Libf Marketing Presentation 2009 11 10

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Lakeshore International Buyout Fund

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Libf Marketing Presentation 2009 11 10

  1. 1. Lakeshore International Buyout Fund Zurich, 10 November 2009
  2. 2. Contents About Lakeshore International pg 3 – 6 • Vision pg 3 • Profile pg 4 • Services pg 5 • Our Strengths pg 6 Lakeshore International Buyout Fund pg 7 – 22 • Background & Opportunity pg 8 • Investment Philosophy (Fund) pg 9 • Investment Philosophy (Fund Manager) pg 10 • Investment Objective pg 11 • Investment Strategy pg 12 • Investment Process pg 13 • Investment Policy pg 14 • Risk Guidelines pg 15 • Track Record pg 16 - 17 • Trade Examples pg 18 • Fund Structure pg 19 • Fee Structure pg 20 • Service Providers pg 21 • Consultants pg 22 Contact pg 23 Disclaimer pg 24 2
  3. 3. Lakeshore International – Vision • Our vision is to be an independent premium provider of comprehensive financial services to HNW and qualified institutional clientele around the globe. • Our belief is that a thorough understanding of client needs, combined with well balanced and comprehensive services, a consultative approach, the experience and professionalism of quality employees and transparency are essential to the success of any investment advisory business. business 3
  4. 4. About Lakeshore International - Profile • Founded 2008 as a partnership (share capital CHF 1m) • Independent Asset Manager ( p g (Member of Swiss Association of Asset Managers) g ) • Substantial investor in own funds • Comprehensive services to HNWIs & Institutions • Globally focused with considerable inroads into Eastern Europe, Russia & Asia • Offices: Zurich, Moscow, Shanghai (planned) • 20+ Staff • AUM >$ 300’000’000 4
  5. 5. About Lakeshore International - Services • Asset Management & Fund Management (LIBF & LISOF) • Wealth Management (advisory, discretionary, asset allocation & portfolio construction, risk management & investment controlling) • Famil Office Services (fully understand the unique needs & Family Ser ices (f ll nderstand niq e aspirations of each family according to their history, tradition & values) 5
  6. 6. About Lakeshore International – Our Strengths • Flexible, solution driven, tailor-made approach, client focused • Comprehensive & transparent • Independent (partners, products etc.) • Team has over 100 years combined experience in global financial markets • In-depth local research with relevant industry experience • Ongoing development of & investment in quality staff • Global with strong regional focus 6
  7. 7. Lakeshore International Buyout Fund (LIBF) 7
  8. 8. Background & Opportunity - LIBF Background • The financial crisis has caused major dislocations in the global financial markets • Especially emerging markets, Russia and the CIS particularly. • Financial institutions globally operating on a restricted basis and in emerging markets almost incapable of lending at the mid and small cap level. • Global deleveraging trend adding further pressure and forcing investors to sell assets • Substantial uncertainty leading to a reduction in asset values, especially medium and small cap illiquid unlisted investments in EM. • Investors have exited or continue to look to exit at ridiculous prices. • Resulting in significant opportunities for long term investors with capital to put to work. The Opportunity • Fund will focus its activities in the Russian & CIS markets. • Fund will invest in the following sectors, natural resources (coal, iron ore, non-ferrous and precious metals (gold), oil & gas), infrastructure (natural resources areas), beneficiation (utilising the natural resources, specifically gas & petrochemicals), transportation (ocean freight or transport related to the above natural resources areas) and the production of construction (infrastructure) materials. • Fund will diversify in the above sectors holding a portfolio of 10 to 20 investments investments. • Fund has identified numerous potential opportunities and believes with its genuine Russian base, knowledge and inside track on deals the fund is extremely well positioned to excel in the current environment. • The fund management team believes that with cash to deploy the opportunity is even better than in the aftermath of the previous emerging market crisis over the past 20 years and that annualized net returns of 30% with acceptable volatility over a two to three year time period are possible. 8
  9. 9. Investment Philosophy (Fund) - LIBF • Through ongoing monitoring and detailed research of the macro and micro economic environment in a region (Russia & CIS), undervalued businesses with potential (investment opportunities) can be found. • These selected investment opportunities, after thorough investigative due diligence and research processes, can be invested in in a risk averse way, through the creative use of investment capital and a capital structure (equity, options, warrants, secured lending, etc). • Additional value can be created and or the businesses turned around through a comprehensive understanding of business processes, active investor input and participation, transfer of competencies and proactive strategic management. • These investment opportunities, once this additional value has been created, can be sold at attractive returns relative to the risks of investing in them them. 9
  10. 10. Investment Philosophy (Fund Manager) - LIBF • Conservative approach to investing – identifying and focus on industries that we know & in which we feel we have a competitive advantage. • Use of a quality team of investment p q y professionals with the relevant knowledge & experience of selecting and monitoring “Buyout” investments as well as of the dynamics of the “Buyout” market. • Di i li d adherence to comprehensive, d Disciplined dh h i documented & organised d i d processes in investment & risk management leads to consistent performance above benchmarks through all market cycles. 10
  11. 11. Investment Objective - LIBF The Fund’s investment objective is to achieve superior, stable returns through acquisitions and consolidation of undervalued assets with cash generating potential, (mostly in Russia and the CIS) through active participation and by incrementally adding value over the term of the investment while monitoring market risk and maintaining investment specific risk at acceptable and comparatively low levels. To this end: • the Fund will target absolute returns & a minimum of US$ 3mth LIBOR plus 5%, over a 2-3 year period; • the Fund will attempt to preserve capital with moderate risk relative to the equity markets through risk, markets, a reasonably diversified portfolio of investment holdings. Further risk minimization is achieved firstly by not overpaying for an investment and secondly through the thorough pre and post investment analysis of potential future events and shocks that may affect an investment, and the careful planning and strategizing so as to mitigate these events and shocks, and where possible, create additional returns from these as if and when they occur and; y • achieve these risk & return objectives with minimum correlation to the direction of the traditional commodity, equity & fixed income markets. 11
  12. 12. Investment Strategy - LIBF • The identification or short listing of undervalued businesses / investment candidates that meet our investment attributes and criteria. Two broad aspects to this: • the first is the identification of “stable” exploitable macroeconomic influences in the areas where we believe we have a core competence as well as the “sell-side” market’s requirements. • the second is the identification of investment candidates through a two stage process, firstly an initial broad screening to obtain an initial list of preliminary candidates with the required attributes and then a second more detailed quantitative screening on these initial candidates to get a final list. • The final selection process of businesses that we invest in, including pre-investment risk assessment and mitigation, the timing of our entry and exit, effective use of the capital structure and more than just price to secure the deal and maximize our return. • The preliminary shortlist of target companies are ranked in accordance with suitability, • An extensive information gathering exercise and further assessment , detailed analysis and diligence, allows further shortening of the list. • In some instances potential target-companies actively solicit or initiate participation by our team, through recommendations by external consultants (deal arrangement) or through our having passed an elimination process or so called “beauty parade”. beauty parade • Evaluate the risks, find solutions to mitigate or take advantage of. • Work with legal experts to ensure no hidden legal risks or obstacles. • Prior to investing, consider exit, never “set in stone”, deliberately flexible allowing for additional benefits. • Ongoing communication with “sell-side” allows for efficient exit strategy. • Understand macroeconomic trends & cyclicality of markets to optimise the length of investment, as well as potential return, and the entry and exit. • The fi l t Th final step, most optimal means & method of acquisition ( t li it d t price, i l d b t ti l th d f i iti (not limited to i includes benefits that we bring to the deal i acquisitions and consolidation, access to fit th t b i t th d l i.e. i iti d lid ti t capital, established relations). • Adding value through active participation in all aspects of acquired entities business (financial, investors, know how, consolidation & growth, synergistic & investment opportunities). • Exit on strength once the value potential is realised or exit to take advantage of superior opportunities. 12
  13. 13. Investment Process - LIBF Idea Generation & Target Selection Industries & markets identified Optimal Exit Create a Candidate Interest List Initial Candidate Interest List assessment Detailed Analysis & Initial Risk assessment Research; Signing of Active monitoring of potential exit Drawing up of Initial Assessment Report Memorandum of Intentions Exit Proposal produced IC- approval to proceed with DD (MoI) IC - approval to exit Execution of Exit Proposal Monitoring Initial contact Exit Monitoring Report produced Confidentiality Agreement (CA) signed Deal Assessment Summary produced Preliminary due diligence Draft MoI produced IC - closure of deal & final summary signed off y g IC - appro al of acquisition & MoI approval acq isition Investment Committee MoI signed off (IC) Evaluate, approve & monitor Risk / reward Participation & Value Secondary Analysis & Enhancement Research; Deal Execution Financial Structure Optimization Secondary due diligence Participation on Board of Directors Deal Proposal / Heads of Agreement (HoA) produced Participation in management IC - approval of deal execution Enhance investor value HoA signed off IC - active monitoring & remove / reduce risk Closure of deal Monthly valuations produced & submitted to IC Quarterly Investment Update & Risk Reports submitted to IC 13
  14. 14. Investment Policy - LIBF • Invest 80% of gross assets in securities issued by companies in, or principal trading market is in Russia or other CIS states, derive 50% or more of their total revenue or profit in these countries, or having 50% or more of their assets in these countries. g • Undertake positions on a portfolio basis, diversify to reduce exposure to abnormal changes in market price of any single position by invest in at least 14 securities & using derivatives for hedging (currency & market). • Invest in securities issued by companies of any capitalization or value however predominantly in companies with total revenues of at least US$20 Million per year. • In addition may invest up to 10% of its gross assets in securities that do not qualify as Russian or CIS company securities, but who are expected to benefit f iti b t h t dt b fit from developments i th d l t in those countries ti economies. • The Fund may use a loan facility (leverage) of maximum 30% of its gross asset value (GAV). 14
  15. 15. Risk Guidelines - LIBF • No more than 25% of the Fund’s gross assets may be invested in any individual security or in the securities of any one issuer • No more than 90% of the Fund’s net assets may be invested in equities • No more than 50% of the Fund’s net assets may be invested in unlisted securities • At l least 10% of the Fund’s gross assets should b i t f th F d’ t h ld be invested i li id i t d in liquid investment grade b d t t d bonds • The use of derivative instruments is permitted only as a short-term tactic or hedge, intended for capital preservation • No more than 20% of the Fund’s net assets may be invested in derivative instruments • The Fund will not embark on any sophisticated currency hedging strategies, however it may be used on a selective basis during unfavourable macro economic conditions 15
  16. 16. Track Record – LIBF (Fund from Launch) Lakeshore International Buyout Fund L k h I t ti lB tF d 1.00% 1,008.00 NAV indexed to $1'000 Monthly ROR % 0.50% 1,004.00 R 0.00% 1,000.00 Nov-09 Jul-09 Oct-09 Aug-09 Sep-09 Dec-09 -0.50% 996.00 -1.00% 992.00 Monthly Returns Value of $1'000 invested Industry Sector Analysis Market / Region Analysis 19.36% Construction Materials 44.81% Mining Precious Metals Russia Oil & Gas 35.83% 35 83% 100.00% 16
  17. 17. Track Record – LIBF (Team) 15% Historic Averaged Monthly Returns (showing profit averaged over life of deal) 300% Accumulat % Return Monthly Returns (average over life of deal) 250% Accumulated % Returns (average over life of deal) Monthly RoR % 10% 200% 150% ted y 5% 100% 50% 0% 0% Jan-06 Apr-06 Oct-06 Oct-07 Jul-06 Jan-07 Apr-07 Jul-07 Jan-08 Apr-08 Oct-08 Jul-08 Jan-09 Apr-09 -50% O O O A A A A J J J J -5% 5% -100% 100% 40% Historic Monthly Returns (showing profit in month deal realised) 300% Accumulated % Return Monthly Returns (actual realised in month sold) 250% Accumulated % Returns (average over life of deal) 30% Monthly Ro % 200% oR 20% 150% 100% 10% 50% 0% 0% -50% 06 06 06 06 07 07 07 07 08 08 08 08 09 09 Jan-0 Apr-0 Jul-0 Oct-0 Jan-0 Apr-0 Jul-0 Oct-0 Jan-0 Apr-0 Jul-0 Oct-0 Jan-0 Apr-0 -10% -100% 17
  18. 18. Track Record – LIBF (Team) Historic Capital Usage - Excess Capital Withdrawn on Deal Closure S$m) Monthly Basis s 220 80 d Month by Month  200 AUM / Capital Invested Month by Month 70 180 Average Monthly Capital Usage (US$m) 60 160 140 50 m) Averag Capital Used (US (US$m M / Capital Invested 120 40 100 80 30 60 20 40 ge AUM 10 20 0 0 Apr-06 Apr-07 Apr-08 Apr-09 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Oct-06 Oct-07 Oct-08 18
  19. 19. Completed Trade Examples – LIBF (Team) Description D i i Volume of V l f Return on R Investment I Asset Region Entry Investment Rate of Return Investment Period (Exit) (mn) (mn) (months) Acquisition of stake JSC Centrenergogas Russia $10.00 20% $2.00 4 (Strategic investor) Acquisition of stake q JSC Arctic Holding Russia $5.00 $5 00 61% $3.03 $3 03 17 (Strategic investor) Short term investment JSC Bassol Russia $5.00 23% $1.13 4 (Strategic investor) Short term investment JSC AvtoVAZ Russia $17.50 19% $3.28 4 ( (Strategic investor) g ) Acquisition of stake Matyushkinskaya Vertical LLC Russia $40.00 19% $7.50 4 (Strategic investor) Short term investment ZhaikMunai Kazakhstan $0.20 20% $0.04 4 (Strategic investor) Acquisition of 7% JSC Tolliattiazot Russia $80.00 20% $16.00 4 (Private placement) Acquisition of 1.6% JSC Tolliattiazot Russia $8.00 13% $1.00 3 (Private placement) Acquisition of 2% JSC Tolliattiazot Russia $12.00 12% $1.40 3 (Private placement) 19
  20. 20. Fund Structure - LIBF • Incorporated as an exempted limited liability company in the Cayman Islands on 11 November 2008 2008. • Subscriptions: US$ 1’000’000 1 000 000 Monthly, 5 business days notice • Redemptions: Monthly, 30 days notice Soft lock 1% within 1st 12 months 20
  21. 21. Fee Structure - LIBF • Management Fee: 2% • Performance Fee: 20% HWM & Hurdle Rate (US$ 3 Month LIBOR + 2%) $ • Administration Fee: 0.10% • Custodian Fee: 0.01% 0 01% • Setup Fee: $150’000 max one off fee to the fund amortised over 5 years • Distribution Fee: up to 2% • Redemption Fee: 1% within 1st 12 months 21
  22. 22. Service Providers - LIBF • Investment Manager: Lakeshore International Management Inc • Ad i i t t Administrator: PNC Global Investment Servicing (Europe) Limited • Custodian: PNC International Bank Limited • Auditors: KPMG • Legal Advisors: Walkers (Europe) 22
  23. 23. Consultants- LIBF • Tax & Financial • KPMG • PriceWaterhouseCoopers • Corporate Finance & IT • McKinsey & Company • Legal • Squire Sanders • C’M’S’ Hasche Sigle • Eversheds • Geological & Resources • Micromine • IMC Montan • Miller & Lents • DeGolyer and MacNaughton • CIFAL • Economic Intelligence • R-Techno 23
  24. 24. Contact Zurich Lakeshore International Management Inc Usteristr. 14, CH 8001 Zurich Usteristr 14 CH-8001 Zurich, Switzerland Telephone: +41 44 215 31 11 Fax: +41 44 215 31 12 E-Mail: info@lakeshore-international.com Moscow LLC Lakeshore International Management Veskovsky Lane 2/1 127006 Moscow, Russian Federation 006 osco , uss a ede a o Telephone: +7 495 411 62 14 Fax: +7 499 973 50 86 E-Mail: info@lakeshore-international.com 24
  25. 25. Disclaimer The entire content of this Lakeshore International Group presentation is protected by applicable copyright laws (all rights reserved). Any data of may be used only for personal but not for commercial use. Such use or printing of information contained in this presentation is only permissible with a clear indication of the source. While Lakeshore International Group has made every effort to ensure that the information in this presentation is correct at the time of publication, Lakeshore International Group does not make any representation or warranty (including liability to third parties) either expressly or by implication as to the accuracy, reliability or completeness of such information. This presentation is intended solely for information purposes and is subject to change at any time without prior notice. Any information or opinions expressed in this presentation do not constitute a solicitation, offer or recommendation to purchase or sell investment instruments, or to enter into any other transactions. Investment opinions and market assessments as expressed in sources in this presentation are subject to change at any time. Lakeshore International Group is not responsible for any change of investment considerations. We recommend that you consult your investment advisor before making any investment decision based on the consultation of the Lakeshore International Group presentation. Lakeshore International Group shall not be liable directly or indirectly for any loss or damage suffered as a result of the use of information published in this presentation. The information contained herein may be restricted by applicable local regulations at your domicile. The investment products and other services contained in this presentation are intended only for eligible investors (e.g. “Qualified Investors”) or for existing clients of Lakeshore International Group. All information contained in this presentation shall be non-binding and for informational purposes only. No responsibility is assumed for the accuracy or completeness of the information information. 25
  26. 26. Disclaimer The entire content of this Lakeshore International Group presentation is protected by applicable copyright laws (all rights reserved). Any data of may be used only for personal but not for commercial use. Such use or printing of information contained in this presentation is only permissible with a clear indication of the source. While Lakeshore International Group has made every effort to ensure that the information in this presentation is correct at the time of publication, Lakeshore International Group does not make any representation or warranty (including liability to third parties) either expressly or by implication as to the accuracy, reliability or completeness of such information. This presentation is intended solely for information purposes and is subject to change at any time without prior notice. Any information or opinions expressed in this presentation do not constitute a solicitation, offer or recommendation to purchase or sell investment instruments, or to enter into any other transactions. Investment opinions and market assessments as expressed in sources in this presentation are subject to change at any time. Lakeshore International Group is not responsible for any change of investment considerations. We recommend that you consult your investment advisor before making any investment decision based on the consultation of the Lakeshore International Group presentation. Lakeshore International Group shall not be liable directly or indirectly for any loss or damage suffered as a result of the use of information published in this presentation. The information contained herein may be restricted by applicable local regulations at your domicile. The investment products and other services contained in this presentation are intended only for eligible investors (e.g. “Qualified Investors”) or for existing clients of Lakeshore International Group. All information contained in this presentation shall be non-binding and for informational purposes only. No responsibility is assumed for the accuracy or completeness of the information information. 26

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