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Monday, 10 November 2014
This Mornings News
This Mornings News
Private Equity
Litigation Finance
Juridica Investments (JIL) Dividend Declaration:

Dividend: The company has declared a 20pps (or approximately US$35.2m in aggregate)

Timeline: Further to the previous announcement indicating a 20pps dividend the company has provided a timeline:
Payable on 14 January 2015 to shareholders on the Register at 12 December 2014.

Overall Distributions: Following this distribution, the Company will have returned approximately US$101.3m to
shareholders via dividends; totalling 58.6pps.
Investec insight

Post the upcoming dividend of 20pps, JIL will have returned approximately US$101.3m to shareholders via dividends;
totalling 58.6pps or 48% of raised capital. This demonstrates management’s commitment to return realised profit.

With a prospective yield of c.13.5% it could provide a welcome boost to many spread compressed portfolios, especially
those who are looking for extra yield and are comfortable with a degree of yield variability.

Juridica has provided an uncorrelated NAV return of c.80% over its six and a half year life, producing an annualised return
of over 12% in NAV terms and close to 14% in price terms. Given the maturity of the portfolio we would expect returns to
continue to gather momentum

Access fund detail here
Alternative Credit
Real Estate Credit Investments (RECI) October NAV

Returns: NAV increased over the month from 158.7 to 159.1pps a rise of 0.3%.

Bond Portfolio: The bond portfolio saw a decline of -0.68% over October, reflecting the background volatility in the market.

Loan Portfolio Events: RECI funded a further €7.8m of it’s €32.3m commitment to a whole Loan secured against German
multi-family properties. This loan facility is now 72% drawn. A mezzanine loan secured against a trading boutique hotel at
King’s Cross was sold at par plus accrued interest and fees as part of a Sponsor led refinancing, this investment has
returned an annualised yield in excess of 15%
Investec insight

RECI is trading at a modest premium of 3.5%, has a running yield of 6.5%, and a targeted annual total return of 9%.The
manager, Graham Emmett, backed by the wider Cheyne team has been especially proactive in the management of the
fund’s assets.

The active management has resulted in RECI almost hitting its target total return with two months of the year to go, and
should comfortably surpass it by year end. It should be noted that those investors who have reinvested dividends would
have achieved a return of 13.8% year to date.

Access fund detail here
Global
British Empire (BTEM) Half-year to 30 September
Heads of Product
Sales
Sales Trading
Market Making
Corporate
Jamie Lowe
Charles Stagg
Carl Goossens
Peter Brown
David Anderson
+44 (0) 20 7597 5015
+44 (0) 20 7597 5042
+44 (0) 20 7597 5787
+44 (0) 20 7597 5063
+44 (0) 20 7597 5097
Jamie.Lowe@investec.co.uk
Charles.Stagg@investec.co.uk
Carl.Goossens@investec.co.uk Peter.Brown@investec.co.uk
Fin Bodman
Edward Malone
+44 (0) 20 7597 5247
+44 (0) 20 7597 5098
Fin.Bodman@investec.co.uk
Edward.Malone@Investec.co.uk
Readers in all geographies please refer to important disclosures and disclaimers starting on page 5
David.Anderson@Investec.co.uk

Returns: NAV total return was +6.8% and share price return was 8.9%vs.the benchmark return of 5.1%.

Longer term Performance: Over 10 years, your Company's NAV has returned 149% versus 131% for the MSCI All
Country World ex-US Index, 143% for the Morningstar Global Index, and 137% for the MSCI All Country World Index.

Discount: Ranged between 10.3% and 14.3% but reduced over the year from 11.8% to 10.3%.

Buybacks: 9.4m shares were bought back and placed into treasury at discounts ranging from 10.1% to 14.8% and adding
an estimated 0.83% to NAV For the year ended 30 September 2014.

TER: ongoing charges ratio was 0.90%, compared with 0.69% in 2013.

Dividends: Total dividends paid and proposed for the year amount to 10.5pps, which is unchanged from last year's
ordinary dividends. There will be no special dividends over the year.

Currency Hedging: Since the year end, the Company has hedged part of its exposure to the Japanese yen.

Underling Portfolio: as the discounts in BTEM’s underlying holdings have narrowed the manager has been able to recycle
capital into other opportunities still trading on wide discounts. At the year end, it was 28.6%, which compares to a level of
28.4% one year ago. The top ten investments represent 41% of the portfolio.
Investec insight

The fund’s performance remains ahead of its benchmark and could provide a useful portfolio diversifier for those who do not
want or need a large degree of US exposure. This said the company does have some look through US exposure via
companies such as Harbourvest Global Private Equity (HVPE), which is one of our favoured picks in the listed private equity
space,

Access fund detail here
Infrastructure
International Public Partnerships Limited (INPP) Interims, 1 July 2014 to 7 November 2014

Returns: NAV movement from 31 Dec 2013 123pps to 124.8 as of 30 June, the Company expects further NAV accretion
since 30 June 2014. This is due to organic growth, increasingly keen pricing in the secondary market and Macro economic
factors including movements in government bond yields in the period.

Long-term returns: Total Return (comprising share price growth and aggregate dividends) since IPO in November 2006 to
7 November 2014 of 103.3%

Dividend: A full year 2014 dividend of 6.30pps is currently targeted (up 2.5% from full year 2013).

Portfolio: Progress in the portfolio was strong, £171m invested in Lincs offshore transmission project, Priority Schools
Building Programme (£78m invested). Disposal of two non-strategic, minority stakes from its portfolio for (£3.5m).

Inflation Protection: Inflation linkage in the portfolio strengthened with recent investments such that a 1% increase in
inflation leads to a 0.84% increase in return (previously 0.81%).

Construction Exposure: portfolio currently has less than 1% of assets still in physical construction.
Investec insight

We would note the recent strong NAV performance from 3i Infrastructure (3IN) in its latest set of results was partly due to
the increasingly aggressive pricing of assets in the secondary markets. While different funds in terms of PPP/PFI exposure
from INPP, we see it as a useful proxy for the overall movement of discount rates and the impact that this has on the
sectors NAV.

The fund and sector as a whole has enjoyed the relative benefit of low interest rates, inflation and falling government bond
yields, all helping improve the risk adjusted returns. While the current environment is especially conducive to strong returns,
investors should be vigilant if any of the background conditions change rapidly.

Access fund detail here
Property
Macau Property Opportunities (MPO) Interims, 30 September 2014:

Returns: NAV rose by 1.7% to US$4.97. In Sterling terms this was 306pps, an increase of 7.2% (based on a US$/GBP£
exchange rate of 1.62 versus 1.71 as at 30 June 2014).

Share buybacks: The Company repurchased and cancelled 3.2% of its issued share capital at a weighted average price of
246.85ps.

Loan To Value: LTV currently 25% up from 22%.
Page 2 | Monday, November 10, 2014 |

Cash Levels: US$30m cash was generated through a combination of new loan facilities and restructuring of existing debt
covenants. MPO's cash balance was US$28.2m, of which US$5.9m is pledged as collateral for MPO's banking facilities,
resulting in free cash of US$22.3m.

Property Outlook: Property transaction volumes continued their decline though home prices remained supported by
healthy housing demand and tight supply. Industry experts expect the number of transactions to edge lower for the rest of
the year in the face of ongoing property curbs.

Gaming Outlook: Macau's gaming revenues fell for the fourth consecutive month in September, buffeted by weakness in
the VIP segment. Total gaming revenues dropped 11.7% year-on-year to US$3.2bn, the first double-digit decline since June
2009. However, full year gaming growth is forecast to be flat on 2013 at c. US$45 bn - a figure that has grown almost eight
times in only a decade.
Investec insight

The growth in the region remains impressive, and the management have demonstrated diligence in their buyback and
capital returns policy. The next stage of development is the construction of Sendo Square and the final sales phase of the
Fountainside, with the occupancy permit due to be received by year end.

MPO is currently trading at a c.-23% discount and remains a good value method for those looking to access growth in the
area.

Access fund detail here
Daily Article
Significance of secular market should not be underestimated

People who work in specialized fields seem to have their own language. Practitioners develop a shorthand to communicate
among themselves. The jargon can almost sound like a foreign language.Finance is filled with colorful phrases such as
“Spoos,” “Vol,” “Monte Carlo simulation,” and “Gaussian Copula.” In these columns, I try to eschew the usual Wall Street
jargon. But I have used the phrase “secular cycles” (most recently here), and a reader recently called me on it. To redress
that error, this week I will discuss what a secular — vs. cyclical — market is, its significance and what it might mean to your
portfolios.

Based on a lifetime of observations and a few decades in the markets, I understand that societies, beliefs and fashions all
move in long arcs of time. We call these arcs several things: cycles, periods, eras. They vary in length and intensity, but
they are typically characterized by an idiosyncratic set of qualities that set them apart from each other as unique.

Regardless of the name we affix to them, we intuitively understand what defines a specific period of time. If you name an
era, I can describe for you the dominant economic and societal themes and trends. Ultimately, all of these eventually find
their way to equities and bonds. Rather than describe these obliquely, let me give you a definition, and then a few specific
examples:

Secular cycles are the long periods — as long as decades — that come to define each market era. These cycles alternate
between long-term bull and bear markets. Societal elements affect these markets. These cycles are driven by specific and
dominant economic ideas.

Each secular market cycle reflects the key issues of an era. These can include geo-politics, economics, resource
consumption, technology or any one of a number of other elements. Over time, each of these factors comes to define the
dominant economic theme of a generation. Consider the post-War World II era, or the inflationary malaise of the 1970s or
even the roaring 1980s and 1990s. Each period can be defined as a secular cycle.

With each secular cycle, a dominant Market Trend emerges. Historically, these have been extremely powerful and, once
established, are very difficult to break. They can last 10 to 20 years.

To access the full article please click here
Page 3 | Monday, November 10, 2014 |
UK Listed CEFs: 1yr Z-Scores UK funds > £150m
BBGI SICAV Ord
2.29
Boussard & Gavaudan EUR Ord
2.02
Dexion Absolute GBP Ord
1.5
JPMorgan Indian Ord
1.44
D
Genesis Emerging Markets Ord
E
Hansa Trust Ord
A
RBlueCrest AllBlue GBP Ord
1.43
1.14
1.09
Law Debenture Corporation Ord
1.06
0.97
Temple Bar Ord
0.92
Witan Ord
-2.01
Bankers Ord
-2.04
Polar Capital Technology Ord
Worldwide Healthcare Ord
-2.14
JPMorgan European Smaller Comp Ord
-2.22
C
H
E
A
P
BlackRock Greater Europe Ord
-2.29
Ruffer Investment Company Ord
-2.46
Phaunos Timber Ord
-2.67
Fidelity Special Values Ord
-2.75
Scottish American Ord
-2.99
-4.08
Jupiter European Opportunities Ord
3
2
1
0
-1
-2
-3
-4
-5
Source: 2014© Morningstar
US Listed CEFs: 1yr Z-Scores UK funds > £150m
2.4
2.39
2.17
1.7
1.67
1.64
1.63
1.51
1.49
1.41
C
H
E
A -1.71
P-1.97
-0.83
-0.84
-0.95
-0.98
-1
-1.08
-1.99
-2.11
LMP Capital & Income Ord
BlackRock Energy & Resources Ord
BlackRock Util & Infra Trust Ord
China Fund Inc Ord
D Calamos Convertible & High Ord
E Voya Infrastructure Ind & Mat Ord
A Calamos Strategic Total Return Ord
R Aberdeen Greater China Fund Ord
MS China A Share Ord
Wells Fargo Adv Glo Div Opp Ord
Japan Smaller Capitalization Ord
PIMCO Income Opportunity Ord
BlackRock Real Asset Equity Ord
BlackRock Income Opportunity Ord
Templeton Emerging Mkts Income Ord
JH Financial Opportunities Ord
Liberty All-Star Equity Ord
AllianceBernstein Glb High Inc Ord
Nuveen Credit Strat. Income Ord
Source Capital Inc Ord
3
2.5
2
1.5
1
0.5
0
-0.5
-1
-1.5
-2
-2.5
Source: © 2014 Morningstar
Page 4 | Monday, November 10, 2014 |
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Sales
Charles Stagg
Tel: +44 (0) 20 7597 5042
Charles.Stagg@investec.co.uk
Fin Bodman
Tel: +44 (0) 20 759 5247
Fin.Bodman@investec.co.uk
Market Making
Peter Brown
Tel: +44 (0) 20 759 5063
Peter.Brown@investec.co.uk
Edward Malone
Tel: +44 (0) 20 7597 5098
Edward.Malone@Investec.co.uk
Sales Trading
Carl Goossens
Tel: +44 (0) 20 7597 5787
Carl.Goossens@investec.co.uk
Corporate Finance
David Anderson
Tel: +44 20 7597 5097
David.Anderson@investec.co.uk
Jeremy Ellis
Tel: +44 20 7597 5153
Jeremy.Ellis@investec.co.uk
Page 5 | Monday, 10 November 2014 | www.investec.co.uk/research