GP Investments : Quarterly financial report

GP Investments

Earnings Release

Third Quarter 2022

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3Q22 highlights

November 14, 2022 - GP Investments, Ltd. ('GP') [B3: GPIV33], announces its 3Q22 results. GP posted a net loss of USD 5.8 million in 3Q22; the Net Asset Value ('NAV') at the end of the period was USD 292.7 million. The main events of the third quarter were:

• Spice: During the quarter, GP concluded its Public Tender Offer for all outstanding shares of Spice Private Equity Ltd. for a price of USD 16.25 per share.
• BR Properties: After the conclusion of the BRL 5.9 billion asset sale to Brookfield, BR Properties amortized 100% of its debts and announced a capital reduction of BRL 2.42/share. BR Properties' shares have been negotiating ex-capital reduction since October.
• G2D (subsequent event): In November, G2D announced a partial divestment in its portfolio, which increased its NAV from BRL 7.26 on September 30, 2022, to BRL 7.58 on November 14, 2022.

G2D Quarterly Results: On September 30, 2022 G2D's NAV was USD 141.3 million.

Spice PE Quarterly Results: On September 30, 2022 Spice PE's NAV was USD 158.4 million.

About GP Investments

GP Investments is a leading private equity and alternative investments firm. Since its foundation in 1993, it has raised over 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 segments.

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 visit www.gp-investments.com

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GP Investments - Portfolio overview

GP Investments' Portfolio

G2D's Portfolio

Spice's Portfolio

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 distinct strategies, mainly distinguished by company size, geography, and sectors.

Spice Private Equity Ltd. ('Spice PE') is an investment company focused on global private equity investments and listed on the SIX Swiss Exchange (SPCE). Since 2016, the Board of Directors has reorganized the company to drive operational efficiency and to provide shareholders with direct access to an attractive portfolio of private equity investments. GP Investments is the controlling shareholder of Spice PE.

At the end of 3Q22 Spice PE reported Net Asset Value of USD 158.4 million. Its balance sheet, after subsequent events, comprised: Cash & cash equivalents (27% of total NAV); direct investments (63%); and the legacy portfolio (10%). 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 created 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, 2022, G2D's Investment portfolio comprised: 46% in disruptive brands in CPG through The Craftory; 52% in direct investments (Blu, CERC, 2TM Group, Quero Educação and Digibee); and 12% in venture capital investments in Silicon Valley, through Expanding Capital. For more information, please visit https://ri.g2d-investments.com

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GP Investments portfolio

	Date of investment	Investment vehicle
	November 2012	GPCP V
	Industry	Asset liquidity
	Sporting goods retail	Publicly traded

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

Update

For 3Q22, Grupo SBF reported net revenues of BRL 1.47 billion (-1.4% vs. 2Q21) and adjusted EBITDA of BRL 161.0 million (-35.9% vs. 3Q21). Adjusted net profit was BRL 34.3 million.

During the quarter, Grupo SBF opened the first two Nike Direct Inline Stores in Brazil, which provide an exclusive and unique experience to the client and focus on Lifestyle and women's products. Another quarter's highlight was the launch of the official Brazilian National Team jersey, which showed a growth of 50% vs. the last World Cup in the first 10 weeks of sales.

Centauro: Gross revenues in 3Q22 were up 12.8% from 3Q21, with a total SSS of 13.9%. The adjusted gross margin in 3Q22 was 46.8%. At the end of the quarter, the company had 233 stores, with a total selling area of approximately 239,000 sq.m.

Fisia (Nike's exclusive representative in Brazil) reported a 3Q22 gross revenue of BRL 929.4 million (+11.2% vs. 3Q21). Of this total, DTC (direct-to-consumer) sales (which include brick-and-mortar stores and the digital platform) were 54.9%. Gross margin in 3Q22 reached 43.1% (+7.9 p.p. vs. 3Q21).

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

	Date of investment	Investment vehicle
	June 2016	GPCP VI
	Industry	Asset liquidity
	Commercial real estate	Publicly traded

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.

Update

BR Properties ('BRPR') reported 3Q22 net revenues of BRL 84.8 million, totaling BRL 266.0 million in YTD22 net revenue, and a FFO of BRL 60.3 million (FFO margin of 71%), the highest level reported since BR Properties creation.

Leverage: With the sale of part of its portfolio to Brookfield, BRPR transformed its net debt position into a net cash position, completely reversing its growing net financial expenses and becoming a net financial revenue generator. The adjusted net financial result for 3Q22 was BRL 17.2 million.

Debt amortization: Throughout 3Q22, the Company amortized all its debt in the amount of BRL 2,987.5 million, referring to the entire outstanding balance plus pre-payment premium, if applicable.

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Capital reduction: On October 14th, the Company paid the total amount of BRL 1,125.0 million of the Capital Reduction, equivalent to BRL 2.42 per share. The Company's shares began trading on an 'ex-Capital Reduction' basis on October 3rd.

Portfolio Vacancy: In 3Q22, BRPR's consolidated financial and physical vacancy rates were 5.4% and 4.9% respectively. The physical vacancy rate for office spaces was 7.5% at the end of the quarter, while the same rate was 2.7% for warehouses.

Average Rent: During the quarter, the average rent/sqm/month of the same commercial property portfolio was up 16.1% in the last twelve months, and the average rental grew by 13.1% vs 2Q22.

For more details, please, visit the BR Properties website.

	Date of investment	Investment vehicle
	February 2021	GP Investments & G2D Investments
	Industry	Asset liquidity
	Fintech	Privately held

2TM Group, the parent company of MB, democratizes investments in alternative assets, offering new solutions for companies and end-consumers.

Update

During 3Q22, the 2TM Group, through MB Asset, reached the amount of BRL 1.0 billion of assets under management, which represents a process of expansion of activities, adding services other than brokerage of cryptocurrency. A new Ethereum staking service was also announced, which will provide the platform's customers an opportunity to obtain passive income from their ETH positions, increasing the potential yield.

MB has partnered with CryptoArtery and associated itself with the Jaguar Friends project, an international project that raises funds towards the preservation of jaguars The project has a collection of NFTs called Jungle Society that will allocate part of the proceeds to conservation projects.

2TM participated in the group of studies of CVM, which made further progress in the construction of a coherent and favorable regulatory environment for crypto assets in Brazil. In this context, CVM issued a ruling in October characterizing cryptoassets as digitally represented assets that can be objects of transactions carried out through distributed ledger technologies (DLTs).

GP Investments