Question: Where will I find my investment return right now?

Answer: Alternative Investments.

Jeffrey Pike, Senior Vice PresidentKensington Capital Partners Limited

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• Who is this guy?

• The Powerful “Alternative” Effect on Asset Mix

• Ask Mitt – Why Private Equity Makes Sense

• What’s New in the Alternative Aisle?

• Questions

Agenda

Private Equity

Providing institutional and HNW investors with innovative solutions that capture the opportunity in Private Equity including direct private company investments plus exposure to Private Equity funds throughout North America and Europe.

Kensington: Smart Alternatives

Hedge

Providing institutional and HNW investors with select investment strategies through exposure to Canadian Hedge Fund Managers. Comprehensive portfolios are developed to enhance portfolio return and minimize risk.

Infrastructure

Providing long-term infrastructure investment opportunities with a specialty on power generation facilities throughout North America.

$ 360 Million

$6 Million

AdvisoryProviding strategic advice and project leadership to corporate, government and financial stakeholders. Sound guidance is provided for acquisitions, divestitures, growth strategies, turnarounds, refinancings and the development of optimal financial structures.

• Growing independent Canadian Alternative Investment manager.

• Based in Toronto.• Founded in 1996.• Privately held.

Power Income Fund September

2012

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The Case for Alternative AssetsTraditional Asset Classes

Financial meltdown as the lesson. Portfolio construction brutally tested.

Investors have a risk that the next 3-5 years of deleveraging and recovery will neither be successful nor easy.

Will retirement funding be adequate?

Will traditional asset mix be satisfactory going forward ?

StocksBondsCash

Alternative Asset Classes

1. True Diversification away from conventional equity = Anti TSX.

2. Develop enhanced portfolios - waterproof/bulletproof/shockproof.

3. Institutional thinking: long-term return potential. Patience brings returns.

4. Differentiation in product offering / non-commoditized.

5. HNW affluent market plays in this space. Ideal for certain investors.

Private EquityHedge

InfrastructureReal Estate

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The Powerful Alternative Impact on Asset Mix

1995 2005 2012

Stocks

Bonds

Cash

Stocks

Bonds

Cash

Other

Stocks

Bonds

Cash

Public

Private

Hedge

Public

Private

Hedge

Source: Data extracted from “Building a Better Portfolio Around the Traditional Asset Mix” presented at AIMA Canada Luncheon by William W. Moriarty, President & CEO, University of Toronto Asset Management Corp.

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Institutional Private Equity Allocations

• Why are institutional investors moving to Private Equity?

• Moving away from inconsistent public markets.• Pro-actively diversifying by looking for

consistent return.

$15 Billion$159 Billion

$34 Billion$235 Billion$7.6 Billion

$91 Billion

Institutional Allocations to Private Equity(as a % of total portfolio)

Source: Annual Reports.

Ask Mitt: Private Equity Basics

• Significant return opportunity – non-correlated

• Manage J-Curve

• Buy correctly• Do not overpay• 6-9 months of due diligence• Developed investment thesis• Exit strategy

• Steady stream of growth

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Why Private Companies ?

• Katz Group / Edmonton – 100%• Rexall – Pharma Plus• 1800 Drugstores • $7.0 Billion Revenues

Investors own private companies for the same investment benefit of owning public companies. To enjoy an

appreciation in the value of a company as it continues to grow.

• McCain Family / New Brunswick – 100%

• McCain Foods • 51 Global Food Plants• $6.5 Billion Revenues

• Thomson Family / Toronto – 85%• The Globe and Mail

Private Equity Transformation

Established Operating Business

Give & Go Prepared Foods Corp.Revenue: $97 MEnterprise Value $193 M

Revenue: $167 MEnterprise Value $325 MSold to OMERS

How to cross the border.Significant growth in SKUs.Solved capacity issues.$25 million of revenue into Wal-Mart.Develop “Frozen Shipped” baking technique.

4 Year Hold3.4x Invested Capital31% IRR

60% of Private Equity Sales are from Founders

Ambitious Corporation

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Why Multi-Manager in Private Equity?

Risk of some loss

30.0%

1.0%0.0%

1.0%

Direct investment in single private

equity company

Investment in single private equity fund

Manager

Investment in private equity fund of funds

Risk of total Loss

42.0%

30.0%

Diversification Reduces

Risk

Source: Weidig and Mathonet report, “The Risk Profiles of Private Equity”, January 2004, Nathalie Gresch & Rico von Wyss, Spring 2011.

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Kensington Portfolio Strategy

AlphaDiversification

Primary funds from multiple managers create a low risk foundation for the portfolio

+ deal flow

Direct private equity ownership and secondary fund investments drive

excess returns for Kensington investors

Kensington GlobalPrivate Equity Fund

2011 Deal Flow

171 investments reviewed 50 Investments full due diligence

5 investments made

Private Equity Fund Managers Direct Investments

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Private Equity Can Provide Significant Diversification

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76.3% BIG 3 TSX14.2%

11.8% BIG 3 KGPEF68.6%

Energy 25.3%

Materials 19.6%

Industrial 6.0%Consumer Discretionary 4.6%

Consumer Staples 3.0%

Health Care 1.6%

Financials 31.4%

Information Technology 1.2%

Telecom Services 5.2%Utilities 2.1%

S&P/TSX COMPOSITE INDEX

Energy 0.5%

Materials 9.0%

Industrials 18.4%

Consumer Discretionary 35.5%

Consumer Staples 6.8%

Health Care 1.7%

Financials 4.7%

Information Technology

14.7%

Telecom Services 8.5%Other 0.3%

KENSINGTON GLOBAL PRIVATE EQUITY FUND

What’s new in the Alternative Aisle ?

Private Equity• Multi-manager• Liquidity• Valuation• Transparency

Hedge• Think Nimble• Where is the return?• Aggregation combinations

Infrastructure• Not a capital gains play• Infrastructure for 20+ years inflation protected income stream

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Alternatives: 4 Constituent AudiencesNo longer strange or obscure

• Yet not widely held or understood• Current chapter – adaptation and familiarity

Provider• Demystify: clarify/explain product/strategy details.• Easy to do business with: correct vehicle, fundSERV, RRSP eligible.• Build Distribution

Intermediaries/Distributors• Strengthen your menu board• Think about Private label

Advisor• Add to the product tool-box• Economic sharing• Add value to your practice

Investor• Portfolio Benefit• Absolute return• Diversification• Meeting funding requirements

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Thank you !

Questions…