Presentation on theme: "New Mountain Capital LLC"— Presentation transcript:
1New Mountain Capital LLC Presentation For:Fresno County Employees' Retirement AssociationFebruary 01, 2006
2Mission StatementNew Mountain’s intention is to be “best in class” in the new generation of private equity as measured by:ReturnsControl of riskService to our limited partnersThe quality of the businesses we build
3Major Themes And Strategies No “sealed bid” auctionsProactively targeted industry sectorsLong term expectation: 60% targeted, 40% opportunisticRigorous due diligenceVery strong downside protectionNon-cyclical, “defensive growth” sectorsHigh quality niche leadersOutstanding free cash flow characteristicsNMC usually in a senior credit position, with current cash yieldFocus on “value added” and real growthStart with solid stable base, then build major company in a growth industryTop quality management partners, investing their own moneyIntensive New Mountain “value added” at all levelsOutstanding return potentialNew Mountain is maintaining its high return standardsNew Mountain is exceeding return targets to dateFull team efforts
4New Mountain Today “Best in class” in private equity by many measures 44.5% IRR since inception, even with all private positions valued at cost (1)78.0% IRR on publicly traded positions; even while S&P has been down 15.0% (2)No write-off or write-down on any fund investment; portfolio less levered than S&P 500CalPERS’ best performing U.S. private equity fund (buyout or venture) for vintage year 2000(3)CalPERS’ top 5 performing major U.S. private equity commitment relative to vintage year for entire period. (3) (4)$2.3 billion of capital under management; hundreds of millions more in capital turned awayWorld class institutional investors and advisors; outstanding references and client service“Best in class” teams; financial and operating; full team effortsInstitutional integrity, stability and complianceAbsolute dedication to superior performance in everything we do(1) Gross returns, New Mountain Fund I, January 2000-December 2005(2) S&P performance from 12/31/99-12/30/05(3) According to CalPERS’ website- 10/4/05; U.S. funds(4) U.S. general private equity; $50 million investments and up
5Exceptional Returns Despite Market Decline: Strayer Stock Price Performance(1) $400 million value $1.5 billion at exitDebt free with $110 million cash & equivalents on hand(1) 11/30/00 – final exit (8/17/05). Given the nature of the privately negotiated investments generally made by New Mountain, public indices may not be appropriate benchmarks for comparing performance. Public benchmark returns do not include receipt or reinvestment of dividends paid(2) Reflects stock price appreciation only. NMC’s percentage gain would be higher after taking into account cash dividends and accretion of PIK preferred stock received by NMC.
7Strayer Example: Focus on Investor Value Added Metrics12/31/00Present (1)Enrollment12,00023,768Campuses1437State Licenses39Growth Rate12%25%DebtNoneManagement DepthThinStrong(1) As of 9/30/ Enrollment pertains to the average of the first nine months of Campuses include two new ones scheduled to open in Q
8National Medical Health Card: A Continuation of Past Success (1)New Mountain acquired control of NMHC in March 2004Stock price as of 12/30/2005(1) An $11.50 per share conversion price, reduced by the estimated net present value of preferred dividends to be received
9NMHC Example: Value Creation via Governance Change National Medical Health Card Systems, Inc. (“NMHC”) is a rapidly growing pharmacy benefit managerRanked sixth in the Fortune 100 growth list in 2004, immediately after eBayLeader in service quality and transparencyAt time of New Mountain investment (March 2004), NMHC was NASDAQ-listed but majority controlled by founder/chairmanExtensive related-party transactions between founder/chairman and companyRented headquarters building to companyProvided temporary housing to company sales forceCompensation and benefitsNew Mountain added value in multiple ways:Steven Klinsky became new non-executive chairmanInstalled new CEORebuilt boardStrengthened balance sheetSourced key acquisitionsHelped with sales introductionsBrought about Wall Street research coverage (0®7)
10New Mountain Returns: Stock Selection and Investor “Value Added,” Not Debt National Medical Health Card Systems, Inc. (“NMHC”)
11Transactions at New Mountain RealizedProceeds andUnrealizedValue$ MillionsDate ofInitialInvestmentDate ofInitialRealizationCapitalInvested(1)RealizedProceeds(2)UnrealizedValue(3)Multipleof CostGrossIRR(4)Fund IPublicly Traded InvestmentsStrayer Education, Inc.Strayer Preferred StockMay-01Jun-02$115.0$422.1$0.0$422.13.7x77.6%Strayer OptionsMay-04Jun-0523.072.00.072.03.1x150.4%National Medical Health Card Systems, Inc.(5)Mar-0480.010.0189.2199.22.5x67.5%Total Realized and/or Publicly Traded Investments$218.0$504.1$189.2$693.33.2x78.0%Unrealized Investments (At Cost)Surgis, Inc.Dec-01$70.0$0.0$70.0$70.0Overland Solutions, Inc.Feb-03105.06.8110.8117.6Apptis, Inc.Oct-03144.012.0148.1160.1Total Unrealized Investments (held at cost)$319.0$18.8$328.9$347.7Total Investments$537.0$537.0$522.9$518.1$1,041.01.9x44.5%Fund IIInvestments (At Cost)MailSouth, Inc.Mar-05$110.0$3.0$110.0$113.0Deltek, Inc.Apr-05180.00.0180.0180.0Validus HoldingsDec-05__ 0.0__$410.0$3.0$410.0$413.0Total Investments
12NMC Transaction Footnotes Capital invested represents the aggregate amount invested by New Mountain in each portfolio company.Realized proceeds include all cash dividends, interest income and other payments received from or in respect of portfolio companies as well as cash distributions from the sale of securities as of December 30, All figures are gross, before expenses, management fees and carried interest, if any.Unrealized investments and the remaining portions of partially realized and/or publicly traded investments have been valued as of December 30, 2005, at original cost and closing prices as of December 30, 2005, respectively.IRRs are calculated based on daily investment inflows and outflows, with the return annualized. Gross IRRs shall mean an aggregate, compound, annual gross internal rate of return on investments. In the case of portfolios of realized and unrealized investments, the gross IRRs are based on realizations and internal valuations of New Mountain as of the applicable date. Internal rates of return are presented on a “gross” basis (i.e., they do not reflect the management fees, carried interest, taxes, transaction costs and other expenses to be borne by investors in the Fund, which in the aggregate are expected to be substantial); for a description of such management fees and carried interest, see “VII. Summary of Principal Terms.” Prospective investors upon request may obtain a hypothetical illustration of the effect of such fees, expenses and other charges on such returns. Actual realized returns on unrealized investments will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions on which the valuations used in the prior performance data contained herein are based. Accordingly, the actual realized returns on unrealized investments may differ materially from the returns indicated herein.Based on $27.20 closing price (December 30, 2005) 6,956,522 shares on an “as converted” basis.