Listed fund of funds manager Conversus Capital has seen distributions from managers outpace capital calls by nearly $60 million in the first quarter and expects to keep receiving proceeds from exits through this year. The firm had $91 million of distributions in the first quarter and paid out $33.4 million in capital calls.
While the size of the gap between distributions and capital calls in the first quarter will likely shrink, “The trend of distributions outpacing capital calls is sustainable,” Tim Smith, chief financial officer for Conversus, told PEO. “The first quarter was fairly large in that standpoint. We have 25 portfolio companies that have filed for IPOs that have not gone live yet. We expect them to over the next six months. We have a fairly significant backlog of announced exits that haven’t closed yet.”
Conversus’ anticipated pipeline of exits represents about $46 million of net asset value, Smith said.
The firm’s net asset value of investments was an estimated $1.8 billion in the first quarter, compared to $1.9 billion in the same quarter in 2009. Net unrealised gains on investments were $29.7 million for the quarter, while realised gains totaled $5.5 million, the firm said.
From the prior quarter, Conversus’ net asset value per unit has increased 1.2 percent.
Distributions came as the capital markets thawed and buyers found reasonable prices for deals, Smith said. Also, Conversus’ portfolio is “fairly mature”, he said.
“It’s been a complete reversal of where we were a year ago,” Smiths said. “Our GPs have proven themselves time and again to be very successful investors.”
Conversus has been holding off on making new commitments since last April to focus on “realising the value of the existing portfolio by applying cash flow to fund capital calls and expenses, repay debt and, eventually, return capital to unit holders through unit repurchases and cash distribution”, Smith told PEO last year.
The new commitment embargo is still in place, Smith said.
“We aren’t actively investing … we have $685 million in unfunded commitments,” he said. “We’re not committing new capital but we do have the unfunded commitments that will be new investments.”