(Alliance News) - JZ Capital Partners Ltd on Wednesday said it intends to hold an extraordinary general meeting to vote on a new investment policy as the company looks to create liquidity and return capital to shareholders.
JZ is a closed-end investment company which invests in microcap firms in US said its new strategy will "look to realise investments, pay down debt and materially reduce commitments to new investments" with the goal of returning capital.
On August 29, JZ completed a USD30 million tender offer, part of a wider plan to return around USD100 million to shareholders. The remaining USD70 million will be returned "via a series of tender offers, special dividends or opportunistic market buyback" across the next 12 to 15 months.
However, JZ said its plan is now "more ambitious" and it seeks to raise around USD400 million to USD500 million in liquidity by the of its financial year ended February 2023.
This is so that JZ can "pay down a substantial amount of debt and return a substantial amount of capital to shareholders" and at the same time having the capital needed to grow its net asset value.
The plan involves "realisations, secondary sales of certain asset portfolios, joint venture partnerships" and its US side-car fund, JZ Partners II, which will invest in US microcap deals. The side-car fund is set to launch in the next 45 days and intends to raise around USD500 million. JZ intends to invest around 5% of the fundraise over a period of five years.
In terms of secondary sales, JZ is presently in the market with a US microcap portfolio, looking to realise GUSD150 million to USD170 million of gross proceeds before the end of February 2020.
JZ's real estate assets need more investment to service their debt and to cover pre-development expenses. The firm's investment adviser sold half of a JZ development in Brooklyn, New York, at the end of 2018. The adviser is looking for partners or even to sell JZ's other development sites and is not planning any further real estate investments beyond the current portfolio.
Moreover, other than current commitments and support of the existing portfolio, JZ does not plan to allocate any "meaningful capital" to new investments and instead focus on realisations and enhancing the existing portfolio.
A circular with details of the general meeting to approve the new strategy and side-car investment will be sent out "as soon as practicable".
Shares in JZ were up 1.7% at 478.00 pence in London on Wednesday afternoon.
By Anna Farley; annafarley@alliancenews.com
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Jz Capital (JZCP)