Conversus exit flow continues in Q3

The Euronext-listed fund of funds saw distributions of $100m in the third quarter and expects to continue collecting more in proceeds from GP exits than it pays out in capital calls ‘over the medium term’.

Conversus Capital, a listed fund of funds, received distributions in the third quarter of $99.6 million, following distributions of $129 million and $90 million in Q2 and Q1, respectively.

The firm received $51.9 million in capital calls in Q3, nearing the $67.2 million it received in the first two quarters of the year combined.

“New investment activity by our general partners increased 50 percent over the second quarter, as firming credit markets supported high quality deals globally,” Bob Long, president and chief executive officer of Conversus, said in a statement.

Conversus debuted in the Euronext in 2007 at $25 a share. The fund of funds reported an estimated net asset value per unit of $25.32 as of 30 September, an increase of 4.8 percent since 30 June 2010. Investment NAV was $1.8 billion, while the firm had $611 of unfunded commitments.

“For the fourth quarter of 2010, we estimate that net positive portfolio cash flows will be in the range of $75 million to $100 million,” the firm said in an earnings report. “The key take away is that we are confident in our expectation that the pace of our distributions will exceed capital calls over the medium term, assuming stable economic conditions.”

Distributions were driven by GP sales to strategic buyers and sales of publicly traded securities. About 72 percent of the $319 million in distributions in the first nine months of 2010 were from buyout funds, with venture funds comprising 15 percent and special situation funds at 7 percent. The remaining 6 percent came from sales of directly held public equities.

The ten largest distributions for the nine months ending 30 September totaled $91.9 million and were related to portfolio companies Shenzhen Bank/Ping An Insurance, Unity Media, Kenan Advantage, Vitality Foodservice, Equinox, NuVox, Richard Ellis, Michael Foods, MultiPlan and Medegen Holdings, Conversus said.

Capital calls of $119 million for the first nine months of 2010 included $97.3 million for buyout funds.

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