Interview With London Pacific Group CFO
by Danny H. Chan of Team StreetSideInvestor
Good Afternoon, this is Danny H. Chan with StreetSideInvestor’s Executives’
Corner. Today’s Executives' Corner is sponsored by TradePortal.com, Winner of
Technology Investor Magazine's "Editors Choice Award for the Active Online
Trader."
This morning, we’re speaking to Ian Whitehead, Chief Financial Officer of London
Pacific Group Ltd (NYSE:LDP). London Pacific Group Ltd. engages principally in
the venture capital, life insurance and annuities, fund management and financial
advisory services. Funds under management or administration total approximately
$3.9 billion. The Company's principal operating subsidiaries by business area
and location are Berkeley International Capital Corporation, which is engaged in
venture capital; London Pacific Life & Annuity Company, which is engaged in life
insurance and annuities; Berkeley Capital Management, which is engaged in fund management; Select Advisors, which is engaged in financial advisory services,
and Berkeley International Limited, which is engaged in fund management/venture
capital.
StreetSideInvestor:
What does London Pacific actually do and how does it correlate to the venture
capital side?
Mr. Whitehead:
The primary strategy of London Pacific is to gather assets through our insurance
operating businesses, which sell fixed annuities in the U.S. and the U.K., and
then to seek superior returns on a portion of those assets by investing in late
stage B2B technology companies sourced in the U.S. In addition, we have an
investment management business that manages the bond portfolios for the
insurance companies as well as third party “wrap program” assets for clients of
twenty-two or so brokerage firms. Also we have a financial advisory business
which provides investment management and back-office support capabilities for
financial advisors and larger networks of advisors. Recently we have been developing a web capability, which we are going to call myOfficeOnline, which
will enable financial advisors to handle their business much more efficiently
over the internet.
StreetSideInvestor:
Can you speak a little more about Berkeley International Capital Corporation?
Mr. Whitehead:
Berkeley International Capital Corporation originates and monitors the venture
capital deals. Its experience goes back twenty years and we have been involved
in some very high profile names such as AOL, Oracle, and 3Com. The company is
located in San Francisco where we have an experienced team of professionals with
engineering and financial backgrounds which is managed by Arthur Trueger, the
executive chairman of the company. The specialty of the company is to invest in
telecom related technology sectors. Fiber optics has been a recent focus as well
as semiconductor and bandwidth companies. Also we have invested in a few
e-learning companies, such as Saba and Knowledgenet. We aim to take an ownership stake of five to ten percent with an investment range of between five
and twenty-five millions dollars. We don’t invest in e-retailing companies ;
our emphasis has very much been on the technology infrastructure companies.
Since the beginning of last year, over 11 companies have completed IPOs or been
acquired.
StreetSideInvestor:
Some of the questions that shareholders have is that will London Pacific provide
more information on private placements as well as public holdings and why isn’t
this information already available?
Mr. Whitehead:
Actually, we have just added a “holdings” section to our website, which can be
found at londonpacific.com. It is a list of material holdings of public and
private technology stocks owned by our operating insurance companies, at August
31, 2000.
StreetSideInvestor:
There is a perception on the street that groups London Pacific with incubators
such as CMGI and Internet Capital Group. Should London Pacific be put into that incubator type category?
Mr. Whitehead:
I would say yes with just two caveats. Clearly we have been building up a
venture capital portfolio in our operating companies that has been very
successful. But at the same time we have two clear differences. One is that our
company does not rely on secondary offerings of stock to bring in fresh cash
into the group. We utilize the regular cash flow that comes into our annuity
operations to invest a portion of that cash flow into our new VC deals.
Secondly we own a number of operating subsidiaries such as our annuity, fund
management and financial advisory businesses which gather assets under
management which now exceed $5 billion in aggregate amount.
StreetSideInvestor:
London Pacific is now included in the FTSE 250, what implications does this have
for the company in the future?
Mr. Whitehead:
This is a very positive development for the company. There is no doubt we are being seen on the radar screens of some UK institutions for the first time. I
have held meetings with a handful of institutions during the last week. We would
like to see one or two brokerage firms following us in the UK in addition to the
two analysts in the US. I should add that Bear Stearns and Friedman Billings
have already been very helpful opening doors in the UK through their London
offices. Trading activity in our stock has picked up significantly in recent
days as we approach the day for inclusion in the index on the 15th. Inclusion in
the FTSE 250 should help to reinforce the name recognition for the sale of our
insurance products in the UK as well as the development of myOfficeOnline
outside the US. Furthermore, we will be able to highlight the benefit of being
able to invest in US private equities indirectly through owning London Pacific
stock. A public portal for US private equity is virtually unknown in London.
StreetSideInvestor:
Speaking of institutions currently in the United States there are two firms that
have coverage on your company, one being Friedman Billings & Ramsey and the
other is Bear Stearns. What is London Pacific doing to attract more attention
from Wall Street?
Mr. Whitehead:
Our main objective is to run a strong business. If we are successful in our
strategy then the value of the company should increase and we will become more
attractive to the larger Wall Street firms. We are seeking a larger following
in the U.K. so hopefully that will rebound back into the U.S. and we should then
get an additional brokerage firm following our stock at some point in the
future.
StreetSideInvestor:
Recently, we did an interview with Light Path Technology which owns a sizeable
portion of LightChip. You recently made an investment in this company as well.
Could you expand a little bit more on the private placement?
Mr. Whitehead:
LightChip was a very attractive opportunity for us. We have said in the past
that we would be looking at companies in the fiber optics space, building on the
success of the New Focus IPO in the 2nd quarter this year. We led that
financing round with Morgenthaler Ventures, AT&T Ventures, LightPath
Technologies and J.P. Morgan. We will be looking at other companies in the
same sector.
StreetSideInvestor:
If you could tell one thing to our readers out there about London Pacific what
would it be?
Mr. Whitehead:
The majority of the investment community is excluded from the IPO market in
technology companies. London Pacific provides a pipeline of late stage venture
capital holdings in one of the most exciting technology spaces today after many
years of experience in Silicon Valley, with an in-built funding source through
its insurance operations.
Danny H. Chan of Team StreetSideInvestor does not own or short individual stocks. The information in this column under no circumstances serves as a
recommendation to buy or sell stocks. To view past Executives' Corner articles
please Click Here. To view our interview schedule please Click Here.
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