November 2015 Disclaimer This presentation has been prepared by - - PowerPoint PPT Presentation

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November 2015

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Disclaimer

This presentation has been prepared by Absolute Equity Performance Fund Limited (AEP). The information contained in this presentation is for information purposes only and has been prepared for use in conjunction with a verbal presentation and should be read in that context. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this presentation, AEP has not considered the objectives, financial position or needs of any particular recipient. AEP strongly suggests that investors consult a financial advisor prior to making an investment decision. This presentation is strictly confidential and is intended for the exclusive benefit of the institution to which it is presented. It may not be reproduced, disseminated, quoted

• r referred to, in whole or in part, without the express consent of AEP.

No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of AEP, its related bodies corporate, shareholders or respective directors, officers, employees, agents or advisors, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence for any loss arising from the use of information contained in this presentation. This presentation includes “forward looking statements”. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of AEP and its officers, employees, agents or associates that may cause actual results to differ materially from those expressed or implied in such statement. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. AEP assumes no obligation to update such information. This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained in it forms the basis of any contract or commitment. Any offer or sale of securities will be made pursuant to definitive documentation, which describes the terms of the offer (Offer Document). An Offer Document for any offer of securities in AEP will be made available when the securities are offered. Prospective investors should consider the Offer Document in deciding whether to acquire securities under the offer. Prospective investors who want to acquire under the

• ffer will need to complete an application form that is in or accompanies the Offer Document.

This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities of AEP have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (Securities Act) or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. NOT FOR DISTRIBUTION IN THE UNITED STATES

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Agenda

• About the Company
• Investment Performance
• Bennelong Long Short Equity Management
• Introduction: Investment Strategy
• Value Proposition: Investment Performance, Lower Drawdowns, Risk

Reward, Uncorrelated Returns

• Investment Process: Example 1, Example 2, Example 3
• Portfolio Snapshot
• Investment Manager
• Board of Directors
• IPO Timetable
• Roadshow Timetable
• Communications
• Conclusion
• Appendix

3

SLIDE 4

About the Company

• The objective is to achieve absolute returns over the medium to long term, through capital growth

and income, regardless of market cycles

• The Company will seek to achieve this by investing in Pair Trades and constructing a portfolio

predominantly comprised of large capitalisation Australian equities in a market neutral style that seeks to minimise equity market risk

• The Investment Strategy is similar to the strategy launched in February 2002. The Investment

Strategy has since delivered an average return of 18.14%*, which equates to more than 10% per annum excess returns over the ASX200 during this period

• The Investment Strategy’s largest drawdown was 12.2% and occurred in the GFC, as compared to

the 47.5% fall in the ASX200. The Fund took 6 months to recover the capital from this peak to trough decline compared with the 71 month period for the ASX200

• The Company aims to provide shareholders with a source of return that is uncorrelated to all

traditional asset classes

4

*Includes Bennelong Securities Management Account February 2002 to June 2008 and BLSEF July 2008 to 30 September

• 2015. Please note that past performance is not an indication of future returns.

SLIDE 5

Investment Performance

5

The following charts incorporate the pro forma results of Bennelong Securities Management Account between February 2002 and June 2008 (being the account’s actual results recalculated to reflect the identical fund terms of BLSEF) and the historic performance of BLSEF between July 2008 and 30 September 2015. The return calculations for BLSEF and Bennelong Securities Management Account are based on audited accounts.

Source: Bloomberg

$ $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $10,000 Investment in Feb 2002 Investment Strategy ASX 200 (Accum)

SLIDE 6

Performance Attributes

6

Note: The monthly returns highlighted in blue are net returns of the Bennelong Long Short Equity Fund (pre tax) from July 2008 to September 2015. The monthly returns not highlight in blue are "pro forma" net returns of the Bennelong Securities Management Account (pre tax) July 2002 to June 2008, that have been recalculated to reflect the identical terms as BLSEF.

Investment Strategy

Fiscal Year Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Year

Statistics

2015-16 8.85%

• 0.69%

5.71% 14.26% Since Inception Return: 18.1% pa. 2014-15 3.04%

• 1.56%
• 3.59%
• 4.33%

3.12% 2.83% 2.66% 0.05% 3.59% 0.03%

• 1.91%

4.86% 8.60% Positive Full Year Periods: 13 years 2013-14 3.52% 2.27% 0.83% 1.88%

• 1.80%

2.68%

• 2.32%

2.50% 0.16%

• 4.97%
• 0.80%
• 0.44%

3.23% Negative Full Year Periods: 0 years 2012-13 1.57%

• 1.61%
• 2.00%

1.69%

• 0.41%

0.89% 0.46%

• 0.28%

0.69% 0.01% 9.49% 1.10% 11.75% Positive Months: 114 (70.4%) 2011-12 2.12% 1.91%

• 1.25%
• 5.06%

3.09% 3.27%

• 2.04%
• 8.43%

6.35% 4.22% 1.19% 8.47% 13.35% Negative Months: 48 (29.6%) 2010-11 2.90%

• 0.96%
• 0.98%

1.23% 2.87% 3.65%

• 0.59%

4.39% 1.85% 2.34% 3.09% 4.12% 26.46% Positive Month Average Return: 3.3% 2009-10 2.24% 5.61%

• 1.14%

2.65% 1.71% 3.57% 0.25%

• 6.16%

4.77%

• 1.10%

3.24% 2.84% 19.44% Negative Month Average Return: -2.3% 2008-09 1.16%

• 3.57%
• 8.98%

3.78% 5.78% 0.49% 5.69% 7.88%

• 1.72%

4.26%

• 1.24%
• 7.16%

4.94% Maximum Drawdown: -12.2% 2007-08 1.70%

• 3.72%

5.63%

• 0.22%

4.41% 9.04%

• 2.10%
• 2.82%

3.40% 1.06% 7.07% 7.36% 34.27% Maximum Drawdown Recovery: 6 months 2006-05 5.57% 7.67%

• 2.62%

5.22% 2.01% 1.35% 0.55% 5.42% 3.62%

• 3.12%

0.92%

• 2.90%

25.55% 2005-06

• 2.87%
• 1.51%

4.10%

• 2.33%

2.88% 8.73% 1.24% 4.76% 10.16% 2.90% 2.58% 0.95% 35.45% 2004-05 4.36%

• 0.80%

3.22% 1.42%

• 0.29%

1.61% 6.29% 7.29% 5.01%

• 0.49%
• 0.27%

1.81% 32.87% 2003-04

• 1.93%
• 0.99%

2.01% 4.85% 3.78%

• 1.27%

0.19% 0.16% 0.49%

• 3.41%

0.78% 2.60% 7.18% 2002-03 1.17% 2.64%

• 3.45%
• 2.61%

3.86% 4.59% 2.34% 6.21%

• 0.44%

0.61% 0.82% 3.00% 19.91% 2001-02

• 3.31%

3.12%

• 1.05%
• 0.31%
• 0.92%
• 2.54%

ASX200 Accumulation Index

Fiscal Year Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Year

Statistics

2015-16 4.40%

• 7.79%
• 2.96%
• 6.58%

Since Inception Return: 7.4% pa. 2014-15 4.40% 0.62%

• 5.38%

4.43%

• 3.25%

2.06% 3.28% 6.89%

• 0.06%
• 1.70%

0.40%

• 5.30%

5.68% Positive Full Year Periods: 9 years 2013-14 5.20% 2.50% 2.19% 3.97%

• 1.31%

0.79%

• 3.03%

4.97% 0.29% 1.77% 0.68%

• 1.50%

17.43% Negative Full Year Periods: 4 years 2012-13 4.28% 2.14% 2.18% 2.98% 0.47% 3.35% 4.95% 5.37%

• 2.21%

4.54%

• 4.50%
• 2.32%

22.75% Positive Months: 101 (62.3%) 2011-12

• 3.97%
• 1.91%
• 6.13%

7.25%

• 3.48%
• 1.35%

5.08% 1.91% 1.22% 1.43%

• 6.64%

0.66%

• 6.71%

Negative Months: 61 (37.6%) 2010-11 4.47%

• 1.15%

4.62% 1.78%

• 1.07%

3.66% 0.18% 2.35% 0.67%

• 0.29%
• 1.97%
• 1.80%

11.73% Positive Month Average Return: 3.1% 2009-10 7.31% 6.57% 6.24%

• 2.08%

1.78% 3.74%

• 6.18%

2.16% 5.75%

• 1.38%
• 7.51%
• 2.59%

13.15% Negative Month Average Return: -3.4% 2008-09

• 4.56%

4.09%

• 9.85%
• 12.61%
• 6.20%
• 0.28%
• 4.88%
• 4.57%

7.98% 5.57% 1.36% 4.00%

• 20.14%

Maximum Drawdown: -47.5% 2007-08

• 2.08%

2.44% 5.56% 2.90%

• 2.83%
• 2.72%
• 10.85%
• 0.69%
• 3.31%

4.53% 1.53%

• 7.46%
• 13.40%

Maximum Drawdown Recovery: 71 Months 2006-05

• 1.72%

3.33% 1.33% 4.57% 2.31% 3.69% 1.83% 1.63% 3.29% 2.89% 2.64%

• 0.17%

28.66% 2005-06 2.60% 2.01% 5.08%

• 3.85%

4.49% 3.08% 3.49% 0.58% 4.74% 2.56%

• 4.70%

2.11% 23.93% 2004-05 0.19% 1.13% 3.79% 3.17% 4.61% 3.24% 1.40% 2.22%

• 0.88%
• 3.03%

3.30% 4.79% 26.35% 2003-04 3.18% 2.92%

• 0.23%

3.34%

• 2.02%

3.78%

• 0.83%

3.15% 2.32%

• 0.30%

1.95% 2.68% 21.61% 2002-03

• 4.03%

1.56%

• 4.15%

2.70% 1.13%

• 1.63%
• 1.66%
• 4.91%

3.96% 4.31% 0.35% 1.19%

• 1.71%

SLIDE 7

Richard Fish, Portfolio Manager Sam Shepherd, Portfolio Manager November 2015

SLIDE 8

Introduction - Investment Strategy

• The investment strategy is designed to remove market risk, offering a pure exposure

to company risk within controlled pairs.

• The investment manager uses fundamental analysis to identify relative value
• pportunities primarily amongst the S&P/ASX 100 index, and seeks to unlock this

value using 25 to 40 pair trades.

• The investment strategy seeks to generate returns through fundamental analysis,

diversification (50 to 80 securities) and leverage (up to 2.5x short, up to 2.5x long) Market neutral is an extremely effective strategy particularly when it is supported by a very disciplined process.

8

It is possible to consistently identify instances where stock prices are not reflecting fundamental value. We invest on the premise that companies return to fundamental value over longer periods.

SLIDE 9

Value Proposition - Investment Performance

9

Source: Bloomberg

26.8% 13.4% 15.2% 16.4% 19.4% 18.14%

• 0.7%

9.4% 6.5% 5.9% 5.3% 7.4%

• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 1 year 3 years 5 years 7 years 10 years Since Inception Return Per Annum Investment Strategy ASX 200 (Accum)

SLIDE 10

Value Proposition – Lower Drawdowns

10

Source: Bloomberg

The Investment Strategy’s largest drawdown was 12.2% and occurred during the GFC, as compared to the 47.5% fall in the ASX200. The Fund took 6 months to recover from this peak to trough decline, compared with the 71 month period for the ASX200.

• 50%
• 45%
• 40%
• 35%
• 30%
• 25%
• 20%
• 15%
• 10%
• 5%

0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Drawdown Investment Strategy ASX200 (Accum)

SLIDE 11

Value Proposition – Risk Reward

11

The investment strategy risk is controlled at the stock level. The ungeared strategy is low volatility given the removal of market risk. Gearing is then applied; volatility is similar to equities.

Volatility (since inception) Return and Volatility (since inception)

Source: Bloomberg

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 0.0% 5.0% 10.0% 15.0% 20.0% Return Per Annum Volatility Per Annum Aust 10 Year Govt Bond Investment Strategy ASX 200 REIT (Accum) ASX 200 (Accum) MSCI World (Accum) Cash (Aust) 3.5% 0.5% 3.4% 12.0% 13.1% 16.6% 12.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Investment Strategy Ungeared Cash (Aust) Aust 10 Year Govt Bond MSCI World (Accum) ASX 200 (Accum) ASX200 REIT (Accum) Investment Strategy Volatility Per Annum

SLIDE 12

Value Proposition – Uncorrelated Returns

12

ASX Correlation with Traditional Asset Classes (since inception) Investment Strategy Correlation with Traditional Asset Classes (since inception)

The investment strategy has consistently generated a non correlated return to traditional asset classes

• ver long periods of time thereby adding considerable diversification benefits to portfolios.

Source: Bloomberg

• 0.03
• 0.01
• 0.16
• 0.04

0.08

• 1.00
• 0.80
• 0.60
• 0.40
• 0.20

0.00 0.20 0.40 0.60 0.80 1.00 ASX 200 (Accum) MSCI World (Accum) ASX200 REIT (Accum) Aust 10 Year Govt Bond Cash (Aust) Correlation coefficient 1.00 0.54 0.66

• 0.39
• 0.13
• 1.00
• 0.80
• 0.60
• 0.40
• 0.20

0.00 0.20 0.40 0.60 0.80 1.00 ASX 200 (Accum) MSCI World (Accum) ASX200 REIT (Accum) Aust 10 Year Govt Bond Cash (Aust) Correlation Coefficient

SLIDE 13

13

Investment Process

The following examples are provided as illustrations only; they are provided so that potential investors can understand the concept of using “pairs”. The examples are not intended to reflect actual investments that the LIC may make or to be seen as indicative of the likely returns of implementing the investment strategy. The LIC may not be successful in implementing the strategy of making the returns indicated.

SLIDE 14

0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 2010 2011 2012 2013 2014 2015 Ramsay Primary Health Care P&L Index

Investment Process – Example 1

14

Profit and Loss Impact: This pair was driven by the re-rating of the long position while the short position held broadly flat. The investment team believed that Ramsay (long) had a superior business model and management team versus Primary Health Care (short). The Investment Manager believed that this would be reflected in the longer term.

Source: Bloomberg

Return

SLIDE 15

Investment Process – Example 2

15

Profit and Loss Impact: This pair was initially driven by the re-rating of Oil Search (long), and more recently the sharp decline in Santos (short). The Investment Manager believed that Oil Search had assets that were high quality and high ROIC versus Santos’ assets which were low quality and low ROIC. This had left Santos exposed to a period of weak oil prices.

Source: Bloomberg

0.0x 0.4x 0.8x 1.2x 1.6x 2.0x 2011 2012 2013 2014 2015 Oil Search Santos P&L Index Return

SLIDE 16

Investment Process – Example 3

16

Profit and Loss impact: This pair was range bound for a time, however, more recently Woolworths (short) has declined further than Wesfarmers (long). The Investment Manager believed that Wesfarmers was operationally and strategically out-performing Woolworths. Woolworths announced a profit downgrade in February 2015.

Source: Bloomberg

Return 0.80x 0.90x 1.00x 1.10x 1.20x 1.30x 1.40x Jul 2013 Nov 2013 Mar 2014 Jul 2014 Nov 2014 Mar 2015 Wesfarmers Woolworths P&L Index

SLIDE 17

Portfolio Snapshot - Outcome

17

BLSEF Factor Snapshop Comparison Index Longs Shorts Net Number Of Stocks 100 29 33 62 Initial Portfolio Weight 100 100

• 100

0.0 Beta 1.00 0.98

• 0.85

0.13 Aggregate Statistics: Value P/E 14.7 15.6 14.2 1.4 Yield 5.3 3.5 5.1

• 1.6

Price / Book 1.8 2.3 1.4 0.9 EV/EBITDA 9.8 10.8 8.8 2.0 EV/Sales 2 2.1 1.1 1.0 Growth Forecast Earnings Growth 0.9 12.9 2 10.9 Forecast Dividend Growth 3.3 9.3

• 2.1

11.4 Quality Return On Equity 12.6 15.0 10.0 5.0 Dividend Cover 1.3 1.8 1.4 0.4 Interest Cover 6.9 9.2 5.8 3.4

SLIDE 18

Investment Manager

Richard Fish, Senior Portfolio Manager

• Established Investment Manager in 2002
• 30 years market experience in Australian equities (ANZ McCaughan, Bain Securities, MacNab

Clarke & Partners)

• Bachelor of Business Degree and Diploma from Securities Institute of Australia

Sam Shepherd, Senior Portfolio Manager

• Joined Investment Manager in 2012
• 22 years market experience in Australian equities (Credit Suisse, JP Morgan, Norwich Investment

Management)

• Bachelor of Commerce Degree and Diploma from Securities Institute of Australia

Sam Taylor, Senior Investment Analyst

• Joined Investment Manager in 2008
• 15 years experience in Australian equities (Ocean Financial Group, Hartleys, Intersuisse)
• Bachelor of Business Degree

Steven Lambeth, Senior Investment Analyst

• Joined Investment Manager in 2014
• 10 years experience in Australia (JCP Investment Partners, Wallara Asset Management, Towers

Perrin)

• Bachelor of Commerce with Honours and CFA Institute charterholder (since 2003)

18

SLIDE 19

ASX Codes: AEG and AEGO Offer Price: $1.10 per ordinary share Issue Size: Min: $25m, Max: $75m, Overs: $25m Loyalty Options: 1 per ordinary share Strike price: $1.10 Vesting date: 6 months after listing Option expiry date: 16 November 2017 Offer expected to close: Broker firm offer: 4 December 2015 General offer: 7 December 2015 Shares expected to commence trading on ASX: 16 December 2015 Brokers to the Offer: Ord Minnett Limited Morgans CIMB Bell Potter Securities Co-Manager: Taylor Collison Limited Investment Manager: Bennelong Long Short Equity Management

IPO Timetable

19

SLIDE 20

Roadshow Timetable

20

City Date Presentation time Venue

Sydney Monday 9 November 10.00am - 11.30am Wesley Conference Centre Lyceum Theatre, 220 Pitt Street, Sydney Melbourne Wednesday 11 November 10.00am - 11.30am Morgans at 401 401 Collins Street, Melbourne Adelaide Thursday 12 November 10.00am - 11.30am The Hilton Adelaide 233 Victoria Square, Adelaide Brisbane Monday 16 November 10.00am - 11.30am The Novotel Brisbane Lawson Room 1, 200 Creek Street, Brisbane Perth Tuesday 17 November 10.00am - 11.30am Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth Sanctuary Cove Friday 20 November 4.15pm – 5.15pm AIOFP Presentation Intercontinental Sanctuary Cove Resort Manor Circle, Sanctuary Cove

SLIDE 21

21

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SLIDE 22

Conclusion

22

• The objective is to achieve absolute returns over the medium to long term, through capital

growth and income, regardless of market cycles

• The Company will seek to achieve this by investing in Pair Trades and constructing a portfolio

predominantly comprised of large capitalisation Australian equities in a market neutral style that seeks to minimise equity market risk

• The Investment Strategy is similar to the strategy launched in February 2002. The Investment

Strategy has since delivered an average return of 18.14%*, which equates to more than 10% per annum excess returns over the ASX200 during this period

• The Investment Strategy’s largest drawdown was 12.2% and occurred in the GFC, as

compared to the 47.5% fall in the ASX200. The Fund took 6 months to recover the capital from this peak to trough decline compared with the 71 month period for the ASX200.

• The Company aims to provide shareholders with a source of return that is uncorrelated to all

traditional asset classes

*Includes Bennelong Securities Management Account February 2002 to June 2008 and BLSEF July 2008 to 30 September 2015. Please note that past performance is not an indication of future returns.

SLIDE 23

Appendix 1: Recent Awards

• Winner : 2008 Australian Hedge Fund Industry Award for Best Market Neutral Fund.
• Nominee : 2009, 2010 and 2013 Australian Hedge Fund Industry Award, Best Market

Neutral Fund

• Nominee : 2011 Australian Hedge Fund Industry Award - Australian Hedge Fund of

the Year and Best Market Neutral Fund.

• Finalist : 2012 Australian Fund Manager Awards, Absolute Return Fund
• Nominee : 2015 Professional Planner/Zenith Fund Award, ‘Alternative strategies'

category

23

SLIDE 24

Appendix 2: Manager / Fund Details

• Style – Absolute Return Australian Equities
• Domicile – Australia
• Manager – Bennelong Long Short Equity Management Pty Ltd
• Fund Managers – Richard Fish & Sam Shepherd
• Fund Analysts – Sam Taylor & Steven Lambeth
• Assets Under Management of Manager – A$320.8m (as at 30 September 2015)
• Management Fee – 1.5% ex-GST
• Performance Fee – 20.0% ex-GST (high water mark)
• Prime Broker - UBS AG, Australia Branch
• Custodian – UBS Nominees Pty Ltd
• Administrator – TMF Fund Administrators (Australia) Pty Ltd

24

SLIDE 25

Appendix 3: Contact Details

25

Company Daniel Liptak Tel: +61 422 375 415 daniel.liptak@zgadvisors.com.au Chris Donohoe Tel: +61 413 315 631 chris@seedpartnerships.com Will Spraggett Tel: + 61 400 535 577 will@seedpartnerships.com Co-Manager Investment Manager Hamish Nairn Tel: +61 8 8217 3908 hnairn@taylorcollison.com.au Client Services Tel: 1800 895 388 client.services@bennfundsmanagement.com.au Joint Lead Managers Ross Baildon Ord Minnett Tel: +61 7 3214 5509 rbaildon@ords.com.au Phillip Lee Morgans CIMB Tel: +61 7 3334 4864 philip.lee@morgans.com.au Tim Griffin Bell Potter Tel: +61 2 8224 2841 tgriffin@bellpotter.com.au