Our Private Equity Investment Approach

We generally use disciplined "Value for Growth" and "Break-up Value" investment approaches for private equity investments.

Value for growth targets typically have excellent products or services; high margins; competitive advantage; substantial cash flow; sustainable growth; and are available at prices which are attractive relative to value, growth and risk. Break-up candidates typically have reasonable prices and substantial surplus assets or unrealized value.

We avoid industries and companies subject to large commodity price exposure and prefer companies that are focused on niche markets, have a significant market share and enjoy pricing power for their products. We generally target companies with enterprise values of $25 million to $75 million and EBITDA of $6 million or more. We definitely consider larger or smaller transactions if they represent platforms for executing an attractive industry consolidation, if they have considerable surplus assets, if they are particularly good businesses or if they represent particularly good value.

For private equity investments, industries we are already favourably disposed toward include:

• Healthcare,
• Consumer products, and
• Industrial products.

Target equity IRR's for private equity investments are generally greater than 25%.

Public Market Opportunities

From time to time, on an opportunistic basis, we make specific investments in publicly traded companies that we believe are significantly mispriced.

These investments are generally toehold investments, going private targets or are part of a basket of such securities.

Such investments are made periodically and only as, when and where opportunity exists.

Public market investments generally related to niche businesses that do not have significant commodity price risk.

Target equity IRR's for public market opportunities are generally greater than 20%.

Later Stage Venture Capital

The companies we target for Kinetic Capital TNT Limited Partnership are generally later stage venture capital investments.

These explosive growth targets typically have: an outstanding founder/driver recognized as a world-class expert in the area, well advanced products or services with explosive growth potential in large commercial markets, a “technically corroborating” investor funding on the same terms, and financing leverage from milestones or warrants.

We generally look to invest $1 million to $3 million per investment, and run a portfolio that targets 10 to 12 positions.  Areas we are already favourably disposed toward include:

• Life science,
• Wireless/Cable, and
• Information Systems/Software.

Target equity IRR's for later stage venture capital investments are generally greater than 30%.

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