Hibridge Capital

"

• Hibridge is a unique, owner managed investment management and services business with a track record of delivering:
  • positive non correlated returns;
  • robust, independent advice; and
  • tax efficient and proficient establishment and management of offshore structures.
• Proprietary "off market" investment opportunities, not available through traditional investment houses, are sourced through a broad network of relationships. We are not constrained in our investment approach by size, geography or asset class
• Since 2003, Hibridge has invested over £55 million in private equity, property and secured debt investments (predominantly in Africa) for its clients and has been involved in corporate advisory transactions valued at in excess of £100 million
• The majority of our remuneration is received in performance equity rather than in fees. In addition, the founders invest their own capital in funds promoted by Hibridge Capital. As such, our interests are fully aligned with our clients

PRIVATE EQUITY

OVERVIEW

• Rather than being burdened by excess capital we prefer to raise funds for specific investment opportunities. In this respect, our philosophy is that if we serve our investors well they will support us in new ventures
• Our investors include large financial institutions and high net worth individuals
• The majority of our investments are proprietary, sourced through an existing network of personal contacts which has been developed over many years of investment banking and advisory business
• We take an eclectic approach to private equity - our skills are developed to adapt to an ever changing environment. As such, we are not focused on any single sector
• We are active in the development of our portfolio investments. We not only bring traditional skills like corporate finance and structuring to our portfolio companies but we also facilitate growth by introducing the management teams we back to our global network of contacts
• We invest in control positions with the following characteristics:
  • excellent management that are willing to make a meaningful investment in the business;
  • proprietary opportunities, we will generally not participate in a competitive sale process;
  • existence of a clearly understood and creative business plan that reflects highly visible profitability and growth; and
  • an identifiable exit strategy at the time of investment.
• We are happy to co-invest with other financial investors and work with them in a complementary way. However, we require representation on the Board and negative control.

SECURED DEBT

OVERVIEW

• Hibridge Capital sources, structures and arranges funds for secondary debt finance opportunities predominantly in Africa through MCapital its subsidiary operating in South Africa - see presentation.
• We have delivered investors double digit returns with a low correlation to any asset class since 2003 and throughout the economic difficulties since 2007
• All debt investments are asset and/or cash flow backed and secured by a charge over property and personal surety
• Average investment size is approximately £1 million and the average term is eighteen months
• We are acknowledged as having a robust credit culture and work with highly reputable law firms to implement transactions and execute security
• Investment opportunities are sourced through a number of partnerships with debt originators, professional firms and banks. To them we are a long-term creative partner able to structure debt that best matches the various needs of preserving equity, improving cash flow and reducing costs

WHY BORROWERS PAY "MEZZANINE" RATES

• Primary lenders typically lend between 50% and 80% of capital requirement
• The remaining capital must be financed by equity and/or mezzanine debt
• Borrowers generally use mezzanine debt funding for the following reasons:
• equity funding is scarce and more expensive in the long term;
• mezzanine debt increases returns to the borrower;
• mezzanine increases a borrower's capacity to invest in other projects and therefore facilitates a spreading of risk;
• a mezzanine partner provides the borrower with greater flexibility compared to an equity partner

CRITERIA FOR MAKING LOANS

• Borrower
• must be experienced with a demonstrable track record
• verifiable financial statements of project and borrower
• clean credit history
• must contribute equity
• defined exit strategy
• personal guarantee provided by borrower
• Financials/security
• no greater than 75% loan to value exposure
• return on project costs in excess of 35%
• charge over assets and pledge of shares
• personal surety
• restrictive undertakings
• borrower subordination
• Board representation
• Term of loan
• initial fees to cover legal, due diligence and closing costs
• average term 18 months
• generally no prepayment penalty
• interest rolled up

INVESTMENT PROCESS

Hibridge Capital has a structured and disciplined approach to managing exposures and achieving enhanced returns

SELECTED INVESTMENTS

Hibridge Capital has invested in a wide variety of transactions in the UK and South Africa exceeding £20 million.
We are recognised as one of the leading independent mezzanine finance operators in South Africa.
Our strategy is to only invest in high quality opportunities. In this respect, we fund less than 3% of the potential transactions made available to Hibridge Capital per annum...."

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