Search Fund Economics (PDF)

3$57,,,6($5&+)81'(&2120,&6
29(59,(:
7KLV VHFWLRQ DGGUHVVHV WKH EDVLF HFRQRPLFV IRU WKH HQWUHSUHQHXUV DQG LQYHVWRUV LQ VHDUFK IXQG
LQYHVWPHQWV
7KHWZRNH\FRPSRQHQWVLPSDFWLQJWKHVSOLWRISURFHHGVLQDVHDUFKIXQGDUHWKHVWUXFWXUHRIWKHLQYHVWRU
FDSLWDODQGWKHVHDUFKIXQGHQWUHSUHQHXU¶VHDUQHGHTXLW\UHIHUUHGWRDV³0DQDJHU(TXLW\´LQWKLVPrimer
DOVRRIWHQFDOOHG³&DUULHG,QWHUHVW´
6HDUFKIXQGLQYHVWRUVW\SLFDOO\VWUXFWXUHWKHLULQYHVWPHQWVWRJDLQSUHIHUHQFHRYHUWKHHTXLW\UHFHLYHGE\
WKHVHDUFKHU%\GRLQJWKLVWKHLQYHVWRUVPDLQWDLQSURWHFWLRQLQGRZQVLGHVFHQDULRVE\KDYLQJSUHIHUHQFH
RQWKHUHWXUQRIWKHLUFDSLWDODQGRIWHQDJXDUDQWHHGPLQLPXPUHWXUQRQWKHFDSLWDOZKLOHVWLOONHHSLQJ
WKHSRWHQWLDOIRUXQFDSSHGJDLQV0DQDJHUHTXLW\LVXVXDOO\LVVXHGDVFRPPRQHTXLW\DVVXFKRQO\RQFH
VRPHRUDOORIWKHLQYHVWRUFDSLWDOKDVEHHQUHWXUQHGRIWHQZLWKDSUHIHUUHGUHWXUQGRHVWKHVHDUFKIXQG
HQWUHSUHQHXUEHJLQWRUHDOL]HYDOXHLQKLVHTXLW\RZQHUVKLSLQWKHFRPSDQ\
7KLVVHFWLRQRQHFRQRPLFVLVLQWHQGHGWRHPSKDVL]HWKDWWKHSULPDU\GULYHUVRIHFRQRPLFUHWXUQDUHWKH
SHUIRUPDQFHRIWKHFRPSDQ\DQGWKHDEVROXWHGROODUJDLQRQWKHLQYHVWPHQW+RZHYHULWDOVRLOOXVWUDWHV
WKDWWKHIRUPDQGVWUXFWXUHRIWKHLQYHVWRUV¶FDSLWDOFDQLPSDFWWKHVSOLWRISURFHHGVEHWZHHQLQYHVWRUVDQG
VHDUFKIXQGHQWUHSUHQHXUV

,19(6725&$3,7$/
6HDUFKIXQGLQYHVWRUFDSLWDOLVSURYLGHGLQWZRVWDJHVWRIXQGWKHVHDUFKWKH³VHDUFKFDSLWDO´DQG
WR IXQG WKH FRPSDQ\ DFTXLVLWLRQ WKH ³DFTXLVLWLRQ FDSLWDO´  8SRQ DQ DFTXLVLWLRQ WKH VHDUFK FDSLWDO
FRQYHUWVLQWRWKHVDPHVHFXULWLHVLVVXHGIRUWKHDFTXLVLWLRQFDSLWDOLQYHVWPHQWW\SLFDOO\WKLVFRQYHUVLRQLV
GRQH DW D VWHSSHGXS YDOXH RIWHQ  SHUFHQW RI WKH RULJLQDO LQYHVWPHQW WR FRPSHQVDWH LQYHVWRUV IRU
UXQQLQJWKHULVNRQWKHVHDUFK
2QFH DQ DFTXLVLWLRQ LV FRPSOHWHG WKH SRVWFORVLQJ FDSLWDO VWUXFWXUH ZLOO LQFOXGH VRPH RU DOO RI WKH
IROORZLQJ
x

7UDGLWLRQDOGHEWHJUHYROYHUVHQLRUWHUPGHEWDQGSRWHQWLDOO\PH]]DQLQHGHEW

x

6HOOHUILQDQFLQJ

x

,QYHVWRUHTXLW\HJUHGHHPDEOHDQGQRQUHGHHPDEOHSUHIHUUHGVWRFN

x

&RPPRQHTXLW\

,QYHVWRUFDSLWDOFDQFRPHLQYDULRXVIRUPV,QWRGD\¶VILQDQFLQJHQYLURQPHQWLQYHVWRUVKDYHVWUXFWXUHG
DFTXLVLWLRQFDSLWDOWRSURYLGHSUHIHUHQFHLQWKHIRUP RIFDSLWDOVWUXFWXUHVHQLRULW\DQGSUHIHUUHGUDWHRI
UHWXUQRYHUWKH0DQDJHU(TXLW\7KLVFDQEHDFFRPSOLVKHGXVLQJYDULRXVVHFXULWLHVLQFOXGLQJEXWQRW
OLPLWHGWRWKRVHDGGUHVVHGEHORZ

23

3UHIHUUHGHTXLW\±7KHUHDUHPDQ\YDULDWLRQVDQGWKHUHIRUHURRPIRUFUHDWLYLW\LQVWUXFWXULQJSUHIHUUHG
HTXLW\  3UHIHUUHG HTXLW\ LV MXQLRU WR DOO GHEW VHFXULWLHV EXW VHQLRU WR FRPPRQ HTXLW\  ,Q VHDUFK IXQGV
SUHIHUUHGHTXLW\LVPRVWRIWHQLVVXHGDVSDUWLFLSDWLQJSUHIHUUHGVWRFN

x

Preferred stockRIIHUVWKHKROGHUWKHULJKWWR%27+DWKHLQLWLDOYDOXHSOXVDFFXPXODWHGDQG
XQSDLGSUHIHUUHGGLYLGHQGVLIDQ\3/86ESHUFHQWRIWKHFRPPRQHTXLW\OHVVYHVWHG
0DQDJHU(TXLW\GHVFULEHGEHORZXSRQVDOHRUOLTXLGDWLRQ3UHIHUUHGVWRFNFDQEHLVVXHGDV
UHGHHPDEOHSUHIHUUHGVWRFNRUQRQUHGHHPDEOHSDUWLFLSDWLQJSUHIHUUHGVWRFN

x Redeemable preferred stock FDQ EH UHGHHPHG LQ ZKROH RU LQ SDUW SULRU WR D VDOH
UHFDSLWDOL]DWLRQRUOLTXLGDWLRQ2QFHUHGHHPHGWKHUHGHHPDEOHSUHIHUUHGVWRFNKDVQR
IXUWKHUSDUWLFLSDWLRQ

x Nonredeemable participating preferred stock FDQQRW EH UHGHHPHG SULRU WR D VDOH
UHFDSLWDOL]DWLRQRURWKHUOLTXLGLW\HYHQWDVGHILQHGE\WKHWHUPVRIWKHDJUHHPHQW


)RUWKHVDNHRIVLPSOLFLW\WKHIROORZLQJDQDO\VLVIRFXVHVRQWZRSRWHQWLDOVWUXFWXUHVRILQYHVWRUFDSLWDO
x

6WUXFWXUH  )RU HYHU\  RI ,QYHVWRU &DSLWDO  EX\V 1RQUHGHHPDEOH 3DUWLFLSDWLQJ 3UHIHUUHG
6WRFNZLWK3UHIHUUHG5HWXUQXVXDOO\a

x

6WUXFWXUH)RUHYHU\RI,QYHVWRU&DSLWDOEX\VUHGHHPDEOHSUHIHUUHGVWRFNDQG
EX\VQRQUHGHHPDEOHSDUWLFLSDWLQJSUHIHUUHGVWRFN
x
x

6HULHV$5HGHHPDEOH3UHIHUUHG6WRFNaFRXSRQ
6HULHV%1RQUHGHHPDEOH3DUWLFLSDWLQJ3UHIHUUHG6WRFNZLWK1R&RXSRQa
L 0DQDJHU(TXLW\FRPHVLQWKHIRUPRI&RPPRQVKDUHVWKDWSDUWLFLSDWHZLWKWKH
6HULHV%1RQUHGHHPDEOH3DUWLFLSDWLQJ3UHIHUUHG6WRFN

6WUXFWXUHDQG6WUXFWXUHFDQEHVXEVWDQWLDOO\HTXLYDOHQWDWFHUWDLQLQWHUHVWUDWHVDQGSUHIHUUHGUHWXUQV
6RZK\FKRRVHRQHVWUXFWXUHRUWKHRWKHU"+LVWRULFDOO\DVWUDGLWLRQDOSULYDWHHTXLW\IXQGVPRYHGLQWRWKH
VHDUFKIXQGVSDFHWKH\VWDWHGDSUHIHUHQFHIRU6WUXFWXUH+RZHYHUPDQ\KLJKQHWZRUWKLQGLYLGXDOVRU
VHDUFK IXQG IRFXVHG LQYHVWPHQW ILUPV ZLWK H[WHQVLYH VHDUFK IXQG LQYHVWPHQW RU RSHUDWLQJ H[SHULHQFH
RIWHQSURSRVH6WUXFWXUHDVDQRWKHUYLDEOHDOWHUQDWLYH,QWKHUHFHQWSDVWDSSUR[LPDWHO\SHUFHQWRI
GHDOVKDYHEHHQGRQHZLWK6WUXFWXUHDWWKHHOHFWLRQRIWKHVHDUFKIXQGHQWUHSUHQHXU
7KHDGYDQWDJHVGLVDGYDQWDJHVRIHDFKVWUXFWXUHIRUWKHLQYHVWRUDQGWKHHQWUHSUHQHXUDUHGHSLFWHGLQWKH
IROORZLQJFKDUW



24



,QYHVWRU

6HDUFKHU

6WUXFWXUH3UHIHUUHG(TXLW\
8VXDOO\FRXSRQ
3URV
x 0DLQWDLQV XQFDSSHG UHWXUQV RQ HQWLUH
LQYHVWPHQW


&RQV
x ,Q D PLGGOLQJ RXWFRPH WKH SUHIHUUHG
UHWXUQFDQEHFRPHRQHURXVDQGOHDGWR
PLVDOLJQPHQW RI LQFHQWLYHV EHWZHHQ
WKHHQWUHSUHQHXUDQGLQYHVWRUV
x 0D\ SURPRWH H[FHVVLYH ULVNWDNLQJ E\
VHDUFKHU WR FUHDWH RXWVL]HG JURZWK LQ
HTXLW\


3URV
x 0RUH FRPPRQO\ NQRZQ VWUXFWXUH
RXWVLGHWKHVHDUFKIXQGFRPPXQLW\


&RQV
x RIWKHLQYHVWRUHTXLW\LQYHVWPHQW
KDV D FRXSRQ DWWDFKHG WKHUHIRUH
VLJQLILFDQWO\PRUHFDVKJHQHUDWLRQDQG
UHWXUQWRLQYHVWRUVLVUHTXLUHGLQLQLWLDO
\HDUVWRVWRSFRXSRQDFFUHWLRQ
x ,Q PLGJURZWK VFHQDULRV VLJQLILFDQW
DFFUHWLRQ RI WKH SUHIHUUHG HTXLW\ FDQ
OHDGWRPLVDOLJQPHQWRILQFHQWLYHVDQG
EHGHPRWLYDWLQJWRHQWUHSUHQHXU


6WUXFWXUHVSOLWRI5HGHHPDEOH3UHIHUUHG
(TXLW\DQG1RQUHGHHPDEOH3DUWLFLSDWLQJ
3UHIHUUHG6WRFN6HULHV$
6HULHV%
3URV
x )RFXVHVPDQDJHUVRQFDVKIORZJHQHUDWLRQ
DQGHDUO\UHWXUQRIFDSLWDO
x (DUO\ UHWXUQ RI FDSLWDO DOORZV IRU
UHLQYHVWPHQWLQRWKHURSSRUWXQLWLHV
x ,QYHVWRUVWLOOPDLQWDLQVRIWKHXSVLGH
x 3URYLGHVRSSRUWXQLW\WRWDNH³FKLSVRIIWKH
WDEOH´DQGWKHUHIRUHRSSRUWXQLW\WRUHLQYHVW
UHGHHPHG FDSLWDO LQ RWKHU JURZWK
LQYHVWPHQWV ZKLOH VWLOO SUHVHUYLQJ XSVLGH
SRWHQWLDO>UHZRUG@

&RQV
x 7KH VHDUFKHU KDV D EHWWHU FKDQFH DW
UHGHHPLQJ WKH KLJK FRXSRQ GHEW TXLFNO\
WKHUHIRUHGULYLQJGRZQUHWXUQV

3URV
x $OORZVSD\GRZQRIH[SHQVLYHFRPSRQHQW
RI FDSLWDO VWUXFWXUH PRUH TXLFNO\ EHFDXVH
RQO\ KDOI RI WKH WRWDO LQYHVWRU HTXLW\
LQYHVWPHQWLVDFFUHWLQJ
x (DUO\ UHGHPSWLRQ RI 6HULHV $ 3UHIHUUHG
FUHDWHV HFRQRPLF YDOXH WR HQWUHSUHQHXU
VLPLODUWRSD\LQJGRZQWKLUGSDUW\OHYHUDJH
x (DUO\ UHWXUQ RI FDSLWDO FDQ ERRVW ,55 DQG
DOORZ IRU HDUO\ YHVWLQJ RI SHUIRUPDQFH
EDVHGFDUU\

&RQV
x ,Q PLGGOLQJ RXWFRPH RI JUHDWHU WKDQ 
\HDUV VLJQLILFDQW DFFUHWLRQ RI 6HULHV $
FDQEHFRPHRQHURXV


6RPHLQYHVWRUVZDUQHGWKDW6WUXFWXUH$FRXOGEH³PDVVLYHO\GHPRWLYDWLQJWRPDQDJHUV´DQGFRXOGKDYH
³DGHYDVWDWLQJHIIHFWRQWKHHQWUHSUHQHXU´7KHVHQHJDWLYHFRQVHTXHQFHVDUHPRUHDFXWHLQORZJURZWK
RXWFRPHVZLWKRXWVLJQLILFDQWIUHHFDVKIORZJHQHUDWLRQ,QWKHVHFDVHVWKHRULJLQDOLQYHVWRUFDSLWDOSOXV
WKH SUHIHUUHG FRXSRQ PD\ SURKLELW WKH HQWUHSUHQHXU IURP SDUWLFLSDWLQJ LQ DQ\ PHDQLQJIXO HTXLW\ JDLQ
8OWLPDWHO\ LQYHVWRUV DOO QRWHG WKDW WKH HTXLW\ FDSLWDO VKRXOG EH VWUXFWXUHG WR DOLJQ WKH LQWHUHVWV RI
LQYHVWRUVDQGHQWUHSUHQHXUV

25

0$1$*(5(48,7<
$ W\SLFDO VHDUFK IXQG HQWUHSUHQHXUV ZLOO YHVW LQWR  SHUFHQW RI WKH FRPPRQ HTXLW\ ³0DQDJHU
(TXLW\´RIWKHDFTXLUHGFRPSDQ\LQWKUHHHTXDOWUDQFKHV
x

7UDQFKH8SRQDFTXLVLWLRQRIDFRPSDQ\

x

7UDQFKH  2YHU WLPH DV ORQJ DV VHDUFKHU UHPDLQV DQ HPSOR\HH RI WKH DFTXLUHG FRPSDQ\
FRPPRQO\D\HDUYHVWLQJVFKHGXOHDQG

x

7UDQFKH%\DFKLHYLQJSHUIRUPDQFHEHQFKPDUNVHJ,55KXUGOHV

3DUWQHUVKLSVW\SLFDOO\HDUQSHUFHQWRIWKHFRPPRQHTXLW\ZKLOHVRORVHDUFKHUVHDUQSHUFHQW
3HUIRUPDQFHEHQFKPDUNVJHQHUDOO\VWDUWDWSHUFHQW,55QHWWRLQYHVWRUVDQGPD[RXWDWSHUFHQW
,55 QHW RI 0DQDJHU (TXLW\  3HUIRUPDQFH YHVWLQJ FDQ EH RQ D VOLGLQJ VFDOH RU LQ LQFUHPHQWV XSRQ
DFKLHYLQJPLQLPXPWKUHVKROGVHJSHUFHQWSHUFHQWDQGSHUFHQW,55KXUGOHV&XUUHQWO\WKHUH
LVDPRYHPHQWWRZDUGVDUHGXFLQJ,55VFDOHEDVHGRQ\HDUVKHOGLHDQLQYHVWRUPLJKWUDWKHUKDYHD
SHUFHQW ,55 RQ D \HDU LQYHVWPHQW DV RSSRVHG WR D  SHUFHQW ,55 RQ D \HDU LQYHVWPHQW
%HQFKPDUNVEDVHGRQ5HWXUQRQ,QYHVWHG&DSLWDOLHFDVKRQFDVKUHWXUQUDWKHUWKDQ,55PD\EHXVHG
EXWLWLVXQFRPPRQ
,QUDUHLQVWDQFHVWKHHQWUHSUHQHXUFDQUHTXHVWDWKLUGSDUW\YDOXDWLRQRIWKHFRPSDQ\LIDOLTXLGLW\HYHQW
KDVQRWRFFXUUHGDIWHUILYH\HDUV7KH,55FDOFXODWHGDWWKDWSRLQWFDQEHXVHGIRUSXUSRVHVRIYHVWLQJWKH
SHUIRUPDQFHHTXLW\

9$/8(&5($7,21
7KHUHDUHWKUHHSULPDU\OHYHUVXVHGWRFUHDWHHTXLW\YDOXHLQDQ\FRPSDQ\
2SHUDWLRQV
x

5HYHQXH JURZWK WKURXJK VDOHV DQG PDUNHWLQJ HIIRUWV RU VWUDWHJLF LQLWLDWLYHV HJ QHZ
SURGXFWVVHUYLFHVJHRJUDSKLFH[SDQVLRQSULFLQJ

x

0DUJLQH[SDQVLRQWKURXJKFRVWUHGXFWLRQRURSHUDWLQJOHYHUDJH

x

$GGRQDFTXLVLWLRQVWRHQKDQFHVFDOHSURGXFWVHUYLFHRIIHULQJVRUFDSDELOLWLHV

)LQDQFH
x

&DSLWDOVWUXFWXUHGHFLVLRQV

x

&RVWRIFDSLWDO

x

&DSLWDOLQWHQVLW\UHGXFWLRQ±IL[HGDVVHWVZRUNLQJFDSLWDODQGRUFDSLWDOH[SHQGLWXUHV

9DOXDWLRQ0XOWLSOH
x

%X\DWORZHUPXOWLSOHVVHOODWKLJKHUPXOWLSOHV
26

2IWKHVHWKUHHOHYHUVPDQDJHUVFDQLQIOXHQFHRSHUDWLRQVDQGILQDQFHPRVWHIIHFWLYHO\,WLVXVHIXOIRUD
VHDUFK IXQG HQWUHSUHQHXU WR DQDO\]H SRWHQWLDO DFTXLVLWLRQ RSSRUWXQLWLHV E\ FRQVLGHULQJ ZKDW ³FDOFXODWHG
EHWV´ VKHLV PDNLQJ WR GULYH HTXLW\ YDOXHFUHDWLRQ )RU LQVWDQFH DQDFTXLVLWLRQ RSSRUWXQLW\ PD\ KDYH
LQFUHGLEO\KLJKJURZWKSRWHQWLDOEXWDOVRDKLJKYDOXDWLRQPXOWLSOH'RHVWKHHQWUHSUHQHXUEHOLHYH LWLV
SRVVLEOH WR KLW WKH JURZWK WDUJHWV QHFHVVDU\ WR MXVWLI\ D KLJK HQWU\ YDOXDWLRQ PXOWLSOH"  $OWHUQDWLYHO\
DQRWKHU LQYHVWPHQW RSSRUWXQLW\ PD\ KDYH VORZHU JURZWK EXW KLJK IL[HG DVVHW LQWHQVLW\  'RHV WKH
HQWUHSUHQHXUEHOLHYHFDSLWDOUHTXLUHPHQWVFDQEHUHGXFHGHQRXJKWRJHQHUDWHDFDVKRQFDVKUHWXUQWREH
DWWUDFWLYHWRDOOLQYROYHG"
7KHUH LV QR ULJKW RU ZURQJ DQVZHU WR WKHVH TXHVWLRQV  5DWKHU WKH HQWUHSUHQHXU VKRXOG PDWFK KLVKHU
SHUVRQDOULVNUHZDUGSURILOHDQGRSHUDWLQJVWUHQJWKVZLWKWKHFKDUDFWHULVWLFVRIWKHLQYHVWPHQW

+<327+(7,&$/(;$03/(2)6($5&+)81'(&2120,&6
7R LOOXVWUDWH WKH SRWHQWLDO HFRQRPLFV RI D VHDUFK IXQG LQYHVWPHQW ZH ZLOO WDNH D UHSUHVHQWDWLYH VHDUFK
IXQGWUDQVDFWLRQDQGPDQDJHUHTXLW\SDFNDJHDQGDSSO\WZRGLIIHUHQWRSWLRQVRILQYHVWRUFDSLWDO7RVHH
WKHLPSDFWRQUHWXUQVWRLQYHVWRUVDQGVHDUFKHUVZH¶OOUXQWKUHHGLIIHUHQWRSHUDWLQJVFHQDULRV

6XPPDU\RI2SHUDWLQJ6FHQDULRV
2SWLPLVWLF


[

5HYHQXH*URZWK
$QQXDO(%,7'$0DUJLQ([SDQVLRQ
([LW0XOWLSOH
,QFUHDVHLQ1HW:RUNLQJ&DSLWDO
&DVK7D[3D\PHQWV
'HSUHFLDWLRQ $PRUWL]DWLRQ
&DSLWDO([SHQGLWXUHV

%DVH&DVH


[

3HVVLPLVWLF


[

RI5HYHQXH*URZWK
RI(DUQLQJV%HIRUH7D[HV
.LQ<HDUIL[HGPDUJLQWKURXJKRXW
.SHU<HDU


7KHUHSUHVHQWDWLYHWUDQVDFWLRQZLWKWKHFDSLWDOVWUXFWXUHDWFORVLQJIROORZV

7UDQVDFWLRQDVVXPSWLRQV
x PLOOLRQLQVDOHVDQGPLOOLRQ(%,7'$
x

[(%,7'$SXUFKDVHPXOWLSOHPLOOLRQSXUFKDVHSULFH

x

[WUDGLWLRQDO6HQLRU'HEW

x

[6HOOHU'HEW

27

$FTXLVLWLRQ&DSLWDOL]DWLRQ

6HQLRU'HEW
6HOOHU)LQDQFLQJ
,QYHVWRU&DSLWDOD
7RWDOE

V
(%,7'$0XOW

[

[

[

[

 RI7RWDO





(a) Includes search capital of $300K at 50% step-up.
(b) Ignores transaction costs.



:HZLOODQDO\]HWKHGLIIHUHQFHVLQUHWXUQVWRERWKLQYHVWRUVDQGVHDUFKHUVXQGHUWZRGLIIHUHQWVWUXFWXUHV
IRUWKHLQYHVWRUFDSLWDO

x 6WUXFWXUH1RQUHGHHPDEOH3DUWLFLSDWLQJ3UHIHUUHG6WRFN
x

6WUXFWXUHVSOLWRI
o

5HGHHPDEOH3UHIHUUHG6WRFN

o

1RQUHGHHPDEOH3DUWLFLSDWLQJ3UHIHUUHG6WRFN


5HJDUGOHVV RI WKH VWUXFWXUH RI LQYHVWRU FDSLWDO WKH VHDUFK IXQG SULQFLSDO ZLOO UHFHLYH WKH IROORZLQJ
0DQDJHU(TXLW\SDFNDJH

x 3RWHQWLDORIRI&RPPRQ(TXLW\

o YHVWVDWDFTXLVLWLRQ
o

YHVWVRYHU\HDUVDOVRFRPPRQO\YHVWVRYHU\HDUV

o

8SWRYHVWVDFFRUGLQJWRQHWLQYHVWRU,55SHUIRUPDQFHKXUGOHV
ƒ

6WUDLJKWOLQHYHVWLQJLVPRVWFRPPRQEHWZHHQ,55DQG,55±LH
YHVWLQJDW,55YHVWLQJDW,55DQGYHVWLQJDW,55

)ROORZLQJLVDVXPPDU\RIWKHUHVXOWVLQHDFKRIWKHWKUHHRSHUDWLQJVFHQDULRVGHVFULEHGDERYHGHSHQGLQJ
RQZKHWKHU6WUXFWXUH$RU6WUXFWXUH%LVXVHGIRU,QYHVWRU&DSLWDO
6XPPDU\RI5HWXUQVV
,QYHVWRUV
6WUXFWXUH
6WUXFWXUH
2SWLPLVWLF&DVH


%DVH&DVH


3HVVLPLVWLF&DVH



6HDFKHU
6WUXFWXUH
6WUXFWXUH





 

$V LOOXVWUDWHG WKH JUHDWHVW GULYHU RI HFRQRPLF UHWXUQV WR LQYHVWRUV DQG VHDUFKHUV LV WKH FRPSDQ\¶V
RSHUDWLQJSHUIRUPDQFHDQGWRWDOJDLQRQWKHLQYHVWPHQW
28

1RWHWKDWWKHHFRQRPLFVWRWKHVHDUFKHUZRXOGEHVSOLWLQDSDUWQHUVKLSVFHQDULR
7KHIROORZLQJWZRWDEOHVSURYLGHPRUHGHWDLORQWKHUHVXOWVRIWKHWKUHHRSHUDWLQJDQGWZRILQDQFLQJFDVHV
GHVFULEHG)LQDQFLDOPRGHOVZLWKPRUHGHWDLORQHDFKVFHQDULRFDQEHIRXQGLQ([KLELW

29

6800$5<&$6+)/2:02'(/ 5(78516,19(6725&$3,7$/6758&785(
(US$ in 000s, except where noted)
2SWLPLVWLF&DVH
2SHUDWLQJ$VVXPSWLRQV
$QQXDO5HYHQXH*URZWK
$QQXDO(%,7'$0DUJLQ([SDQVLRQ
([LW9DOXDWLRQ0XOWLSOH

%DVH&DVH

3HVVLPLVWLF&DVH



[



[



[

<HDU6DOHV
<HDU(%,7'$










([LW7(9
/HVV1HW'HEW
7RWDO(TXLW\













5HGHHPDEOH3UHIHUUHG(TXLW\
1RQ5HGHHPDEOH3UHIHUUHG(TXLW\
9DOXHRI&RPPRQ(TXLW\













5HWXUQV
,QYHVWRU5HGHHPDEOH3UHIHUUHG(TXLW\
,QYHVWRU1RQ5HGHHPDEOH3UHIHUUHG(TXLW\
,QYHVWRU&RPPRQ(TXLW\
7RWDO5HWXUQWR,QYHVWRUV
















2ULJLQDO,QYHVWPHQW
5HWXUQRQ,QYHVWHG&DSLWDO
,QYHVWRU,55


[



[



[


0DQDJHU&RPPRQ(TXLW\2ZQHUVKLS
0DQDJHU3D\RXW








 

30

6800$5<&$6+)/2:02'(/ 5(78516,19(6725&$3,7$/6758&785(
(US$ in 000s, except where noted)
2SWLPLVWLF&DVH

%DVH&DVH

3HVVLPLVWLF&DVH

2SHUDWLQJ$VVXPSWLRQV
$QQXDO5HYHQXH*URZWK







$QQXDO(%,7'$0DUJLQ([SDQVLRQ
([LW9DOXDWLRQ0XOWLSOH


[


[


[

<HDU6DOHV
<HDU(%,7'$










([LW7(9
/HVV1HW'HEW
7RWDO(TXLW\













5HGHHPDEOH3UHIHUUHG(TXLW\
1RQ5HGHHPDEOH3UHIHUUHG(TXLW\
9DOXHRI&RPPRQ(TXLW\













5HWXUQV
,QYHVWRU5HGHHPDEOH3UHIHUUHG(TXLW\DE
,QYHVWRU1RQ5HGHHPDEOH3UHIHUUHG(TXLW\
,QYHVWRU&RPPRQ(TXLW\
7RWDO5HWXUQWR,QYHVWRUV
















2ULJLQDO,QYHVWPHQW
5HWXUQRQ,QYHVWHG&DSLWDO
,QYHVWRU,55


[



[



[


0DQDJHU&RPPRQ(TXLW\2ZQHUVKLS
0DQDJHU3D\RXW










(a) Includes Investor Capital dividends during duration of investment.
(b) Cash from operations pays down Redeemable Preferred Equity over 5 year hold period.

31