Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.



Published on

Published in: Business, Economy & Finance
  • Be the first to comment

  • Be the first to like this


  2. 3. GROUP SNAPSHOT <ul><li>The Peregrine group is a leading provider of wealth and asset management solutions. </li></ul><ul><li>Assets under management currently exceed R 22 billion. </li></ul><ul><li>Citadel R 10 billion </li></ul><ul><ul><ul><li>Quant R 9 billion </li></ul></ul></ul><ul><ul><ul><li>Hedge funds R 3 billion </li></ul></ul></ul><ul><li>10 th biggest broker by value, 7 th by shares traded and 5 th by deals settled. </li></ul><ul><li>Market capitalisation (net of treasury shares) @ R7.50 of R1.5 billion. </li></ul><ul><li>Capitalised at 6.7% of assets under management. </li></ul><ul><li>PE ratio per trading update (@ R7,50) between 8.2 times and 9.3 times to end March 06. </li></ul>
  3. 4. GROUP PROFILE C ontribution to Sep 05 <ul><li>WEALTH MANAGEMENT 23% </li></ul><ul><ul><ul><li>Citadel </li></ul></ul></ul><ul><li>ASSET MANAGEMENT 35% </li></ul><ul><ul><ul><li>Hedge Funds </li></ul></ul></ul><ul><ul><ul><li>Peregrine Capital </li></ul></ul></ul><ul><ul><ul><li>Peregrine Investment Managers (PIM) </li></ul></ul></ul><ul><ul><ul><li>Caveo FOHF (JV with IS) </li></ul></ul></ul><ul><ul><ul><li>Peregrine Quant </li></ul></ul></ul><ul><li>TRANSACTIONAL 26% </li></ul><ul><ul><ul><li>Broking & Structuring </li></ul></ul></ul><ul><li>PROPRIETARY CAPITAL 16% </li></ul><ul><ul><ul><li>Investment returns (net of group costs) </li></ul></ul></ul>
  4. 5. PERSONAL FINANCIAL FRAMEWORK WEALTH MANAGEMENT - CITADEL 1.WEALTH CREATION (“What you do for a living”) 2.YOUR LIFESTYLE ASSETS (‘How you live”) 3.WEALTH PRESERVATION (“Securing your future”) 4.EXCESS ASSETS (“More than enough”)
  5. 6. CITADEL <ul><li>Focussed on individual high-net-worth wealth management </li></ul><ul><ul><li>Clients with R 2 million plus to invest </li></ul></ul><ul><ul><li>Average current top-up client size R 5,0 million </li></ul></ul><ul><ul><li>Average new client size R 8,0 million </li></ul></ul><ul><li>Total assets under management approximately R 10 billion </li></ul><ul><ul><li>New inflows of R 100 million per month </li></ul></ul><ul><ul><li>Client retention of 96% </li></ul></ul><ul><ul><li>Annuity outflows of almost R600 million </li></ul></ul>WEALTH MANAGEMENT
  6. 7. CITADEL - PROFITABILITY <ul><li>Annuity profit R 4 million per month = approx R50 m per annum </li></ul><ul><ul><li>PLUS 20% performance fee above lifetime benchmark per client </li></ul></ul><ul><ul><li>Benchmark is inflation after accounting for all costs and taxes </li></ul></ul><ul><ul><li>High watermark catch up from late 2001 / early 2002 </li></ul></ul><ul><ul><li>Performances fees currently averaging R 3 million per month plus </li></ul></ul><ul><ul><li>Approximately half the client base now at, or above, high watermark </li></ul></ul><ul><ul><li>Strong gearing to weaker currency over time </li></ul></ul>WEALTH MANAGEMENT
  7. 8. CITADEL – PERFORMANCE FEE “RUN RATE” <ul><li>At current level of AUM of R 10 billion : </li></ul><ul><ul><li>if all clients at benchmark: run-rate of R 20 million per 1% real </li></ul></ul><ul><ul><li>if half the clients at benchmark: run-rate of R10 million per 1% real </li></ul></ul><ul><ul><li>Half the clients at benchmark: 5% real = R 50 million fees per annum </li></ul></ul><ul><ul><li>Half the clients at benchmark: 10% real = R 100 million fees per annum </li></ul></ul>WEALTH MANAGEMENT
  8. 9. Peregrine Quant <ul><li>Over R9 billion in AUM </li></ul><ul><li>Cashflow positive </li></ul><ul><li>Good progress in both the institutional and retail markets </li></ul><ul><li>All the infrastructure costs have been spent </li></ul><ul><li>Belief that quantitative asset management will continue to gain ground on the more traditional styles </li></ul>ASSET MANAGEMENT
  9. 10. HEDGE FUNDS <ul><li>Peregrine is the biggest player in the local hedge fund industry. </li></ul><ul><li>The group’s exposure to the hedge fund industry is extensive with investments across a broad range of strategies exceeding R5 billion on a worldwide basis. </li></ul><ul><li>In excess of R 2,5 billion is managed in single strategy hedge funds. </li></ul><ul><li>Within the group’s wealth management arm, Citadel, over R1 billion is invested with leading hedge fund managers on a multi - strategy approach. </li></ul><ul><li>In addition, R1,7 billion is currently managed globally on a fund of hedge fund basis with an international joint venture partner. </li></ul><ul><li>Caveo, a newly formed FOHF joint venture with Investment Solutions currently has R 330 million under management. </li></ul><ul><li>The group also houses one of the country’s leading derivative, equity and prime broking operations. </li></ul>
  10. 11. OUR INTEGRATED HEDGE FUND STRATEGY <ul><li>FUND OF HEDGE FUNDS / MULTISTRAT </li></ul><ul><ul><ul><li>Caveo </li></ul></ul></ul><ul><ul><ul><li>Citadel Multistrat </li></ul></ul></ul><ul><li>SINGLE STRATEGY FUNDS </li></ul><ul><ul><ul><li>Peregrine Capital </li></ul></ul></ul><ul><ul><ul><li>Peregrine Investment Managers (PIM) </li></ul></ul></ul><ul><li>PRIME BROKER </li></ul><ul><ul><ul><li>Peregrine Prime </li></ul></ul></ul>
  11. 12. CAVEO – Top of the funnel <ul><li>Combining Peregrine’s hedge fund experience and reputation </li></ul><ul><li>with Investment Solutions distribution (and manager access) </li></ul><ul><li>Currently R330 million under management </li></ul><ul><li>Potential to manage several billion </li></ul><ul><li>Conflict of interest resolved by “non-Peregrine” products </li></ul>ASSET MANAGEMENT
  12. 13. OUR INTEGRATED HEDGE FUND STRATEGY <ul><li>FUND OF HEDGE FUNDS / MULTISTRAT </li></ul><ul><ul><ul><li>Caveo </li></ul></ul></ul><ul><ul><ul><li>Citadel Multistrat </li></ul></ul></ul><ul><li>SINGLE STRATEGY FUNDS </li></ul><ul><ul><ul><li>Peregrine Capital </li></ul></ul></ul><ul><ul><ul><li>Peregrine Investment Managers (PIM) </li></ul></ul></ul>
  13. 14. PEREGRINE CAPITAL <ul><li>Fundamental equity hedge fund management company </li></ul><ul><ul><li>Over R2.1 Billion in AUM </li></ul></ul><ul><ul><li>Comfortable at current AUM , but closed to new flows </li></ul></ul><ul><ul><li>Hedge fund : 44% p.a. gross compounding since July 98 </li></ul></ul><ul><ul><li>Performance fund : 65% p.a. gross compounding since July 98 </li></ul></ul><ul><ul><li>50/50 economic deal with management – stability in team </li></ul></ul><ul><li>Profit from annual fees of only R 10 million BUT </li></ul>ASSET MANAGEMENT
  14. 15. PEREGRINE CAPITAL – PERFORMANCE FEES AT AUM of R 2,1 BN ASSET MANAGEMENT 168 m 40% pa 147 m 35% pa 126 m 30% pa 105 m 25% pa 84 m 20% pa 63 m 15% pa 42 m 10% pa Performance Fees Return
  15. 16. OUR INTEGRATED HEDGE FUND APPROACH <ul><li>FUND OF HEDGE FUNDS / MULTISTRAT </li></ul><ul><ul><ul><li>Caveo </li></ul></ul></ul><ul><ul><ul><li>Citadel Multistrat </li></ul></ul></ul><ul><li>SINGLE STRATEGY FUNDS </li></ul><ul><ul><ul><li>Peregrine Capital </li></ul></ul></ul><ul><ul><ul><li>Peregrine Investment Managers (PIM) </li></ul></ul></ul><ul><li>PRIME BROKER </li></ul><ul><ul><ul><li>Peregrine Prime </li></ul></ul></ul>
  16. 17. BROKING AND STRUCTURING <ul><li>Peregrine Securities </li></ul><ul><ul><li>Equity Broking </li></ul></ul><ul><ul><ul><li>Peregrine Prime </li></ul></ul></ul><ul><ul><ul><li>Peregrine Equities </li></ul></ul></ul><ul><ul><li>Derivative Broking </li></ul></ul><ul><ul><li>Derivative & Quantitative Research </li></ul></ul><ul><ul><li>Structuring </li></ul></ul>TRANSACTIONAL
  17. 18. Base Case (?) Earnings for Peregrine (note assumptions) R 180 m @ 6.7% 12 Interest PAT = R116m, HEPS ± 60 cps @11%, each additional 5% pa = R17.5m Large transactions/structures excl. Each additional R1bn AUM = R2.5 m @15%, each additional 5%pa = R12.5m 1% pa real performance = R10m Sensitivities (15) Holdings costs 162 Total 40 Return on proprietary capital 125 Subtotal 30 Securities 5 PeregrineQuant 40 Hedge funds 50 Citadel PBT (Rm) Company
  18. 19. Balance sheet <ul><li>No external gearing at year end </li></ul><ul><li>R 360 million in cash / near cash investments </li></ul><ul><li>Approximately R 150 million cash in working capital </li></ul><ul><li>Generating cash at a rate of R 20 million per month (pre tax) </li></ul><ul><li>BUT </li></ul><ul><ul><li>Earnings do rely on good investment performance </li></ul></ul><ul><ul><li>Business is highly people dependent </li></ul></ul>
  19. 20. FINALLY, AN INTERESTING COMPARISON AND SOME HOMEWORK <ul><li>Man Group Plc ( ) </li></ul><ul><li>Largest listed hedge fund manager. Listed on the LSE. </li></ul><ul><li>Man Group Plc is a : </li></ul><ul><ul><ul><ul><li>“ leading global provider of alternative investment products and solutions. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>One of the world’s largest future’s brokers.” </li></ul></ul></ul></ul><ul><li>Assets under management @ 12 Jan 06 - $ 45.8 billion </li></ul><ul><li>Market Capitalisation - $ 11.9 billion </li></ul><ul><li>Market cap : AUM = 26% !!!! </li></ul><ul><li>Fiscal PE (trailing) – 19.3 times </li></ul>