ID_New Value.indd

i n t e l l i g e n ce d y n a m i c s
research & analys i s
Sept 07, 2009
Company Research
New Value AG
Key Highlights
■■ Diversification by investments in IT and healthcare
■■ More than 40% discount on NAV
■■ High weight of 3S industries in portfolio
■■ Relatively high transparency
■■ Unique positioning as investment company providing growth capital
New Value AG
ISIN: CH0010819867
New Value AG
i n t e l l i g e n ce d y n a m i c s
research & analys i s
Date of report:
September 7, 2009
Stock Profile
Core business:
Private equity investments
Exchanges: SIX and Xetra
Date of listing:
May 16, 2006 (on SIX)
Stock price: CHF 14.50
52 week high and low:
CHF 20.90 - CHF 13.00
Fiscal Yr End: March 31
Local Currency: CHF
Ticker
Bloomberg: NEWN SW
Reuters: NEWN.S
Shares Outstanding: 3,287,233
Market Cap: 47.66 mCHF
Free Float: 91%
CHF
Stock performance over 1 year
22
21
20
19
18
17
16
15
14
13
12
Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jun-09 Sep-09
2
Investment Research
COMPANY PROFILE (www.newvalue.ch)
New Value AG (hereinafter referred to as “New Value” or “Company”) is a private
equity (PE) company which invests in Switzerland and neighbour countries. New
Value pursues an investment approach focused on companies which feature high
corporate governance standards, social responsibility, ecological sustainability and
an ethical business model. At the end of Q1 2009/10, the investment volume of the
Company’s portfolio stood at 70.5 mCHF.
New Value is a Zurich-based investment company which was founded in May 2000
and got listed on the Berne Stock Exchange 3 months later. By 2006, New Value
moved its listing to the SIX Swiss Exchange.
INVESTMENT STRATEGY
New Value invests primarily in growth companies with an ethical innovative approach.
The Company aims at establishing a diversified portfolio comprising of promising
companies operating both in high tech as well as traditional sectors. Maximum
exposure to one sector is restricted to 50% of net asset value (NAV) and not more
than 20% is to be invested in an individual position. In order to further diversify risks,
investments are spread across different development stages ranging from early-stage
to growth financing. Furthermore, the Company may invest up to 50% of its funds into
listed companies.
Unlike most of its competitors, New Value does not leverage its investments using
debt but only invests its own funds. The Company usually acquires significant
minority positions and actively takes board seats in its holding companies. New Value
follows a medium to long term investment approach with a targeted holding period of
approximately 5 years.
New Value’s investment manager EPS Value PLUS AG (EPS), an integrated private
equity specialist, is in charge of investment and risk management processes. The
associate investment advice fee amounts to 0.5% of audited NAV per quarter. In
addition, EPS receives a performance related fee of 10% and 20%, respectively, of
share price increase in case the share price has risen by more than 10% and 15%,
above the watermark.
KEY HIGHLIGHTS
■■ Diversification of investments especially in IT and healthcare
New Value is making deliberate efforts in diversifying its investment portfolio. The
renewable energy sectors contribution to the portfolio decreased from 53% in Q1
2008/09 to 42% in Q1 2009/10, as the Company made significant investments in
other sectors such as IT and health-care in FY 2008/09 and Q1 2009/10.
New Value financed QualiLife SA, a software company that specializes in developing
access technologies for the disabled, the elderly and hospital patients. Apart from
financing QualiLife, New Value also increased its share holding in Swiss Medical
Solution, Mycosym International, Bogar, Silentsoft and Natoil.
■■ More than 40% discount on NAV
While New Value’s share price and NAV were moving largely in line until end of FY
2005, the share price has shown steady increasing discount on its NAV per share
since then. As of Aug 31 2009, the discount stood at 43.7% of the NAV.
New Value AG
i n t e l l i g e n ce d y n a m i c s
3
Investment Research
research & analys i s
The significant discount to NAV is partially due to the negative market environment
and reluctance of the investors towards PE companies.
Development of share price and NAV (CHF)
Premium (+) / Discount (-) on NAV
30
20%
28
3.3%
24
0%
22
1.5% -0.8%
Mar 07 Mar 08 Mar 09 Aug 09
Mar 03 Mar 04 Mar 05 Mar 06
-10%
20
18
-20%
16
14
-30%
12
10
9.9%
10%
26
-40%
Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Aug 09
NAV
Share price
-50%
-15.7%
-24.0%
-34.5%
-43.7%
■■ High weight of 3S industries in portfolio
In Q1 of the fiscal year 2009/10 New Value’s NAV grew by 17%, primarily as a result
of a rebound in the share price of 3S Industries since March 2009/10. Whereas, in
FY 2008/09, the Company’s NAV decreased by 20.5% as compared to FY 2007/08
largely due to lower valuations of 3S Industries. This indicates a high dependency on
3S Industries which accounts for approximately 35% of the total investments. New
Value sold around 10% of its holdings in 3S Industries in FY 2008/09 and could realize
a multiple of 15x compared to the initially invested price.
■■ Relatively high transparency
New Value informs regularly about the latest developments and business prospects of
its portfolio companies. Furthermore, the Company publishes the NAV of its portfolio
twice a month. Therefore, potential and actual investors get an idea of where there
money is invested. This compares favourably with most of its competitors which
usually provide less information regarding their investments.
OUTLOOK AND PROJECTIONS
New Value is one of the few private equity companies which use its own funds
for investments and also has healthy financials with enough liquidity. These
characteristics of New Value will help it withstand the current economic crisis. The
Company’s diversified investment portfolio with investments across companies in
different phases of life cycle creates various growth opportunities with lower risks. We
believe that New Value is well placed to achieve substantial growth in the near term
once the recession eases out.
The Company’s performance in FY 2008/09 was severely hampered by negative
performance of 3S Industries but the positive results in Q1 2009/10 and deliberate
efforts of diversification in portfolio are positive signs.
New Value sees a considerable growth potential in the medium term in its portfolio
as new investments as well as increase in the current holdings can be made at lower
valuations.
New Value AG
i n t e l l i g e n ce d y n a m i c s
4
Investment Research
research & analys i s
SCOT ANALYSIS
STRENGTHS
CHALLENGES
■■ Use of own funds and no impact of
leverage
■■ Continuous decrease in discount on
NAV over the past few years
■■ Risk diversification through
investments across different
development stages
■■ Improving portfolio diversification
■■ Relatively high transparency
■■ Continue with successful exits (track
record: 4 exits so far)
OPPORTUNITIES
THREATS
■■ Low valuation of shares (potential of
non-listed portfolios companies not
yet reflected)
■■ Severe economic slowdown which
affects portfolio valuation
■■ Attractive investment opportunities
due to the current financial crisis
■■ Dependency on 3S
■■ Capitalize on current trend in
sustainable and ethical investments
PERFORMANCE
■■ Q1 - 2009/10
For the 1st quarter ending June 30, 2009, New Value witnessed a substantial 17%
increase in the value of its investments, primarily as a result of a rebound in the share
price of 3S Industries since March 2009. 3S Industries earned prestigious contracts
in the 1st quarter of 2009/10 and regained more than 75% of the earlier fall in share
price. The NAV of its investment portfolio increased to CHF 25.46 per share on June
30, 2009, as against CHF 21.76 per share on March 31, 2009.
In the same quarter, New Value increased its share in Natoil AG and QualiLife SA.
Lubricant maker Natoil completed a 1.06 mCHF capital increase in June 2009. New
Value contributed CHF 90,000 to this capital increase and converted 0.3 mCHF in
loans. The Company also purchased additional shares of healthcare software provider
QualiLife totaling 0.64 mCHF, thereby increasing its share to 25.1%.
■■ FY 2008/09
The slowdown in economic activities adversely affected financial performance of New
Value and forced it to report a loss of 14 mCHF in FY 2008/09. The loss was primarily
due to reduced valuations for its two publicly-traded portfolio companies, 3S and
Meyer Burger. A loss per share of CHF 4.91 was registered for the reporting period
versus a profit per share of CHF 7.78 in the previous year. NAV followed the similar
trend and fell to CHF 21.76 per share, 20.5% below the previous year.
New Value has been quite favorably and at times unfavorably influenced by the success
of 3S Industries. In order to reduce the impact of 3S share prices the Company did
not acquire any new shares, on the contrary, New Value sold 10% of its holdings in
3S and realized 1.04 mCHF.
New Value AG
i n t e l l i g e n ce d y n a m i c s
5
Investment Research
research & analys i s
PORTFOLIO COMPANIES
As of June 30, 2009, Investment portfolio of New Value comprised 11 companies
operating in renewable energies, medicinal technology, health care, IT and new
materials sectors.
Company
3S Industries
Idiag
Solar Industries
Bogar
Swiss Medical Solution
FotoDesk Group
Mycosym International
Silentsoft
Natoil
Qualilife
Meyer Burger Technology
Sector
Form
Market price as per
June 30, 2009
(CHF)
Portfolio share
Company share
Renewable Energies
Shares
24,891,108
31.80%
10.30%
Medtech
Shares
8,052,235
10.30%
49.70%
Renewable Energies
Shares
7,770,500
9.90%
33.10%
Health
Shares
7,146,254
9.10%
29.80%
7.50%
38.90%
6.90%
45.00%
6.00%
49.10%
Medtech
Shares
1,557,905
Convertible loan
4,317,407
IT
Shares
4,502,115
Convertible loan
863,098
Shares
4,226,830
Loan
457,648
IT
Shares
3,577,553
4.60%
25.70%
New materials
Shares
1,590,000
2.00%
30.50%
IT
Shares
1,360,000
1.70%
25.10%
Renewable Energies
Shares
167,700
0.20%
0.10%
70,480,353
90.10%
Health
Total
Portfolio structure as of June 30, 2009
2%
10%
13%
42%
15%
Renewable energy
Medicinal technology
Health care
IT
New materials
Cash and cash equivalents
18%
Portfolio structure as of June 30, 2008
2%
12%
8%
14%
53%
11%
Renewable energy
Medicinal technology
Health care
IT
New materials
Cash and cash equivalents
New Value AG
i n t e l l i g e n ce d y n a m i c s
6
Investment Research
research & analys i s
Diversified Private Equity Portfolio
New Value has made investments in various companies at various stages, this can
be seen below:
Launch
Relative Performance
Product
Sales
Profitability /
Growth
Bogar
3S Industries
Solar Industries
Meyer Burger
FotoDesk
Swiss Medical
Solution
Natoil
Exit
Realization /
Stock Exchange
Listing
SAF
Innoplana
Silentsoft
Idiag
Mycosym
QualiLife
Corporate Development
3S Industries AG’s stock performance
3S manufactures manual and semi-automated production lines for solar modules. In
cooperation with partner companies, it also offers fully automated production lines.
Furthermore, its product range includes solar systems which can be used as roofs,
facades or shading elements.
30
25
CHF
20
15
10
5
0
Apr-08
3S INDUSTRIES AG (3S) - www.3-s.ch
Jul-08
Source: Bloomberg
Oct-08
Jan-09
Apr-09
Jul-09
In FY 2008/09, sales quadrupled over the previous year to 109 mCHF. EBIT increased
fivefold to 12.5 mCHF; the EBIT margin also went up to 12.3% from the previous
year’s level of 10.4%. In the last fiscal, 3S acquired Somont GmbH, Germany, a
manufacturer and specialist of solar cell stringing machine. 3S raised an additional
capital of 62 mCHF to finance the takeover and the growth. New Value did not
participate in the capital increase due to its current high exposure to 3S. During FY
2008/09, New Value sold 263,800 shares at an average price of CHF 22.45 and
bought 56,122 shares at an average price of CHF 16.58, realising 1.04 mCHF. 3S
Industries recently delivered its first semi-automatic production line to Bangalore,
India, where the company is currently intensifying its sales activities.
IDIAG AG (IDIAG) - www.idiag.ch
Idiag develops and distributes innovative products for medicine, therapy and sports
applications in the back care and respiration growth segments. So far Idiag has
three products in its portfolio. These products are used for respiratory training, spinal
diagnostics and body weight management. SpiroTiger is a device targeted for training
of respiratory muscles. MediMouse enables computer based and rayless examination
of the spine. Whereas, recently introduced Fitmate, is used for performance
diagnostics and body weight management. Apart from this Idiag has introduced
SpiroTiger SMART to expand within the existing products.
For FY 2008/09 sales decreased by 12% over the previous year. It is targeting
development of new medical application areas for SpiroTiger, whereas, new product
generations are expected to stimulate growth.
New Value AG
i n t e l l i g e n ce d y n a m i c s
7
Investment Research
research & analys i s
MYCOSYM INTERNATIONAL AG (MYCOSYM) - www.mycosym.com
Mycosym is a biological plant technology company whose products are based on
mycorrhiza, a natural symbiosis between plant roots and fungi. These products
vitalize plants and better protect them from environmental stress factors in order to
reduce the use of fertilizers and water consumption.
In FY 2008/09, the difficult economic environment in Spain led to a decline in sales in
the olive segment, as a result total sales fell by 27%. The firm has appointed Juan P.
H. Candau as CEO for Spain. Mr. Candau has extensive experience in the areas of
plant and seed cultivation, business development and corporate structuring.
For the current year, Mycosym is targeting expansion of the distributor base along
with introduction of additional plant cultivation products. Mycosym has accelerated
the development of a second product line for the lawn market segment. Used as a
water management tool, savings in use of water are up to 40%. In March 2009, New
Value contributed an additional 0.22 mCHF in loaned funds for expansion of the firm’s
capital base.
BOGAR AG (BOGAR) - www.bogar.com
Bogar develops, produces and distributes pet medicine and food based herbal
ingredients. Bogar is a pioneer in veterinary phytomedicine and offers products for
dogs, cats and horses. Its distribution channels comprise retail partners, pharmacies,
chemists, veterinaries and its internet shop in Swiss, German and Austrian markets.
In FY 2008/09, Bogar acquired Trixie (a retail supplier to approximately 5,000
customers), a new distribution partner in Germany, as well as two major internet
portals – zooplus and shop-apotheke. For the same period, Bogar recorded a revenue
increase of 87% over last year’s figure. New Value increased its share in BOGAR’s
capital stock to 29.8% by investing an additional 2.2 mCHF.
Globally installed solar energy capacity
SI invests in existing and development stage companies across the entire value
chain of solar module manufacturing. The firm targets for a competitive industrial
integration of these companies. SI entered into a strategic partnership with MX Group
and acquired a minority interest in the company to produce PV solar modules with a
capacity of 120 MW per year.
In GW / Year
6
5
4
3
2
1
0
SOLAR INDUSTRIES AG (SI) - www.solarindustries.ch
2005 2006 2007 2008 2009e 2010e 2011e
In FY 2008/09, SI entered into a joint-venture with api nòva energia to produce highpurity polysilicon for PV applications. At the end of FY 2008/09 it raised 5 mCHF in
new capital, New Value increased its share in SI by investing 2 mCHF. The company
is planning additional significant investments on the fast-growing Italian market.
Source: Solar Annual 2008
FOTODESK GROUP AG (FOTODESK) - www.fotodesk.com
New Value portfolio company Colorplaza SA was merged into FotoDesk Group AG
in 2008. New Value now holds an approximately 45% in Fotodesk. Fotodesk is an
integrated company in the area of digital imaging services. Along-with traditional
photo printing, it offers innovative lifestyle products such as self-stick posters, laptop
skins and wall tattoos.
In FY 2008/09, FotoDesk also acquired FlauntR, an online provider of image editing,
archiving and sharing. The company is focusing on use of innovative web technologies
and continuous product innovations in the area of print, fine art and décor.
New Value AG
i n t e l l i g e n ce d y n a m i c s
8
Investment Research
research & analys i s
SWISS MEDICAL SOLUTION AG (SMS) - www.swissmedicalsolution.ch
SMS develops, produces and distributes new technologies in the field of preventive
medicine. It has developed a platform for vitro diagnostics suited for home application.
So far, SMS has launched a test called U-Lab for early diagnosis of urinary tract
infections. Whereas, two additional products are now in advanced development stage.
SMS is currently testing a built-in diaper test for detecting UTIs in small children.
In FY 2008/09, SMS entered into exclusive marketing agreements for distribution of
U-Lab® in Switzerland and Germany. SMS registered a revenue growth rate of 184%
from the year earlier. New Value participated in a financing round in September 2008.
The Company invested 2 mCHF, increasing its share in SMS to 38.9%.
SILENTSOFT S.A. (SILENTSOFT) - www.silentsoft.com
M2M Industry Growth
50
bUSD
40
42
30
20
10
0
22
12
2004
2008
Market size
Source: ABI Research
2012
Silentsoft offers a large range of technologies and processes for the operation of
machine to machine (M2M) communication networks. Thereby, it specializes on
telemetry for bulk ware in tanks or silos as well as on energy management for building
information systems. Silentsoft had 800 clients in 10 countries with a total of 26,000
tanks. Its clients include amongst others Swisscom, Die Post, Swiss Property, Total,
Serimo and Swatch Group.
In FY 2008/09, Silentsoft introduced the new SNODE hardware generation. Introduction
of SNODE took longer-than-expected development time causing a decline of 32% in
the revenue. Silentsoft has returned to its growth path by testing and launching some
more products. In order to finance the growth plans, in November 2008 Silentsoft held
a financing round with existing shareholders, raising 2 mCHF. New Value increased
its share by 1.2 mCHF raising its share in Silentsoft to 25.7%. Silentsoft signed
contracts in May 2009 for the installation of over 1,200 telemetry systems, including
major projects in the cities of Zurich and Winterthur.
NATOIL AG (NATOIL) - www.natoil.ch
Natoil is a producer of industrial lubricants which are largely based on renewable
resources, mainly the high oleic sunflower. Natoil’s lubricants feature less friction
losses than comparable products based on mineral oils hence reducing energy
consumption and wear. Its customers amongst others include Jumbo, Alcan, Arburg
and Meyer Werft.
In FY 2008/09, Natoil increased its sales by 63% over the previous year and received
additional industry approvals from machine manufacturers including Junker and
Moog. Whereas, Arburg has been delivering all gears for a specific machine type
exclusively with Natoil since mid-2008. For 2009 Natoil has planned additional new
customer acquisitions in the plastic injection moulding and pump sectors.
New Value AG
i n t e l l i g e n ce d y n a m i c s
9
Investment Research
research & analys i s
QUALILIFE S.A. (QUALILIFE) - www.qualilife.com
QualiLife develops and distributes IT solutions which enable elder or handicapped
people to access numerous technologies such as telephony, internet, fax, DVD,
business solutions or computer. QualiLife’s products are based on MS Windows
and are very easy to handle. In Switzerland, QualiLife products for disabled are
fully covered by health insurance funds if prescribed by a doctor. In Canada, health
insurance funds cover 75% of costs.
In early June 2009, QualiLife acquired its first major customer, the Hildebrand Private
Clinic, in the Swiss canton of Ticino. Walter M. Huber joined QualiLife as CEO in June
2009. In the same year the company launched its first solution for the eHealthcare
industry – QualiMedical Unified Communication, an integrated information and
communication platform. To finance this solution, New Value took part in a capital
increase for QualiLife, boosting its shareholding to 25.1%.
Meyer Burger Technology AG’s stock
performance
400
350
300
CHF
250
200
150
100
50
0
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
MEYER BURGER TECHNOLOGY AG (MBT) - www.meyerburger.ch
MBT is a supplier of sawing and slicing systems for materials such as silicon, sapphire
and other crystals. In addition to its headquarter in Switzerland, MBT has subsidiaries
in Japan and China and operates service centres in Germany and the Philippines.
Furthermore, the group cooperates with external sales and service partners in the
US and Taiwan.
In FY 2008/09, MBT successfully expanded through majority interests in Hannecke
Systems and AMB Apparate + Maschinenbau. MBT also founded of two service
company’s in Germany and Norway. The firm net sales reached 455 mCHF in FY
2008/09, up 119% from 208 mCHF in FY 2007/08. In the same period, EBIT jumped
by 208% to reach 77 mCHF.
SHAREHOLDING STRUCTURE
Source: Bloomberg
No. of machines produced by MBT
700
637
600
As of March 31, 2009, shares outstanding amounted to 3,287,233 with a par value of
CHF 10. In addition, as per 31 March, 2009 New Value held 321,512 (9.8% of issued
shares) treasury shares. According to SIX, free float was approximately 91%.
Shareholding Structure
500
400
19.9%
283
300
200
100
35
65
59.9%
104
5.4%
0
2004
Source: MBT
2005
2006
2007
2008
5.0%
9.8%
Personalvorsorgekasse der Stadt Bern
Corisol Holding AG
Aargauische Gebäudeversicherungs
New Value treasury shares
Other shareholders
New Value AG
i n t e l l i g e n ce d y n a m i c s
10
Investment Research
research & analys i s
BOARD OF DIRECTORS
ROLF WÄGLI (PRESIDENT AND CEO, EXECUTIVE)
Mr. Rolf Wägli is a graduate banker with an experience of 20 years in international
investment and private banking at banks such as Credit Suisse, Bank Cantrade,
Rothschild, Interallianz-Bank, Grindlays and Bankinstitut Zürich. In addition to his
mandate at New Value, he is chairman of R. Wägli & Cie AG asset management
company and member of the supervisory boards of other international companies.
PAUL SANTNER (VICE PRESIDENT, NON-EXECUTIVE)
Mr. Paul Santner was working for 23 years at Digital Equipment Corporation, the
world’s former second largest computer manufacturer, amongst others as Vice
President Europe. Since 1999 he has been working as a professional member of
supervisory boards of companies from various sectors.
GERHART ISLER (MEMBER, NON-EXECUTIVE)
Mr. Gerhart Isler holds a lic. oec. publ. of the University of Zurich. After his studies
he was working as a journalist and later on as director at Finanz & Wirtschaft (FuW),
a Swiss business journal. From 1988 to 2004 he was chairman of FuW. Next to his
mandate at New Value, he is amongst others member of the boards of Ypsomed
Holding AG and Grand Casino Baden.
THOMAS KELLER (MEMBER, NON-EXECUTIVE)
Mr. Thomas Keller is a graduate electrical engineer with additional studies in business
administration as well as personnel and organizational management. Before joining
the supervisory board of New Value in 2004 he was working as consultant and
executive at different companies in high tech and executive search sectors. Since
2001, he is also owner of seed leadership counsels, a consultancy company for
career planning and executive search.
JAN LARSSON (MEMBER, NON-EXECUTIVE)
Mr. Jan Larsson is a dentist who further studied economics as well as organization
and administration theory. He is founder of Dentina Dentalverstriebsgesellschaft,
nowadays the largest European shipment company for dental supplies sold to Henry
Schein Group in US. Initially as founder and owner of Switzerland’s first Technology
Park in Tägerwilen and afterwards as founder member and president of SwissParks.
ch, the association of Swiss technology parks and business incubators, he has been
supporting start-up companies in the technology sector.
PE market in Europe
120
MARKET
112
Europe
100
81
bEUR
80
72
71
74
60
79
54
47
37
40
28
20
0
2004
Source: EVCA
2005
Fund raising
2006
2007
Investments
2008
Institutional investors such as banks, pension funds, insurance companies and
corporate investors account for more than half of the funds raised for PE investments
in Europe. Almost two third of these funds originate in Europe, with the US, Asia and
the rest of the world contributing the rest.
After a steady increase over the last few years, funds raised for PE investments in
Europe dropped for the second consecutive year. However, in 2008, fundraising by
European private equity houses slowed down its pace of decline and dropped only
marginally by 2.5% over the previous year. Fundraising reached 79 bEUR in 2008,
slightly less than the 81 bEUR raised in 2007.
New Value AG
i n t e l l i g e n ce d y n a m i c s
11
Investment Research
research & analys i s
Private Equity investments reached 54 bEUR in 2008, representing a 27% drop
compared to 2007. Nevertheless, it was the third-best investment year for the
European private equity industry. In spite of a decrease in investments the number
of companies financed increased by 5%, a total of 5,986 companies were financed
in 2008.
Major part of the funds raised for PE investments in Europe was used for buyouts,
while expansion (Growth and Later stage capital) and early-stage financing accounted
for 20% and 5%, respectively.
Allocation of funds in 2008
7%
5%
4%
Buyout
Growth capital
Later stage venture
Start-up
Others
13%
70%
Source: EVCA
Impact of credit crisis on PE industry
Subprime mortgage financial crisis has caused a credit crunch in global economy.
This has affected PE industry in multiple ways, PE players were previously heavily
dependent on syndicate and high-yield debt, but low liquidity has left them cashstrapped as banks started going back on their positions. Also, the banks have
drastically tightened the credit allowance conditions, leading to a rising cost of debt
for PE companies.
The prevailing credit crisis has resulted in low investments in PE. The amount invested
by PE companies decreased by 16% for the 2nd quarter of 2009/10, as against the
first quarter. Whereas, the investments declined at a steeper rate of 27% for the
year 2008/09 over the previous year. Raising debt has become more difficult and
many PE companies have postponed new investments because of overall declining
company valuations. While in the short term negative returns are expected, interesting
investment opportunities arise, especially for investment companies with sufficient
equity capital.
Evolution of private equity funds raised and
Investments in Switzerland
3,500
3,081
3,000
mEUR
2,500
2,000
1,495
1,500
1,636
1,000
500
0
837
176 272
2004
1,307
905
363
2005
Funds raised
Source: EVCA
1,478
2006
2007
Investments
2008
Switzerland
PE investments in Switzerland are slightly low as compared to other European
countries. While European countries on an average invested 0.42% of their GDP in
PE in 2008, the PE investments for Switzerland were 0.39%. In UK, Europe’s leading
PE market, PE investments were 1.24% of its GDP.
New Value AG
i n t e l l i g e n ce d y n a m i c s
12
Investment Research
research & analys i s
PE investments as % of GDP in 2008
1.4%
1.24%
1.2%
1.02%
1.0%
0.8%
0.6%
0.45%
0.4%
0.42%
0.39%
0.30%
0.28%
0.26%
0.24%
0.24%
0.2%
tu
ga
l
Po
r
ay
w
or
N
an
d
nl
Fi
er
m
an
y
G
et
he
rl a
nd
s
N
pe
i tz
er
la
nd
Sw
Eu
ro
e
an
c
Fr
ed
en
Sw
U
K
0.0%
Source: EVCA
The Swiss PE sector developed positively in 2008 as compared to other European
countries. Both fundraising as well as investments went up significantly last year.
Swiss private equity firms raised a total of 3.1 bEUR in 2008, more than double the
level of fundraising in 2007. This increase was largely due to the raising of a new 1
bEUR fund focused on life sciences. In 2008, family offices and private individuals
made highest contributions. Whereas, insurance companies contributed significantly
less, representing only 5% of the total. Meanwhile, corporate investors increased
their contributions more than threefold.
Evolution of private equity divestments in
Switzerland
300
268
265
250
mEUR
200
151
150
130
113
100
50
0
2004
Source: EVCA
2005
2006
2007
2008
Swiss private equity firms invested a total of 1.3 bEUR in 201 companies in 2008.
Compared with 2007, the amount invested increased by 45%. In 2008, buyout values
decreased by 15% and number of companies financed by about 22% as compared
with 2007. The amount invested in venture decreased by 52%, whereas, number of
companies financed in the venture space increased by 25%.
In 2008, as in 2007, private equity firms based in Switzerland invested more than 70%
of the total amount in companies located outside Switzerland. Whereas, domestic
investors provided 75% of the total funds raised, while in 2007 they provided only
10%.
In 2008, private equity firms based in Switzerland exited 24 companies with a total
cost divested of 130 mEUR, half of 2007. More than 75% of the amount was divested
by means of trade sale for nearly 30% of all companies divested. The main exited
sector by amount was transportation, and by number of companies, consumer goods,
retail and life sciences.
New Value AG
i n t e l l i g e n ce d y n a m i c s
13
Investment Research
research & analys i s
COMPETITION
New Value competes with other Swiss PE companies such as Invision Private Equity
AG, BioMedInvest AG, Capvis Equity Partners AG, Private Equity Holding AG, Vinci
Capital Switzerland S.A. and Zurmont Madison Private Equity L.P. These companies
are profiled below:
INVISION PRIVATE EQUITY AG (IPE)
Since inception in 1997, IPE has raised more than 400 mCHF for investments in
European companies which mainly operate in IT, telecommunication, medicinal
technology, financial services and media sectors. Until now, IPE has invested in more
than 60 companies and exited 9 through an IPO and 16 through trade sale. In October
2008, Invision closed its latest fund, Invision IV, with commitments of 185 mEUR.
BIOMEDINVEST AG (BMI)
BMI is a Swiss venture capital fund focusing on early to mid-stage financing of
companies in the healthcare sector. BMI aims to invest about 1-10 mCHF over the
life time of the portfolio companies. It currently manages one fund with a size of 100
mCHF which is invested into 16 portfolio companies. Amongst others, its portfolio
companies include Arpida, a biopharmaceutical company focusing on new antibiotics
drugs, which was listed on SIX in 2005.
BV HOLDING AG (BVH)
BVH is focusing on succession and growth financing primarily in the medicinal
technology, IT and communication sectors. Its investment strategy is aimed at
profitable companies with a turnover between 15 mCHF and 150 mCHF located in
Switzerland and bordering countries. As of June 30, 2009, the fair value of BVH’s
portfolio amounted to 66.9 mCHF. BVH is listed on the Berne Stock Exchange.
CAPVIS EQUITY PARTNERS AG (CEP)
CEP invests in small and medium sized companies in Switzerland, Germany and
Austria, mainly in case of succession of family owned businesses and corporate spinoffs. CEP invests a minimum of about 20 to 100 mEUR in each equity operation.
It was awarded Switzerland’s best Private Equity house in 2007 by Private Equity
International. CEP funds currently total 900 mEUR and since 1990 it has invested in
39 companies with a total transaction volume of more than 4 bCHF.
PRIVATE EQUITY HOLDING AG (PEH)
Development of VCS’ NAV / Share
250
CHF
200
150
100
VINCI CAPITAL SWITZERLAND S.A. (VCS)
50
0
PEH is a PE company listed on SIX. As compared to New Value, PEH follows a
broad investment strategy diversifying across ventures funds, special situation funds,
buyout funds and direct investments. As of July 31, 2009, PEH’s portfolio had a NAV
of approximately 265 mCHF out of which only 7% were held in direct investments.
Unlike New Value, PEH does invest on a global basis.
2003
2004
2005 2006 2007
NAV*
Payout
2008
*Excluding PE fund which was established in cooperation
with Swisscom
Source: VCS, own calculations
VCS is a PE company focusing on Swiss technology and life sciences companies.
Total NAV of the funds managed by VCS amounts to more than 200 mCHF. In June
2009, VCS has successfully raised a fund totaling 82 mCHF, Mona Lisa Capital AG
contributed 1 mCHF to this fund. VCS’s former holdings include amongst others
Actelion, a Swiss biotechnology company recently included in the Swiss Market
Index.
i n t e l l i g e n ce d y n a m i c s
research & analys i s
New Value AG
14
Investment Research
ZURMONT MADISON PRIVATE EQUITY L.P. (ZMPE)
ZMPE, based on the Cayman Islands, is advised by Zurmont Madison Management
AG. It focuses on succession of family owned businesses, management buy-outs and
corporate spin-offs in Switzerland, Germany and Austria. ZMPE seek investments in
mid-size companies with revenues in the range of 50 - 250 mCHF and positive cash
flows. It does not invest in start-up or ventures. Unlike New Value, ZMPE uses also
debt to leverage its investments. So far, the team has invested in 17 companies with
a transaction total in excess of 360 mCHF.
New Value AG
i n t e l l i g e n ce d y n a m i c s
15
Investment Research
research & analys i s
DETAILED FINANCIALS
BALANCE SHEET
Fiscal Year ended on March 31
2007/2008
ASSETS
2008/2009
CHF
Current assets
Loans
500,000
240,000
Other receivables
102,875
65,591
68,106
16,262
Cash and cash equivalents
14,882,671
7,630,280
Total current assets
15,553,652
7,952,133
63,676,470
53,530,700
3,078,749
5,638,153
Total non-current assets
66,755,219
59,168,853
Total assets
82,308,871
67,120,986
Accrued income and deferred costs
Non-current assets
Participations
Loans
LIABILITIES & SHAREHOLDERS EQUITY
Liabilities
Trade liabilities
Short-term financial liabilities
Passive derivative instruments
Deferred costs and accrued income
Total Liabilities
0
0
720,000
1,324,800
0
0
406,228
451,405
1,126,228
1,776,205
Shareholders' equity
Capital stock
32,872,330
32,872,330
Treasury shares
(6,406,150)
(5,231,499)
Capital reserves
25,139,669
22,115,981
Retained earnings
29,576,794
15,587,969
Total shareholders' equity
81,182,643
65,344,781
Total liabilities & shareholders' equity
82,308,871
67,120,986
New Value AG
i n t e l l i g e n ce d y n a m i c s
16
Investment Research
research & analys i s
INCOME STATEMENT
Fiscal Year ended on March 31
2007/2008
2008/2009
CHF
Income from participations and loans
Gain from sale of participations
Non-realized gain from participations and loans
Interest income
Other income
9,838,388
1,043,816
17,630,680
5,371,986
204,594
239,433
0
0
27,673,662
6,655,235
(1,857,114)
(17,330,686)
Realized losses from participations and loans
(690,743)
(138,645)
Investment expenses
(180,000)
(187,131)
(2,727,857)
(17,656,462)
(1,249,576)
(1,746,663)
Total income from participations and loans
Losses from participations and loans
Non-realized losses from participations and loans
Total losses from participation and loans
Operating expenses
Investment advisor fee
Third-party personnel expenses
(96,840)
(96,840)
Expenses for supervisory board
(245,486)
(152,850)
Expenses for auditing
(66,552)
(65,851)
(539,817)
(480,079)
(54,602)
(27,060)
Other administrative expenses
(181,697)
(178,824)
Capital tax
(251,429)
(105,000)
(2,685,999)
(2,853,167)
Expenses for communication / investor relation
Consulting fees
Total operating expenses
Financial income
Financial expenses
Financial result
Profit before tax
Income tax
Net profit
227,208
92,276
(177,274)
(226,707)
49,934
(134,431)
22,309,740
(13,988,825)
0
0
22,309,740
(13,988,825)
New Value AG
i n t e l l i g e n ce d y n a m i c s
17
Investment Research
research & analys i s
CASH FLOW STATEMENT
Fiscal Year ended on March 31
2007/2008
2008/2009
CHF
Operating cash flow
Net profit
Adjustment for interest expenses
Adjustment for interest income
Non-realized gains from participations and loans
Non-realized losses from participations and loans
22,309,740
(13,988,825)
6,991
33,825
(431,802)
(331,709)
(17,630,680)
(5,371,986)
1,857,114
17,330,686
(9,838,388)
(1,043,816)
Realized losses from sale of participations
690,743
138,645
Investment expenses
120,000
187,131
Realized gains from sale of participations
Emoluments
65,591
0
(18,992)
(22,222)
Changes in accrued income and deferred costs
185,196
265,427
Changes in trade receivables
(52,353)
0
Changes in other short-term financial liabilities and
(63,596)
(420,000)
137,040
(75,322)
(2,663,396)
(3,298,166)
Granted loans
(1,890,000)
(2,140,000)
Purchase of participations
(5,629,899)
(7,458,985)
Sale of participations
15,770,616
6,084,696
Changes in other receivables
passive derivative financial instruments
Changes in accrued costs and deferred income
Net operating cash flow
Cash flow from investing activities
Effective interest income
252,965
118,126
8,503,682
(3,396,163)
Cash inflow from capital increase (par value)
0
0
Cash inflow from capital increase (agio)
0
0
Change in other short term liabilities
0
1,324,800
(15,568,162)
(17,514,418)
19,902,455
15,665,381
Net cash flow from investing activities
Cash flow from financing activities
Purchase of own shares
Sale of own shares
Effective interest paid
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of
(6,991)
(33,825)
4,327,302
(558,062)
10,167,588
(7,252,391)
4,715,083
14,882,671
14,882,671
7,630,280
period
Cash and cash equivalents at the end of period
New Value AG
i n t e l l i g e n ce d y n a m i c s
18
Investment Research
research & analys i s
RATIO ANALYSIS
Fiscal Year ended on March 31
2007/2008
2008/2009
Current Ratio
13.81
4.48
Quick Ratio
13.81
4.48
0.01
0.03
Total Debt Ratio
0.01
0.03
Equity Ratio
0.99
0.97
Debt-Equity Ratio
0.01
0.03
Fixed asset to Net Worth
0.82
0.91
Return on Assets
27.10%
-20.84%
Return on Equity
27.48%
-21.41%
Return on Capital Employed
27.04%
-20.64%
Short term solvency ratios
Current Liability to Net Worth
Long-term Solvency or Financial Leverage ratios
Profitability ratios
Market value ratios
Market Price per share (Sept 7, 2009) (CHF)
14.50
EPS (CHF)
(4.26)
Price/Earnings Ratio
(3.41)
Book value per share (CHF)
19.88
Market Value to Book Value Ratio
Market capitalization (mCHF)
Outstanding shares
Method of research: Desk research using publicly available information
0.73
47,664,879
3,287,233
New Value AG
i n t e l l i g e n ce d y n a m i c s
19
Investment Research
research & analys i s
DISCLAIMER:
By accepting this report you acknowledge the following restrictions as legally binding.
This report (henceforth known as “document”) may not be transmitted either directly or indirectly to USA, Canada and Japan or conveyed to a citizen of USA
or any person residing in any one of the afore-mentioned countries and it may not be brought into or distributed in their territories.
This document has been drafted by the authors concerned as a non-binding opinion on the market situation and on the instruments of investment in question
and compiled by the Dynamics Group AG in order to provide background information about the company. The research report has been accomplished on
behalf of the company and Dynamics Group AG has been financially compensated. It is intended exclusively for the purpose of information.
The Dynamics Group AG has not individually verified the information and data on which this document is based. All information and data in this document
originate from generally available sources which the author concerned or the Dynamics Group AG viewed as reliable at the time of drafting this document.
However, no liability can be assumed for their correctness, accuracy, completeness and appropriateness – neither expressly nor tacitly. The contents of this
document do not represent an assurance or guarantee by the author concerned or the Dynamics Group AG.
The Dynamics Group AG shall not be liable for any consequential damage to properties – on whatever legal grounds it may be. Liability of the Dynamics
Group AG on account of premeditation or gross negligence shall remain unaffected by this.
The Dynamics Group AG has no permission to provide assurances or assume guarantees on behalf of the companies or a third party mentioned in this
document. Neither the companies mentioned in this document nor any other individual assume liability for any loss, damage or detriment that may result
from the use of this document, especially when taking decisions on investments, or from other reasons. The Dynamics Group AG cannot be held responsible
for detrimental consequences that occur or may occur due to the use or its omission based on the views and inferences contained in this document. Past
performance trends of value, price or rates do not provide any indications to the future trends for an investment. The Dynamics Group AG does not provide
any guarantees for the suggested yield or the achievement of referred targets.
This document does neither represent an offer of purchase, holding or sale of any securities, money market instruments or of derivatives, nor does it contain
the basis for a contract or a commitment of any kind. Every investment, for example, in debentures, shares and options, is partly associated with enormous
risks. A decision on investment with regard to any security may not be based on this document. This document is neither an advice on investment, nor a
recommendation or invitation for purchasing, holding or selling any securities, money market instruments or derivatives.
The authors concerned, the Dynamics Group AG including its board of directors and employees may hold bull or bear positions in the described securities
and/or options, futures and other derivatives that are based on these securities or other investments that refer to their performance published in this document.
This document has been provided to you for information only. It may not be reproduced or distributed to others or published in any other form partially or
fully.
The distribution of this document and the information contained therein may be restricted in other jurisdictions by law and persons who may come into possession of this document must be aware of possible restrictions and adhere to the same. Failure to comply with such restrictions may constitute an infringement of the laws in USA or Canada governing the securities or of the laws of any other jurisdiction.
This study is protected by the copyright laws. It may be used only for the purpose as defined in this disclaimer. Portions of the study, if quoted, must be
acknowledged by indicating the source. Any use other than this shall require prior written permission by the Dynamics Group AG. Reproduction, circulation,
publication and provision of online access to the document shall be regarded as its use and the same shall require permission. Circulation of this document,
especially in a foreign country, may be permitted only under the provisions of the disclaimer and the applicable regulations. Unauthorized use of the study or
omission of details of the source or the acknowledgement of copyright may lead to initiation of a civil suite for damages and be liable for prosecution.
If any part or individual formulations of this disclaimer are found to be unsustainable or become unsustainable at a future date, the rest of the contents and
their validity shall not be affected by it.
Dynamics Group AG
Utoquai 39
CH-8008 Zürich
Tel. +41 43 268 32 32
Fax +41 43 268 32 39
[email protected]
www.dynamicsgroup.ch
Zeughausgasse 22
CH-3011 Bern
Tel. +41 31 312 28 41
Fax +41 31 312 28 49
21, rue des Caroubiers
CH-1227 Carouge/GE
Tel. +41 22 308 62 20
Fax +41 22 308 62 36