GP Investments : 2Q21 Results

GP Investments

Earnings Release

Second Quarter 2021

2

2Q21 highlights

August 16, 2021 - This release reports 2Q21 results of GP Investments, Ltd. ("GP") [B3: GPIV33], a leader in private equity and alternative investments.

Highlights include:

1. In 2Q21 GP posted net income of USD 51.1 million, and the Net Asset Value ("NAV") reached USD 319.8 million at the end of the quarter. Second quarter results mainly reflect the appreciation of the Brazilian Real, the increase in fair market value ("FMV") of the companies in GP's Brazilian portfolio, and the appreciation in G2D's investment portfolio.
2. Sale of LEON Restaurants: In May, Spice PE announced the completion of the sale of LEON Restaurants Ltd. ("LEON") to EG Foodservice Limited ("EG Group"). Spice PE received gross realization proceeds of approximately USD 43.7 million and expects to receive up to additional USD 4.9 million in the coming months.
3. Mercado Bitcoin (subsequent event): In July, Softbank led an investment of approximately USD 200 million in the company. This transaction generated approximately BRL 23.4M in proceeds for GP, and valued its remaining stake in Mercado Bitcoin at BRL 288.1M.
4. G2D's IPO: G2D raised approximately BRL 281 million through a primary offering in May 2021. The initial public offering was priced at BRL 7.16 per share - a premium of 25% over its net asset value per share as of December 2020. Following several developments in its portfolio, G2D's NAV per share is currently estimated at BRL 10.09 per share.

About GP Investments

GP Investments is a leading private equity and alternative investments firm. Since its founding in 1993, it has raised 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 to be more efficient and profitable by becoming leaders in their industries. 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. The firm currently has offices in São Paulo, New York, London and Bermuda. For more information, please see www.gp-investments.com

GP Investments

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GP Investments - Portfolio overview

GP Investments has a diversified portfolio of companies held directly or indirectly through affiliated vehicles that are managed by GP and have significant influence on their investee companies. Each investment vehicle focuses on specific strategies, mainly differentiated by company size, geography, and sectors.

Spice Private Equity Ltd ("Spice PE") is an investment company focused on global private equity investments, listed (as SPCE) on the SIX Swiss Exchange, which uses proprietary capital as part of its strategy of pursuing a portfolio of companies with global leadership ambitions. GP Investments is now the controlling shareholder of Spice PE.

At the end of 2Q21 Spice PE reported Net asset value of USD 152.8 million, up 7.3% from the end of 1Q21. Its balance sheet comprised: cash & cash equivalents (44% of total NAV); direct investments (44%); and the legacy portfolio (9%). 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 born 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. At June 30, 2021, G2D's Investment portfolio comprised: 37% in disruptive brands in CPG through The Craftory; 31% in Brazilian fintechs (Blu, CERC, Mercado Bitcoin and Sim;paul); 13% in venture capital investments in Silicon Valley through Expanding Capital; 4% in edtech (Quero Educação); and 15% net cash. For more information, please visit https://www.g2d-investments.com/

GP Investments

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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, Nike's Brazilian operation; and NWB, a sports content producer that owns sports-related YouTube channels including Desimpedidos and Acelerados.

2Q21 update

Grupo SBF reported 2Q21 net revenues of BRL 1,123 million, up 369.1% YoY (from 2Q20), and 2Q21 EBITDA of BRL 169 million (EBITDA margin of 15.1%).

Following the acquisitions of the Brazilian operations of Nike and NWB, the group has been focused on strengthening each business unit individually and maximizing their synergies.

With the advance of the vaccination plan and the gradual lift of social distancing measures, Centauro's brick-and- mortar stores' performance improved significantly during the quarter. For further details, please check 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.

2Q21 update

BR Properties ("BRPR") reported 2Q21 net revenues of BRL 78.6 million, up 4% YoY (from 2Q20), and 2Q21 Ebitda of BRL 55.0 million (Ebitda margin of 70%), up 6% from 2Q20.

The company closed the quarter with financial and physical vacancy rates of 29.4% and 30.5%, respectively. Disregarding the 101,926 m2 acquired in the Parque da Cidade complex, the financial and physical vacancy rates are 16.7% and 19.7%, respectively, or 1.9 and 1.5 percentage points lower, respectively, than in 1Q21. Net debt at the end of the quarter was BRL 2.0 billion, with an average cost of CDI + 2.2%, resulting in a Net leverage ratio of 8.5x, and Interest coverage ratio of 3.4x.

New leases: BRPR has signed new leases for 32,000 m2 of its GLA which has not been accounted for in the 2Q21

results: it will have a positive impact on the financials of the coming quarters.

Average rent: Over the last twelve months the average rent per m² increased 7%. Excluding the new leases of Torres Ventura, this growth would be 13%.

Acquisitions: In May, BRPR acquired the Centauri Warehouse for BRL 156 million. This is a property of 63,000 m2, still in development, but 100% pre-leased. The acquisition consolidating BRPR's strategy in the logistics segment.

Sale: As part of its strategy of divesting non-core assets and optimizing capital structure, BRPR sold 76,002 m² of its GLA during the quarter, bringing its total area sold in the first half of 2021 to 87,898 m².

GP Investments

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Spice Private Equity portfolio

	Date of investment	Investment vehicles
	October 2017	GP, Spice PE & GPIAC
	Industry	Asset liquidity
	Enterprise software support	Publicly traded

Rimini Street (Nasdaq: RMNI) is a global provider of enterprise software products and services. It is the leading third-party provider of support for Oracle and SAP software products, and a Salesforce partner.

2Q21 update

Rimini Street remains on track to achieve its strategic growth plan annual revenue target of USD 1 billion by 2026. 2Q results show consistent growth in all key operational and financial metrics, with record revenue of USD 91.6M, up 16.9% from 2Q20. Gross profit margin in the quarter was 62.2%, with revenue retention of 94%.

In July, the company redeemed the remaining Series A Preferred Stock, funded by a new USD 90M debt instrument with a very significantly lower cost of debt, which will save USD 24M in financial expenses in the next 12 months. After Rimini's 2Q21 earnings release, GP Investments and Spice PE were able to obtain partial liquidity, generating sale proceeds of approximately USD 3.5 million for GP and USD 1.5 million for Spice.

	Date of investment	Investment vehicle
	May 2018	Spice Private Equity
	Industry	Asset liquidity
	Restaurants	Privately held

Bravo Brio (formerly FoodFirst Global Restaurants) is the owner and operator of two distinct Italian restaurant brands in the upscale affordable dining segment: Bravo Fresh Italian and Brio Italian Mediterranean.

2Q21 update

Despite a swift and successful vaccination rollout in 2Q21, economic recovery in the US has been slower than expected. As more states start lifting restrictions, dine-in is already showing promising signs of recovery while take- out and delivery have been keeping their momentum.

The company made significant progress with multiple initiatives across marketing, technology and operations, increasing efficiency, and successfully introducing several new virtual brands developed by Virtual Dining Concepts in partnership with influencers and celebrities, such as Mariah Carey, Tyga, Guy Fieri, Mr. Beast and FoodGod. However, in line with most other restaurant chains in the US, the company has been facing challenges in: (i) food costs, as factories face labor shortages and are increasing prices; and (ii) labor, mainly due to unemployment benefits, leading to many restaurants operating below full potential given staff shortage. Bravo Brio's 2Q21 sales were very close to their 2Q19 levels for comparable restaurants with each month showing continued improvement.

GP Investments