Strategic Initiatives

RNS Number : 4925Q

J.P. Morgan Private Equity Ltd

07 November 2012

 

JPEL ANNOUNCES STRATEGIC INITIATIVES 

·      Reposition JPEL portfolio

o  Coupled with available capital from net distributions from JPEL's existing portfolio, explore sale of pre-credit crisis assets in secondary market to invest in growth opportunities

o  Create a more transparent and concentrated portfolio

o  Existing deal flow and return expectations are very attractive

·      Continue to improve capital structure

o  Retire 2013 Zero Dividend Preference Shares in April 2013

o  Aim to reduce JPEL debt by 2015 while improving interest costs

·    Provide liquidity for holders of US$ Equity Shares

o  It is JPEL's current policy to return 50% of portfolio distributions, net of capital calls, operating expenses and any near term payment obligations, to shareholders¹

o  To that end, JPEL will seek to purchase up to $20 million of US$ Equity Shares, or approximately 9% of shares outstanding through a coordinated share repurchase programme on 14 November 2012 at up to a 35% discount to prevailing NAV dated 30 September 2012.  Any such purchases will be accretive to the NAV of the remaining US$ Equity Shares

o  Continue to look to purchase US$ Equity Shares through a variety of programmes

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GUERNSEY, 7 NOVEMBER 2012

Today, J.P. Morgan Private Equity Limited ("JPEL" or the "Company") is pleased to announce a series of strategic initiatives that the Board believes demonstrates its continued commitment to shareholders.  

"Since inception, implementing JPEL's core strategy has involved investing in seasoned private equity assets that are repositioned approximately every 36 months by redeploying net distributions in new private equity investments and returning substantial levels of capital to US$ Equity Shareholders through a variety of methods." said Trevor Ash, JPEL's Chairman. "In the years following the credit crisis, distribution levels from the JPEL portfolio, although greatly improved in recent months, was limited.  As a result, the ability of the Company to reposition its portfolio as well as the quantum and frequency of distributions to US$ Equity Shareholders was reduced."

"Today, we are implementing a more aggressive series of strategic initiatives to enable the Company to once again actively reposition its portfolio and return larger amounts of capital to US$ Equity Shareholders while maintaining strong cover for ZDP holders.  As a first step, JPEL will seek to repurchase up to $20 million of US$ Equity Shares through a coordinated share repurchase programme." added Mr. Ash.

The Company's strategic initiatives are highlighted in greater detail below:

Actively Reposition JPEL Portfolio

JPEL is currently exploring the possibility of selling certain portfolio investments in the secondary market and aggregating such potential proceeds with available capital from net distributions in order to reposition the Company's portfolio. In particular, JPEL will seek to reposition its portfolio towards growth-oriented investments in a more concentrated portfolio that will allow for more specific transparency to shareholders.  

Since inception, JPEL has sought to reposition its portfolio by redeploying net distributions in new private equity investments.  In the years following the credit crisis, distribution activity from the JPEL portfolio, although greatly improved in recent months, was limited.  As a result, the Company was not able to reposition its portfolio as aggressively as had been the case historically.  Through strategic sales of non-core assets, JPEL will be in a strong position to take advantage of more attractive opportunities in the secondary private equity market.  Notably, the Company's investment performance for assets purchased during or subsequent to the credit crisis has been strong and any asset sales will enable JPEL to continue to repopulate its portfolio with such higher-quality assets.

Continue to Improve Capital Structure

JPEL will seek to continue to improve its capital structure and lower overall gearing over the next three years. Specifically, JPEL is seeking to rationalise its capital structure through three key initiatives:

·    Increase NAV by repositioning the portfolio towards a more concentrated portfolio of growth oriented assets as noted above;

·    Repay the 2013 ZDP Shares in April 2013 and 2015 ZDP Shares in October 2015 using a combination of  capital available through the Company's lower cost, more flexible bank facility as well as through net distribution and asset sale proceeds; and

·    Pay down bank facility borrowings over time using a portion of net cash flows from distributions and asset sales

Continue to Support US$ Equity Shares and Return Capital to Investors

On 14 November 2012 JPEL plans to commence a coordinated share repurchase programme, managed by JPMorgan Cazenove, to purchase up to $20 million of US$ Equity Shares outstanding at up to a 35% discount to prevailing NAV dated 30 September 2012.  The price of the US$ Equity Shares repurchased by JPEL will be subject to satisfaction of the limits imposed at the Company's recent General Meeting that it must not exceed the higher of (a) 105 per cent. of the average market values for a US$ Equity Shares taken from the Official List of the UK Listing Authority for the five Business Days immediately preceding 14 November 2012 and, (b) the higher of the last independent trade and the highest current independent bid price on the trading venues where the purchase is carried out.  This coordinated share repurchase programme will be accretive to the NAV of the remaining US$ Equity Shares.

Interested buyers or sellers of the Company's shares should contact J.P. Morgan Cazenove on or before 14 November 2012.  The exact number of US$ Equity Shares to be repurchased by the Company, and the pricing of those Shares, will be determined following a book-build programme coordinated by J.P. Morgan Cazenove. Accordingly, the number of US$ Equity Shares and the value of such shares repurchased by the Company may be less than the Company's limit of $20 million.  Any shortfall may be utilised by the Company, on terms decided by the Company, in making future purchases of US$ Equity Shares.  J.P. Morgan Cazenove will seek to match sellers pursuant to the Company's share repurchase programme to natural buying interest at the same price.

In addition, JPEL will continue to look to purchase US$ Equity Shares through a variety of programmes. Since inception, JPEL has returned capital to investors through the operation of its tender facility and through open market share repurchases and has returned over $153 million to shareholders through such mechanisms.  Moreover, since August 2011, JPEL has returned approximately 6.2% of the weighted average shares outstanding during fiscal year 2012 through a mix of share repurchases and a formal tender offer.  Assuming completion of the coordinated share repurchase programme, JPEL will have repurchased approximately 15% of the weighted average US$ Equity Shares outstanding during fiscal year 2012.

This communication does not constitute an offer or invitation or solicitation to make an offer by or on behalf of the Company or any of its affiliates, directors, officers, employees or shareholders to buy, sell or enter into an agreement for the sale or purchase of shares or any of the businesses or assets described herein.

This communication is not and should not be taken as constituting the giving of investment advice by the Company or its managers to any recipient.

Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up. Future returns are not guaranteed and a total loss of principal may occur.

Recipients of this communication are recommended to seek their own independent legal, tax, financial and other advice and should rely solely on their own judgment, review and analysis in evaluating the Company, its business and its affairs.

This document includes statements that are, or may be deemed to be, "forward-looking statements".  In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance.  The Company's actual performance, results of operations, internal rate of return, financial condition, liquidity, distributions to shareholders and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document.

1. Subject to applicable legal, corporate and regulatory restrictions. Shareholders should not expect that they will necessarily be able to realise, within a period which they would otherwise regard as reasonable, their investment in the Company, nor can they be certain that they will be able to realise their investment on a basis that necessarily reflects the value of the underlying investments held by the Company.

About J.P. Morgan Private Equity Limited

J.P. Morgan Private Equity Limited is a Guernsey registered and incorporated, London Stock Exchange-listed, closed-ended investment company (LSE: JPEL, JPEZ, JPZZ, JPSZ) designed primarily to invest in the global private equity market.  The investment objective of the Company is to achieve both short and long-term capital appreciation by investing in a well diversified portfolio of private equity fund interests and by capitalising on the inefficiencies of the secondary private equity market.  On 17 August 2009, JPEL issued warrants free of subscription cost to shareholders on record.  The warrants are publicly traded on the London Stock Exchange under the symbol "JPWW."

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For further information please contact:

J.P. Morgan Private Equity Limited

Troy Duncan / Greg Getschow  

[e-mail] / [e-mail]  

Rosemary DeRise / Samantha Ladd

[phone]  / [phone]  

[e-mail] / [e-mail]

Peregrine Communications

Anthony Payne / Max Hilton

[phone]  

[e-mail] / [e-mail]  

 

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