• When investments are sold and cash is received in the fund, the Manager has a right to a performance fee of 17.5% of the increase in the value of the Fund, subject to a compound 8% hurdle rate of return.
So, my math shows that compounding 8% over say 5 years brings up 47%. So that is their hurdle, before they pay a performance fee
Plus, the presentation also says "Cash must be received in the Fund before the Manager is paid a performance fee."
So they have to sell something , and at a good profit, to make any performance fee, so they can't diddle to books
Lets say they make 70% in that 5 years, we pay them 12.5%, we keep 57.5%.
I also expect that if they only made say 50%, then of that 8.75% they are entitled to, they can only take 3%, because that is the compound hurdle point
So if you think their taking a slice over and above 8%pa compounded is ripping us off, well, I don't I guess is fair to say
This below was from the prospectus
In addition, the Manager will be entitled to receive a Performance Fee from the Company equal to 17.5% (plus GST) per annum of the Investment Portfolio’s gain each year (being the amount by which the Portfolio NAV at the end of a Financial Year exceeds or is less than the Portfolio NAV at the start of the Financial Year, subject to certain additions or reductions in equity during the relevant Financial Year resulting from actions which are set out in more detail in Section 13.1), subject to outperformance of the hurdle of 8.0% p.a. This Performance Fee will be accrued on an annual basis in arrears and will only be paid at times when proceeds received from realisation of Investments is available to the Company and will be paid in respect of the whole amount of the gain (not just the amount over the 8% hurdle). The Performance Fee can be fully or partially paid by the issue of Shares in the Company or in cash at the Manager’s election.
Actually I stand corrected, they can take back into Hurdle point from the look of that.
Maybe someone can do the math on that then. Lets say they beat the hurdle by 1% after 5 years, thats 49%, they will take 17% of that, which is 9%...does that sound right?
Less than I thought, but I'd still take it. Im in this for 5 and 10 baggers, not 8% return. If I "only" banked 8% from this while hoping they bankroll a google or apple, I won't complain.
DYOR
The 10% termination bit is irrelevant. If the shareholders decide to terminate their contract, I would expect it is because they blew the company up. We are backing these guys, plain and simple. I think all that covers is a global player deciding its cheaper to buy the entire company and delist it, rather than nibble away at Siteminder. If I were a long term buyer for siteminder I'd be better off to make a T/O offer for BTI right now, rather than pay a bucketload for it later on.
Does anyone know what % of siteminder they own?
While I'm at it, anyone have thoughts on the impact of the PMs innovation package?
BTI Price at posting:
96.5¢ Sentiment: Buy Disclosure: Held
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