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Fund Description Keating Capital is a business development company that specializes in making pre-IPO investments in innovative, emerging growth companies that are committed to and capable of becoming public. We provide our investors with the ability to participate in a unique fund that allows our stockholders to share in the potential value accretion that we believe typically occurs once a company completes an IPO, which we refer to as a private to public valuation arbitrage.
Investment Objective Our investment objective is to maximize capital appreciation, which we seek to achieve through equity investments in later stage, pre-IPO companies. We target a 2x return over an anticipated 3-year holding period.
Equity Partners for Companies Primed to Become Public ®
Investor Fact SheetQ4 2012
Nasdaq: KIPO
5251 DTC Parkway, Suite 1100 ✦ Greenwood Village, Colorado 80111 ✦ (720) 889-0139 ✦ KeatingCapital.com
As of December 31, 2012
Stock Data
NAV per share $8.00
Closing price per share (12/31/12) $6.27
52-week range $5.72 - 9.69
52-week average daily volume 8,876
Market cap (millions) $57.5
Price/NAV 0.78x
Condensed Financial Data (millions)
Net assets $73.4
Investments at fair value $65.0
Cash $8.9
Debt1 $0.0
CapitalizationShares outstanding 9,174,785
Public float 98.2%
Distributions (per share)
2012 $0.032
2011 $0.133
Fees and ExpensesBase management fee 2%
Incentive fee4 20%
1 Keating Capital does not use leverage2 Long term capital gains3 Return of capital4 Based on realized capital gains less realized capital losses less unrealized depreciation on investments
Additional Information
Investment Committee:
✦ Timothy J. Keating
✦ Kyle L. Rogers
✦ Frederic M. Schweiger
For additional information, please contact the Investor Relations Director:
Margie L. Blackwell (720) 889-0133 [email protected]
✦ There is no assurance that our portfolio companies will be able to complete an IPO or other liquidity event or that we will be able to realize any net capital gains from the sale of our publicly traded portfolio company investments. In the event the expected investment horizon is less than 3 years, the targeted return may be correspondingly reduced.
✦ Following an IPO, the shares we hold in our portfolio companies are generally subject to customary 180-day lockup restrictions. There can be no assurance that we will be able to achieve our targeted return on any individual portfolio company investment if and when it goes public, and following the lockup expiration, or on the portfolio as a whole.
1 Corsair postponed its IPO in May 2012 due to weak market conditions and has not updated its registration statement on file with the SEC since. BrightSource withdrew its registration statement in April 2012.
Buy Privately, Sell Publicly, Capture the Difference
Targeted Portfolio Company Investment Horizon
20Portfolio company investments
(since inception)
5Filed for IPOs1
7Lead investor
3Completed IPOs
(NPTN, SZYM, LOCK)
Target36
MonthsPrivate
12 months
Eligible for Disposition
12 months
CompletedIPO/Lockup
6 months
Private – IPO Registration
on File6 months
Portfolio Company Activity
Valuationincrease
Buy privately
Sell publicly
Capture thedifference
Private Public
Investor Fact Sheet Q4 2012
5251 DTC Parkway, Suite 1100 ✦ Greenwood Village, Colorado 80111 ✦ (720) 889-0139 ✦ KeatingCapital.com
Keating Capital, Inc. (“Keating Capital”) is a Maryland corporation that has elected to be regulated as a business development company under the Investment Company Act of 1940. Keating Investments, LLC (“Keating Investments”) is an SEC registered investment adviser and acts as investment adviser to and receives base management and/or incentive fees from Keating Capital. Keating Investments and Keating Capital operate under the generic name of Keating. This Investor Fact Sheet is a general communication of Keating and is not intended to be a solicitation to purchase or sell any security. This Investor Fact Sheet may contain certain forward-looking statements, including statements with regard to the future performance of Keating Capital. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results to differ materially are included in Keating Capital’s Form 10-K and Form 10-Q, and include uncertainties of economic, competitive, and market conditions, and future business decisions all of which are difficult or impossible to predict accurately, and many of which are beyond the control of Keating Capital. Although Keating Capital believes that the assumptions underlying the forward-looking statements included herein are reasonable, any of the assumptions could be inaccurate and therefore there can be no assurance that the forward-looking statements included herein will prove to be accurate. Except as required by the federal securities laws, Keating Capital undertakes no obligation to revise or update this Investor Fact Sheet or any forward-looking statements contained herein, whether as a result of new information, future events or otherwise.
✦ Net unrealized appreciation of approximately $3.2 million as of December 31, 2012, with 17 of 19 portfolio companies still private.
✦ Dividend of $0.03 per share paid in December 2012, representing a distribution of 100% of our 2012 net realized capital gains, and which we believe begins to evidence and validate our strategy.
Why Own Keating Capital?
1 Dollar amounts represent Keating Capital’s investment cost as of December 31, 2012 (excluding any follow-on investments in subsequent financing rounds or open market purchases).
Structural Protection (as of December 31, 2012)
Portfolio Companies1 (as of December 31, 2012)
$2,500,000
March 2011
$500,000
July 2010
$2,000,000
October 2010
$2,500,000
March 2011
$4,000,000
August 2011
$1,000,000
July 2010
Nasdaq: SZYM
$4,000,000
July 2011
Nasdaq: CRSR Pending
$2,500,000
February 2011
Internet & Software Technology Cleantech
$3,000,000
June 2011
$1,300,000
August 2011
$4,000,000
December 2011
$4,000,000
September 2011
$3,000,000
September 2011
$3,000,000
January 2012
$5,000,000
March 2012
$5,000,000
June 2012
$5,000,000
March 2012
$5,000,000
May 2012
$3,500,000
June 2012
NYSE: LOCK
✦ We attempt to negotiate structural protections such as special IPO conversion rights on preferred stock investments, warrants for additional shares at a nominal exercise price, or liquidation preferences that allow us to receive more than our investment cost in the case of a sale or liquidation.
✦ The ability to realize this structurally protected appreciation (“SPA”) at the time of the IPO will depend on a number of factors including each portfolio company’s completion of an IPO, any adjustment to the special IPO conversion price that may be negotiated prior to or during the IPO process, the possible subsequent issuance of more senior securities that may impact the relative value of the structural protection, and fluctuation in the market price of each portfolio company’s common shares until such time as the common shares received upon conversion can be disposed of following the expiration of the 180-day post-IPO lockup period. This SPA is calculated assuming each portfolio company completes an IPO and would not be available unless each portfolio company completes an IPO. The SPA is not impacted by the IPO price since the structural protections are designed to derive such SPA at any IPO price at the time of the IPO (although there are limitations on the structural protection we have for two portfolio companies which may diminish the value of our SPA in those portfolio companies). Further, even if an IPO is completed, this SPA would not be realized unless the market price of each portfolio company’s common shares equals or exceeds the IPO price at the time such shares are disposed of following the post-IPO lockup period. Please see our annual report on Form 10-K for the year ended December 31, 2012, for additional information on, and risks related to, our structural protections.
$21 millionunrealized appreciation at time of IPO,
if each of these 8 companies completes an IPO
1.8xstructurally protected appreciation multiple
55%of invested portfolio has structural protection
(based on fair value)
$36 millionfair value of these 8 companies
8 of 17private companies have structural protection
(i.e., right to convert at discount to IPO)