GP Investments : 3Q21 Results

GP Investments

Earnings Release

Third Quarter 2021

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3Q21 highlights

November 12, 2021 - This release reports 3Q21 results of GP Investments, Ltd. ('GP') [B3: GPIV33], a leader in private equity and alternative investments.

Highlights include:

1. In 3Q21 GP posted net profit of USD 63.3 million; and Net Asset Value ('NAV') at the end of the quarter was USD 364.2 million. The third quarter results mainly reflect (i) the increase in fair market value ('FMV') of the companies in GP's portfolio, and (ii) appreciation of the investment portfolios of G2D Investments Ltd. ('G2D') & Spice Private Equity Ltd. ('Spice PE').
2. 2TM Group (parent company of Mercado Bitcoin): In July, Softbank led an investment of approximately USD 200 million in the company. This transaction generated proceeds of approximately BRL 23M for GP, and valued its remaining stake in Mercado Bitcoin at BRL 288M.
3. G2D: Several developments in the portfolio of G2D in 3Q21 resulted in a 66% increase in its NAV in the quarter, from BRL 6.08 per share on June 30, 2021, to BRL 10.09 on September 30, 2021. For more information, please visit https://www.g2d-investments.com/
4. Divestment of Rimini Street (subsequent event): Investment vehicles managed by GP completed a full divestiture of the stake in Rimini Street, Inc. ('Rimini'), generating net proceeds of approximately USD 29.5 million for GP.
5. Spice PE's divestment of Rimini Street and investment in Argo Seguros Brasil S.A. (subsequent event): Spice PE completed a full divesture of its stake in Rimini, generating net proceeds of approximately USD 34.4 million. In addition, in October 2021 Spice PE announced a transaction to acquire 100% of the shares of Argo Seguros Brasil S.A. ('Argo Brasil'), a Brazilian multichannel specialized insurance provider, from Argo Group International Holdings, Ltd., and will invest USD 35 million, including an equity injection to supplement Argo Brasil's liquidity position. The completion of this transaction is still subject to the satisfaction of certain conditions, including the approval by regulatory and antitrust authorities.

About GP Investments

GP Investments is a leading private equity and alternative investments firm. Since its founding in 1993, it has raised USD 5 billion from investors worldwide, completed investments in more than 50 companies, and executed over 25 equity capital market transactions.

GP Investments has a consistent and disciplined investment strategy, targeting established companies that have the potential to grow and become more efficient and profitable by becoming leaders in their industries.

Since 2006, the Class A shares of GP Investments have traded in the form of Brazilian Depositary Receipts (BDRs) on the Brazilian Stock Exchange (B3 S.A. - Brasil, Bolsa, Balcão), under the ticker GPIV33, and on the Luxembourg Stock Exchange. GP Investments currently has offices in São Paulo, New York, London and Bermuda. For more information, please see www.gp-investments.com

GP Investments

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GP Investments - Portfolio overview

GP Investments has a diversified portfolio of companies held directly or indirectly through affiliated vehicles which are managed by GP and have significant influence on their investee companies. Each investment vehicle focuses on specific strategies, mainly differentiated by company size, geography, and sectors.

Spice Private Equity Ltd ('Spice PE') is an investment company focused on global private equity investments, listed (as SPCE) on the SIX Swiss Exchange. It uses proprietary capital as part of its strategy of pursuing a portfolio of companies with global leadership ambitions. GP Investments is now the controlling shareholder of Spice PE.

At the end of 3Q21 Spice PE reported Net Asset Value of USD 161.2 million. Its balance sheet comprised: Cash & cash equivalents (48% of total NAV); direct investments (39%); and the legacy portfolio (7%). Its balance sheet is debt-free. For more information, please visit www.spice-private-equity.com

In July 2020, GP Investments and Spice PE created G2D Investments, Ltd ('G2D'), a new investment vehicle focused on companies that have developed disruptive technologies.

G2D primarily targets minority investments in tech enabled companies operating in large addressable markets, led by outstanding management teams, and with clear competitive advantages.

G2D was born with a geographically diversified portfolio and with platforms that allow it to pursue new investment opportunities in companies headquartered in Europe, the United States and Brazil. On September 30, 2021, G2D's Investment portfolio comprised: 42% in disruptive brands in CPG through The Craftory; 43% in Brazilian fintechs (Blu, CERC, 2TM Group and Sim;paul); 9% in venture capital investments in Silicon Valley, through Expanding Capital; 3% in edtech (Quero Educação); and 4% net cash. For more information, please visit https://www.g2d-investments.com/

GP Investments

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GP Investments portfolio

Grupo SBF (B3: SBFG3) is the holding company of: Centauro, Latin America's largest retailer of sporting goods; Fisia, Nike's Brazilian operation; and NWB, a sports content producer that owns sports-related YouTube channels including Desimpedidos and Acelerados.

3Q21 update

In 3Q21, Grupo SBF reported gross revenues of BRL 1.9 billion (+139.6% vs. 3Q19) and Adjusted Ebitda of BRL 251 million (+119.2% vs. 3Q19), which is a record for the company. Adjusted net income was BRL 109.8M (+208.4% vs. 3Q19), with a 7.4% margin (+1.6p.p. vs 3Q19).

Centauro: Gross revenues in 3Q21 were up 24% vs. 3Q19, with total SSS of 16.1%. Gross margin in 3Q21 was 50.2%, +0.8p.p higher than in 3Q19. Another positive highlight was the opening of 10 new stores, and renovation of one unit to the G5 model, totaling 47% in G5 area and 227,300 sq.m. in total selling area.

Fisia: Gross revenues in 3Q21 were 43.6% higher than in 2Q21, at BRL 1.0 billion. Of this total, DTC (direct-to-consumer) sales (which include stores and the digital platform) are already 36%.

For further details, please check Grupo SBF's website.

BR Properties (B3: BRPR3) is one of Brazil's leading commercial real estate investment companies. It operates in acquisition, rental, management, development, and sale of commercial real estate, primarily in the high-end segment, including offices and warehouses (both logistics and industrial) in Brazil's main metropolitan areas.

3Q21 update

BR Properties ('BRPR') reported 3Q21 net revenues of BRL 83.5 million, up 6% YoY (from 2Q20), and 3Q21 Ebitda of BRL 58.3 million (with Ebitda margin 70%).

The company's financial and physical vacancy rates at the end of the quarter were 29.6% and 30.8%, respectively. Excluding the 101,926 sq.m. acquired in the Parque da Cidade complex, these financial and physical vacancy rates would be 16.5% and 19.2%. Net debt at the end of the quarter was BRL 1.9 billion, with an average cost of CDI + 2.4%, resulting in a leverage ratio (Net Debt/Ebitda) of 8.1x, and interest coverage ratio of 2.4x.

New leases: During 3Q21 and in October, BR Properties signed new leases for 10,796 sq.m. of its GLA, bringing the total leased year-to-date to 98,694 sq.m.

Average rent: In 3Q21 the average rent/sq.m./month of the commercial property portfolio was up 7.7% in nominal terms the last twelve months. Compared to the previous quarter, the average rent increased 1.7%.

Share buyback: In 3Q21 the company completed its 2020 share buyback program, and subsequently cancelled the

17.3 million common shares remaining in treasury after completion of the program. Also in the quarter, the company approved a new share buyback program for up to 18 million common shares.

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Dividends: In accordance with BR Properties' new dividend policy, the board approved a distribution of BRL 94.7 million in dividends, equivalent to BRL 0.196 per share.

For more details visit the BR Properties website.

Spice Private Equity portfolio

Rimini Street (Nasdaq: RMNI) is a global provider of enterprise software products and services. It is the leading third-party provider of support for Oracle and SAP software products, and a Salesforce partner.

3Q21 update

The funds managed by GP completed a total divestment in Rimini Street, Inc. ('Rimini'), generating net proceeds of approximately USD 29.5 million for GP and USD 34.4 million for Spice PE.

GP and Spice PE invested USD 12 million and USD 24 million, respectively, in Rimini in October 2017, as part of Rimini's merger with GP Investments Acquisition Corp (GPIAC) - a special purpose acquisition company (SPAC) - which listed Rimini shares on the Nasdaq Stock Exchange with the ticker RMNI.

Bravo Brio (formerly FoodFirst Global Restaurants) is the owner and operator of two distinct Italian restaurant brands in the upscale affordable dining segment: Bravo Fresh Italian and Brio Italian Mediterranean.

3Q21 update

Bravo Brio's 9M21 sales performance was very close to that of 9M19 for comparable restaurants (-1.3%), but profit margins have been generally below expectation, due primarily to two factors: fewer open restaurants than initially planned; and continued operating challenges due to shortage of labor and protein price inflation.

In early October, Bravo Brio invested in VDC(Virtual Dining Concepts), in a transaction of USD 10M, in exchange for a 7.5% stake in the company. Spice PE contributed USD 6.3M as part of the transaction. The recent performance of VDC has been generally positive, with significant improvements in margins as more outside partners are added to the platform and provide more attractive unit economics.

GP Investments