Kensington Global Private Equity Fund Announces Record Distribution
TORONTO, Feb. 28, 2013 /CNW/ - Three years into a North American
economic recovery of slow but steady GDP growth, most investors have
not seen this improved economic performance translate into portfolio
earnings. Yet despite the headwinds facing public markets, private
equity continues to represent an alternative investment strategy that
is delivering sustained investor returns.
The realities of today's public markets, such as continued volatility
driven by external events — from fiscal crises in Europe to political
gridlock in Washington — combined with normal gyrations from quarterly
earnings expectations and high frequency trading, have gradually
separated the stock market index from the economic cycle. And as public
markets finally edge back to pre-downturn levels, public market
investors must face the discouraging fact that recent stock market
gains — while encouraging — have merely returned market values to where
they were five years ago.
"Over the past several years, traditional portfolios of stocks and bonds
have largely failed in their core mission to create wealth, generate
income, and secure long-term retirement savings, while the private
equity market has been providing investors with a reliable avenue to
participate in the steady economic growth that surrounds us," says Rick
Nathan, Managing Director, Kensington Capital. "Private equity
represents an investment in the real economy, where wealth creation is
based on real measures such as earnings growth and profitability, and
the abilities of private equity managers to translate these measures
into tangible gains for investors."
This wealth creation has translated into strong performance for the Kensington Global Private Equity Fund, which today announced a record distribution of $2.13 per Unit,
representing a 9.8% payout. After this latest distribution, fund
investors will have received a total of $3.69 per Unit (16.9%) within
the past 12 months.
Canada's largest institutional investors, which require steady long-term
portfolio gains to fund their pension obligations, have also
participated in the growth of private equity markets and are continuing
to allocate more and more capital to the sector. In particular, the
Canada Pension Plan Investment Board (CPPIB), Canada's, largest
investor, held 17.1% of its total assets in private equity investments
as of December 31, 2012, while OMERS increased its private market
investments (consisting of private equity, real estate and
infrastructure) to 40% during the 2012 period. Globally, according to
Preqin's Investor Outlook, a strong majority (85%) of large
international investors stated that their private equity portfolio
returns met or exceeded expectations in 2012, and almost a third (27%)
expect to increase their level of exposure to private equity in 2013.
Investment in private markets remains promising, with private equity
activity continuing an upward trajectory. Canada's Venture Capital &
Private Equity Association (CVCA) and Thomson Reuters last week
released a joint report showing that the 2012 private equity market saw
the highest deal volume on record. According to the report, disclosed
Canadian buyout and private equity disbursements totalled $11.6 billion
in 2012, marking the highest level of dollars invested in the Canadian
market since 2008. Private equity transactions totalled 313, up 4% from
2011 and establishing a new market record.
Kensington Global Private Equity Fund Distribution Details
The distribution announced today will be paid on March 26, 2013 to
Unitholders of record on March 5, 2013. Each Unitholder will be paid a
distribution of $2.13 per Unit, for a total distribution of
approximately $5.9 million. Each class of Units will receive the same
distribution per Unit.
The Kensington Fund invests in a diversified portfolio of private
companies and funds, typically holding each underlying company for a
period of three to five years before selling to a larger corporation or
into the public markets through an IPO.
"When we sell an investment at a profit, our policy is to distribute
those profits to our investors, while re-investing the original
capital," reports Nathan. "Today's announcement represents the
distribution of the realized profits that we have generated from the
sale of portfolio companies through the past several months."
The new distribution exceeds the $1.56 per Unit paid in October 2012,
reflecting strong growth in the realized gains achieved within the
Kensington private equity portfolio.
Current Unitholders of the Fund who wish to reinvest the distribution
into additional Units should ensure that they are enrolled in the
Fund's Distribution Re-Investment Plan (DRIP) prior to March 22, 2013.
Individual Unitholders should contact their Investment Advisors to
enroll in the DRIP via the FundSERV system.
Broadening Access to Private Equity
Traditionally, private equity has only been available to large
institutional investors who can meet very high minimum amounts in
several different investments to create a diversified portfolio. The
Kensington Fund was established to make these investment opportunities
available to the broader investing public. Institutional investors
invest alongside individual investors in the Kensington Fund, which can
be purchased by accredited investors through their investment advisors
via the FundSERV system.
Other barriers to entry for many investors include the challenges of
identifying and evaluating private equity firms, difficulty accessing
high quality opportunities, and the risk of committing to new private
equity funds as a 'blind pool', before any of the private company
investments have been made.
"At Kensington we seek to remove barriers and make private equity
markets more accessible to investors. Anyone can look at our current
investment portfolio via our website and our regular investment reports
and decide whether or not they want to buy into it today, at the
current net asset value (NAV)," notes Nathan, "Investors like the idea
of buying into a fully assembled portfolio that includes a mix of new
companies with a 5-year time horizon, as well as companies being
prepared for sale, and everything in between. They don't have to wait
several years for their first distribution, like they would if they
were buying into a brand new private equity fund."
The Kensington Global Private Equity Fund has a strong track record of
creating value for investors, and has generated annualized returns of
11.0% in the three years ending on December 31, 2012 — more than double
the S&P/TSX Index's annualized returns of 4.5% over the same period.
Kensington, founded in 1996, is a leading Canadian investor in
alternative investments. Kensington is best known for its private
equity investment programs, having committed over $600 million since
2002, and is also an active investor in infrastructure assets and hedge
funds. Institutional investors such as pension funds and professional
asset managers, as well as high net-worth individuals and retail
investors, hold Kensington funds. For more information on Kensington
and current offerings, please visit www.kcpl.ca.
SOURCE: Kensington Capital Partners Limited
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