K1 Ventures

[opmi]

K1VENTURES: ($0.197) Surprise sale of Helm affirms investment portfolio value, inspires special dividend hopes

K1 Ventures will sell its entire 80% stake in Long Haul Holding Corp ("Helm"), a US locomotive and railcar leasing company, to Wells Fargo Bank for aggregate cash consideration of ~US$152m ($192m).

While management does not expect the transaction to have material impact on the group's FYJun14 financials, post-sale, we estimate K1's book value per share to jump from $0.15 to $0.18.

The deal price comes at a ~20% premium to one broker's estimate of Helm's fair value at $159m, according to a report dated back in Aug last year.

Following the stake sale, K1 will see its cash per share balloon from 1¢ to 10¢ (55% of share price), which would likely inspire hopes of a generous special dividend payout at the fiscal year end.

Since 2004, K1 has returned an estimated $540m to shareholders in capital distribution and dividends, reflecting its positive investment track record.

Meanwhile the group continues to hold a portfolio of other quality assets that could offer meaningful capital upside, including:
- a 12.2% stake in Knowledge Universe Holdings, a global pre-school education services provider
- US$100m of convertible preferred shares of Guggenheim Capital (7% coupon), and
- a 1.6% stake in China Grand Auto, the largest auto dealership in China.

The market reaction to the sale is positive, with K1 shares advancing 9% since resuming from its trading halt.

At the current price of $0.197, K1 trades at 1.1x pro-forma P/B.

By Ben Oh

noted that the buyer is Well Fargo, a bank. Probably can finance at dirt cheap Fed money. And earn the big spread.

Also note that the mgt that got in with the LBO was not part of the deal. Probably remain with Helm. With Well Fargo as backer, financing for growth is no issue.

[desmondxyz]

K1VENTURES: ($0.197) Surprise sale of Helm affirms investment portfolio value, inspires special dividend hopes

K1 Ventures will sell its entire 80% stake in Long Haul Holding Corp ("Helm"), a US locomotive and railcar leasing company, to Wells Fargo Bank for aggregate cash consideration of ~US$152m ($192m).

While management does not expect the transaction to have material impact on the group's FYJun14 financials, post-sale, we estimate K1's book value per share to jump from $0.15 to $0.18.

The deal price comes at a ~20% premium to one broker's estimate of Helm's fair value at $159m, according to a report dated back in Aug last year.

Following the stake sale, K1 will see its cash per share balloon from 1¢ to 10¢ (55% of share price), which would likely inspire hopes of a generous special dividend payout at the fiscal year end.

Since 2004, K1 has returned an estimated $540m to shareholders in capital distribution and dividends, reflecting its positive investment track record.

Meanwhile the group continues to hold a portfolio of other quality assets that could offer meaningful capital upside, including:
- a 12.2% stake in Knowledge Universe Holdings, a global pre-school education services provider
- US$100m of convertible preferred shares of Guggenheim Capital (7% coupon), and
- a 1.6% stake in China Grand Auto, the largest auto dealership in China.

The market reaction to the sale is positive, with K1 shares advancing 9% since resuming from its trading halt.

At the current price of $0.197, K1 trades at 1.1x pro-forma P/B.

By Ben Oh

noted that the buyer is Well Fargo, a bank. Probably can finance at dirt cheap Fed money. And earn the big spread.

Also note that the mgt that got in with the LBO was not part of the deal. Probably remain with Helm. With Well Fargo as backer, financing for growth is no issue.

All these are irrelevant to k1 anymore after sale. When I first saw Well Fargo, my first thought is, Warren Buffett got anything to do with this?

[CityFarmer]

All these are irrelevant to k1 anymore after sale. When I first saw Well Fargo, my first thought is, Warren Buffett got anything to do with this?

I recalled Warren Buffett is bullish on rail business. It shouldn't be a surprise for him to support the deal.

(not vested)

[desmondxyz]

All these are irrelevant to k1 anymore after sale. When I first saw Well Fargo, my first thought is, Warren Buffett got anything to do with this?

I recalled Warren Buffett is bullish on rail business. It shouldn't be a surprise for him to support the deal.

(not vested)

And he has 9% stake in Well Fargo, somehow I can't help to think he is behind the deal.....

[opmi]

Was expecting a rail company to buy helm.
Wells Fargo was a surprise. Probably paid a
premium

[Nick]

Scoop of the Day: k1 last Friday announced the divestment of its 80.1% stake
in Helm, its rail equipment leasing business, to Wells Fargo Bank for an
aggregate cash consideration of USD152m (SGD192m). The sale consideration
is at a premium to Helm’s book value (SGD129m) and is expected to increase
NTA per share by ~ 7 cents on closure. K1 bought Helm in 2005 for USD110m
and have since recouped part of its investment in 2008 via the sale of associate
holding DM&E. The sale of Helm continues management’s track record of
profitable exits, and will increase NAV/share by 3 cents, by our estimates. With
the divestment of Helm, the group has 3 remaining investments: 1) a 12.2%
stake in Knowledge Universe Holdings (KUH); 2) a USD100m investment in
preferred shares of Guggenheim Capital with a 7% coupon rate and a conversion
option; 3) a 1.6% stake in China Grand Auto, the largest automotive dealership in
China and majority-owned by private equity firm TPG. Since 2004, the group has
returned some SGD540m to shareholders in capital distributions and dividends
from profitable exits. The divestment of Helm will boost k1’s cash holdings to
cSGD200m (9.3cts/share), most of which is likely to be distributed as
management will not be making any new investments. We raise our valuation for
Helm from SGD159m to SGD180m, equivalent to the divestment price after
netting out estimated transaction costs. We continue to value k1 using a sum-ofparts
valuation methodology, with the key value drivers coming from KUH and
Guggenheim Capital. Our TP is SGD0.26 after incorporating a 20% holding
company discount. BUY maintained. (Goh Han Peng) [DMG OSK]

(Not Vested)

[GreedandFear]

Scoop of the Day: k1 last Friday announced the divestment of its 80.1% stake
in Helm, its rail equipment leasing business, to Wells Fargo Bank for an
aggregate cash consideration of USD152m (SGD192m). The sale consideration
is at a premium to Helm’s book value (SGD129m) and is expected to increase
NTA per share by ~ 7 cents on closure. K1 bought Helm in 2005 for USD110m
and have since recouped part of its investment in 2008 via the sale of associate
holding DM&E. The sale of Helm continues management’s track record of
profitable exits, and will increase NAV/share by 3 cents, by our estimates. With
the divestment of Helm, the group has 3 remaining investments: 1) a 12.2%
stake in Knowledge Universe Holdings (KUH); 2) a USD100m investment in
preferred shares of Guggenheim Capital with a 7% coupon rate and a conversion
option; 3) a 1.6% stake in China Grand Auto, the largest automotive dealership in
China and majority-owned by private equity firm TPG. Since 2004, the group has
returned some SGD540m to shareholders in capital distributions and dividends
from profitable exits. The divestment of Helm will boost k1’s cash holdings to
cSGD200m (9.3cts/share), most of which is likely to be distributed as
management will not be making any new investments. We raise our valuation for
Helm from SGD159m to SGD180m, equivalent to the divestment price after
netting out estimated transaction costs. We continue to value k1 using a sum-ofparts
valuation methodology, with the key value drivers coming from KUH and
Guggenheim Capital. Our TP is SGD0.26 after incorporating a 20% holding
company discount. BUY maintained. (Goh Han Peng) [DMG OSK]

(Not Vested)

Yes, K1 continues to perform well. The investment in Guggenheim Capital is even more of a black box than the other investments but there should be some upside there given that the warrants were issued during the financial crisis and the financial sector has done very well since then. It would be strange if Guggenheim is not considering an IPO given the current strength of the US stock market.

Vested

[opmi]

Guggeheim may not IPO because of compliance. Stay private better.
Hopefully can sell out to some PRC banks at peak of market...

After everything divested, Keppel use the listed shell for another purpose.
k1 are formerly Singmarine. If anyone remember...hahaha....

[kbl]

Scoop of the Day: k1 last Friday announced the divestment of its 80.1% stake
in Helm, its rail equipment leasing business, to Wells Fargo Bank for an
aggregate cash consideration of USD152m (SGD192m). The sale consideration
is at a premium to Helm’s book value (SGD129m) and is expected to increase
NTA per share by ~ 7 cents on closure. K1 bought Helm in 2005 for USD110m and have since recouped part of its investment in 2008 via the sale of associate
holding DM&E. The sale of Helm continues management’s track record of
profitable exits, and will increase NAV/share by 3 cents, by our estimates. With
the divestment of Helm, the group has 3 remaining investments: 1) a 12.2%
stake in Knowledge Universe Holdings (KUH); 2) a USD100m investment in
preferred shares of Guggenheim Capital with a 7% coupon rate and a conversion
option; 3) a 1.6% stake in China Grand Auto, the largest automotive dealership in
China and majority-owned by private equity firm TPG. Since 2004, the group has
returned some SGD540m to shareholders in capital distributions and dividends
from profitable exits. The divestment of Helm will boost k1’s cash holdings to
cSGD200m (9.3cts/share), most of which is likely to be distributed as
management will not be making any new investments. We raise our valuation for
Helm from SGD159m to SGD180m, equivalent to the divestment price after
netting out estimated transaction costs. We continue to value k1 using a sum-ofparts
valuation methodology, with the key value drivers coming from KUH and
Guggenheim Capital. Our TP is SGD0.26 after incorporating a 20% holding
company discount. BUY maintained. (Goh Han Peng) [DMG OSK]

(Not Vested)

Good morning everyone.

Does he know what he is writing or not?

Some history....

K1 Ventures Buys Helm Holding in $472 Mln Transaction (Update1)
By Kyunghee Park - May 25, 2005 08:37 EDT

http://www.bloomberg.com/apps/news?p...d=aLNaO1kIrxYk

... ``The successful track record of Helm's management team in North America will provide solid foundation for expansion into international markets,'' Steven Green, chief executive of K1 Ventures, said in the statement.

Of the $472 million, $241 million will be for the acquisition of net assets, $219 million for the retirement of existing debt and $12 million as the estimated cost of completing the acquisition, the company said. It said $137 million will be funded by equity and $335 million by debt, which is expected to be financed through Credit Suisse First Boston. ...

k1 Ventures sells majority stake in US rail leasing company Helm at a loss
Published on Feb 21, 2014
2:58 PM

http://www.straitstimes.com/breaking...-loss-20140221

k1 Ventures is selling its controlling stake in North America's largest independent rail-carriage leasing company for a fraction of the price it had paid.

k1 and its wholly-owned subsidiary, Focus Up Holdings, have entered into a definitive agreement to sell its effective 80.1 per cent stake in Long Haul Holding Corp (Helm) to Wells Fargo Bank for about US$152 million (S$192 million).

k1 forked out US$472 million for Helm in July 2005.

At the time, Helm owned a fleet of 795 locomotives and almost 20,000 rail cars, directly or through joint ventures.

<not vested>

[opmi]

hahaha.....journalists never do homework. typical.
lesson is verify what u read in newspapers. not 100% chun one.

Helm was not the best of investments. 9 years make less than 50% total.
OK. Given that USA gone thru subprime and Great Recession.