K1 Ventures

[cif5000]

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

Based on 2016 AR, it was stated that "The Group has received approximately US$35.1 million of scheduled dividends since June 2011. In addition, the Group has received supplemental special distributions of approximately US$3.8 million related to the Preferred Units."

Assume K1 disposed Guggenheim at US$220M, total sum would be US$259M. This gives a return of 17.2% compounded over 6 years.

10% compounded over 6 years would give US$177M. Greenstreet should be entitled to at least 15% of the realized net profit in this case. Actual amount may vary though since they are many confusing subclauses under the management agreement.

Wow, cif5000 guessed the disposal price of Guggenheim almost right on the dot, just by 1M! Impressive!

At US221M, assuming 4% stake, the p/aum would be 2.3%. If the assumption is right, I would be disappointed as the valuation is on the lower end of what I expected.

Nevertheless, this "workout" gave me a decent return with a 4 month holding period. I have since sold off my position after the announcement was made.

Congrats!

I've got no crystal ball and the assumption was at best a guestimate.

Still can't get precise with the tax and incentives.

Book value $143m
Gross consideration US$220m or $309.4m (USD @ 1.4)
Gross gain $166.4m
Net Gain of 29ct or about $125.6m

Tax and management incentives $40.8m (or 24.5%)

If the tax/incentives had been 35%, the current NAV of 76ct will get a 3.5ct cut. 
If the transaction was any lower, it would have been worse.
In hindsight, buying at $0.70 wasn't that great. At sub-$0.60, it was worth a punt.

If any lesson, it would be to value the parts net of tax/incentives rather than its gross value.

[yawnyawn]

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

Based on 2016 AR, it was stated that "The Group has received approximately US$35.1 million of scheduled dividends since June 2011. In addition, the Group has received supplemental special distributions of approximately US$3.8 million related to the Preferred Units."

Assume K1 disposed Guggenheim at US$220M, total sum would be US$259M. This gives a return of 17.2% compounded over 6 years.

10% compounded over 6 years would give US$177M. Greenstreet should be entitled to at least 15% of the realized net profit in this case. Actual amount may vary though since they are many confusing subclauses under the management agreement.

Wow, cif5000 guessed the disposal price of Guggenheim almost right on the dot, just by 1M! Impressive!

At US221M, assuming 4% stake, the p/aum would be 2.3%. If the assumption is right, I would be disappointed as the valuation is on the lower end of what I expected.

Nevertheless, this "workout" gave me a decent return with a 4 month holding period. I have since sold off my position after the announcement was made.

Congrats!

I've got no crystal ball and the assumption was at best a guestimate.

Still can't get precise with the tax and incentives.

Book value $143m
Gross consideration US$220m or $309.4m (USD @ 1.4)
Gross gain $166.4m
Net Gain of 29ct or about $125.6m

Tax and management incentives $40.8m (or 24.5%)

If the tax/incentives had been 35%, the current NAV of 76ct will get a 3.5ct cut. 
If the transaction was any lower, it would have been worse.
In hindsight, buying at $0.70 wasn't that great. At sub-$0.60, it was worth a punt.

If any lesson, it would be to value the parts net of tax/incentives rather than its gross value.

Greenstreet carried interest for Guggenheim should be around 24M USD. (Sum of disposal inclusive dividends 259M - initial capital 100M) * entitlement to 15% net profit since Guggenheim investment returned >15% p.a.

[brattzz]

1) Oct 2017 - Dividends 6.5cts

2) NOW!!!! special dividends = capital reduction!!

Source: The Business Times Singapore
Type: Special Dividend Announced
From: 17/Aug/2017

K1 Ventures announced that it has proposed to distribute surplus cash to its shareholders by way of a capital reduction exercise, following the sale of its entire interest in Guggenheim Capital. The company plans to distribute SGD 0.3035 in cash for each ordinary share held in the company, by a books closure date to be determined by its directors.

[brattzz]

Ex-Date Pay Date Type Price

11/Dec/2017 26/Dec/2017 Cash S$ 0.304
25/Oct/2017 08/Nov/2017 Cash S$ 0.065

money money money!

[cyclone]

Completion of Divestment of Interests in Guggenheim Capital, LLC

k1 Ventures Limited refers to the announcement released on 28 July 2017 in relation to the divestment by the Company’s indirect wholly-owned subsidiaries, DFS Holdings I Corp and DFS Holdings II Limited, of the Company’s entire ownership interests in Guggenheim Capital, LLC, comprising 100,000 Series A preferred units, 250,000 common units, 11,111,111 detachable warrants, and an additional 1.85 million common units for a gross cash consideration of approximately US$221 million, which is prior to any deductions for U.S. income taxes and the Greenstreet carried interest (the "Guggenheim Disposal").

The Guggenheim Disposal has taken place in the U.S. on 17 November 2017.

To avoid any market speculation on the value of the Company, the Company will accordingly be suspending the trading of its Shares on and from 20 November 2017.

After the Company distributes its excess cash to Shareholders, the Company will take steps to commence voluntary liquidation.

[brattzz]

DECLARATION OF INTERIM DIVIDEND
http://infopub.sgx.com/FileOpen/k1%20Ann...eID=483773

The Board of Directors of k1 Ventures Limited (the “Company”) refers to its announcement dated 20 October 2017 in relation to the unaudited results of the Company and its subsidiaries for the first quarter of 2018 ended 30 September 2017.

The Board of Directors is pleased to declare a tax exempt one-tier interim dividend of 35.85 cents per share for the financial year ending 30 June 2018. The dividend will be paid to shareholders on 19 January 2018.

As announced previously, following the completion of the disposal of the Company’s entire interests in Guggenheim Capital, LLC, the Company has disposed of all or substantially all of its assets and property. Consistent with the Company’s stated objective of the monetization of its investments and the distribution of excess cash to its shareholders, the Company intends to distribute its excess cash to its shareholders by way of the interim dividend.