Tetragon Financial Group Limited

Good afternoon. Thank you for joining Tetragon's investor call. You are all in listen-only mode. And as a reminder, this call is being recorded. I will now turn you over to your speaker to commence the presentation.

As one of the principals and founders of the investment manager of Tetragon Financial Group Limited, I'd like to welcome you to our investor call. I'll cover an update on the business and a brief review of our first quarter results, which were released this morning. I'll also respond to questions that were submitted by shareholders over the last weeks. I'd like to remind everyone that the following may contain forward-looking comments, including statements regarding the intentions, beliefs, or current expectations concerning performance and financial condition on the products and markets in which Tetragon invests. Our performance may change materially as a result of various possible events or factors. I'd like to start with the business continuity. To the extent practical in the circumstances, Tetragon and TFG Asset Management are continuing to operate the business as usual, with personnel of Tetragon's Investment Manager and those of TFG Asset Management telecommuting. Our main offices in London and New York remain closed, And we await guidance from the respective authorities as to when and how we can start to return to those offices. But as you can imagine, we're enthusiastic to do so. Moving on to the first quarter results that's released this morning. Return on equity, i.e. the investment performance, was down 5.1% for March. So that leaves our first quarter down 7.5% for the quarter. The NAV per share was down 5.8% for March, and that leaves us down 7.6% for the quarter. So the NAV at the end of March was $2.18 billion, and the NAV per share at the end of March was $22.69 per share. And you can see the breakdown of the quarterly P&L on page two of the March fact sheet. As you might expect, most of the losses are concentrated in event-driven equities, other equities and credit, bank loans, private equity and venture capital. In other words, the equity and credit market related activities. Our asset management businesses were only a small negative for the quarter. Real estate was also a small negative, having benefited from the sale of a large portfolio of European logistics assets in Q4 of 2019, which benefited the Q1, both in terms of valuation and in terms of cash. I'll move on to answering questions in a moment, but before that, I'd like to give some color on the dividend and the proposed tender offer to buy back shares, both of which were announced this morning. As at last night's close, Tetragon's share price stood at approximately a 60% discount to the NAV per share at the end of March of $22.69 per share. We see this as an excellent opportunity for the company to buy back shares and would like to take advantage of that. However, the company's cash position has been at the lower end of its historical range, and furthermore, Tetragon has committed capital to investments, as well as there being an increasing amount of attractive investment opportunities. Thus, it was decided to reduce the quarterly dividend to $0.10 a share, and at the same time, we announced our intention to purchase up to $25 million of Tetragon's shares, in part as we believe them to be particularly underpriced versus the NAVs. We believe that this use of cash is good for shareholders as it allows us to maintain a healthy dividend, and we know that dividends are important to many investors. It allows us to reinvest in the NAV, showing our underlying confidence in the portfolio. It allows liquidity for any sellers in what is a volatile and illiquid market, and it enhances the NAV per share for the benefit of all shareholders. As you know, Tetragon seeks to return value to its shareholders, including through dividends and share repurchases. And indeed, since our IPO in 2007, we've returned approximately $1.4 billion to investors in this manner. Over the last 10 years, we've steadily increased our dividends and were recognized in March of this year by the Association of Investment Companies, the AIC, in a list of the next generation of dividend heroes for having done precisely that. But in the current and indeed anticipated economic and operating environment, however, and based on such other factors, sustainability of cash generation, the company's current and anticipated performance, other potential uses of cash ranging from preservation of the company's investments, and the financial position of investors, other investment opportunities, and finally, Tetragon's share price, we feel that the announced dividend and proposed share buyback is the best way to return value to our shareholders. Finally, in light of market conditions, Tetragon is determined to modify its dividend and capital return policy to remove any particular dividend target payout ratio reference to the normalized earnings. And please note that the exact wording is in the quarterly fact sheet and it's also on our website. Now what I'd like to do is move to answer some questions that we've been asked over the last few days and weeks. And to assist me, Yuko Thomas is going to ask the questions that have been submitted to us.

Thanks very much, Paddy, and thanks to all of you who submitted questions to the call. So first of all, how would you describe first quarter performance versus expectations given the backdrop in global markets?