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1
Confidential
New Mountain Capital LLC
Presentation For:
Fresno County Employees' Retirement Association
February 01, 2006
2
Confidential
Mission Statement
• New Mountain’s intention is to be “best in class” in the new generation of private equity as measured by:
– Returns– Control of risk– Service to our limited partners– The quality of the businesses we build
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Confidential
• No “sealed bid” auctions
• Proactively targeted industry sectors
– Long term expectation: 60% targeted, 40% opportunistic
– Rigorous due diligence
• Very strong downside protection
– Non-cyclical, “defensive growth” sectors
– High quality niche leaders
– Outstanding free cash flow characteristics
– NMC usually in a senior credit position, with current cash yield
• Focus on “value added” and real growth
– Start with solid stable base, then build major company in a growth industry
– Top quality management partners, investing their own money
– Intensive New Mountain “value added” at all levels
• Outstanding return potential
– New Mountain is maintaining its high return standards
– New Mountain is exceeding return targets to date
• Full team efforts
Major Themes And Strategies
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Confidential
New Mountain Today• “Best in class” in private equity by many measures
• 44.5% IRR since inception, even with all private positions valued at cost (1)
• 78.0% IRR on publicly traded positions; even while S&P has been down 15.0% (2)
• No write-off or write-down on any fund investment; portfolio less levered than S&P 500
• CalPERS’ best performing U.S. private equity fund (buyout or venture) for vintage year 2000(3)
• CalPERS’ top 5 performing major U.S. private equity commitment relative to vintage year for entire 1990-2005 period. (3) (4)
• $2.3 billion of capital under management; hundreds of millions more in capital turned away
• World class institutional investors and advisors; outstanding references and client service
• “Best in class” teams; financial and operating; full team efforts
• Institutional integrity, stability and compliance
• Absolute dedication to superior performance in everything we do
(1) Gross returns, New Mountain Fund I, January 2000-December 2005
(2) S&P performance from 12/31/99-12/30/05
(3) According to CalPERS’ website- 10/4/05; U.S. funds
(4) U.S. general private equity; $50 million investments and up
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Confidential
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
11/00 11/01 11/02 11/03 11/04-7%
S&P 500
Monetization11/02
+ 100%²
Major Monetization3/04 Monetization
12/04+ 334%²
+ 305%² FinalMonetization
8/05
+ 262%²
Monetization5/05
+ 233%²( )
Exceptional Returns Despite Market Decline: Strayer Stock Price Performance(1)
•$400 million value $1.5 billion at exit
•Debt free with $110 million cash & equivalents on hand
(1) 11/30/00 – final exit (8/17/05). Given the nature of the privately negotiated investments generally made by New Mountain, public indices may not be appropriate benchmarks for comparing performance. Public benchmark returns do not include receipt or reinvestment of dividends paid
(2) Reflects stock price appreciation only. NMC’s percentage gain would be higher after taking into account cash dividends and accretion of PIK preferred stock received by NMC.
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Confidential
Strayer’s Historical Performance
$11.3
$0.8
$16.5
$2.3
$23.8
$2.7
$29.4
$4.4
$34.2
$5.6
$38.2
$7.1
$45.0
$10.4
$53.1
$14.4
$62.9
$17.9
$69.8
$19.3
$78.2
$21.7
$92.9
$22.8
$116.7
$26.3
$146.4
$32.3
$183.2
$41.2
0
20
40
60
80
100
120
140
160
180
200
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Rapid, consistent growth
CAGR 90-04
22.0%
32.5%
Revenue
Net Income
11,5009,400 10,4008,2007,4006,2005,6004,000 6,8002,900Fall Enrollment 12,100 14,000 16,532 20,138
Fiscal Year Ended 12/31
$ in
Mill
ions
23,539
$11.3
$0.8
$16.5
$2.3
$23.8
$2.7
$29.4
$4.4
$34.2
$5.6
$38.2
$7.1
$45.0
$10.4
$53.1
$14.4
$62.9
$17.9
$69.8
$19.3
$78.2
$21.7
$92.9
$22.8
$116.7
$26.3
$146.4
$32.3
$183.2
$41.2
0
20
40
60
80
100
120
140
160
180
200
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Rapid, consistent growth
CAGR 90-04
22.0%
32.5%
Revenue
Net Income
11,5009,400 10,4008,2007,4006,2005,6004,000 6,8002,900Fall Enrollment 12,100 14,000 16,532 20,138
Fiscal Year Ended 12/31
$ in
Mill
ions
23,539
7
ConfidentialStrayer Example:
Focus on Investor Value Added
(1) As of 9/30/2005. Enrollment pertains to the average of the first nine months of 2005. Campuses include two new ones scheduled to open in Q4 2005.
Metrics 12/31/00 Present (1)
Enrollment 12,000 23,768
Campuses 14 37
State Licenses 3 9
Growth Rate 12% 25%
Debt None None
Management Depth
Thin Strong
8
ConfidentialNational Medical Health Card:
A Continuation of Past Success
$8.00
$27.20
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
"All-In" Purchase Price Year End 2005 Stock Price
March 2004 Year End 2005
New Mountain acquired control of NMHC in March 2004
Stock price as of 12/30/2005
(1) An $11.50 per share conversion price, reduced by the estimated net present value of preferred dividends to be received
(1)
9
ConfidentialNMHC Example:
Value Creation via Governance Change
• National Medical Health Card Systems, Inc. (“NMHC”) is a rapidly growing pharmacy benefit manager
– Ranked sixth in the Fortune 100 growth list in 2004, immediately after eBay– Leader in service quality and transparency
• At time of New Mountain investment (March 2004), NMHC was NASDAQ-listed but majority controlled by founder/chairman
• Extensive related-party transactions between founder/chairman and company– Rented headquarters building to company– Provided temporary housing to company sales force– Compensation and benefits
• New Mountain added value in multiple ways:– Steven Klinsky became new non-executive chairman– Installed new CEO– Rebuilt board– Strengthened balance sheet– Sourced key acquisitions– Helped with sales introductions– Brought about Wall Street research coverage (07)
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Confidential
-100%
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
10/01 2/02 6/02 10/02 2/03 6/03 10/03 2/04 6/04 10/04 2/05 6/05 10/05
(1) Comp set includes: BIOX, CMX, ESRX, HLEX.
0.1
New Mountainannounces intentto acquire control
stake10/03
New Mountaincloses
transaction3/04
514%NMHC
176%
Comp Set¹
18%S&P 500
12/05
New Mountain Returns: Stock Selection and Investor “Value Added,” Not Debt
National Medical Health Card Systems, Inc. (“NMHC”)
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Confidential
$537.0
Deltek, Inc.
$ Millions
Publicly Traded Investments
Strayer Education, Inc.
Strayer Preferred Stock
Strayer Options
National Medical Health Card Systems, Inc.(5)
Unrealized Investments (At Cost)
Surgis, Inc.
Overland Solutions, Inc. Apptis, Inc.
May-01
May-04
Mar-04
Dec-01
Feb-03Oct-03
Date ofInitial
Investment
Total Unrealized Investments (held at cost)
Total Investments
$115.0
23.0
80.0
$70.0
105.0
CapitalInvested(1)
144.0
$319.0
10.0
12.0
$422.1
72.0
$0.0
6.8
RealizedProceeds(2)
$522.9
$18.8
$0.0
0.0
189.2
$70.0
110.8
UnrealizedValue(3)
148.1
$518.1
$328.9
$422.1
72.0
199.2
$70.0
117.6
RealizedProceeds and
Unrealized Value
160.1
$347.7
$1,041.0
3.7x
3.1x
2.5x
Multipleof Cost
1.9x
77.6%
150.4%
67.5%
GrossIRR(4)
44.5%
Total Realized and/or Publicly Traded Investments
$218.0
$504.1 $189.2 $693.3 3.2x 78.0%
Fund II
Fund I
MailSouth, Inc. Mar-05
Apr-05
$110.0
180.0
$410.0
Investments (At Cost)
$537.0
Date ofInitial
Realization
Jun-02
Jun-05
Total Investments
Transactions at New Mountain
$3.0
0.0
$3.0
Validus Holdings Dec-05 _ 120.0 _ 0.0
$110.0
180.0
$410.0
_ 120.0
$113.0
180.0
$413.0
_ 120.0
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Confidential
1. Capital invested represents the aggregate amount invested by New Mountain in each portfolio company.
2. Realized proceeds include all cash dividends, interest income and other payments received from or in respect of portfolio companies as well as cash distributions from the sale of securities as of December 30, 2005. All figures are gross, before expenses, management fees and carried interest, if any.
3. Unrealized investments and the remaining portions of partially realized and/or publicly traded investments have been valued as of December 30, 2005, at original cost and closing prices as of December 30, 2005, respectively.
4. IRRs are calculated based on daily investment inflows and outflows, with the return annualized. Gross IRRs shall mean an aggregate, compound, annual gross internal rate of return on investments. In the case of portfolios of realized and unrealized investments, the gross IRRs are based on realizations and internal valuations of New Mountain as of the applicable date. Internal rates of return are presented on a “gross” basis (i.e., they do not reflect the management fees, carried interest, taxes, transaction costs and other expenses to be borne by investors in the Fund, which in the aggregate are expected to be substantial); for a description of such management fees and carried interest, see “VII. Summary of Principal Terms.” Prospective investors upon request may obtain a hypothetical illustration of the effect of such fees, expenses and other charges on such returns. Actual realized returns on unrealized investments will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions on which the valuations used in the prior performance data contained herein are based. Accordingly, the actual realized returns on unrealized investments may differ materially from the returns indicated herein.
5. Based on $27.20 closing price (December 30, 2005) 6,956,522 shares on an “as converted” basis.
NMC Transaction Footnotes
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Confidential
The New Mountain Team
Managerial Advisory BoardRobert Bennett - CEO, Liberty MediaEdward Breen - CEO, Tyco IndustriesKen Buckfire - Founder, Miller Buckfire
Gary Gensler - U.S. TreasuryFred Langhammer - Former CEO, Estée
LauderDennis Liebowitz - Formerly, CSFB
David Malpass - Chief Economist, Bear Stearns
Arthur Reimers - Goldman Sachs
Professional TeamSteven Klinsky - Managing Director and CEO
Michael Ajouz - Managing DirectorAdam Collins - Managing Director
David DiDomenico - Managing DirectorMichael Flaherman - Managing Director
Douglas Londal - Managing DirectorThomas Morgan - Managing Director
Alok Singh - Managing DirectorDavid Wargo - Managing Director
Andrew Wellington - Managing Director Frank Carolan - Senior Advisor
Harry Durity - Senior AdvisorBob Grusky - Senior Advisor
David Shaw - Senior Advisor Matt Holt - Associate
Peter Masucci - AssociateDaniel Riley - AssociateSarah Dreyfus - Analyst
Matt Ebbel - AnalystAyesha Menon - AnalystAndré Moura - Analyst
Brad Weckstein - AnalystAdam Weinstein - Controller
New Mountain Capital, L.L.C.New Mountain Capital, L.L.C.
NMC Company DirectorsWilliam Brock – StrayerNanci Caldwell – Deltek
David A. Coulter – StrayerKaren Ferguson – OSI
Howard Finkelstein – ApptisRobert Johnson – Strayer
Bert Notini – DeltekDavid Ogens – Apptis
Frank Shepherd – MailSouth
Portfolio Company ManagementRobert Silberman(1) - Pres/CEO, Strayer
Joseph Hutts - Pres/CEO, Surgis Jeff Haniewich - CEO, OverlandSteven Baldwin - CEO, Apptis
James Smith - CEO, NMHCKen DeLaski – Chairman, Deltek Systems
Kevin Parker – CEO, Deltek SystemsAlbert Braunfisch - CEO, MailSouth
Edward Noonan – CEO, Validus
(1) Also serves on the Managerial Advisory Board
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Confidential
New Mountain Capital LLC
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