petrarca capital test pla

Strictly Confidential. | Not For Distribution to the General Public.

Q2 2012INVESTOR PRESENTATION

Petrarca Capital Management, LLCGlobal Financials Sector Fund

PETRARCA OVERVIEW

INTRODUCTION TO PETRARCA CAPITAL

INVESTMENT PROCESS IDEA GENERATION PORTFOLIO CONSTRUCTION RISK MANAGEMENT SUMMARY FUND INFORMATIONPETRARCA OVERVIEW

Page #

Ã�/RQJ�VKRUW�HTXLW\�VWUDWHJ\�IRFXVHG�RQ�WKH�JOREDO� financials sector

STRATEGYStrategy

Managing Partners

Investment Process

Portfolio Characteristics

Alignment of Interests



Page #

MANAGING PARTNERS Strategy

Managing Partners

Investment Process



Ã�Robert Lacoursière, former Partner and Head of Global Banks at Paulson & Co. and James Fotheringham, former Senior Vice President at Paulson & Co.

Ã�Managing Partners have four decades of aggregate experience analyzing financial securities up and down the capital structure, across countries and continents, over economic cycles and during financial crises

Ã�Managing partners were responsible for ~$10bn in as many as 70 financials sector positions in each of their four years at Paulson & Co. (2008-2012)

Strategy



Page #

INVESTMENT PROCESS

Managing Partners

Investment Process



Ã�([KDXVWLYH��UHSHDWDEOH�LQYHVWPHQW�SURFHVV�LQWHJUDWLQJ idea generation, portfolio construction, risk management and ongoing portfolio rebalancing

Strategy



Page #

PORTFOLIO CHARACTERISTICS

Managing Partners

Investment Process


Ã�7UXO\�JOREDO��LQYHVWLQJ�DFURVV�(XURSHDQ��/DWLQ�$PHULFDQ�� Asian, as well as North American financials securities

Ã�3UHGRPLQDQWO\�FRPPRQ�HTXLW\��EXW�FDQ�RSSRUWXQLVWLFDOO\� invest higher in the capital structure

Ã�)DLUO\�FRQFHQWUDWHG��W\SLFDOO\��VKRUWV��ORQJV��DQG�GLUHFWLRQDO��JHQHUDOO\��QHW�H[SRVXUH��EXW�OLTXLG��SRVLWLRQ�VL]H��[�GDLO\�YROXPH��DQG�OLPLWHG�OHYHUDJH��[� gross exposure)

Ã�+ealthy mix of investment themes (macro, sector, ��VLQJOH�QDPH��UHWXUQ�YRODWLOLW\�H[SHFWDWLRQV��IURP�´EXQWVµ��WR�´KRPH�UXQVµ��DQG�SRVLWLRQ�GXUDWLRQV��JHQHUDOO\�� months)

Portfolio CharacteristicsPortfolio Characteristics

Strategy



Page #

Ã�0DQDJLQJ�SDUWQHUV�HDFK�KDYH�D�VLJQLILFDQW�SRUWLRQ�RI�WKHLU net worth invested in the fund

ALIGNMENT OF INTERESTS

Managing Partners

Investment Process



MANAGING PARTNER BIOGRAPHIES

ROBERT LACOURSIÈREManaging Partner, Chief Investment Officer and Co-portfolio Manager


Page #

Ã�Prior to co-founding Petrarca, Robert was a partner at Paul son & Company where he was Head of the Global Banks Team. Ã�Robert has over �� years experience in the global financials sector. Ã�Prior to joining Paulson in 2008, Robert covered US Mortgage and Specialty Finance as a widely-respected sell-side HTXLW\ research analyst at Banc of America Securities. Ã�Prior to that Robert was Head of Financial Strategy at Capital One, and covered US mid-cap banks at Lehman Brothers where he had also been the Director of Latin American (Tuity Research. Ã�Robert headed the Latin American Financial Institutions ��(TXLW\ Research Group at Bear Stearns from New York as well as at Santander Securities from Mexico City.Ã�Before his time on the sell side, Robert worked at the Bank of Nova Scotia in Toronto as a Manager of Latin American Investments. Ã�Robert has an M.B.A. from I.E.S.E. in Spain and a B.A. from the University of Western Ontario in Canada.

Ã�Robert has been married 21 years and has two daughters, aged �� and ��

Placeholder


JAMES FOTHERINGHAMManaging Partner and Co-Portfolio Manager


Page #

Ã�3ULRU�WR��FR�IRXQGLQJ�3HWUDUFD��-DPHV�ZDV�D�6HQLRU�9LFH�3UHVL� dent at Paulson & Company covering the global financials sector from 2008 to 2012. Ã�3ULRU�WR�MRLQLQJ�3DXOVRQ��-DPHV�VSHQW�QLQH�\HDUV�DW�*ROGPDQ��6DFKV�DV�D�VHOO�VLGH�HTXLW\�UHVHDUFK�DQDO\VW�FRYHULQJ�86�0RUW� gage and Specialty Finance from New York and European banks from London.

Ã�-DPHV�KDV�D�'�3KLO��IURP�2[IRUG�8QLYHUVLW\�LQ��WKH�8QLWHG� Kingdom, as well as M.Sc. and B.Sc.H. degrees from Queen’s University in Canada

Ã�-DPHV�KDV�EHHQ�PDUULHG��\HDUV�DQG�KDV�WZR�FKLOGUHQ��DJHG� nine and seven.

Placeholder


JAMES FOTHERINGHAMManaging Partner and Co-Portfolio Manager


Page #

EXPERIENCEÃ�$�6(1,25�9,&(�35(6,'(17 Paulson & Company 2008-2012 The global financials sector

Ã�$�6(//�6,'(�(48,7<�5(6($5&+�$1$/<67 Goldman Sachs�� US Mortgage and Specialty Finance

('8&$7,21Ã�'�3+,/�� Oxford University in the United KingdomÃ�0�6&��$1'�%�6&�+��'(*5((6� Queen’s University in Canada

FAMILY LIFEÃ�%HLQJ�PDUULHG�IRU��\HDUV�Ã��FKLOGUHQ��DJHG�QLQH�DQG�VHYHQ��

Placeholder

TEQUILA CRISIS

RUSSIAN DEFAULT

ASIAN CRISIS

EMERGING MARKET FINANCIAL-LIBERALIZATION

US SUBPRIME BUBBLE

GREAT FINANCIAL CRISIS

BANK BAILOUTS

PIIGS SOVEREIGN CRISIS

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

BRADY BOND PLAN

MEXICAN BANK PRIVATIZATIONS

Managing Partner,Chief Investment Officer& Co-Portfolio Manager

Managing Partner,Co-Portfolio Manager

MANAGING PARTNER EXPERIENCE

Canada Europe Latin America U.S. Global

BANK OF NOVA SCOTIAManager

��

��

��

��

��

��

��

��

��

JAMES FOTHERINGHAM


Page #

ROBERT LACOURSIÈRE

Placeholder PlaceholderFINANCIALS SECTOR GLOBAL EVENTS TIMELINE

IESEMBA

BANK OF NOVA SCOTIAManager, Latin America Invesments

SANTAN'(593��+HDG�RI�/DWLQ�$PHULFDQ�%DQN�(TXLW\�5HVHDUFK

BEAR STEARNS0'�3ULQFLSDO��+HDG�RI�/DWLQ�$PHULFDQ�%DQN�(TXLW\�5HVHDUFK

LEHMAN BROTHER693��'LUHFWRU�RI�/DWLQ�$PHULFDQ��(TXLW\�5HVHDUFK693��8�6��0LG&DS�%DQN�(TXLW\�5HVHDUFK

CAPITAL ONEHead Financial Strategy

BANK OF AMERICA SECURITIESPrincipal, U.S. Mortgage, Consumer &6SHFLDOW\�)LQDQFH�(TXLW\�5HVHDUFK

3$8/621��&2��,1&�Partner, Head of Global Banks

��

��

��

�� 3$8/621��&2��,1&�SVP, Global Banks

*2/'0$1�6$&+6$VVRFLDWH��(XURSHDQ�(TXLWLHV93��(XURSHDQ�%DQN�(TXLW\�5HVHDUFK

*2/'0$1�6$&+693��86�0RUWJDJH��&RQVXPHU��6SHFLDOW\�)LQDQFH�(TXLW\�5HVHDUFK�

2;)25'D Phil

Managing Partner2

Chief Investment Officer (CIO)&R�3RUWIROLR Manager

Robert Lacoursière

Managing Partner2

&R�3RUWIROLR Manager

James Fotheringham

Chief Operating Officer(COO)

7%'

Trader

7%'

Analyst

7%'

Financial Controller

7%'

1 Organizational structure will broaden to support anticipated growth in assets under management2 Managing partners share portfolio responsibility; CIO has ultimate portfolio discretion

Office Manager

7%'

PRIME BROKERS Goldman, Sachs & Co.Credit Suisse

LEGAL COUNSEL Seward & Kissel LLP (U.S.)Ogier (Cayman)

AUDITOR TBDADMINISTRATOR TBDBANK TBD

Service Providers

PROPOSED ORGANIZATION


Page #

IDEA GENERATION

��

40�

��

60�

70�

80�

-1x 0x 1x 2x �x 4x �x 6x 7x 8x

GEOGRAPHICAL MONITOR (illustrative, from Q4’11)

HIGH OPPORTUNITY

MODERATE OPPORTUNITY LOCAL MACRO CONVICTION REQUIRED

MODERATE OPPORTUNITY GLOBAL MACRO CONVICTION REQUIRED

LOW OPPORTUNITY

Country Sensitivity to Global Economic Growth1

Fina

ncia

ls P

rice

Rel

atio

nshi

p to

Dom

esti

c Ec

onom

y2� Financials are a levered play on

economic cycles

� We focus on countries levered to changes in global growth, and financials securities most sensitive to their domestic economies

� We time investments according to macro inflection signals and expected policy responses

Russia

ChileSouth Korea

India

Poland

Malaysia

Colombia

Norway

Brazil

Mexico

Sweden

PhilippinesAustralia

Thailand

Canada

Hungary

Czech Republic

Argentina

Singapore

Peru

Denmark

Netherlands

Taiwan

Spain

France

Switzerland

ChinaHong Kong

USA

Japan

Turkey

UKGermany

Italy

Bubbles sized in proportion to market capitalization

1. ConseTuent change in each country’s annual growth in nominal GDP in USD from a 100bps change in annual growth in nominal GDP in USD of the G7 countries plus China. versus annual growth in nominal domestic GDP. SourFH� Bloomberg.


Page #

2. Relationship (R2) between Tuarterly share price performance of financials stocks

28x

26x

18x

14x

12x

0x

�x

10x

��x

20x

��x

��x

Canada Europe Asia LatAm USA

Fina

ncia

l Co

mpa

nies

’ Le

vera

ge1

TA (

US

GAA

P) �

TCE

Capital DGHTXDF\ is an important input into our sector analysis framework

We gauge capital DGHTXDF\ by gross tangible assets (US GAAP) to tangible common HTXLW\

Relative leverage allows us to contextualize existing and potential regulatory forbearance

Leverage differs among regions, as well as among companies within regions

1. Leverage calculated as tangible assets under US GAAP over tangible common eTuity; tangible assets are estimated wherever US GAAP eTuivalents are not disclosed.SourFH� Company reports, Petrarca estimates.

SHORT ABOVE THE LINERisk of share dilutionDQG�or weaker growth

BUY BELOW THE LINEExpectation for capital return

DQG�or stronger growth

LEVERAGE THRESHOLD

CAPITAL ADEQUACY MONITOR (illustrative, from Q4’11)


Page #

petrarca capital test pla

Design

petrarca capital management

cofounding petrarca

financials sector positions

head of global banks

financial securities

coportfolio managerpage

global banks team

head of financial strategy