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Where wealth is a serious matter in building a solid investment portfolio one stock at a time... November 1,2004 Newsletter NL-110104-10016       Exus Global, Inc.   (OTCBB:EXGO)   Website:  http://www.exusglobal.com     Authorized: 900 Million   Outstanding Shares: 60 million     Float:   30,000,000   About Exus Global, Inc. - Exus Global is a publicly traded venture fund and a registered SEC  Business Development Company (BDC) located in New York City. The company has initiated a strategy to create value for shareholders by investing in emerging companies that are positioned for strong industry growth or that have business models with strong cash flow potential. In addition to initial financing, Exus provides its portfolio companies with a variety of services including managerial and administrative assistance, back office support, pre-IPO and public listing planning, public relations and investor relations, marketing and feasibility studies and identification of strategic or financial partners.   EXGO receives payment in the form of restricted common shares for providing its BDC advisory services.   About Business Development Company (BDC). The regulatory framework for Business Development Companies (BDCs) was created in 1980 by the U.S. Congress. Congressional intent behind the creation of BDCs was to encourage the flow of public capital to private companies. It is Exus Global’s intent to do just that by financing small companies and helping them to fulfill their business plans and build value for Exus shareholders by increasing the asset value of its portfolio. In the past, private investments were generally limited to accredited investors (wealthy individuals) and institutional investors (banks, insurance companies, employee benefit plans, and trusts and charitable organizations). However, the introduction of the Business Development Company model has created a conduit for individual investors to invest in both private & public companies, and for ‘underserved’ companies to receive the financing they need to continue growth. There are a number of characteristics that differentiate Business Development Companies from other public companies. A BDC is eligible to raise up to per year by the issuance and sale of “free trading stock” using an exemp-tion from registration with the SEC (Regulation E). As an investment company under the 1940 act, a BDC is by definition not considered a ‘Penny Stock’. A BDC is exempt from the SEC’s Penny Stock Rule 15g-9 that requires broker/dealers to qualify investors prior to purchasing certain low priced securities and prohibits solicitation of those securities. The asset to debt ratio requirement for BDCs provides for a very conservative capital structure compared to other finance companies including banks. The 1980 Act, which established the rules and regulations for BDCs, requires that BDCs maintain at least 200% asset coverage or a equity to debt ratio of no less than 2:1.
Article in recent Fortune about BDCs Now You, Too, Can Be a Buyout King Private-equity firms like KKR and Blackstone Group are offering shares to the public. FORTUNE Tuesday, June 1, 2004 By Julie Creswell You have to hand it to Wall Street: It sure knows how to bait the hook. In recent weeks a number of gold-plated private-equity firms, including Kohlberg Kravis Roberts & Co. (KKR) and Blackstone Group, have rolled out plans to raise money in the public market. For small investors, the lure here is the chance to gain entry to these exclusive clubs where previously only institutional investors or the ultrawealthy could play. "Who doesn’t want to ride KKR’s coattails?" asks David Menlow, founder of IPO Financial Network. "There’s a lot of fame and fortune there." This trend gained momentum in April when Apollo Management, a private-equity firm run by former Drexel Burnham banker Leon Black, raised million for a closed-end fund called Apollo Investment Corp. It, in turn, plans to invest that money mostly in private companies with revenues between million and $1 billion. Sensing an opening, nearly a dozen other private-equity shops, including Gores Technology Group, Thomas H. Lee, Gleacher Partners (managed by former Morgan Stanley banker Eric Gleacher), plus Blackstone and KKR, best known for its 1989 buyout of RJR Nabisco, also filed. If all these funds get off the ground—and that’s a big if—they could raise more than billion. These sexy new investment funds are really 60-year-old, dusted-off relics called Business Development Companies, or BDCs. Like real estate investment trusts (REITs), these BDCs have to spin out the majority of their income to shareholders. Wall Street brokers are hyping the higher yields (BDCs are expected to yield 8%, vs. 4.6% for a ten-year U.S. Treasury), to gin up investor interest. For the private-equity firms looking to raise cheap cash fast, these BDCs are a huge boon: they usually have to woo pension funds and endowments for up to a year to gather the money they can now raise very quickly in the public market. The funds are planning to use the cash to take stakes in midsized companies that are too small to go public and are struggling to get loans due to bank consolidation. Particularly for KKR and Blackstone, these retail funds allow them to invest in companies that are too small for their institutional pools. Last, they get to collect some massive fees: Investors pay a 2% annual management fee, and the fund gets 20% of any income or capital gains. But high fees aren’t the only drawback for little guys looking to invest. Investors will get scant information about private-company stakes, as they’re difficult to value. Also, private-equity investments may take years to earn a return, unlike stocks. Furthermore, the funds note in their prospectuses that closed-end funds, which trade like stocks, tend to trade at a discount to the fund’s net asset value. Seven weeks after going public, the Apollo fund is already down 11%, vs. a 3% decline in the S&P 500. Some observers already predict the days of this latest trend are numbered. "Everyone is trying to get into the party, but that means the market is going to get saturated," says Tom Taulli, who manages a small private-equity fund called Oceanus Value Fund. "KKR and Blackstone will get the deals done. The rest may be out of luck." Better them than investors.     Remember a couple of months back when I recommended a BDC? The company was FCHAF...Notice that when you went to your account one day and found 16 additional companies in your portfolio,well folks,this is what a BDC does,it gives dividends in the way of stock in companies they hold..This is a wonderful way to build a portfolio and these BDC's should be held for the long-term and the longer you hold these type of issues the more companies that will eventually come towards your portfolio.We feel this is worth holding in your portfolio and will be a sure positive growth oriented stock that presently is attractively priced..... Close Friday .007 Target price mid 2005 .21+ Have a good day Varok varok@qcol.net Your friend in the investment community. http://www.stockmarketquarterly.com
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