Activity Report - Summer 2007

Transcription

1 Activity Report - Summer 2007 We are pleased to present this second issue of PPF Investments ( PPFI ) Activity Report for the period from July 1 st to September 30 th We would like to share with our investors and other interested parties the interim results of PPFI, achievements and goals of this period. PPFI Key Facts PPF Investments is an independent, international private equity group with a focus on transitional economies, such as those found in Central and Eastern Europe and Asia. PPFI s investment strategy is to focus on the fundamentals: sound business & corporate strategy, prudent management, and optimal capital structure. PPF Investments has the right to use the PPF trademark, brand name of the prominent Czech financial group. PPF Investments and PPF Group are two independent groups in terms of assets and business activities. PPFI consists of two groups of companies: Investment Corporations are created for investment purposes based on PPFI investors profile and risk appetite. Currently, we operate PPF Alpha and PPF Beta with total subscribed capital exceeding USD 850 million. PPFI launched its first Investment Corporation - PPF Alpha - in December The initial subscription period of PPF Alpha finished in December Investors in PPF Alpha have subscribed USD 500 million with a right to commit of up to USD 1 billion. The second Investment Corporation - PPF Beta was launched in Summer Investors have already raised USD 248 million of a targeted amount of up to USD 800 million. Advisory Companies include a general advisor PPF Investments (UK) and four sub-advisors operating in the Czech Republic, Russia, Ukraine and Mainland China. Page 1

2 PPFI Portfolio of Investments We are continuously seeking investment opportunities that demonstrate business stability combining highly focused management and entrepreneurial culture. PPFI investment approach is based on: an in-depth knowledge and understanding of selected geographies, an ability to offer active financial, managerial and structural support, and access to a broad range of local professional advisers, managers and counsels. PPFI has truly become a very important player in the buy-out market in Central and Eastern Europe, Russia and China. PPF Alpha portfolio consists of 32 companies or projects. The chart bellow illustrates current industry allocation of PPF Alpha portfolio. PPF Alpha Portfolio of Investments as of September 30th - Industry allocation 1% 5% 23% 2% 16% 13% 9% 3% 28% Banking, insurance & financial services (9%) Hotels, restaurants, travel & leisure (3%) Media & telecommunications (28%) NPL's (16%) Oil & Gas & Biofuels (2%) Real estate (23%) Retail trade (1%) Utilities & waste management (5%) Other industries (13%) Below you can find a list of selected investments of PPFI Alpha portfolio. Target / project Date of Investment Location Activity Shareholding Nanyou December 2005 China Non performing loans CME December 2005 CEE Television broadcasting Peninsula January 2006 China Non performing loans Vegacom March 2006 Czech Republic Network system integrator Pražské služby May 2006 Czech Republic Waste collection and incineration 8.55% 15.8% Page 2

3 AB Credit June 2006 Czech Republic Non performing loans Oriel Resources December 2006 Russia, Kazakhstan Chrome mining and processing Termizo November 2006 Czech Republic Municipal waste incineration 16.14% 91% Ardaf January 2007 Romania Insurance 71% RAI February 2007 Romania Insurance Continental Hotels March 2007 Romania Hotel accommodation Inner Mongolia April 2007 China Non performing loans 31% Boryspil Land April 2007 Ukraine Real estate 67% Komodor May 2007 Ukraine Real estate 50% UKR CATV May 2007 Ukraine Cable TV s Real Estate Portfolio I Office Development I Oil Products Distribution I July 2007 Czech Republic Real Estate August 2007 Romania Real Estate 50.39% October 2007 Ukraine Oil products distribution 29% PPF Beta is designed as an investment vehicle for a limited number of large investments primarily in Russia and other former Soviet Union countries. PPF Beta has acquired a minority shareholding in the Russian insurance company Ingosstrakh. Summer New Investments and Changes in the Portfolio Investments This section provides a list of PPFI recent investments. Through PPF Alpha, we have managed to close 3 new transactions and we have increased PPFI equity participation in other 3 projects (AB Credit, Ardaf and UKR CATV). We have invested almost USD million to these six transactions, which is in line with PPFI strategy with regards to transaction size and portfolio strategy. We have downsized our holding in project Oriel Resources to 16.14%. PPF Beta has acquired a minority shareholding in Russian insurance company Ingosstrakh via its Cyprus-based investment vehicle. Real Estate Portfolio I (Czech Republic) PPF Investments has acquired a portfolio of number of mainly administrative buildings throughout the Czech Republic, strategically located in large cities. The entire portfolio retains more than 120 thousand square meters of net rentable area. PPFI is convinced that it can Page 3

4 effectively manage the portfolio, improving of occupancy rate as well as effectively managing the cost thus further increasing its value. Office Development I (Romania) PPF Investments has acquired a 50.39% stake in the company that owns 28,000 square meters of construction land in the Northern part of Bucharest, Baneasa area. Together with experienced local partners, PPF Investments plans to develop a class A office complex. Construction is scheduled to start in early 2008 and to be completed within 20 months. Oil Products Distribution I (Ukraine) At the beginning of October 2007 PPF Investments has entered the Oil products distribution industry in Ukraine. The company, in which PPFI has become a shareholder, is operating mostly in the Central and Eastern Ukraine. Jointly with the local partner we are planning to expand the business across the whole country. AB Credit (Czech Republic) PPFI is shareholder of AB Credit, which is one of the leading debt collection agencies on the NPL market in the Czech Republic. The company realizes investments into NPLs, collects and services cash flows, and gets a high rate of return out of its activities. In Summer 2007, PPFI increased its investment in this project by USD 13 million. Ardaf (Romania) 71% shareholding in Romanian insurance company ARDAF was purchased as a distressed asset in January In the period under review, PPFI has increased its investment in this project by USD 13 million. UKR CATV (Ukraine) PPFI increased its share capital also in the project of acquisitions of cable televisions and Internet providers in Ukraine. PPF Investments slightly amended its acquisition strategy over the last quarter. We began to concentrate on the regions where we are already present and our current acquisition opportunities are carefully targeted to enable us to strengthen our footprint on the market. Top management group was established during the past quarter and PPFI expects the team to become functional and commence the consolidation process in the last quarter of Oriel Resources (Russia, Kazakhstan) In Summer 2007 PPFI purchased additional 300,000 shares of Oriel Resources, the UK AIM listed company owns St Petersburg smelter and Kazakh chrome and nickel mines; and simultaneously part of PPF Alpha s position has been sold to another investor. At the end of September 2007, PPF Alpha possessed 102,758,352 shares, which represented approximately 16.14% stake in the company (approximately 1.5% less than at the end of last quarter). In this period the company announced that it intends to build a USD 129.5m ore processing plant by 2009 in north-western Kazakhstan. The plant should have a capacity of 1 million metric tons a year. Page 4

5 Ingosstrakh (Russia) Ingosstrakh is one of the largest Russian insurance companies with GWP of USD 1.4bn in 2006, being the second largest insurer in life and the third largest insurer in non-life business in Russia. PPF Beta acquired via its Cyprus-based investment vehicle, minority shareholding of 38.46%. Summer Exits This section provides a list of recent exits: Temposervis (Czech Republic) In June 2007 PPFI sold its interest in Temposervis to Weeford Group. The exit was completed in mid September The sale has been part of non core investments sale there might be other assets sold shortly in order to focus on more sizable investments. Vegacom (Czech Republic) During the reviewed period PPF Investments granted exclusivity to one of the potential acquirers to enable them to conduct due diligence. In September 2007 the final purchase price was agreed and negotiations regarding legal documentation commenced. It is assumed that the documentation should be signed in November Summer Financial Overview All of PPFI investments have performed quite well and we have managed to increase the fair market value of Invested Capital. PPF Alpha Invested Capital (USDm) (USDm) Q1 (2006/07) Q2 (2006/07) Q3 (2006/07) Q4 (2006/07) Page 5

6 The cumulative growth of the market value for the last three quarters of the financial year 2006/2007 (from 1 st January 2007 to September 30 th 2007) was almost 46%. PPFI and People During the last quarter, PPFI has further increased the number of staff numbers with hires throughout several of the PPFI offices. During Summer 2007, PPFI welcomed four new Analysts: Albina Gulevich, Marina Kvasnikova, Petr Malik and Qiang Zhao. The new Analysts have settled into the London, Prague and Beijing offices and are already proving to be a valuable asset to PPFI. Other new hires have joined the offices in Prague and Beijing and will be providing administrative support for the local teams. All PPFI team members are highly experienced in the area of investment banking, international finance and private equity and during their professional careers have worked or co-operated with a number of blue chip financial institutions. Outlook PPFI has been active in the target markets, seeking for interesting investment opportunities and closely reviewing number of prospective new investments. During the Summer 2007, 4 potential investments have been brought to an advanced stage of negotiation and we will make a great effort to include them into our portfolio soon. Strong focus is, however, not only on an enlargement of PPFI portfolio with new investments, but also on the portfolio projects and further increase of their value, via established tools and achievement of set goals and targets. Our flexibility in respect to exit strategies and timing is essential in order to be able to realize planned exits and/or capitalise on instant exit opportunities. We are convinced that the pursued approach suits well with the situation and prospects of target markets and therefore we remain optimistic about the future of PPFI. Page 6

7 Contacts PPF Investments (UK) Ltd. 33 Chester Street SW1X 7BH London United Kingdom Telephone: +44 (0) Fax: +44 (0) PPF Investments (Russia) Ltd. 8 Pravda Street, Bld Moscow Russia Telephone: Fax: PPF Investment Consulting (Beijing) Ltd. Beijing Lufthansa Center, C 312A 50 Liangmaqiao Rd., Chaoyang District Beijing P.R.C. China Telephone: Fax: PPF Investments (CR) a.s. Na Pankráci 1658/ Prague 4 Czech Republic Telephone: Fax: PPF Investments (Ukraine) Ltd. 72 (A), Chervonoarmiyska Street (Velyka Vasylkivska), office Kyiv Ukraine Telephone: +38 (0) Fax: +38 (0) info@ppfinvestments.com Page 7

8 DISCLAIMER The information provided in this document has been prepared by PPF Investments (UK) Ltd acting in its capacity as general adviser to the PPF Investments Group Ltd and all its subsidiaries. No information may be reprinted without the express permission of PPF Investments (UK) Ltd. No information contained in this document is intended to solicit any investment or offer to invest by any person and no person listed in these pages is authorised or regulated by any financial services regulator. All pages in this document are provided for information only. PPF Investments (UK) Ltd 2007 Page 8