Industry Observations December 31, Asset Management Industry

Transcription

1 Industry Observations December 31, 2016 Asset Management Industry

2 Select Asset Management Public Company Industry Data (USD in millions, except per share data) Price at 12/31/16 % of 52 Week High Equity Value Enterprise Value Debt / Total Capital Assets Under Management LTM Revenue LTM Earnings CY 2017 Revenue Estimate CY 2017 Earnings Estimate Company Name Ticker Traditional Asset Management Apollo Global Management, LLC APO $ % $3, N/A 57.7% $188, $1, $ $2, $ Artisan Partners Asset Management Inc. APAM $ % $1, $1, % $99, $ $73.81 $ $85.59 Eaton Vance Corp. EV $ % $4, $4, % $336, $1, $ $1, $ Federated Investors, Inc. FII $ % $2, $2, % $364, $1, $ $1, $ Fortress Investment Group LLC FIG $ % $1, $1, % $70, $ $62.90 $1, $ GAMCO Investors, Inc. GBL $ % $ $1, % $39, $ $ N/A N/A Janus Capital Group, Inc. JNS $ % $2, $2, % $198, $1, $ $1, $ Legg Mason, Inc. LM $ % $3, $5, % $732, $2, $84.01 $2, $ Waddell & Reed Financial, Inc. WDR $ % $1, $ % $85, $1, $ $1, $ Alternative Asset Management Market Data LTM Operating Data Forward Estimates Ares Management, L.P. ARES $ % $1, $5, % $97, $1, $77.98 $1, $ Cohen & Steers, Inc. CNS $ % $1, $1, % $60, $ $79.15 $ $88.61 Ellington Financial LLC EFC $ % $ N/A 61.33% N/A $ $15.92 $87.74 $49.28 Oaktree Capital Group, LLC OAK $ % $2, $6, % $99, $ $ $1, $ Och-Ziff Capital Management Group LLC OZM $ % $ $ % $39, $ $ $ $82.94 Virtus Investment Partners, Inc. VRTS $ % $ $ % $46, $ $42.71 $ $45.89 Private Equity/ Venture Capital BlackRock Capital Investment Corporation BKCC $ % $ $ % N/A $ $ $ $62.36 Capital Southwest Corporation CSWC $ % $ $ % N/A $16.00 $11.00 N/A N/A Hercules Capital, Inc. HTGC $ % $1, $1, % N/A $ $68.75 $ $ Main Street Capital Corporation MAIN $ % $1, $2, % N/A $ $98.45 $ $ Prospect Capital Corporation PSEC $ % $2, $5, % N/A $ $ $ $ The Carlyle Group LP CG $ % $1, $6, % $169, $2, $10.70 $2, $ TICC Capital Corp. TICC $ % $ $ % $0.00 $74.76 $72.08 $ $56.48 Triangle Capital Corporation TCAP $ % $ $1, % N/A $ $36.45 $ $76.25 Notes: LTM (latest twelve months); Enterprise Value (market capitalization less total cash and short-term investments plus short-term borrowings and total long-term debt); EBITDA (earnings before interest, taxes, depreciation and amortization) Source: Capital IQ The material contained in this publication is meant to provide general information regarding valuation topics. This publication does not constitute investment advice with respect to the securities of any company discussed herein, is not intended to provide information upon which to base an investment decision, and should not be construed as such. Professional advice should be obtained before taking any action based on the information contained herein. Publicly available information utilized in this publication has been obtained from sources deemed to be reliable. Houlihan does not guarantee the accuracy or completeness of the information provided within this publication. The material presented reflects information known to the authors at the time this publication was written and this information is subject to change. Houlihan Capital 2

3 Select Asset Management Public Company Valuation Metrics (USD in millions, except per share data) Company Name Ticker Return On Assets Return On Equity LTM Operating Statistics Return On Revenue Capital Growth Net Income Growth Net Income Margin TEV/ LTM Revenue Trading Multiples TEV/ CY 2017 Revenue Price/ LTM Earnings Traditional Asset Management Apollo Global Management, LLC APO 11.6% 38.4% N/A 31.7% 60.7% 16.8% N/A N/A 175.9x Artisan Partners Asset Management Inc. APAM 15.0% 149.7% 47.3% -10.7% -11.1% 10.1% 1.7x 1.7x 28.0x Eaton Vance Corp. EV 13.5% 34.7% 16.9% -4.3% 4.8% 18.0% 3.4x 3.1x 22.2x Federated Investors, Inc. FII 17.1% 31.5% 23.0% 21.8% 24.0% 18.3% 2.4x 2.2x 14.6x Fortress Investment Group LLC FIG 4.3% 26.3% 6.8% 27.9% N/A 14.4% 1.3x 1.2x 44.9x GAMCO Investors, Inc. GBL 21.2% 54.8% 29.1% -11.7% 12.2% 30.3% 3.2x N/A 9.5x Janus Capital Group, Inc. JNS 6.4% 9.8% 8.7% -3.4% 3.8% 15.8% 2.1x 1.9x 14.0x Legg Mason, Inc. LM 3.2% -1.3% 3.9% -2.7% N/A -3.1% 1.9x 1.8x 15.4x Waddell & Reed Financial, Inc. WDR 13.8% 22.3% 18.9% -15.8% -28.9% 14.3% 0.7x 0.8x 8.3x Mean 11.8% 40.7% 19.3% 3.6% 9.4% 15.0% 2.1x 1.8x 37.0x Median 13.5% 31.5% 17.9% -3.4% 4.8% 15.8% 2.0x 1.8x 15.4x Alternative Asset Management Ares Management, L.P. ARES 1.5% 16.7% 1.8% 22.3% 248.6% 7.8% 5.2x 4.3x NM Cohen & Steers, Inc. CNS 25.9% 30.4% 31.3% 4.0% 16.6% 23.1% 4.4x 4.0x 18.7x Ellington Financial LLC EFC -0.5% -2.2% N/A -15.3% N/A -26.8% N/A N/A NM Oaktree Capital Group, LLC OAK 0.0% -1.5% 0.1% 337.3% 74.1% 16.7% 8.0x 5.1x 2.6x Och-Ziff Capital Management Group LLC OZM -2.1% -43.8% -2.5% -50.1% N/A -18.7% 1.1x 1.3x 3.9x Virtus Investment Partners, Inc. VRTS 4.2% 7.8% 5.2% -19.4% -9.8% 13.0% 2.4x 2.5x 22.5x Mean 5.5% -1.9% 8.5% 51.3% 27.0% 1.5% 4.0x 3.2x 11.9x Median 0.0% -1.5% 2.6% -15.3% 16.6% 13.0% 3.4x 3.3x 11.3x Private Equity/Venture Capital BlackRock Capital Investment Corporation BKCC 5.3% -15.3% 5.5% -10.6% N/A -88.5% 7.0x 7.4x 11.1x Capital Southwest Corporation CSWC 1.0% 4.0% 1.1% 53.6% -80.9% 68.8% 12.8x N/A 85.4x Hercules Capital, Inc. HTGC 5.6% 9.3% 5.7% 8.0% 39.2% 41.2% 10.0x 8.6x 18.7x Main Street Capital Corporation MAIN 4.6% 8.8% 4.7% 9.5% -17.2% 56.3% 15.5x 13.8x 26.5x Prospect Capital Corporation PSEC 5.1% 4.5% 5.3% -2.3% -45.9% 20.3% 7.3x 7.3x 13.2x The Carlyle Group LP CG 1.7% -2.7% 2.2% -22.9% 328.0% 0.4% 2.5x 2.6x 28.9x TICC Capital Corp. TICC 3.0% 1.6% 3.1% -28.8% N/A 9.8% 11.4x 8.5x 31.7x Triangle Capital Corporation TCAP 5.4% 6.4% 5.4% -4.8% -6.3% 31.9% 9.6x 8.6x 15.4x Mean 4.0% 2.1% 4.1% 0.2% 36.2% 17.5% 9.5x 8.1x 28.8x Median 4.9% 4.2% 5.0% -3.5% -11.7% 26.1% 9.8x 8.5x 22.6x Notes: LTM (latest twelve months); NTM (next twelve months); EBITDA (earnings before interest, taxes, depreciation and amortization); TEV (total enterprise value) Source: Capital IQ Houlihan Capital 3

4 Asset Management Public Company LTM Equity Performance 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% % % % % Traditional Asset Management Private Equity/Venture Capital S&P 500 Index Alternative Asset Management Dow Jones Industrial Average Note: The indices are derived from the equity performance of the previously listed companies. Source: Capital IQ Houlihan Capital 4

5 Recent M&A Activity in Asset Management Industry January 1, 2016 to December 31, 2016 (USD in millions) Close Date Target Acquirer Target Company Primary Industry Implied Enterprise Value 11/21/2016 CIFC LLC F.A.B. Partners I LP Asset Management and Custody Banks $2, /31/2016 Russell Investment Management Company (nka:russell TA Associates Management, L.P.; Reverence Asset Management and Custody Banks $1, /22/2016 American Realty Capital Global Trust II, Inc. Global Net Lease, Inc. Asset Management and Custody Banks $ /4/2016 Minority Equity Interests in Five Alternative Investment Firms Affiliated Managers Group, Inc. Asset Management and Custody Banks $ /13/2016 Clarion Partners, LLC Legg Mason, Inc. Asset Management and Custody Banks $ /18/2016 Landmark Partners, Inc. OM Asset Management plc Asset Management and Custody Banks $ /1/2016 The Mutual Fund Store, LLC Financial Engines, Inc. Asset Management and Custody Banks $ /1/2016 GE Asset Management Incorporated State Street Global Advisors, Inc. Asset Management and Custody Banks $ /6/2016 Deutsche Wealth & Asset Management, US Private Client Services Raymond James Financial, Inc. Asset Management and Custody Banks $ /5/2016 MetLife Premier Client and MetLife Securities and Certain Assets Massachusetts Mutual Life Insurance Company Asset Management and Custody Banks $ /2/2016 Octagon Credit Investors, LLC Conning & Company, Asset Management Arm Asset Management and Custody Banks $ /8/2016 Resource America, Inc. C-III Capital Partners LLC Asset Management and Custody Banks $ /14/2016 GKC Holdings, LLC Burford Capital Limited Asset Management and Custody Banks $ /1/2016 Apex Capital Management, Inc. Fiera US Holding Inc. Asset Management and Custody Banks $ /13/2016 PENSCO Trust Company Opus Bank Asset Management and Custody Banks $ /1/2016 Sterne Agee LLC, Securities Clearing Business And Independent INTL FCStone Inc. Asset Management and Custody Banks $ /30/2016 Rainier Investment Management, LLC Manning & Napier, Inc. Asset Management and Custody Banks $ /28/2016 DailyFX IG Group Holdings plc Asset Management and Custody Banks $ /20/2016 Independence Realty Advisors, LLC Independence Realty Operating Partnership, LP Asset Management and Custody Banks $ /29/2016 The Killen Group, Inc. Chartwell Investment Partners, LLC Asset Management and Custody Banks $ /25/2016 Vest Financial LLC CBOE Holdings, Inc. Asset Management and Custody Banks $ /16/2016 RiverBanc LLC New York Mortgage Trust, Inc. Asset Management and Custody Banks $ /23/2016 Ramius Alternative Solutions LLC AllianceBernstein L.P. Asset Management and Custody Banks $ /5/2016 Courier Capital, LLC Financial Institutions, Inc. Asset Management and Custody Banks $ /27/2016 M Science LLC Leucadia National Corporation Asset Management and Custody Banks $ /5/2016 Ronald N. Lazzaro P.C. (nka:rnl & Associates) BerkshireBanc Investment Services, Inc. Asset Management and Custody Banks $ /9/2016 Hatteras Funds, LLC, Liquid Alternatives Investment Management Hatteras Funds Management Group Asset Management and Custody Banks $ /10/2016 Sterling National Bank (Yonkers Branch), Wealth Management Midland States Bank Asset Management and Custody Banks $4.80 1/3/2016 HK Graphene Technology Corp. Ford Cheer International Limited Asset Management and Custody Banks $3.57 6/20/2016 Pandora Venture Capital Corporation WRIT Media Group, Inc. Asset Management and Custody Banks $3.50 3/14/2016 American Residential Gap LLC ProGreen Properties, Inc. (nka:progreen US, Inc.) Asset Management and Custody Banks $1.29 5/2/2016 Key Link Assets Corp. Foothills Exploration, Inc. Asset Management and Custody Banks $0.43 2/12/2016 Asia Training Institute, Inc. N/A Asset Management and Custody Banks $ /14/2016 Zosano, Inc. N/A Asset Management and Custody Banks $0.23 3/30/2016 Kore Resources, Inc. (nka:uneeqo, Inc.) N/A Asset Management and Custody Banks $ /29/2016 Stumm Financial Services Salem Five Financial Asset Management and Custody Banks N/A 12/23/2016 Hydra Industries Acquisition Corp. Inspired Entertainment, Inc. Asset Management and Custody Banks N/A 12/21/2016 Matterhorn Capital Management LLC Avalon Advisors, LLC Asset Management and Custody Banks N/A 12/16/2016 Terrapin 3 Acquisition Corporation Yatra Online, Inc. Asset Management and Custody Banks N/A 12/9/2016 Wheatland Advisors Inc. Orrstown Financial Services, Inc. Asset Management and Custody Banks N/A 11/30/2016 Farrington Financial Group Thompson-Hamel, LLC Asset Management and Custody Banks N/A 11/24/2016 Apex 9 Inc. Heritage Mining Company Asset Management and Custody Banks N/A 11/23/2016 Petrus Resources Corporation Waters Holdings, Inc. Asset Management and Custody Banks N/A 11/22/2016 Minn Shares Inc. (nka:minn Shares Inc., Prior to Reverse Merger Minn Shares Inc. Asset Management and Custody Banks N/A 11/7/2016 Financial Control SYSTEMS STP Investment Services Inc. Asset Management and Custody Banks N/A 11/2/2016 Pegasus Advisors, LLC Mercer Advisors Inc. Asset Management and Custody Banks N/A 11/2/2016 SAS Capital Management, LLC Folio Dynamics Inc. Asset Management and Custody Banks N/A 11/2/2016 kwantix Trading LLC and kwantix Trading Advisors LLC Moody Aldrich Partners, LLC Asset Management and Custody Banks N/A 11/2/2016 Gerstein, Fisher & Associates, Inc. People s Securities, Inc. Asset Management and Custody Banks N/A 11/1/2016 First Affirmative Financial Network, LLC FOLIOfn, Inc. Asset Management and Custody Banks N/A 11/1/2016 BDCA Adviser, LLC BSP Acquisition I, LLC Asset Management and Custody Banks N/A 10/31/2016 ALCUS Financial Group, LLC VisionQuest Wealth Management, LLC Asset Management and Custody Banks N/A 10/31/2016 Michael Dallas, LLC Bloomfield Hills Financial, Inc. Asset Management and Custody Banks N/A 10/31/2016 AssetMark, Inc. Huatai International Finance I Limited Asset Management and Custody Banks N/A 10/24/2016 Jeffrey Slocum & Associates, Inc. (nka:pavilion Advisory Group Pavilion Advisory Group Inc. Asset Management and Custody Banks N/A Source: Capital IQ Houlihan Capital 5

6 S&P Capital IQ - Sector Last 3 Month Equity Performance 25.0% Change in Market Cap by S&P Capital IQ Sector 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 9/30/ /31/ /30/ /31/2016 Energy Materials Industrials Consumer Discretionary Healthcare Financials Information Technology Telecommunication Services Utilities Consumer Staples Note: The indices are derived from the equity performance of the S&P Capital IQ Sectors. Source: Capital IQ Houlihan Capital 6

7 M&A Deal Flow Statistics by S&P Capital IQ Sector 16,000 M&A Deal Count - Number of Transactions 14,000 12,000 10,000 8,000 6,714 7,080 6,957 8,845 7,176 7,735 7,544 8,953 7,561 8,024 8,265 8,970 7,120 6,788 6,011 6,954 6,000 4,000 2,000 3,814 4,204 4,641 5,372 4,647 4,989 5,391 5,700 5,147 5,062 5, $1,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q M&A Deals - USA & Canada M&A Deals - Rest of the World M&A Deal Count - Total Transaction Value ($ Billions) $900 $800 $700 $600 $500 $400 $329.1 $354.4 $343.6 $409.1 $321.9 $372.8 $381.4 $462.7 $430.2 $512.6 $406.6 $440.3 $419.0 $268.0 $295.1 $457.4 $300 $200 $100 $234.9 $252.2 $246.4 $338.2 $400.7 $251.0 $289.7 $450.7 $402.3 $385.2 $499.4 $408.0 $403.0 $375.6 $293.7 $352.0 $0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Transaction Value - USA & Canada Transaction Value - Rest of World Houlihan Capital 7

8 M&A Deal Flow Statistics by S&P Capital IQ Sector Percentage Dollars Invested by Sector 4Q16 Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Real Estate Telecommunications Services Utilities Not Listed Houlihan Capital 8

9 About Houlihan Capital Houlihan Capital is a leading, solutions-driven valuation, financial advisory and boutique investment banking firm. We pride ourselves on being thought leaders in an ever-changing landscape. Houlihan Capital is SOC-compliant, a FINRA and SIPC member and committed to the highest levels of professional ethics and standards. Valuation & Financial Advisory We provide an array of services that include enterprise valuations, portfolio valuation, valuation of carried interest, transaction opinions, tax and financial reporting compliance, purchase price allocations, and a wide variety of consulting services through our Financial Advisory Group. Investment Banking Through our Investment Banking Group, we offer sell side/buy side advisory, private placement and capital raises. Special Situations Through our Special Situations desk, we provide services that fit outside the archetypal verticals, including liquidity solutions, transactional advisory, and secondary market advisory and trading. For additional information about our Industry expertise and services, visit: Andrew Smith Paul Clark Michael Norton asmith@houlihan.com pclark@houlihan.com mnorton@houlihan.com