Strategic Equity Capital plc · LSE:SEC

Strategic Equity Capital — Q4 2021 Earnings Presentation

25 slides from Strategic Equity Capital's earnings presentation, January 2022

  1. Slide 1: Strategic Equity Capital plc Q4 2021

    Strategic Equity Capital plc (SEC.LN) Q4 2021 January 2022

  2. Slide 2: Risk Warnings

    RISK WARNINGS You should not rely on any information or opinions contained in this presentation in making an investment or other decision but should obtain appropriate and specific professional advice of your own. Nothing contained in this presentation constitutes or should be construed to constitut

  3. Slide 3: Important Information

    IMPORTANT INFORMATION Gresham House Asset Management Limited (GHAM) is the Investment manager to and invests on behalf of No undertaking, representation, warranty, or other assurance, express or implied, is made or given by or on behalf Strategic Equity Capital plc (“SEC”, the “Trust” or the “Fund”)

  4. Slide 4: Executive Summary

    EXECUTIVE SUMMARY Q4 2021 shareholder update ▪ Strong performance (NAV/share +2.1%)1, outperforming the FTSE Small Cap index (-0.5%), driven by takeover approaches for both Clinigen and River & Mercantile during the period. Total NAV return of 49% since September 2020 despite no exposure to 'macro-r

  5. Slide 5: Strategic Equity Capital plc (SEC)

    STRATEGIC EQUITY CAPITAL PLC (SEC) Application of private equity techniques to small public companies ▪ Differentiated strategy with highly-concentrated portfolio, deep research focus and engaged approach ▪ Genuine small cap - a structurally overlooked part of the market ▪ Long term investment horiz

  6. Slide 6: Specialists in Alternatives

    SPECIALISTS IN ALTERNATIVES Gresham House plc (Gresham House) is a London Stock Exchange-quoted specialist alternative asset management group (GHE.LN), providing funds, direct investments and tailored investment solutions, including co-investment. → Specialists in five areas of alternative investmen

  7. Slide 7: Fund Strategies Spanning Business Lifecycle

    FUND STRATEGIES SPANNING BUSINESS LIFECYCLE A suite of private and public equity products with the capability to support a company throughout its lifecycle. ▪ Public Equity - offers investors exposure to UK smaller public companies through a long term investment philosophy, using private equity tech

  8. Slide 8: Well-Invested Specialist Small Company Investment Platform

    WELL-INVESTED SPECIALIST SMALL COMPANY INVESTMENT PLATFORM Public Equity team - 6 investment professionals Private Equity team - 20 investment professionals Ken Wotton Brendan Gulston Adam Khanbhai Laurence Hulse Amber Stone-Brown Cassie Herlihy Bevan Duncan Clive Austin Trevor Hope Managing Directo

  9. Slide 9: Portfolio Evolution

    PORTFOLIO EVOLUTION Significant progress in evolving portfolio over the last 15 months1; lower levels of activity in Q4 following a busy Q3 Q4 2020 to Q4 2021 Q4 2020 to Q4 2021 £75.7m purchases (£9.3m in Q4) £76.5m sales (£15.8m in Q4) 34% Closing NAV (4% Closing NAV - Q4) 50% Opening NAV (10% Open

  10. Slide 10: Portfolio & Pipeline Themes

    PORTFOLIO & PIPELINE THEMES Healthcare and Regulation and High-quality cyclical / Pensions and savings Digitisation and data Covid recovery Sustainability / Energy pharmaceutical compliance services ▪ Increasing complexity of ▪ AI and ‘Big Data’ Transition ▪ Growing regulatory burden ▪ Niche, high I

  11. Slide 11: Performance Summary

    PERFORMANCE SUMMARY Annualised 35 31.3 29.5 30 26.6 25 20 18.0 15.6 16.2 15 13.5 % 10.0 9.4 10 5 2.1 0 -0.5 -1.7 -5 Q4 2021 3 yr 5 yr SEC NAV Total Return FTSE Small Cap x IT Total Return IT UK Smaller Companies Total Return Past performance is not necessarily a guide to future performance. Portfoli

  12. Slide 12: Q4 Attribution Analysis

    Q4 ATTRIBUTION ANALYSIS Positive attribution Negative attribution Company % pts Comment Company % pts Comment ▪ Shares derated on Omicron concerns; recovered ▪ Recommended bid for company by private these losses in early Q1 equity firm, Triton Partners ▪ Reported full year results with a beat on net

  13. Slide 13: ESG Focus: Public Equity

    ESG FOCUS: PUBLIC EQUITY As long-term investors with a focus on small and ESG implementation micro-cap companies in the UK equity market, we are active stock pickers applying a private equity 01 Initial assessment 04 Holding period Investment one pager Shareholder responsibilities approach to quoted

  14. Slide 14: ESG in Action

    ESG IN ACTION Case study Changing the way businesses purchase and use energy We invested in the company when it first listed in 2011 but worked with the management team before 2011 The business this point on areas such as Board composition and Initially we took a management incentives prior to IPO.1

  15. Slide 15: Portfolio Characteristics

    PORTFOLIO CHARACTERISTICS Portfolio vs Small Cap Index ▪ High-quality companies trading at discount to historic valuation range and precedent M&A ▪ Higher growth potential with lower gearing and higher margins than the index ▪ Targeting profit recovery & accelerating earnings growth ▪ Accelerated ca

  16. Slide 16: UK Small-Cap Discount

    UK SMALL-CAP DISCOUNT Valuation discount opportunity ▪ Small caps are trading at multi-year discounts relative to larger companies ▪ We believe this is owing to concerns over liquidity, perceived risk, and a reduction in resources devoted to this area of the market. This provides a distinct opportun

  17. Slide 17: Private Equity Outlook

    PRIVATE EQUITY OUTLOOK Private Equity has built up over $1.6tn ‘dry powder’ This is starting to be deployed in UK listed equities Private Equity: Assets under management 2009-2020 5500 5000 Assets under management ($bn) 4500 4000 3500 UK listed companies subject to confirmed 3000 2500 $1.6trn! ? or

  18. Slide 18: Discount Reduction Plan

    DISCOUNT REDUCTION PLAN Narrowing the share price discount to NAV is a key strategic priority to be achieved over time through a package of measures that are now in place and starting to have traction. ▪ Appointment of Ken Wotton as Lead Fund Manager, and focus on leveraging the wider Gresham House

  19. Slide 19: Conclusion & Outlook

    CONCLUSION & OUTLOOK ▪ Covid-19 - the emergence of the Omicron variant illustrates the fragile nature of the recovery from Covid-19. Whilst the general direction of travel is expected to be positive over the coming year, further periods of uncertainty and associated market volatility will likely rem

  20. Slide 20: Appendix

    APPENDIX

  21. Slide 21: Morningstar Small Cap Investment Trust Overlap Analysis

    MORNINGSTAR SMALL CAP INVESTMENT TRUST OVERLAP ANALYSIS AUSC ASL BRSC THRG HSL IPU JMI MINI MTU OIT SEC abrdn UK Smaller Companies Growth Ord (AUSC) 100% 2% 58% 73% 37% 36% 44% 0% 41% 0% 2% Aberforth Smaller Companies Ord (ASL) 4% 100% 10% 6% 26% 16% 21% 2% 1% 2% 5% BlackRock Smaller Companies Ord (

  22. Slide 22: Strategy Public Equity vs. Private Equity

    STRATEGY PUBLIC EQUITY VS. PRIVATE EQUITY A hybrid model that provides many of the benefits of private equity with greater liquidity and lower leverage Typical Public Equity Strategic Public Equity Private Equity Underlying liquidity Due diligence Correlation to equity markets Conviction / concentra

  23. Slide 23: Long-Term Track Record

    LONG-TERM TRACK RECORD 800 750 Cumulative rebased total returns 700 CAGR¹ 650 SEC NAV 17.7% 600 550 FTSE Small Cap ex IT 13.2% Total return 500 450 400 350 300 250 200 150 100 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 1

  24. Slide 24: Top Holdings - Investment Theses

    TOP 10 HOLDINGS1 - INVESTMENT THESES Company Company Investment thesis Investment thesis and % of NAV and % of NAV ▪ A niche market leader in the UK teleradiology sector which is acyclical and is ▪ International provider of B2B data and training in the compliance, insurance, growing rapidly driven b

  25. Slide 25: Fund Overview

    FUND OVERVIEW Strategic Equity Capital plc 1 Shares in issue 63,296,844 Governance London Stock Exchange listed, UK domiciled investment trust, independent Board Corporate broker Liberum Capital Authorisation to purchase 14.99% of own shares for cancellation or to be held in treasury Contingent tend

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