Activity Report - Winter 2008

Transcription

1 Activity Report - Winter 2008 We are pleased to present this issue of PPF Investments ( PPFI ) Activity Report, currently for the period from January 1 st to March 31 st 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 strategic focus on transitional economies, such as those found in Central and Eastern Europe and Asia. PPFI s investment strategy prioritizes strong 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 that reflect PPFI investors profile and risk appetite. Currently, we manage and advice PPF Alpha and PPF Beta with total subscribed capital exceeding USD 1 billion. 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 516 million of a targeted amount of up to almost USD 900 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 27 companies or projects. The chart bellow illustrates current industry allocation of PPF Alpha portfolio. PPF Alpha Portfolio of Investments as of March 31st - Industry allocation 21% 5% 0% 22% 8% 8% 2% 21% 13% Banking, insurance & financial services (8%) Hotels, restaurants, travel & leisure (2%) Media & telecommunications (21%) NPL's (13%) Oil & Gas & Biofuels (8%) Real estate (23%) Retail trade (0%) Utilities & waste management (5%) Other industries (21%) 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 Pražské služby May 2006 Czech Republic Waste collection and incineration AB Credit June 2006 Czech Republic Non performing loans 8.55% 15.8% Page 2

3 Oriel Resources December 2006 Russia, Kazakhstan Chrome mining and processing Termizo November 2006 Czech Republic Municipal waste incineration 19.5% 99.93% 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 GAS SUD December 2007 Romania Natural gas 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. In November 2007, Generali Group acquired 49% shareholding (Class B) and became a significant investor in PPF Beta Ltd. Winter New Investments and Changes in the Portfolio This section provides a list of PPFI recent investments. In Winter 2008 PPFI has focused more on a current portfolio rather than new investments. It has increased its equity participations in some projects. However several new projects have been presented to the Investment Committee. We are confident that some of them will be invested in the current Quarter. Through PPF Alpha, we have increased PPFI equity participation in the following projects: Ukrainian project of cable televisions and internet providers, municipal waste incinerator plant Termizo in the Czech Republic, Russian project Oriel Resources or Romanian natural gas distributor Gas Sud. We have invested almost USD 78.4 million in these transactions, which is in line with PPFI strategy with regards to transaction size and portfolio strategy. As well as the last quarter, we have downsized our invested capital in the Czech Real Estate Portfolio I (see below). Page 3

4 GAS SUD (Romania) In the last calendar quarter of 2007 PPF Investments entered the Romanian gas sector investing in project Gas Sud. In Winter 2008 PPF Alpha increased its equity participation and became shareholder in late February Gaz Sud is a leading private natural gas distributor operating six concessions in Ilfov county (Bucharest Region), Romania. The company supplies gas to the fast growing industry zones around Bucharest as well as residential clients. Gas Sud is the largest independent gas distributor in Romania. Oriel Resources (Russia, Kazakhstan) In the past quarter, PPFI further increased its stake and purchased additional 11,100,000 shares of Oriel Resources, the UK AIM listed company which owns Russian smelter and Kazakh chrome and nickel mines. At the end of March 2008, PPF Alpha possessed in total 125,045,125 shares, what represented approximately 19.5% stake in the company (approximately 1.6% more than at the end of previous quarter). Termizo (Czech Republic) At the beginning of 2008 PPFI increased its equity participation in municipal waste incineration plant in Liberec and became 99.93% shareholder of the company. PPFI perceives the waste management market as a very interesting and intends to use currently held assets (Termizo and Prague services) as a platform for future projects in this industry. UKR CATV (Ukraine) PPFI continues to invest in the project of acquisitions of cable televisions and Internet providers in Ukraine. PPFI now focuses on consolidation phase of the project. Further acquisitions will be aimed at strengthening the position of PPFI in certain regions or on large acquisition opportunities which can secure dominant or leading position in the targeted region. Real Estate Portfolio I (Czech Republic) Real Estate Portfolio I is a portfolio of number of mainly administrative buildings throughout the Czech Republic, strategically located in large cities. PPFI entered the project in the last quarter of financial year 2006/2007 when the entire portfolio comprised more than 120 thousand square meters of net rentable area. In Winter 2008 PPFI successfully sold one administrative building from the portfolio and downsized its invested capital in this project. Page 4

5 Winter 2008 Exits This section provides a list of recent exits. Vegacom (Czech Republic) PPF Investments sold shareholding in Vegacom, a.s. to Eltodo Investment s.r.o. The transaction was closed at the end of March 2008 while the legal documentation was signed in December 2007 and the approval of antimonopoly authorities was obtained at the end of February The Vegacom Group is one of the leading providers of professional services on the Czech information and communication technologies market. The Group focuses on security and communication technologies, telecommunication systems and networks, and IT solutions. Winter Financial Overview The chart bellow illustrates the development of PPF Alpha Invested Capital, starting with the first quarter of financial year 2006/2007. PPF Alpha Invested Capital (USDm) (USDm) Q1 (2006/07) Q2 (2006/07) Q3 (2006/07) Q4 (2006/07) Q1 (2007/08) Q2 (2007/08) The amount of total invested capital in the last quarter increased and we have managed to increase also the fair market value of our portfolio in terms of Invested Capital for the past quarter (from the end of December 2007 till the end of March 2008) by 6.5%. The cumulative growth of the market value for the last four quarters was 39.8%. Page 5

6 PPFI and People During the last quarter, PPF Investments welcomed several new staff members. Yuriy Adamchuk joined our Kiev office as Associate, Pavel Oliyanchuk joined our Moscow team as Director in order to lead our Public Relations and Michaela Maixnerova became a member of our administrative team in Prague. During the next quarter, PPFI will continue to increase staff numbers with hires throughout several of the PPFI offices strengthening the local advisory office teams and we look forward to welcoming new members to our teams in the near future. All PPFI team members are highly experienced in the area of private equity, investment banking and international finance during their professional careers have worked or cooperated with a number of blue chip financial institutions. Outlook PPFI has been active in the target markets looking for interesting investment opportunities and closely reviewing number of prospective new investments. During the Winter 2008, 6 potential investments have been brought to an advanced stage of negotiation, one of them was already terminated and 5 we are moving to the next stages of our approval and investment process. We are convinced that some of them will become part of 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 expertise of our investment professionals and all PPFI team members will assist in further enhancement of the value of the PPFI portfolio. We are also convinced that we are on the right track to maximise returns to our investors while minimising the related risks and 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) / 5811 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. 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 2008 Page 8