SEAN MELNICK

1
(No Transcript)
2
NEDCOR SECURITIES MIDCAP CONFERENCE
SEAN MELNICK
3
GROUP SNAPSHOT

• The Peregrine group is a leading provider of
  wealth and asset management solutions.
• Assets under management currently exceed R 22
  billion.
• Citadel R 10 billion
• Quant R 9 billion
• Hedge funds R 3 billion
• 10th biggest broker by value, 7th by shares
  traded and 5th by deals settled.
• Market capitalisation (net of treasury shares) _at_
  R7.50 of R1.5 billion.
• Capitalised at 6.7 of assets under management.
• PE ratio per trading update (_at_ R7,50) between
  8.2 times and 9.3 times to end March 06.

4
GROUP PROFILE Contribution to Sep 05

• WEALTH MANAGEMENT 23
• Citadel
• ASSET MANAGEMENT 35
• Hedge Funds
• Peregrine Capital
• Peregrine Investment Managers (PIM)
• Caveo FOHF (JV with IS)
• PeregrineQuant
• TRANSACTIONAL 26
• Broking Structuring
• PROPRIETARY CAPITAL 16
• Investment returns (net of group costs)

5
WEALTH MANAGEMENT - CITADEL
PERSONAL FINANCIAL FRAMEWORK

6
WEALTH MANAGEMENT
CITADEL

• Focussed on individual high-net-worth wealth
  management
• Clients with R 2 million plus to invest
• Average current top-up client size R 5,0
  million
• Average new client size R 8,0 million
• Total assets under management approximately R
  10 billion
• New inflows of R 100 million per month
• Client retention of 96
• Annuity outflows of almost R600 million

7
WEALTH MANAGEMENT
CITADEL - PROFITABILITY

• Annuity profit R 4 million per month approx
  R50 m per annum
• PLUS 20 performance fee above lifetime
  benchmark per client
• Benchmark is inflation after accounting for all
  costs and taxes
• High watermark catch up from late 2001 / early
  2002
• Performances fees currently averaging R 3
  million per month plus
• Approximately half the client base now at, or
  above, high watermark
• Strong gearing to weaker currency over time

8
WEALTH MANAGEMENT
CITADEL PERFORMANCE FEE RUN RATE

• At current level of AUM of R 10 billion
• if all clients at benchmark run-rate of R 20
  million per 1 real
• if half the clients at benchmark run-rate of
  R10 million per 1 real
• Half the clients at benchmark 5 real R 50
  million fees per annum
• Half the clients at benchmark 10 real R 100
  million fees per annum

9
ASSET MANAGEMENT
PeregrineQuant

• Over R9 billion in AUM
• Cashflow positive
• Good progress in both the institutional and
  retail markets
• All the infrastructure costs have been spent
• Belief that quantitative asset management will
  continue to gain ground on the more traditional
  styles

10
HEDGE FUNDS

• Peregrine is the biggest player in the local
  hedge fund industry.
• The groups exposure to the hedge fund industry
  is extensive with investments across a broad
  range of strategies exceeding R5 billion on a
  worldwide basis.
• In excess of R 2,5 billion is managed in single
  strategy hedge funds.
• Within the groups wealth management arm,
  Citadel, over R1 billion is invested with
  leading hedge fund managers on a multi - strategy
  approach.
• In addition, R1,7 billion is currently managed
  globally on a fund of hedge fund basis with an
  international joint venture partner.
• Caveo, a newly formed FOHF joint venture with
  Investment Solutions currently has R 330 million
  under management.
• The group also houses one of the countrys
  leading derivative, equity and prime broking
  operations.

11
OUR INTEGRATED HEDGE FUND STRATEGY

• FUND OF HEDGE FUNDS / MULTISTRAT
• Caveo
• Citadel Multistrat
• SINGLE STRATEGY FUNDS
• Peregrine Capital
• Peregrine Investment Managers (PIM)
• PRIME BROKER
• Peregrine Prime

12
ASSET MANAGEMENT
CAVEO Top of the funnel

• Combining Peregrines hedge fund experience and
  reputation
• with Investment Solutions distribution (and
  manager access)
• Currently R330 million under management
• Potential to manage several billion
• Conflict of interest resolved by non-Peregrine
  products

13
OUR INTEGRATED HEDGE FUND STRATEGY

• FUND OF HEDGE FUNDS / MULTISTRAT
• Caveo
• Citadel Multistrat
• SINGLE STRATEGY FUNDS
• Peregrine Capital
• Peregrine Investment Managers (PIM)

14
ASSET MANAGEMENT
PEREGRINE CAPITAL

• Fundamental equity hedge fund management company
• Over R2.1 Billion in AUM
• Comfortable at current AUM , but closed to new
  flows
• Hedge fund 44 p.a. gross compounding since
  July 98
• Performance fund 65 p.a. gross compounding
  since July 98
• 50/50 economic deal with management stability
  in team
• Profit from annual fees of only R 10 million BUT

15
ASSET MANAGEMENT
PEREGRINE CAPITAL PERFORMANCE FEES AT AUM of R
2,1 BN
16
OUR INTEGRATED HEDGE FUND APPROACH

• FUND OF HEDGE FUNDS / MULTISTRAT
• Caveo
• Citadel Multistrat
• SINGLE STRATEGY FUNDS
• Peregrine Capital
• Peregrine Investment Managers (PIM)
• PRIME BROKER
• Peregrine Prime

17
TRANSACTIONAL
BROKING AND STRUCTURING

• Peregrine Securities
• Equity Broking
• Peregrine Prime
• Peregrine Equities
• Derivative Broking
• Derivative Quantitative Research
• Structuring

18
Base Case (?) Earnings for Peregrine (note
assumptions)

19
Balance sheet

• No external gearing at year end
• R 360 million in cash / near cash investments
• Approximately R 150 million cash in working
  capital
• Generating cash at a rate of R 20 million per
  month (pre tax)
• BUT
• Earnings do rely on good investment performance
• Business is highly people dependent

20
FINALLY, AN INTERESTING COMPARISON AND SOME
HOMEWORK

• Man Group Plc (www.mangroupplc.com)
• Largest listed hedge fund manager. Listed on the
  LSE.
• Man Group Plc is a
• leading global provider of alternative
  investment products and solutions.
• One of the worlds largest futures brokers.
• Assets under management _at_ 12 Jan 06 - 45.8
  billion
• Market Capitalisation - 11.9 billion
• Market cap AUM 26 !!!!
• Fiscal PE (trailing) 19.3 times

21
(No Transcript)