Hansa Investment Company Ltd · LSE:HAN
Hansa Investment — Investor Presentation (September 2023)
66 slides from Hansa Investment's investor presentation, September 2023
Slide 1: Shareholder Presentation September 2023
Shareholder Presentation September 2023
Slide 2: Agenda
Agenda ▪ Jonathan Davie – Chairman’s Introduction ▪ William Salomon – Brazil & Wilson Sons ▪ Alec Letchfield – Portfolio Performance ▪ Q&A © 2023 Hansa Investment Company Limited 2
Slide 3: Chairman's Introduction
Chairman’s Introduction © 2023 Hansa Investment Company Limited 3
Slide 4: Board of Directors
Board of Directors Jonathan Davie Simona Heidempergher Richard Lightowler William Salomon Nadya Wells Chairman Chair Of Remuneration Committee Chair Of Audit Committee Non-independent, Non-executive Senior Independent Director & Chair Of Director Nominations Committee Jonathan became Chairman of Han
Slide 5: Our mission
Our mission A globally-diversified, multi-asset class investor who seeks to identify compelling investment opportunities. Long-term, Access to the world’s Dare to be Operating outside not short-term elite, best-in-class managers different the bureaucracies of a large institution © 2023 Hansa Investm
Slide 6: Discount to NAV compared to holding companies
Key topics: Discount to NAV of the Manchester & London Company’s shares compared Hansa Investment Caledonia Investments RIT Capital Partners Majedie British & American Pershing Investment Trust Eurazeo (Jean-Charles Investor AB B Italmobiliare Vivendi Wendel (De to after family controlled Company Li
Slide 7: Impact of share buybacks
Key topics: Impact of share buybacks is not always a long term reduced discount. PSH 5-Year Annualised NAV Return +25.1%* Share buybacks from 2017 through 2022 repurchased 59.1 million shares for $1.1 billion at an average discount to NAV of 28.1%.* Source: Bloomberg & *PSH Annual Investor Presentat
Slide 8: Wilson Sons
Wilson Sons © 2023 Hansa Investment Company Limited 8
Slide 9: Value of HICL holding in Wilson Sons
Value of HICL holding in Wilson Sons Wilson Sons, £61.9m, 16.3% Ocean Wilson (Investments) Limited, £29.4m, 7.7% Remainder of the Portfolio, £288.7m, 76.0% *The fair value of Hansa Investment Company Limited’s holding in OWHL has been apportioned across the two assets in the ratio of the latest repo
Slide 10: Wilson Sons' Business Timeline
Wilson Sons’ Business Timeline 1997 2003 2007 2012 2016 Container terminal operations begin Offshore support vessel operations Wilson Sons’ IPO on the Brazilian 1st expansion of Salvador container Renewal of Salvador container with the successful bid which begin with the launch of PSV Stock Exchange
Slide 11: Cumulative inflation and R$ evolution since IPO 2007
Cumulative inflation and R$ evolution since IPO 2007 Sharp depreciation of BRL in 2016 and 2019 although long term exchange rate slightly above cumulative difference in Exchange rate BRL:USD vs Brazil Inflation vs Inflation US CPI from IPO to 20/9/2023 (Base 100) BR CPI US CPI 1239% BR:US CPI Spread
Slide 12: Investment Performance Since the IPO (2007)
Investment Performance Since the IPO (2007) US Total shareholder return impacted by BRL depreciation. Both BRL and US total share return restricted between 2016 and 2022 by weak performance of oil and gas service businesses including vessels bases and to some degree towage. Total Return - USD Total
Slide 13: IFRS Financial Performance Since the IPO
IFRS Financial Performance Since the IPO Long-term US$ revenue growth impacted by depreciation of the R$ with US$ EBITDA naturally hedged. Net revenue and growth U$M, last twelve months CAGR 07-22: +1% 950 20.9% 23.3% -4.1% 20.4% 21.3% -12.6% 8.1% -4.0% -19.7% -10.2% 8.6% -7.3% -11.8% -13.1% 12.4% 1
Slide 14: Capex and Shareholder Remuneration
Capex and Shareholder Remuneration Dividends since IPO total US$439 million which is 40% of current market capitalisation. Capex should be maintenance with minimal expansion capex needed in the medium term. Capital expenditure US$M (1) 263 Offshore Vessels (50% JV) 36 IFRS 184 167 150 56 137 39 111
Slide 15: Financial Multiples Analysis
Financial Multiples Analysis as of 20-Sep-23 15
Slide 16: Offshore energy: Attractive market perspectives
Offshore energy: Attractive market perspectives Brazil’s O&G market to become increasingly important for global energy demand. 1 Brazil is Extremely Competitive in Offshore Oil Production… 2 …Fostering the Growth of Oil Exploration in the Country # of Contracted FPSOs 6 5 5 Competitive Breakeven Low
Slide 17: Growth Strategy
Growth Strategy Multiple growth prospects underpinning sustainable long-term value creation. RIO GRANDE TERMINAL SALVADOR TERMINAL TOWAGE OFFSHORE ENERGY 1 Post-Covid Normalisation 1 New Quay Capacity 1 Market Growth, Commodity Focus 1 Market Growth 2 Plate Transshipment 2 Renewable Energy Projects
Slide 18: Investment Manager's Report
Investment Manager’s Report © 2023 Hansa Investment Company Limited 18
Slide 19: Agenda
Agenda ▪ Why HICL? ▪ Market Review ▪ Activity and Positioning ▪ Performance ▪ Conclusion ▪ Appendix © 2023 Hansa Investment Company Limited 19
Slide 20: Why HICL?
Why HICL? We are globally diversified, multi-asset class investors who seek to identify compelling investment opportunities in long funds, hedge funds, direct global equities and private assets. We operate without being constrained by benchmarks, but instead seek to conservatively grow capital over
Slide 21: Why HICL?
Why HICL? The combination of an extraordinarily well connected network and an experienced team enables us to invest in exceptional managers. These managers are not normally available to the retail investor. © 2023 Hansa Investment Company Limited 21
Slide 22: Market Review
Market Review © 2023 Hansa Investment Company Limited 22
Slide 23: We came into the year facing a number of challenges
We came into the year facing a number of challenges 2022 December year-on-year CPI vs 2020 Interest rates higher for longer 12.0% 10.5% 5.0% 4.5% 10.0% 9.2% 4.0% 3.5% 8.0% Interest Rate 6.5% 6.0% 3.0% 2.5% CPI YoY 4.0% 2.0% 2.0% 1.4% 0.6% 1.0% 0.0% 0.3% 0.1% 0.0% -2.0% -0.3% 0.0% US UK Europe US Eur
Slide 24: Market performance: year-to-date returns
Market performance: year-to date returns To 31 August 2023 15% 10% % Return (GBP) 5% 0% -5% -10% Source: Bloomberg © 2023 Hansa Investment Company Limited 24
Slide 25: Drivers of outperformance
Drivers of outperformance June year-on-year CPI vs 12 months ago Nvidia has driven the AI boom 10.0% 9.4% 450 9.1% 8.6% 7.9% 400 8.0% Share price $ 350 5.5% CPI YoY 6.0% 300 4.0% 3.0% 250 2.0% 200 150 0.0% US Europe UK 100 Jul-2022 Aug-2022 Sep-2022 Oct-2022 Nov-2022 Dec-2022 Jan-2023 Feb-2023 Mar-2
Slide 26: Medium- and longer-term outlook
Medium- and longer-term outlook Portfolio for the last 10 years: Portfolio for the future: ▪ US Hegemony ▪ Rest of world becoming more attractive ▪ Growth and quality focus ▪ Balance of value, cyclicality, quality and growth ▪ Long duration ▪ Value becoming more in focus ▪ "There is no alternative"
Slide 27: Activity and Positioning
Activity and Positioning © 2023 Hansa Investment Company Limited 27
Slide 28: Activity and positioning
Activity and positioning Japan looking increasingly attractive Increasing exposure to value 160 Relative Return of the MSCI World Growth and MSCI World Value to the MSCI World 160 140 140 120 120 100 100 80 80 60 Jan-2018 Aug-2018 Mar-2019 Oct-2019 May-2020 Dec-2020 Jul-2021 Feb-2022 Sep-2022 Apr-20
Slide 29: Activity and positioning
Activity and positioning Global insurance rates the strongest in 20 years Equities Reinsurance 20 0% to 40% 15 Rate increase 10 0% to 15% 5% to 35% 5 15% to 20% 5% to 20% 0 Forward P/E EV/EBITDA P/B 2017 2018 2019 2020 2021 2022 Hansa Direct Equity MSCI World Current volatile market conditions are t
Slide 30: Activity and positioning: creating a world-class private equity programme
Activity and positioning: creating a world-class private equity programme 60% 250% 50% 200% 40% 30% 150% 20% 10% 100% 0% -10% 50% -20% -30% 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD 30 June 1 Jan 2014 – 30 June 2023 2023 Newer PE funds (2014 onwards) MSCI World Newer PE funds (2014 onwards
Slide 31: Activity and positioning: a portfolio diversified by geography and sector
Activity and positioning: a portfolio diversified by geography and sector As at 31 August 2023 Core Funds Thematic Funds Global Equities Diversifying Assets Strategic (OWHL) Cash 43.2% 7.3% 8.8% 12.5% 24.0% 4.2% 24.5% 25% 20% 16.3% 15% 10% 8.8% 7.7% 6.0% 5% 3.8% 4.2% 3.4% 2.2% 2.2% 2.7% 2.2% 2.0% 1.
Slide 32: Performance
Performance © 2023 Hansa Investment Company Limited 32
Slide 33: NAV, share price and KPI performance
NAV, share price and KPI performance To 31 August 2023 Financial Financial Year 3 years 5 years 10 years (p.a.) YTD 2022-23 (p.a.) (p.a.) NAV Performance TR 4.1% (3.1%) 7.6% 3.2% 5.5% NAV Performance ex. OWHL TR 0.7% (2.7%) 3.6% 3.0% 5.5% Ordinary Share TR 7.6% (10.8%) 5.4% (1.0%) 4.1% ‘A’ Ordinary
Slide 34: Gross time-weighted performance of the different silos
Gross time-weighted performance of the different silos 5 years To 31 August 2023 60.0% 50.0% 47.2% 44.5% 40.0% 35.5% 32.2% 29.0% 30.0% 24.4% 23.3% 21.0% 19.8% 17.9% 17.9% 18.4% 20.0% 10.0% 0.0% -0.5% -10.0% -20.0% -18.8% -30.0% Core Regional Thematic Core & Thematic Global Equities Ocean Wilsons Div
Slide 35: Core regional and thematic fund holdings
£10,000,000 £20,000,000 £30,000,000 £40,000,000 £50,000,000 £70,000,000 £80,000,000 £90,000,000 £60,000,000 £- Findlay Park American 11,424,270 Pershing Square 6,493,079 BlackRock Strat Equity Hedge 5,771,982 To 31 August 2023 Select Equity Offshore 4,882,212 iShares Core S&P 500 2,379,648 SISF Asia
Slide 36: Performance of less correlated funds
Performance of less correlated funds 1 June 2016 to 31 August 2023 Performance of Less Correlated Funds Max Drawdown 40.0% HICL Less Correlated Funds MSCI ACWI FM UK Gilts All Stocks UK CPI 33.4% 0.0% 30.8% -0.8% 30.0% -5.0% -4.5% 20.0% -10.0% 10.0% -15.0% -15.9% -20.0% 0.0% -25.0% -10.0% -30.0% -13
Slide 37: Discount
Discount Hansa Investment Company Limited Ord and A combined Hansa Investment Company Limited Ord and A combined (relative to AIC overall average discount) 0% 0% -10% -10% -20% -20% -30% -30% -40% -40% -50% -50% -60% -60% Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Aug-22 Aug-23 A
Slide 38: Conclusion
Conclusion © 2023 Hansa Investment Company Limited 38
Slide 39: Conclusion
Conclusion ▪ Globally diversified, ▪ Benchmark ▪ The recent introduction ▪ The blend of private ▪ Markets are undergoing multi-asset class unconstrained, seeking of a private equity equity/defensives and something of a investors who seek to conservatively grow programme adds growth equities creates
Slide 40: Appendix
Appendix © 2023 Hansa Investment Company Limited 40
Slide 41: Macroeconomic environment: highlights and lowlights
Macroeconomic environment: highlights and lowlights Year-to-date returns (USD) 20.0% 16.9% 16.8% 15.0% 13.0% 10.0% 6.3% 4.9% 5.2% 5.0% 0.0% -5.0% -5.5% -10.0% -12.0% -15.0% S&P 500 S&P 500 (ex top 7 MSCI Japan MSCI China MSCI Brazil MSCI Emerging Gold Oil technology Markets companies) • Without the
Slide 42: Macroeconomic environment: a very uncertain outlook
Macroeconomic environment: a very uncertain outlook Inflation Interest Rates Market Outlook Interest rates are higher for longer, Equities and bonds under pressure catalysing a deeper recession Higher and persistent inflation Rates inadequate and require steep rate rises causing a deep recession Equ
Slide 43: Macroeconomic environment: Scenario 1, our central view
Macroeconomic environment: Scenario 1, our central view Inflation falls but not as low as 2% Interest rates able to peak Growth falls but soft landing 10.0% 6.0% 8.0% 8.0% 5.0% 6.0% 4.0% 6.0% 4.0% 3.0% 4.0% 2.0% 2.0% 2.0% 1.0% 0.0% 0.0% 0.0% -2.0% -2.0% 2021 2010 2011 2012 2013 2014 2015 2016 2017 2
Slide 44: Macroeconomic environment: Scenario 2, the no-win outcome
Macroeconomic environment: Scenario 2, the no-win outcome Inflation settles at structurally higher levels Central banks forced to keep rates higher for longer Economic collapse is a necessary casualty 10 6.0% 8.0% 8 5.0% 6.0% 6 4.0% 4.0% Interest Rate 4 2.0% 3.0% 2 0.0% 2.0% 0 -2.0% 1.0% -2 -4.0% 0.
Slide 45: Macroeconomic environment: Scenario 3, the unnecessary outcome
Macroeconomic environment: Scenario 3, the unnecessary outcome. The war against inflation may already be won Rates kept too high for too long with central Central banks always get it wrong but unfortunately is a lagging indicator banks behind the curve 25.0% 12.0% 8.0% 10.0% 7.0% 20.0% 8.0% 6.0% 6.0
Slide 46: Macroeconomic environment: mitigating factors
Macroeconomic environment: mitigating factors Economies are robust Valuations not egregious especially if we exclude the mega-cap US tech companies 8.0% 40 7.0% 35 6.0% 5.0% 30 4.0% 25 3.0% 2.0% 20 1.0% 15 0.0% -1.0% 10 -2.0% 5 -3.0% 0 US GDP QoQ annualised There are few signs of excess compared to
Slide 47: Macroeconomic environment: tail risks
Macroeconomic environment: tail risks Rates have seen a step change up which may Global private capital dry powder by fund type Tightening Loan Standards and Stalling Loan Growth impact areas such a RE and PE where there are signs of excess 100 150 % of Banks Reporting Tightening Loan Standards 7.0%
Slide 48: Macroeconomic environment: bonds
Macroeconomic environment: bonds TINA no longer applies with bonds becoming a genuine alternative albeit higher inflation, rates may still present a headwind in the near term. Source: BlackRock Investment Institute, Barclays, Thomson Reuters. © 2023 Hansa Investment Company Limited 48
Slide 49: Macroeconomic environment: US vs EM
Macroeconomic environment: US vs EM EMs looking cheap on a P/E basis EM businesses used to operating in higher rate environments EM tends to outperform during periods of dollar weakness EM companies more prudent than US! 700 130 600 120 MSCI Emerging Markets Index Bloomberg Dollar Spot Index 500 110
Slide 50: Macroeconomic environment: Japan
Macroeconomic environment: Japan The yen is still looking cheap vs the dollar Japan still looks cheap on a P/E basis Japan ROE relative to the MSCI World is improving 12 1.0 160 45 11 0.9 40 140 Yen to Dollar rate 0.9 35 10 0.8 120 30 9 0.8 25 100 8 20 0.7 7 80 15 0.7 6 60 Nov-21 10 0.6 Nov-15 Nov-1
Slide 51: Macroeconomic environment: the dollar
Macroeconomic environment: the dollar Reserve currency $ vs € vs ¥ The dollar was a relative safe haven The Fed putting up rates earlier and faster at time of turmoil 7.0% 6.0% 5.0% Interest Rate 4.0% 3.0% 2.0% 1.0% 0.0% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 UK Europe US A
Slide 52: Macroeconomic environment: the dollar
Macroeconomic environment: the dollar Many of the reason for seeking solace in the $ are now diminishing i.e. USD continues to look expensive on a PPP basis, though it has weakened China ZCP ended, Russia/Ukraine slipped off the front pages recently 1.05 1.00 Euro to Dollar rate 0.95 0.90 0.85 0.80
Slide 53: Global equities: performance by size of holding
Global equities: performance by size of holding As at 31 August 2023 1 Year 3 Year Initial % of Performance Performance Purchase Value % of Global Equity (or since (or since Security Name Date (GBP) Total NAV Silo initial purchase) initial purchase) Interactive Brokers Group Inc 05/04/2017 5,172,159
Slide 54: Global equities silo
Global equities silo As at 31 August 2023 Geographic exposure by listing Performance 1 Year to end August 2023 16% 14.4% Asia, 5.5% 14% 12% UK, 15.5% 10% 8% US , 39.2% 6% 5.2% 4.6% 4% 2% 0% Europe, 39.8% Hansa Investment Company Limited FTSE All Share Total Return MSCI ACWI NR (GBP) Global Equities
Slide 55: The team
The team William Salomon Chairman, Senior Partner 40yrs / 23yrs Alec Letchfield Chief Investment Officer, Partner 30yrs / 10yrs Christopher Townsend Investment Director 23yrs / 13yrs William Lewis George Clifton-Brown Henry Millhouse Robert Royle Research Analyst Research Analyst Research Assistant
Slide 56: Hansa timeline
Hansa timeline Rea Brothers acquire the management of Finsbury Trust becomes Hansa a number of invesment companies, Trust including Scottish & Mercantile Rea Brothers purchases 58% of Hansa Trust becomes Ocean Wilsons Holdings Limited on Hansa Investment behalf of its clients including Company Limit
Slide 57: Corporate structure
Corporate structure Hansa Investment Company Limited 26.45% of OWHL is held by HICL 100% Ocean Wilsons Holdings Limited Fund and Direct Equity Holdings Managed by 100% Hansa Capital Partners LLP 56.52% of Wilson Sons is owned by OWHL Ocean Wilsons (Investments) Limited 43.48% Unlisted subsidiary hol
Slide 58: Ocean Wilsons Holdings
Ocean Wilsons Holdings Ocean Wilsons Holdings is a Bermudian investment holding company whose main assets are a controlling interest in Wilsons Sons and an international investment portfolio, both run 56.52% with a long-term view. The Oceans holding is controlled by the Hansa Investment Company 43.4
Slide 59: Fees
Fees The fee debate is nuanced. Clearly you want to keep fees Passive Third party Can be higher cost with down to reduce friction but Low cost but guaranteed two layers of fees in a sub market returns. Also going low cost may work to your structurally biased fund structure. However, you can invest i
Slide 60: Fees
Fees Weighted average management Annual 3rd party management fees on underlying holdings fee = 1.3%. This includes the 60% management fee paid to Hansa Capital Partners LLP as well as 51.9% management fees paid to third 50% parties for the underlying funds. 40% 37.1% 30% 20% 10% 6.1% 5.0% 0% No Fee:
Slide 61: Fees
Fees Third party fees within HICL 3.0% Internally managed therefore no third party fees 2.5% Fees as % of NAV 2.0% Our management 1.5% fee is reduced from 1% as it is not charged on Ocean 1.0% Wilsons Holdings 0.5% 0.0% HICL RIT Capital Witan Jupiter Merlin Schroder ISF BNY Mellon abrdn GARS Ruffer
Slide 62: Team biographies
Team biographies William Salomon Alec Letchfield Chairman, Senior Partner Chief Investment Officer, Partner William Salomon has extensive knowledge of In 1999 Rea Brothers Group was taken over Alec has over 30 years' experience in Group. This highly diverse range of solutions all aspects of private
Slide 63: Team biographies
Team biographies Christopher Townsend Robert Royle Investment Director, Private Equity Investment Manager, Global Equities Christopher is a qualified solicitor. He has an MA from Peterhouse, Cambridge and was Robert joined Hansa Capital Partners in 2016 to manage Global Equity portfolios. Prior to t
Slide 64: Team biographies
Team biographies William Lewis George Clifton-Brown Henry Millhouse Research Analyst Research Analyst Research Assistant Analyst Will joined Hansa Capital Partners LLP in 2012, after George joined Hansa Capital Partners LLP in 2018, Henry joined Hansa Capital Partners LLP in 2022 having four years o
Slide 65: Important notice
Important notice It is very important that you consider this disclaimer and warning before using the information provided within this presentation pack, as it explains certain regulatory and legal restrictions applicable to any investment services provided, the use and distribution of information in
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