithasmallshare(0.1%)ofahugemarket(836bn)
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andtheBadNews:theCurrentBusinessModelisNoLongerSustainable
Strongcompetitionintheacquisitionofnewassetsthrough externalhiringofprivatebankers
Highacquisitioncosts AssetProfitability
Italy Asset Management Loans Insurance products TotalIncome Margin 53 2 6 61 Europe 78 10 6 94
NumberofBanksRelations
2008 2007
64%
3% 5% 16%
4% 5% 16%
68%
5Is ti tuti
40%
41%
36%
32%
Widespreaduseofmultiplebanks(64%ofclientsusemore thanonebank)
Anewparadigmisnecessarytotakeadvantageofthemarketopportunities
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Banca Profilo:theNewBusinessModel
PillarsoftheNewBusinessModel 1
Modifytherevenuestructureinasustainableway
MainLevers
Product/InvestmentCulture
Banca Profilo:TheNewBusinessModel
PillarsoftheNewBusinessModel 2
RedefinetherelationbetweenthePrivateBankerandtheBank
Banca Profilo:theNewBusinessModel
PillarsoftheNewBusinessModel 3
MakeclientsandPrivateBankersloyaltotheBank, overcomingthetraditionaltradeoff
MainLevers
Fromcommercialpoliciesaimedatmaximizingprofitabilitytocommercialpolicies aimedatmaximizingtheanswerstoclientneedsandthesolutionstotheirproblems
Implications Benefitsforclients: Reliability: Fullyindependentbank Excellentcapitalstrength Relations: Oneonlyreferencepointforthe managementofwealthandany othercomplexneed ServiceLevels: Opportunitytoaccessdirectlythe Qualityofofferandmanagementatall TopManagementoftheBank levels,supportedbyprovenexperienceand RelationBank professionalskills Shareofwallet Breadthofofferrange(onestopshop) increaseand Uniqueservices(servicesinexclusivity) reductionofclient Nonaggressivecommercialpolicy turnover (profitabilitynotlinkedtorisks)
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BancaProfilo:2012Consolidated Targets
Tangible Tangible
TotalClientFuM
Intangible Intangible 8.4 1.7 09/200 9 2012E >100 Cohesiveteamwithstrong corporatespiritatalllevels RecognizedBrand
bn
Revenues
mln
33
Cost/Income
% Satisfiedclients
ROAE %
2% 09/200 9 2012E
36
*NetProfit9Mannualized,excludingpreviousportfolio
BancaProfilo:StockPerformance
Banca Profilo sharesarelistedontheItalianStockExchange Sharepriceof0.62asof30October2009 MarketCapof389mln UntiltheannouncementofthedealwithSator*(19Feb2009),Banca Profilo stockhadperformedinlinewiththe Italianbankingsystem,ie 60%LTM and70%L6M Thestockwasup30%onthedayoftheannouncement,atmorethantwiceSators issueprice,showingthepositive marketreactiontotheinvolvementofSator inBanca Profilo Sincethedealannouncement,Banca Profilo stockpricehasincreasedbynearlythreefold,despitethelargedilution resultingfromthecapitalincrease
BancaProfiloSharePrice(since Jan2007;)
Sator'sInvestmentPrice
Aug 09
Jul07
Jul08
Oct07
Oct08
May07
May08
May09
Nov07
Apr07
Apr08
Apr09
Sep 07
Feb 08
Sep 08
Feb 09
Mar07
Mar09
BancaProfiloshareprice
Dec07
ItalianbankingIndex rebased
Dec08
Sep 09
Oct09
Jan08
Jan09
Jun07
Jun08
Jun09
Banca Profilo:InvestmentCase
AttractiveMarket Potentialand Timing
Italyhasoneofthehighestsavingsratesintheworld Lack of a real independent, high quality serviceoriented private bank in Italy due to historical attractionofoffshorebankingmarket(Switzerland,Monaco) Appropriatetimingduetocurrentturmoilinthebankingindustry,withclientsinsearchofsafehavens Possiblepotentialrepatriationoftheoffshorewealthduetointernationalpressureonbankingsecrecy andtaxhavens Noloanportfolio(90%A financialassets,noCDO,subprimeorothertoxic assets) Goodplatformtorelaunch theprivatebankingbusiness Potential to reshape the service model, leveraging on existing infrastructure while revamping brand andproductportfolio Injectionofnewexperiencedmanagementteam Downsizingofproptradingactivity/risksandoptimizationoffundingsources Attractive valuation at 26 mln for the Group, reflecting a discount on current NAV (vs. premia for EuropeanBanks) Issue price at 0.20 per share, implying a 93% discount to peak market price in 2007, and approximately1/3ofthecurrentprice Sator PEssweetspot:Italy,turnaround,financialservices,managerialinvolvementandcontrol Complextransactionstructuringandnegotiationsduetothepubliclistingandregulatoryrequirements Criticalduediligenceasaresultofdistressedsituationandfundingconstraints
Turnaround Upside
Attractive Valuation
Exit
Expectedtradesalewhenthebusinesshasreachedcriticalmassandprofitability ScarcitypremiumattachedtoasuccessfulItalianprivatebankbystrategicbuyers First bank bailout with private capital in Europe as an alternative to the current Government interventions FirsteveracquisitionofabankscontrolbyaprivateequityfundinItaly FirsteverexemptiononaminoritytenderofferforabankinItaly
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LandmarkDeal
PrivateEquityFunds
November2012