Conversus: Distributions like it’s 2007

Conversus Capital, a listed fund of funds, received distributions in the second quarter of $129 million, reaching levels “not seen since 2007”, the firm said in an earnings report this week.

In the fourth quarter of 2007, an economic high, Conversus received distributions of $146 million, a spokesperson for the firm said.

“Distributions in the second quarter … brought our aggregate distributions since the IPO to over $1 billion,” Bob Long, president and chief executive officer of Conversus, said in a statement.

Conversus debuted on the Euronext in 2007 at $25 a share. The fund of funds reported an estimated net asset value per unit of $24.16 as of 30 June, an increase of 1.6 percent since 31 March 2010. Investment NAV was $1.8 billion while the firm had $653 million of unfunded commitments.

“Conversus believes the drivers of exits in the second half of the year will continue to be the backlog of strong companies not sold during the downturn, the cash rich balance sheets of large corporate purchasers and the general partners’ desire to show liquidity to their limited partners to facilitate upcoming fundraising,” the firm said in the earnings report. “The prospect of increasing capital gains taxes could also lead to accelerating realisations, although, the magnitude of the impact remains unclear.”

The prospect of increasing capital gains taxes could also lead to accelerating realisations, although, the magnitude of the impact remains unclear. Conversus Capital

Distributions were driven by GP sales to strategic buyers and sales of publicly traded securities. About 72 percent of the $219 million in distributions in the first half of 2010 were from buyout funds, with venture funds comprising 15 percent and special situations funds at 7 percent. The remaining 6 percent came from sales of directly held public equities.

The five largest distributions for the six months ended 30 June totaled $47.7 million and were related to portfolio companies Unity Media, Shenzhen Bank, Kenan Advantage, Vitality Foodservice and NuVox Communications, Conversus said.

Conversus also received capital calls of $67.2 million for the six months ended 30 June, which included $52.8 million for buyout funds.

The firm also was able to push back the maturity on its credit facility by two years, to July 2014. The amended terms allows for a maximum borrowing of $375 million through December 2013, and $200 million in 2014.

Conversus has been pursuing a “realization strategy”, in which it is meeting capital calls through distributions it receives from general partners, but not making new commitments to funds. That strategy will continue, a spokesperson said.