Institutional Presentation Mint Capital We are an investment - - PowerPoint PPT Presentation

Institutional Presentation

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www.mintcapital.com.br

Mint Capital

We are an investment company that has, among its partners and co-investors, managers with investing experience and families with deep entrepreneurial roots and

• perational expertise.

Our goal is to preserve and compound our partners and co-investors hard-earned capital by making high-quality, value investments with a holding mindset. To that end, we aim to reach this goal by owning a collection of great businesses, either directly or through common stock.

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More than just financial capital

We have partners and co-investors who are members of families with operational expertise and a desire to continue to learn and invest. More than financial resources, these members bring industry expertise and geographical complementarity to our network. This goes back to what these families have always done, that is, help businesses grow successfully. Without exception, all want to contribute to make more businesses flourish by providing more than financial, also human and intellectual capital. We believe our structure bring advantages both to investors and invested companies who can make decisions focused on the long term and not to find a quick exit.

Investment management re-imagined

We believe a long-term investment horizon is fundamental for value creation. Therefore, we provide patient capital without a pre-determined time period to realize liquidity unlike traditional fund structures. This way, we make investments with a true focus on increasing their earnings power over time so that we could hold our companies into perpetuity.

Truly long-term mindset

Our co-investors benefit from the scale of our structure, share deal flow, personal experiences and take part in the investment decision process, besides acting closely in portfolio companies either through board positions or internal committees. Therefore, our focus is not to gather assets under management but people with different backgrounds, experiences and points of view that can add value beyond simply financial capital.

By endurance we conquer

Leveraging the financial, intellectual, and human capital of our families ecosystem.

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Investment Philosophy

The only investing strategy that we know puts downside risk, fundamentals, and entry price at the heart of the process is Graham & Dodd Investing. That’s why we believe this philosophy, based on the purchase of bargain-priced securities and on a long term mindset, is the most consistent and risk-averse way to

• btain good investment results.

We search for value

The same way we only invest in management teams with skin in the game, we invest our own savings in the same businesses and investment vehicles as our co-investors.

Skin in the game

We value or independence and our approach, therefore, will be

• ften contrarian in nature. That means we will avoid high-flyers

and glamour stories. Because of this, many times we will hold positions that make other people uncomfortable. Thus, being unconstrained in our approach is crucial so we can take advantage of the most attractively priced securities, of any type and size, regardless of market conditions. Hence, we will sacrifice asset growth over consistency, bargains, and an investor base who share the same philosophy

Independence

We operate in the financial industry but we are not of it. We have pride in not following its principles and methods. We spend time and effort to better understand businesses models and its fundamentals, and not on complicated financials models as most market participants. We strive to understand how a business works, how it makes makes money and how insulated it is from competition. We have an owner mindset and invest our capital alongside owners as well.

We are businesses analysts, not financial analysts

We want to own businesses whose earnings power will likely be greater five and ten years from now and with which we would be happy to be shareholders were the market remain closed throughout this time, regardless of the current narratives and consensus. Besides, great companies can be bad investments if purchase price is not adequate.

We focus on fundamentals, not narratives

We will pass an opportunity when we do not understand how a business works or does not meet our

As Ben Graham used to say, Mr. Market is here to serve us, not to guide us.

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Our Approach

We focus on two primary, interrelated disciplines: participations in Listed Equities and Direct Investments (minority and coinvestments) in partnership with value-adding families and coinvestors. Listed Equity Participations Direct Investments Similarly, we purchase common stocks of publicly traded companies when the market offers us an opportunity to buy good businesses at attractive prices, through a bottom-up, value oriented approach. We seek controlling and non-controlling stakes in businesses that generate cash, earn good returns on capital, and are run by outstanding managers. Investment Criteria

• Companies with long-term profitability, a stable business model and highs return on capital;
• Established Niche Expertise;
• Run by outstanding Entrepreneurs and Managers
• In sectors with good and long-term fundamentals;
• Adequate entry price (valuation).

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Why Us

Focus on Value Creation We partner with great management teams with a focus on value creation, not to seek a liquidity event Operating Expertise Co-investors who bring operational expertise and industry knowledge Legacy We want to preserve the business cultures of the companies we invest in Longevity Long term, patient capital without a pre-determined exit window Connectivity Beyond Capital, we suggest financial structures to help businesses grow and also we connect our companies with those who matter

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Our Model

• Committed Capital or invested in Mint Funds of choosing
• Investment team with Public and Private Equity experience sourcing and analyzing deals
• Team with skin in the game and fully dedicated to the company
• Participate in families Deal Flow, have priority on bookbuilding and structures with lower fees
• Option, but not the obligation to invest in opportunities
• Often, out of the radar opportunities
• Bi-monthly investment committees with family members
• Family members participate in board and committees of investees

Committed Capital Mint Funds

• Doesnt have to invest in

any Mint Fund or Separate Managed Account

• 1% Management fee over

committed capital

• Minimum BRL 20MM
• Capital deployed in any

Mint Funds (Equity(Valor), Education,

• r Fundo Excluviso

(including Fixed Income)

• No extra fees besides

those charged by respective funds

• Minimum BRL 20MM

FAMILIES

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Deal Sourcing

Proprietary:

We actively pursue private companies through our personal connections, and by performing research and field work. Our diversified deal sourcing offers a combination of under the radar opportunities as well as more established business where we are perceived with great cultural fit.

Co-investors:

Our members also bring breadth to our deal flow with their own networks.

Outsourced:

We have relationships with well-regarded Investment Banks, M&A Boutiques, and brokers.

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Direct Investments - Case

Business Description / Market Structure

• Primary Education in brazil is

very fragmented and informal

• Brazil urgently needs

improvements in its Primary Education system

• Public education is weak and

with poor outlook. The government can’t keep a high-quality, comprehensive public system

• Primary education market is

6x as large as higher learning in Brazil

• Parents increasingly

searching for better educational solutions

Competitive Advantages

• Bahema project is based on

the perenization of schools methodology, professors and directors, and culture, that together with a long-term horizon that resonates well with school owners that want to see their projects being taken care of for the long term

• Schools are local and exhibit

high swicthcing costs. In fact, student evasion is very low and is mostly attributed to: (i) financial difficulties and (ii) change of city

Fundamentals

• Primary schools unit economics

are very attractive, with high EBITDA to free cash flow conversion due to annual increases in tuition, minimal capex, no working capital needs, and low to no leverage.

• Margin expansion is highly

accretive to the bottom-line since physical space and fixed cost can absorb new classes or student with limited increases in marginal cost

• Longer study cycle (12 years)

compared to higher learning (4 years)

• Parents much more reluctant to

change schools

• Low government dependence

and interference

Valuation

• Mint acquired newly issued

shares on a capital raise at a non-demanding valuation with shares priced at book value

• In addition, shares priced on a

cash-to-cash basis with no goodwill over school school acquisition prices

• Bahema five schools acquired

at 4-9x EBITDA multiples Mint has had an ownership interest in Bahema since 2017

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Direct Investments - Case

• Since first educational investment*: +161%
• 2017: + 112%
• 2018: + 120%

* 11/01/2019

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Listed Equities Participations

The portfolio is constructed with the foremost objective of weathering bad markets very well and then perform reasonably well in bull markets

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Participations – Listed Equity

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Our Long Term Record

Cumulative total return since inception (May 2009): Mint BatalhaValue: 214%

Ibovespa: 86%

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Case

Business Description / Market Structure

• BVMF is the sole provider of trading and post-trading services in

Brazil and its comprised of its core business, both of its equities (Bovespa) and derivatives exchanges (BMF) and its central counterparty and CSD businesses;

• Because it also operates a clearinghouse, trades open at BVMF are

also closed there. This allows BVMF to book both trading and post- trading fees whenever a transaction occurs.

• Moreover, unlike most global financial exchanges, BVMF operates

both a cash and derivatives exchange. Because of this, its volumes tend to be less cyclical and more resilient to financial shocks as adverse scenarios tend to boost demand for protection and certain financial derivatives.

• Trading and post-trading fees account for roughly 80% of total

revenues, almost evenly split between the cash (Bovespa) and derivatives segments (BMF). The remaining 20% of revenues are made up of vendors and market access fees, licensing of indexes, securities lending and so forth.

Fundamentals

• Financial exchanges possess attractive unit economics. Revenue is

recorded every time a transaction is made. However, because of the fixed-cost nature of the business, costs are not incurred in every trade. Usually, the company makes investments in infrastructure and technology (software and systems) upfront, and its cost is later spread

• ut in the millions of transaction that take place. Additional

transactions within the system occur at virtually zero marginal cost.

• The business requires a healthy dose of technology, scale, and

regulatory expertise, but limited CAPEX and working capital.

• Because of the above mentioned reasons, BMF Bovespa has been a

true cash cow over the years, with both high returns on (ROIC and CROIC) and of capital (dividends and buybacks).

• We believe the business is highly entrenched by the possession of

competitive advantages both in terms os scale economies, switiching costs, and network effects Mint has had an ownership interest in B3 since 2015 Thesis: A monopolist trading at a deeply discounted valuation that should greatly benefit of a economy and capital markets turnaround

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Case

Business Description / Market Structure

• Amazon has become one the world’s largest retailers in just

20 years. During this time, it has grown at over 30% per year but has yet to turn significant profits. Nevertheless, the company generates a lot of cash, which gets reinvested to generate even more sales and even more cash.

• Amazon’s business model has evolved from ecommerce

retailer to a marketplace. Amazon’s website is increasingly analog to a financial exchange, a platform that matches thousands of buyers with sellers.

• An with the advent of FBA (Fullfillment by Amazon), the

company's model is that of a Retail Infrastructure.

Fundamentals

• Amazon generates much more cash than profits, given its cash-

generating operating cycle and non-cash charges

• AMZN has been able to fund its massive growth with cash from
• perations, with almost no need to issue debt and equity
• Operational cash flow has grown much faster than earnings, which

could be unsustainable over the long run

• However, trends in profitability and working capital efficiency, that

drives most of its OCF, look in good shape

• AMZN’s free cash flow to equity numbers have to be adjusted for

capital leases and stock-based compensation

• But the company’s earnings power, adjusted for maintenance capex

and SG&A shows a much more profitable business than most people imagine

• Bezos’s Capital allocation will continue to be tilted towards AMZN’s

businesses and growth

• Ultimately, that may minimize short term free cash flow, but we

think should serve AMZN’s shareholders and customers very well. Mint has had an ownership interest in Amazon since 2017.

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Case

Business Description / Market Structure

• Founded 70 years ago, Marisa is one of Brazil’s largest apparel retailers and

the country’s leading women’s fashion and underwear chain.

• The company has a very clear value proposi on: to offer its consumers

current, good quality fashion at attractve prices. Its target audience are Brazilian women aged 25 to 65, predominantly class C.

• In spite of the intense competition, apparel retailers usually shows good unit
• economics. Gross margins are especially high in comparison with other

types of businesses. Indeed, the main Brazilian retailers have recurring gross margins of around or exceeding 50%.

• The leading chains also do not have demand for high investments in fixed

assets, since a large part of their production is outsourced (they do not have their own factories) and the stores are mostly or fully leased. The corollary is that if the results (sales and cash generation) are sufficient, the return on invested capital is attractive.

• Besides selling goods, the leading apparel chains in Brazil have another

business, namely financial products and services. Starting ten years ago, retailers have directly become the main financiers of their consumers by issuing private label credit cards (with purchase installment plans) and granting personal loans. In addition, they offer co-branded cards with a large issuing banks.

Fundamentals

• In spite of the recession in recent years, which has been especially severe on

its target customers and has led to a sharp decline in revenue, the company has been relatively resilient. From 2014 until now, when sales began falling, Marisa has posted over R$130 million in losses, but generated approximately R$545 million in free cash flow;

• In spite of the phenomenon of fast fashion brands, we believe that the value

proposition of a brand continues to be its main differentiating feature.

• Although risks exist from the rise of electronic commerce, traditional chains

like Marisa can reap advantages by leveraging their physical base with their

• n-line operations. More than anything else, stores are still relevant as a

channel for experience, logistics and customer acquisition.

• Additionally, greater penetration by on-line sales, with a change in the flow
• f people in the stores to to websites and mobile devices, could enable better
• ptimization of the number of stores of certain brands by both closing

unprofitable units and/or reducing the sales area.

• We believe the retail unit is earning way below its potential due to macro and

micro issues. We also believe the company can unlock financial and

• perational vaue of its financing unit by pursuing strategic alternatives.

Mint has had an ownership interest in Marisa since 2018

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Our People

Ricardo Dittmer

• Prior to Mint, Ricardo was analyst at

Neoway Business Solutions, working with financial accounts like Santander, Itaú and others.

• Value Investing in Columbia Business

School

• He holds a degree in Business

Administration from Insper

• Cassio has more than ten years of

financial markets experience, with a focus on asset management, equities and behavioral finance.

• Prior to Mint, He has previously

worked in the Family Office area of Itaú-Unibanco, Portfolio Management at Santander Private Banking in Switzerland and portfolio manager of a single family office.

• Member of the advisory board of the

innovation center of Denmark in Brazil and chairman of the board of Minze Seguros.

• Member of the Board at Bahema

Educação.

• He is a certified portfolio manager

with the CVM and has an specialization in Family Wealth Management.

• He holds a degree in Business

Administration from FAAP and an MBA from Columbia University and London Business School.

Cassio Beldi Franco Dal Pont

• Franco has more than ten years of

financial markets experience, with a focus on the analysis of industries, businesses and investment management, both in Private and Public Equities.

• Prior to Mint, Franco was Portfolio

Manager at BatalhaCapital. He was

• n the investment team of a growth

capital Private Equity fund. Before, he was a buy-side analyst at Latour Capital in São Paulo.

• Franco began his career as a busyness

analyst at Citibank.

• He is a member of the Board at

Bahema Educação.

• He is a certified portfolio manager

with the CVM and has an specialization in Family Wealth Management.

• He holds an Economics degree from

FAAP and an MBA from Columbia Business School.

Marcelo Walton

• Marcelo has more than eight years of

private equity experience with focus

• n investments and
• Prior to Mint, Franco was Portfolio

Manager at BatalhaCapital. He was

• n the investment team of a growth

capital Private Equity fund. Before, he was a buy-side analyst at Latour Capital in São Paulo.

• Franco began his career as a busyness

analyst at Citibank.

• He is a member of the Board at

Bahema Educação.

• He has worked at private equity
• He holds a degree in Pulic

Administration from FGV-Fundação GetulioVargas

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Mint Capital

More than just financial capital SP: +55 11 3280 9101 MG: +55 34 2589 2264 mint@mintcapital.com.br www.mintcapital.com.br

www.mintcapital.com.br