Timed Item: 1:00 pm Kayne Anderson Joint Meeting of the Retirement Boards Meeting Date: 10/25/2016 Capital Advisors, L.P. ENERGY INFRASTRUCTURE INVESTING CITY OF FRESNO RETIREMENT SYSTEMS October 25, 2016 www.kaynecapital.com Confidential
Kayne Anderson Capital Advisors Kayne Anderson Overview Capital Advisors, L.P. A Leading Alternative Investment Manager Since 1984 • Over $24 billion in assets invested across marketable securities and private equity funds • Diversified client base • 300 employees in eight offices across the U.S. • Substantial principal commitment; employee capital represents ~7% of firm assets Differentiated Investment Philosophy With Middle Market Focus Identify underserved areas of investment and unique opportunities where inefficiencies exist • ATTACK NICHES Field best-in-class teams to focus on market segments whose size or complexity serve as a barrier to entry for • other investment firms KNOWLEDGE Develop knowledge and sourcing advantages to mitigate and reduce risk • AND SOURCING Extensive network of deep relationships within the industry alongside a strong reputation built over decades • ADVANTAGE Concentrate on investments and strategies that have durable, growing cash flows with potential for capital • FOCUS ON appreciation and acquire at attractive prices CURRENT Focus on yield + growth • INCOME Significant majority of Kayne’s investment have a current yield of 6% to 10% • As of September 30, 2016. Common Philosophy | Shared Resources | Niche Expertise 2
Diversified Platform Kayne Anderson Capital Advisors, L.P. GROWTH PRIVATE ENERGY CREDIT REAL ESTATE EQUITY $18.3 Billion $4.1 Billion $3.3 Billion $0.6 Billion $4.1 1 billion in credit AUM across, corporate credit ($1.6B), energy and real estate One of the largest energy/ A growing participant in the A leading participant in niche A growth private equity team energy infrastructure (MLPs) corporate credit markets real estate private equity focused on non-control managers transformative capital 57 investment 22 investment 38 investment 18 investment • • • • professionals dedicated to professionals integrated professionals with broad professionals supported energy with synergies across credit knowledge and strong by the broader Kayne between marketable sector experience network Five private market/direct • securities (29) and private lending funds: Four real estate private Four private equity funds • • markets (28) teams equity funds primarily focused on lower middle o Three senior credit investing across the capital investing in medical office, market high-growth funds and two junior structure senior housing and student companies with an credit funds Seven upstream-focused housing emphasis on tech-enabled • Liquid credit fund funds investing in high- • services Real estate debt fund with • launching 1Q 2017 growth oil & gas companies investments focused in CLO business in formation One upstream-focused targeted sectors (senior • • fund investing in long-life housing, medical office and mature oil & gas assets student housing/multi- family) Private comingled funds, • SMAs and public closed- SMAs and private funds • end funds investing in marketable securities of midstream companies As of September 30, 2016. 1 The credit platform total of ~$4.1 billion above includes $2.5 billion of double counted assets from real estate debt ($1.2 billion) and liquid energy credit ($1.3 billion). Common Philosophy | Shared Resources | Niche Expertise 3
Broad Energy Expertise Kayne Anderson Capital Advisors, L.P. Approximately 75% of Firm Assets Are Energy Focused Large broadly-experienced energy team with long-term success across midstream and upstream, public and private investments • Team of 57 investment professionals dedicated to energy with a wide range of energy industry backgrounds: buy-side and o sell-side analysts, investment bankers, current and former executives of energy companies and petroleum engineers Kayne Anderson Energy Team KAYNE ANDERSON ENERGY TEAM (57) Bob Sinnott Co-Chairman, Kayne Anderson & Chairman, Kayne Energy Energy Infrastructure Marketable Securities (29) Energy Private Equity (28) J.C. Frey Kevin McCarthy Private Energy Income Fund Energy Private Equity Funds Managing Partner Managing Partner Public & Private Markets Danny Weingeist Chuck Yates Mike Heinz Managing Partner Managing Partner Managing Partner Equity MLP Private Markets Debt Pipeline analysts Investment banking Corporate bonds Private Markets G&P analyst Bank debt experience in negotiation, Finance & Structuring Engineering & Operations Upstream E&P analyst Convertible bonds structuring, and managing Corporate finance Petroleum engineers private investments Hedging (CDS, options) Structuring of private investments Reserve assessments Industry Support Public Fund Board Members Political Analyst PAA General Partner As of September 30, 2016. Common Philosophy | Shared Resources | Niche Expertise 4
• • • • • • Upstream Energy Kayne Anderson Capital Advisors, L.P. DOWNSTREAM UPSTREAM MIDSTREAM Exploration & Production MLPs & C-Corps Royalty Trusts Businesses focused on acquiring (through Canadian and U.S. trusts that purchase or lease) acreage for distribute the earnings of a exploration and production of oil and gas package of oil or natural gas assets MLP structure can be beneficial, though not common Commodity price sensitive as future distributions can vary Tied directly to commodity prices significantly based on the future Hedging can reduce impact of o commodity price commodity price movements, but limit as to how much and how long a company can typically hedge future production Basin of operation (e.g. Eagle Ford vs. Bakken) and quality of assets (“core” vs. “fringe” acreage) is key Common Philosophy | Shared Resources | Niche Expertise 5
• • • • Midstream Energy Kayne Anderson Capital Advisors, L.P. DOWNSTREAM UPSTREAM MIDSTREAM Midstream MLPs Midstream C-Corps & General Canadian Infrastructure Partners • Partnerships that own energy-related No MLP / C-Corp structure infrastructure assets Companies that own energy distinction in Canadian infrastructure assets and the infrastructure companies Qualifying assets include o General Partners of MLPs pipelines, terminals, processing Investment in Canadian energy plants, and storage facilities C-Corp structure allows larger infrastructure (LNG & Canadian o set of holders and less petroleum infrastructure) • Trade on stock exchanges; conform burdensome overhead (no K-1 to the same accounting and reporting Same defensive characteristics of filings), but taxation at entity- principles as other public corps U.S. energy infrastructure assets level • Typically move, process, and store Stable cash flows o General Partners typically o natural resources for a fee, thus Long-lived assets o control the limited partner and minimizing their commodity price have an ownership stake as well High barrier to entry (right-of-way, o exposure as incentive distribution rights Federal environmental and • Investors are not subject to double (IDRs) that provide an incentive commerce regulations) taxation of cash distributions for the partnership to grow distributions Common Philosophy | Shared Resources | Niche Expertise 6
• • • Downstream Energy Kayne Anderson Capital Advisors, L.P. DOWNSTREAM UPSTREAM MIDSTREAM Refinery MLPS & C-Corps Refined Product & Marketing C-Corps YieldCos Refinery MLPs and C-Corps utilize • Companies that are involved in Energy “yield corporation” that crude oil as inputs to produce refined product distribution or typically consists of a set of power gasoline and other refined products marketing generation assets (e.g. wind or solar power plants) MLP / C-Corp structures both Businesses are involved in the o common wholesale and retail distribution Assets built and stabilized prior o of product such as propane to incorporation into the YieldCo entity • Lower margins typically offset by higher business demand visibility Long-term power generation o and/or lower earnings volatility contracts either with utilities or state governments Highly visible, long-term cash o flows with significant growth potential as other assets are developed Common Philosophy | Shared Resources | Niche Expertise 7
What is Energy Infrastructure Kayne Anderson Capital Advisors, L.P. Pipelines/ Processing/ Storage/ Gathering Systems Fractionation Terminals Assets and Business Model • Strategically important energy infrastructure assets that transport and store crude oil, natural gas, natural gas liquids, refined products and other energy commodities • “Hard assets” that are critical to national infrastructure, defensive characteristics, high barriers to entry and have demonstrated consistent distribution growth • Predominately fee-based, contracted businesses not tied to underlying commodity prices Visible cash distribution growth driven by new projects, acquisitions and increasing volumes o • Long-lived assets with predictable earnings, significant free cash flow and modest maintenance capital expenditure requirements MLP Structure C-Corp Structure • Partnerships; not subject to double taxation • Traditional corporate structure appeals to broader investor audience (no K-1s) • Units of ownership are publicly traded like stocks on exchanges (primarily NYSE) Common Philosophy | Shared Resources | Niche Expertise 8
Recommend
More recommend
