Good morning and welcome, ladies and gentlemen to the Cannae Holding’s Second Quarter 2020 Earnings Conference Call. During today’s presentation all parties will be in listen-only mode. Following the presentation the conference will be open for questions with instructions to follow at that time. As a reminder this conference call is being recorded.

I wound now to turn the conference over to Shannon Devine, Investor Relations for Cannae Holding. Please go ahead..

Thank you, operator and good morning, everyone. We appreciate your participation in our second quarter 2020 earnings conference call. Joining me today are Cannae’s Chairman, Bill Foley; Chief Executive Officer, Rick Massey; Executive Vice President, Corporate Finance, David Ducommun and Chief Financial Officer, Bryan Coy.

As a reminder, a replay of this call will be available through 11:59 p.m. Eastern Time on August 14, 2020. Before we begin, I would like to remind you that this conference call may contain forward-looking statements that involve a number of risks and uncertainties.

Statements that are not historical facts, including statements about our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management’s beliefs as well as assumptions made by and information currently available to management.

Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release, which was released this morning and in the statement regarding forward-looking information, risk factors and other sections of Cannae’s Form 10-K and other filings with the SEC.

Let me now turn the call over to Bill..

Thank you, Shannon. Through the second quarter, we continue to monetize investment, nurture our portfolio companies, make new investment and prospect for future investment opportunities. During my career I’ve endured many challenging environments, all of which helped shape my investment philosophy.

Despite a more uncertain economic outlook, our strategy is unchanged. As a result, Cannae was built with fortress-like balance sheet to weather the storm and take advantage of market dislocation. Over the last few months we have seen our deal pipeline expand and are pleased with our new investment opportunity to have both been presented and sourced.

Given this backdrop, we’ve made real progress to deploying our capital into attractive investment that we believe will grow the franchise value of Cannae.

Our primary accomplishment in the second quarter was the initial public offering of Dun & Bradstreet or D&B, where they listed their shares on New York Stock Exchange June 30, at a price of $22 per share having raised $2.4 billion in net proceeds.

Cannae invested in a concurrent private placement at a share price of $21.67 and currently owns approximately 18% of D&B. Cannae’s ownership position is valued at $1.95 billion given D&B’s closing price of $25.50 on July 31, 2020. We look forward to continue to supporting D&B’s strategic transformation and growth.

To capitalize on the many larger investment opportunities we see, Cannae entered into a forward purchase agreement with Foley Trasimene Acquisition Corp or FTAC and which Cannae now has 20% share of the promote.

As an anchor investor and a member of the Sponsor Group, we look forward to working with our partners at THL to identify prospective target businesses with the industries of financial technology or business process outsourcing.

We’re actively and valuing targets for the [indiscernible] tool and will update you once we have definitive agreement with a target. In addition to Cannae’s investment in FTAC. Cannae entered into a forward purchase agreement with Trebia Acquisition Corp or Trebia.

In which Cannae is an anchored investor with a 15% economic interest and a founding member of the Sponsor Group. Again we look forward working with Frank Martire and the team lending their experience with this transaction.

More recently, earlier this week on August 3, Cannae entered into a forward purchase agreement with FTAC Acquisition Corp II for $150 million on similar terms to Trebia.

Subsequent to the quarter end, Black Knight announced definitive purchase agreement to acquire Optimal Blue, a leading provider of secondary market solutions and actionable data services for an enterprise value of $1.8 billion.

Black Knight will combine its compass analytics with Optimal Blue, a newly formed entity in which Cannae will own approximately 20% ownership interest for an equity contribution of $290 million.

Lastly, Cannae disclosed ownership interest and partnership with Senator Investment Group of approximately 12 million shares and economic equivalence in CoreLogic during the second quarter. On June 26, Cannae along with Senator Investment Group submitted unsolicited proposal to acquire CoreLogic for $65 a share [indiscernible] share price.

After spending nearly a year performing to outside due diligence, there are no material uncertainties on a proposal including financial or regulatory. We’re disappointed that CoreLogic has declined our proposal.

Subsequent to quarter end of July 29, we announced the initiative and processed to call a special meeting of shareholders in order to elect nine independent and highly accomplished directors to the CoreLogic Board of Directors.

Unfortunately given where we are in this process, I’m unable to provide any further updates at this time or answer questions regarding this matter. To finance these investments and further rebalance our portfolio, we sold 3.7 million shares of Ceridian at a price of $64.40 a share.

This resulted in gross proceeds of approximately $238.3 million and we recorded a gain of $53 million. As of July 31, 2020 Cannae owned 16.1 million of Ceridian stock worth $1.3 billion. We also completed a secondary offering of approximately 12.65 million shares of Cannae in which we raised proceeds of approximately $455 million.

This offering helped us broaden our institutional shareholder base to provide capital to fund future transaction and reintroduce the Cannae story to the investment community. To conclude, we’ve made significant progress expanding our portfolio investments which we believe positions Cannae for continued value creation and outperformance.

We’re well positioned to deploy our capital as potential deals arrive and we remain very optimistic about our future. Before I turn the call over to Bryan Coy our new Chief Financial Officer. I want to first thank Rich Cox for his service to Cannae. Rich resigned from the company two weeks ago and we’re excited to have Bryan join our team.

I’ve got to know Bryan very well over the course of the last few years as he’s the CFO for Black Knight Sports Entertainment, the Vegas Golden Knights. And I look forward to working with him, in his role in Cannae. With that, I’ll now turn the call over to Bryan to provide a brief overview of our financial results..

Thanks Bill. I’m looking forward to working with you and the team here at Cannae. Turning to our results, the major items of note were similar to the preceding quarter. Mark-to-market gains in our investments and equity and the earnings and losses of our affiliates.

Cannae recorded $471 million on fair market value gains on Ceridian stock along with $53 million of realized gain on the shares sold during the quarter, complimenting $42 million of unrealized gain on our investment in CoreLogic stock.

From our unconsolidated affiliates, Cannae recorded a $56 million loss from Dun & Bradstreet and $138 million gain on its investment, the equity fund. Offset by smaller items for a net $58 million in earnings. On a liquidity front, we enter the second quarter with $399 million in cash.

As Bill mentioned above Cannae created liquidity by selling $238 million of straight in shares ahead of $455 million of equity offering of its own offset mainly by an additional $100 million investment in the equity fund, that provided Cannae with nearly $1 billion in corporate cash and short-term investments at quarter close as well as $100 million of undrawn capacity under the F&F revolver.

Off that amount a total of $225 million was committed during the quarter to FTAC and Trebia in an early July; $200 million was deployed via the D&B private placement. Subsequent to quarter end, our $290 million forward purchase investment in Optimal Blue as well as forward purchase agreement on FTAC II for $150 million.

During the quarter we repurchased over 123,000 shares of our own at an average price of $29.37. On June 30, 2020 Cannae’s book value was $3.1 billion or $34 per share as compared to $1.5 billion or $18.72 per share on December 31, 2019. Now let me turn the call over to Duke who will touch on our pipeline and potential investment opportunities..

Thanks, Brian. As evidenced by second quarter performance. The Cannae team has kept busy. In addition of the transactions we’ve announced publicly, we’ve been busy behind the scenes looking for our next deal. We screen literally hundreds of potential transactions both public and private.

We’ve met with CEOs, private equity owners, large public institutional shareholders and we believe this a great time to deploy capital. We find current owners are in general marginally more willing to transact with us as their long-term outlook is increasingly more uncertain and their strategies in some case of leadership needs to change.

We at Cannae are buyers of long-term value. We have no maximum holding period for an asset as evidenced by a lot of our historical investments. Our outlook coupled with build operational expertise and deal structure and creativity is a one of a kind asset for Cannae.

I should also add, that we can act quickly when needed, we’re not a bureaucratic organization and Bill has a robust bench of managers and industry experts, all of whom help us be decisive, quickly on transactions. We believe this makes us the preferred counter party for sellers and businesses in need of capital.

Our focus for new investments will be primarily in the industry Bill discussed related to payments, data and analytics and Fintech. We’re looking for companies with enterprise values ranging from $1 billion to $10 billion and our equity checks have generally been in the $100 million to $500 million range.

But as you’ve seen to the various fact and other JV partnerships, that we’ve sponsored our economic firepower actually far out strips out existing liquidity. It’s important to us that our targets have defensible market position and the ability to benefit from the leadership and capital Bill brings to the table.

We’ll back to update you as soon as we have a print of agreement with the target to announce. I’ll now turn the call back over to Grant, our operator to begin the Q&A session..

[Operator Instructions] our first question will come from John Campbell with Stephens. Please go ahead..

Bryan, congrats on the new role, looking forward to working with you. You guys must have a pot coffee brewing about 24x7 at the Trasimene offices, it’s been a really, really busy past couple of months for you guys. But I just wanted to get your latest thoughts on a couple of the moving parts. If we could maybe start with Optimal Blue.

I’m sure we’re going to hear a lot from Black Knight next week.

How do you see Optimal Blue become transforming the Black Knight model and in the value proposition and then any thoughts on the kind of ICE and Ellie combo that was announced last night?.

Sure, Well Duke why don’t you take the Optimal Blue piece?.

Yes, so we think is a transformative deal for Black Night. Optimal Blue really has the industry leading set for the [indiscernible] product pricing engine tools for mortgages. Black Knight has a dominant position in mortgage processing.

We think they have a very defensible mode and this is a hybrid product that we think they can bolt-on their existing offering and frankly accelerate the growth of that business even faster than it’s been growing on its own. We think it’s a high-quality asset and we’re excited to see what AJ and the teams do with it.

We’re obviously thinking more [indiscernible] but I’ll let them kind of defer to their specific operating plans for the business. We’re the equity investor here. Obviously [indiscernible] asset, we think it does a lot to accelerate growth for the Black Knight..

On the ICE and Ellie Mae piece, both Ellie Mae and ICE were involved in the Optimal Blue mini-auction. We basically pre-empted the stage and made a term proposal of $1.8 billion. So the seller gave - he gave Black Knight exclusivity.

So I think you can say that the reaction to buy ICE, buy Ellie Group were probably in part due to the fact they were not able to acquire Optimal Blue. And I’m sure that Ellie will be a very nice asset for ICE. I mean they are our major competitor.

They’re well-run company and they’ve now taken another player [indiscernible] marketplace and combined with them so and congratulations to ICE..

Yes, that makes sense. I couldn’t agree more.

How should we be thinking about the various facts and kind of how they play into Optimal Blue and then maybe CoreLogic or is there a pretty big pipeline beyond those two?.

No there is a big pipeline and we’re kind of as you said we’re brewing coffee all the time because we’re looking at so many different transactions kind of all at once. What I would like to think about as the terms of the developing of vaccine, Phase I for us in terms of the SPACs was, from the launch Trasimene I in late May through July 4th weekend.

We were really screening and investigating various companies and trying to understand how a company might fit with our philosophy.

Management needed how their growth prospects were and then I will say, we went to - we culling down for about 100 companies plus down to about 10 companies and we went, we began Phase II which was really dealing with the bankers on the various companies that were of interest.

Then we always went to bankers that represented the company to us in terms of a deck of companies, which is what most of them do. And we went to the bankers, we try to deal with the sponsor representative at the particular bank. But you learn more about the core meaning the core values of a particular transaction we’re looking at.

Then I would say, we started Phase III trial really in late July and that Phase III means, we started talking to management at the various target companies and evaluating management, evaluating their core business principles, their core operating and again culling the herd down and then expanding the herd because others often times that something pops up and we accelerate at Phase I review and get into Phase II and then Phase III.

So at this point, I’m just on the Trasimene SPAC. we’ve probably talked to five different management teams at this point, all of which are very interesting to us.

We got a couple of different companies that we’re extremely interested in and that we’re trying to pursue to see if a transaction can be developed with those company and now, we have the advantage of assuming the markets and everyone assume many things.

But if the markets stay with us for another week and half or so, they will have a second SPAC, that will be even larger than Trasimene I and it gives us the ability to really expand our search process again and looking for large targets.

All of the SPAC that we have normally they find something interesting just won’t be for the amount raised and the SPAC, will include a pipe so we can reward our SPAC investors with a non-promote piece of the business and plus we have a number of sponsors who are very interested in investing with us.

So we really feel like we don’t have a - there is not a top limit on what we can look at and what we can seriously consider and I would expect us to make a couple of major acquisitions honor about you’re in and closing it, honor about you’re in. so that’s kind of the, that’s the SPAC opportunity.

Additionally, we continue to have Cannae being a partner to both Black Knight and Dun & Bradstreet when they find different companies that they feel are interesting to them that would be core to their expansion of their business then Cannae stands ready to make the kind of investment we did with Optimal Blue, but some $500 million.

So that’s kind of our philosophy. Cannae is like a sub-$500 million investor. FEBI [ph] is probably a $1 billion investor and Trasimene I and II could be up to $4 billion, $5 billion, $8 billion, $10 billion investment opportunity. It’s a long answer. But I hope I covered everything..

No, that was very good. It’s amazing. All this kind of started from a single, small little title company. Last one from me, you guys closed the quarter at almost $1 billion in cash. Obviously, there’s kind flurry events here post quarter.

you’re either I guess deploying or set to deploy about $640 million and then that leaves you I guess with about $325 million in cash post all this, does that sound about right? Or I’m missing anything in that math?.

I think that’s right, does that sound right to you, Bryan?.

That sounds actually a little bit high with the last. You might not be coming last back in there, the $150 million for FTAC II..

Okay, got it. All right that’s helpful..

Those forward purchase agreements are deployed when there’s actually an acquisition, there’s not a pending disbursement..

Okay, great. Thank you, guys..

Our next question will come from David Eller with Wells Fargo. Please go ahead..

I think you kind of answered some of my questions in part. But I guess I’ll ask them maybe in a little different way.

Can you just talk about your plans for your Dun & Bradstreet stake? I think you mentioned the $1.9 billion? What are you plans for that following the IPO?.

We’re locked up for six months and the end game in Dun & Bradstreet is not yet been told. Dun & Bradstreet is now in its own acquisition mode and because of the size of offering we were able to accomplish. Dun & Bradstreet $500 million so in cash available and can make some very accretive transactions.

So we feel Dun & Bradstreet story is just unfolding and we don’t have any plans to dispose those any of the Dun & Bradstreet shares.

We really feel like there’s going to be a lot of value created in Dun & Bradstreet over the next 18 months and after that time period, we would probably then start looking at a slow disbursement of some of the shares over a long period of time just as we’ve done with Ceridian where we started with about 39 million shares that we owned and over the last few years, that share count has brought down to about 16.1 million.

What I don’t want to do is unless there is a serious need for very large amount of capital. I don’t want to leave the party too soon and that’s the way I feel about Ceridian and I certainly feel that way about Dun & Bradstreet which is, it’s probably in the first or second innings of its turnaround in my view..

Got it. You kind of touched on it, kind of segue to my second question. You think about the Dun & Bradstreet actually IPO, they put a lot of cash on the balance sheet. But they still do have a good bit of that. So you talked about I think in the past there have been a lot of interesting M&A opportunities.

But you know the leverage was kind of constraining factor there.

Can you talk about just expectations there for how to allocate capital that excess cash?.

We don’t have plans to - but we’re locked into our senior secured notes than unsecured notes. And it’s been so - I believe its February of 2022. So we were able to - on the IPO. We were able to claw back 40% of those two dead instruments. And of course we completely prepaid the preferred. It’s expensive.

But we need to get those balance sheet in much better shape. So I don’t see as paying down the unsecured or secured until February of 2022 when we can do so and there won’t be a make hold, that the make hold is pretty prohibiting.

So I see Dun & Bradstreet making tuck-in acquisition and looking very seriously at the international markets as you may recall Dun & Bradstreet it was a significant international player across the world and overtime, they sold many of those businesses frankly to create a short-term gain, so they can meet numbers.

But they really mortgaged their future. So we’re very active in looking at international partners that maybe ready to sell back to Dun & Bradstreet. So that’s going to be a major focus of our acquisition strategy.

Plus tuck-ins because Dun & Bradstreet needs to have more products, needs to develop products and if they can make a small tuck-in acquisition of a product that fits within their core offerings. Then that’s the way Dun & Bradstreet will really accelerate its growth and get some quarter-over-quarter serious revenue growth.

So that’s the really Dun & Bradstreet philosophy at this point. And a lot more will be revealed over the next two or three quarters as we move down that path..

Got it and then last question from me.

Optimal Blue, can you talk about the funding structure there? Provide a little more detail? Where Black Knight raised up and sold, so will that be raised in a separate box or how do you expect that to be funded?.

There will be debt associated with Optimal Blue about $500 million, that debt will be raised by Black Knight and will be Mirror Notes into the subsidiary Optimal Blue at a premium interest rate. So Black Knight will raise money at x and will fund the transaction at x plus y.

and then THL and ourselves that are 20% owners, we’re minority owners and a subsidiary of Black Knight will own 60%. But that’s kind of the way we put together the structure.

Logically it would have been great if Black Knight could have acquired the company itself, but it would have really fouled up their debt to cap ratios and what we’re trying to do so, is to keep Black Knight at 3.9 debt to cap with the way to see us down to high twos pretty quickly. So that’s really the reason for the structure..

Great, thank you for all the detail..

Our next question will come from Carter Trent with Stephens. Please go ahead..

I just got one quick question. On the press release, I was looking at the cost of invested capital section and noticed the equity fund was broken out separately from CoreLogic. Just to confirm, does the equity fund separate from CoreLogic.

Are they making their own investments in other company?.

Bryan?.

No, they’re not. The equity fund is..

It’s CoreLogic.

Okay, perfect. Thank you..

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Foley for any closing remarks..

Thank you for your time today. To conclude, we’re very pleased with our second quarter results and remain optimistic that the current market environment will continue to offer attractive opportunities for our team.

Cannae continues to bet potential investment that arrive as we work to expand our portfolio and deliver long-term value to our shareholders. Please continue to stay safe and healthy and thank you for your time today..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..