K1 Ventures

[desmondxyz]

At yesterday's EGM, Jeffrey Safchik revealed that k1 owns more than 5% of Guggenheim initially and after some dilution over the years, the stake is below 5% and pretty close to 5% after adding in the converted warrants.

Thanks for the update. Is there any insight how much does the stake worth?

[yawnyawn]

At yesterday's EGM, Jeffrey Safchik revealed that k1 owns more than 5% of Guggenheim initially and after some dilution over the years, the stake is below 5% and pretty close to 5% after adding in the converted warrants.

Thanks for the update. Is there any insight how much does the stake worth?

Obviously Jeffrey Safchik could and would not reveal the value of their Guggenheim's equity stake but he did say it is worth in excess of book.

Therefore i think 3.5% stake in Guggenheim is a fair estimate and agree with Jacmar that most likely the Guggenheim stake equals the current market value if sold.

On KUE, Jeffrey Safchik did mention that KUE has few hundred million of debt on the balance sheet.

[Gin]

If I may add, k1 Management sees Guggenheim as the natural buyer of their interest, given the illiquid nature of the investment. The intention is to negotiate directly with Guggenheim management on the fair value of k1's interest in Guggenheim. I believe this to be the best approach given the long term relationship between the two parties. A failure to come to terms will then result in a more tedious process involving third party valuers. The discussion is still at a "fact-finding" stage.

As for valuation, in my opinion, given the lack of information available on Guggenheim, the simplest approach would be based on AUM and applying a % on it. In this case, this gives rises to a wide range of values. Note however that Guggenheim appears to be more of a diversified financial services company than a pure-play investment firm. But, there is now a narrower range on k1's equity share, I believe that it is fair to assume a 3.5-4.5% stake.

The other point on KUE was that k1 Management believes that they are much closer to a conclusion with KUE then Guggenheim. This said, k1 is keen to see the return of capital on both their investments as soon as practically possible.

[se2037]

Came accross these multiples on transactions that occured in the last 10 years

[se2037]

@Jacmar, care to give a try to estimating the value of the KUE stake (assuming 30% leverage) and remaining cash balance post expenses. Thank you

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[Jacmar]

@Jacmar, care to give a try to estimating the value of the KUE stake (assuming 30% leverage) and remaining cash balance post expenses. Thank you

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It's almost impossible to get a good estimate of what the properties is worth of the KUE stake. I doubt K1 board even knows. You will need a property evaluation to get a decent number. suffice to say that the property mkt across the US has recovered quite a lot in the last few yrs. as for 30% leverage , how do you know that?  it could be 60% and your estimate will be totally out. Hence I don't bother to try and estimate what's worth. Invest base on the GGH stake is good enough.

[Jacmar]

Came accross these multiples on transactions that occured in the last 10 years

 Tks for this posting. 2 comments:

1. you will notice prior to GFC the transacted valuation is high and it goes down during 08/09 as expected and then rise again especially in the last couple of yrs, booming stock mkt. K1 bought GGH in 2011 which would be the low point. so if similar transactions to take place I would expect it to be above average of the 2.7% 

2. the average of 2.7% is also about right. As I mentioned in earlier post, there was a PWC 6/2016 report of listed asset managers and the valuation average was 2.5%. so to take it private you need a premium....10-20% is about right.

Jeff repeatedly said during the EGM that GGH is a very well run company. So what do you think you are willing to pay?? 2.5%, 3% , ...5%? each 0.5% higher is lots of money on the table.

DYODD pls.

[se2037]

Thank you!

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[yawnyawn]

http://infopub.sgx.com/Apps?A=COW_CorpAn...3d8f5e0fc6#

Company's response to the 8% price drop on 24 May. The proposed disposal of Company's stake in KUE is in advanced negotiations.

Current market cap is SGD 254M, based on last closing price of $0.585. Company's book value is $0.43. K1's stake in Guggenheim and KUE is only valued at SGD 67M above book by Mr Market.

(vested)

[tealeaves]

http://infopub.sgx.com/Apps?A=COW_CorpAn...3d8f5e0fc6#

Company's response to the 8% price drop on 24 May. The proposed disposal of Company's stake in KUE is in advanced negotiations.

Current market cap is SGD 254M, based on last closing price of $0.585. Company's book value is $0.43. K1's stake in Guggenheim and KUE is only valued at SGD 67M above book by Mr Market.

(vested)

But just a minor clarification, isnt K1 initial investment in Guggenheim (back in 2011) in the region of US$100m mah? 
yAH, lotsa selling and dumping of K1, if it goes low enuff, thou is thinking of dipping abit abit, hehehe.

(not vested atm)