Question: Where will I find my investment return right now? Answer: Alternative Investments.

1. Question: Where will I find my investment return right now? Answer: Alternative Investments. Jeffrey Pike, Senior Vice President Kensington Capital Partners Limited

2. Agenda • 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

3. Kensington: Smart Alternatives • Growing independent Canadian Alternative Investment manager. • Based in Toronto. • Founded in 1996. • Privately held. 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. 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. Power Income Fund September 2012 $ 360 Million $6 Million Advisory Providing 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.

4. The Case for Alternative Assets Stocks Bonds Cash Traditional 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 ? Private Equity Hedge Infrastructure Real Estate Alternative Asset Classes True Diversification away from conventional equity = Anti TSX. Develop enhanced portfolios - waterproof/bulletproof/shockproof. Institutional thinking: long-term return potential. Patience brings returns. Differentiation in product offering / non-commoditized. HNW affluent market plays in this space. Ideal for certain investors.

5. The Powerful Alternative Impact on Asset Mix 1995 2005 2012 Public Private Hedge Stocks Bonds Cash Stocks Bonds Cash Other Stocks Bonds Cash 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.

6. 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. Institutional Allocations to Private Equity (as a % of total portfolio) $34 Billion $235 Billion $7.6 Billion $91 Billion $15 Billion $159 Billion Source: Annual Reports.

7. 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

8. Why Private Companies ? 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. • Katz Group / Edmonton – 100% • Rexall – Pharma Plus • 1800 Drugstores • $7.0 Billion Revenues • McCain Family / New Brunswick – 100% • McCain Foods • 51 Global Food Plants • $6.5 Billion Revenues • Thomson Family / Toronto – 85% • The Globe and Mail

9. Private Equity Transformation Ambitious Corporation Established Operating Business Give & Go Prepared Foods Corp. Revenue: $97 M Enterprise Value $193 M Revenue: $167 M Enterprise Value $325 M Sold 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 Hold 3.4x Invested Capital 31% IRR 60% of Private Equity Sales are from Founders

10. Why Multi-Manager in Private Equity? 42.0% 30.0% 30.0% Diversification Reduces Risk 1.0% 1.0% 0.0% Investment in single private equity fund Manager Direct investment in single private equity company Investment in private equity fund of funds Risk of total Loss Risk of some loss Source: Weidig and Mathonet report, “The Risk Profiles of Private Equity”, January 2004, Nathalie Gresch & Rico von Wyss, Spring 2011.

11. Kensington Portfolio Strategy Private Equity Fund Managers Direct Investments 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 Alpha Diversification Kensington Global Private Equity Fund 2011 Deal Flow 171 investments reviewed 50 Investments full due diligence 5 investments made

12. Private Equity Can Provide Significant Diversification 76.3% BIG 3 TSX 14.2% 11.8% BIG 3 KGPEF 68.6%

13. 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

14. Alternatives: 4 Constituent Audiences No 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

15. Questions… Thank you !