K1 Ventures

[yeokiwi]

http://infopub.sgx.com/FileOpen/Divestme...eID=456167

The Board of Directors of k1 Ventures Limited (the “Company”)
wishes to announce that its wholly-owned subsidiary, Focus Up Holdings Limited (“Focus Up”)
has entered into a redemption agreement with National Realty Trust, Inc. (formerly known as
KU Education Inc.) for the divestment of the Company’s 10.2% equity interest in KUE 3 LP for
a gross cash consideration of approximately US$29 million, which is prior to any deductions
for U.S. income taxes and the Greenstreet carried interest1
(“KUE 3 LP Disposal”). KUE 3
LP holds approximately 65 per cent of the ownership interest in National Realty Trust, Inc.
which is the holding company of U.S. real estate assets which are principally comprised of
special purpose childcare learning centers leased to KinderCare Learning Centers LLC.

[yawnyawn]

http://infopub.sgx.com/FileOpen/Divestme...eID=456167

The Board of Directors of k1 Ventures Limited (the “Company”)
wishes to announce that its wholly-owned subsidiary, Focus Up Holdings Limited (“Focus Up”)
has entered into a redemption agreement with National Realty Trust, Inc. (formerly known as
KU Education Inc.) for the divestment of the Company’s 10.2% equity interest in KUE 3 LP for
a gross cash consideration of approximately US$29 million, which is prior to any deductions
for U.S. income taxes and the Greenstreet carried interest1
(“KUE 3 LP Disposal”). KUE 3
LP holds approximately 65 per cent of the ownership interest in National Realty Trust, Inc.
which is the holding company of U.S. real estate assets which are principally comprised of
special purpose childcare learning centers leased to KinderCare Learning Centers LLC.

You missed out the important part,

The transaction is expected to increase the Group’s earnings per share and net tangible assets per share by approximately 5 cents for the financial year ending 30 June 2017, after taking into consideration adjustments for factors such as net assets, income taxes, and the Greenstreet carried interest.

NTA is now 48 cents after KUE disposal and before Guggenheim disposal.

(vested)

[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)

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)

Yes K1 initial investment in Guggenheim is US$101.8M.

I was previously stating that K1's stake in Guggenheim and KUE was only valued at SGD 67M above book by Mr Market, which I thought was pretty absurd.

[yawnyawn]

Minerd's Guggenheim attracts broad fixed-income inflows in May

Overall, Guggenheim has $161 billion in fixed-income assets under management.

https://www.investing.com/news/stock-mar...may-491012

[desmondxyz]

Minerd's Guggenheim attracts broad fixed-income inflows in May

Overall, Guggenheim has $161 billion in fixed-income assets under management.

https://www.investing.com/news/stock-mar...may-491012

hmm...what does it mean to K1?

[Contrarian]

> hmm...what does it mean to K1?

It means that Guggenheim has a strong ability to increase AUM of its funds. The stronger this ability, the higher the valuation of Guggenheim.

[cif5000]

The transaction is expected to increase the Group’s earnings per share and net tangible assets per share by approximately 5 cents for the financial year ending 30 June 2017, after taking into consideration adjustments for factors such as net assets, income taxes, and the Greenstreet carried interest.

Book value S$6m
Gross proceeds US29m or S$40m
Gross gain $34m

Less tax and management incentives of about $12.3m
Gain of 5ct or about $21.7m

Not sure what the taxes and incentives for Guggenheim disposal look like? Fair to assume 35%?

[yawnyawn]

The transaction is expected to increase the Group’s earnings per share and net tangible assets per share by approximately 5 cents for the financial year ending 30 June 2017, after taking into consideration adjustments for factors such as net assets, income taxes, and the Greenstreet carried interest.

Book value S$6m
Gross proceeds US29m or S$40m
Gross gain $34m

Less tax and management incentives of about $12.3m
Gain of 5ct or about $21.7m

Not sure what the taxes and incentives for Guggenheim disposal look like? Fair to assume 35%?

For this, you have to refer to the paragraph 3 of the "Proposed Amendment to the Management Agreement" circular entered between K1 and Greenstreet in 2014.

http://www.k1ventures.com.sg/admin/files...202014.pdf

This is how i inferred the management agreement. To keep it simple, upon disposal of any investments, Greenstreet gets a cut on the realized net profits(total distributions + divestment amount - initial capital - threshold level).

1) If the investment managed to compound at 10-15% over the years, Greenstreet will be entitled to a carried interest of up to 10% of the realised net profits

2) If the investment managed to compound >15% over the years, Greenstreet will be entitled to a carried interest of 15% of the realised net profit.

[yawnyawn]

The transaction is expected to increase the Group’s earnings per share and net tangible assets per share by approximately 5 cents for the financial year ending 30 June 2017, after taking into consideration adjustments for factors such as net assets, income taxes, and the Greenstreet carried interest.

Book value S$6m
Gross proceeds US29m or S$40m
Gross gain $34m

Less tax and management incentives of about $12.3m
Gain of 5ct or about $21.7m

Not sure what the taxes and incentives for Guggenheim disposal look like? Fair to assume 35%?

For this, you have to refer to the paragraph 3 of the "Proposed Amendment to the Management Agreement" circular entered between K1 and Greenstreet in 2014.

http://www.k1ventures.com.sg/admin/files...202014.pdf

This is how i inferred the management agreement. To keep it simple, upon disposal of any investments, Greenstreet gets a cut on the realized net profits(total distributions + divestment amount - initial capital - threshold level).

1) If the investment managed to compound at 10-15% over the years, Greenstreet will be entitled to a carried interest of up to 10% of the realised net profits

2) If the investment managed to compound >15% over the years, Greenstreet will be entitled to a carried interest of 15% of the realised net profit.

I tried to do some rough calculation for the case of KUH, the initial capital was US$57M and additional threshold was US$41M. Total threshold US$98M.

Based on AR2016, "Total cash and property distributions received from inception are approximately US$223 million at 30 June 2016." Divestment of KUH gives US$29M.

Therefore, capital in KUH managed to compound at ~12% over 13 years. The capital would grow to US$197M if investment in KUH compounded at
10% over 13 years. Greenstreet should be entitled to 10% of US$55M (US$252M less US$197M), therefore ~US$5.5M.

[cif5000]

The transaction is expected to increase the Group’s earnings per share and net tangible assets per share by approximately 5 cents for the financial year ending 30 June 2017, after taking into consideration adjustments for factors such as net assets, income taxes, and the Greenstreet carried interest.

Book value S$6m
Gross proceeds US29m or S$40m
Gross gain $34m

Less tax and management incentives of about $12.3m
Gain of 5ct or about $21.7m

Not sure what the taxes and incentives for Guggenheim disposal look like? Fair to assume 35%?

For this, you have to refer to the paragraph 3 of the "Proposed Amendment to the Management Agreement" circular entered between K1 and Greenstreet in 2014.

http://www.k1ventures.com.sg/admin/files...202014.pdf

This is how i inferred the management agreement. To keep it simple, upon disposal of any investments, Greenstreet gets a cut on the realized net profits(total distributions + divestment amount - initial capital - threshold level).

1) If the investment managed to compound at 10-15% over the years, Greenstreet will be entitled to a carried interest of up to 10% of the realised net profits

2) If the investment managed to compound >15% over the years, Greenstreet will be entitled to a carried interest of 15% of the realised net profit.

I tried to do some rough calculation for the case of KUH, the initial capital was US$57M and additional threshold was US$41M. Total threshold US$98M.

Based on AR2016, "Total cash and property distributions received from inception are approximately US$223 million at 30 June 2016." Divestment of KUH gives US$29M.

Therefore, capital in KUH managed to compound at ~12% over 13 years. The capital would grow to US$197M if investment in KUH compounded at
10% over 13 years. Greenstreet should be entitled to 10% of US$55M (US$252M less US$197M), therefore ~US$5.5M.

Thank you!

How about Guggenheim? Assuming k1 disposed this at US$220m, how much would the incentive be?

I finally looked at the circular for the 2010 Management Agreement. 
http://www.k1ventures.com.sg/admin/files...rcular.pdf