2017 Final Results

RNS Number : 7625G

Apax Global Alpha Limited

06 March 2018

 

(LSE: APAX)                                                                                                                                                       

Apax Global Alpha Limited

Annual results for the year ended 31 December 2017

For further information regarding the announcement of AGA's 2017 annual results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com 

Key highlights

·      Total NAV Return of 2.2% significantly impacted by the euro strengthening by 12%⁽¹⁾ against the US dollar. Total NAV Return of 10.2% on a constant currency basis

·      Adjusted NAV decreased by €26.3m to €912.4m during the 12 months to 31 December 2017, despite positive return contributions from Private Equity and Derived Investments portfolios, which were offset by dividend payments and adverse FX movements

·      Second semi-annual dividend of 4.17 pence per share declared, equivalent to 2.5% of euro NAV at 31 December 2017. Dividend will be paid on 4 April 2018

·      Adjusted NAV per share of €1.86 (£1.65), compared to €1.91 (£1.63) at 31 December 2016

·      AGA was 98% invested and had a net cash balance of €19.0m at 31 December 2017

·      Following the second lock-up release, AGA's free float increased above 50% and AGA has been included the FTSE UK Indices Series

Performance highlights

·      Portfolio delivered a Total NAV Return of 10.2% on a constant currency basis, Private Equity contributed 4.9%, and Derived Investments contributed 7.6%, before FX impact of -8.0%, and other costs of -2.3% inclusive of performance fees

·      Derived Debt Investments contributed 2.1% and Derived Equity 5.5% to Total NAV Return

Adjusted NAV movements	Private Equity €m	Derived Investments €m	Cash €m	Other €m	2017 Total €m
Adjusted NAV at 31 December 2016	494.1	406.2	33.9	4.6	938.7
+ Investments	150.8	278.5	(429.8)	0.5	-
- Divestments	(74.5)	(376.6)	455.5	(4.4)	-
+ Interest and dividend income	-	-	27.2	(0.9)	26.3
+/- Unrealised gains	47.3	3.5	-	-	50.8
+/- Realised gains	-	42.9	-	-	42.9
+/- FX	(32.2)	(40.5)	(4.5)	-	(77.2)
+/- Costs and other movements	-	-	(10.3)	0.4	(9.9)
- Dividends paid	-	-	(46.4)	-	(46.4)
+/- Performance fee reserve	0.6	(6.8)	(6.6)	-	(12.8)
Adjusted NAV at 31 December 2017	586.1	307.2	19.0	0.1	912.4

Investment activity highlights

·      Exposures skewed towards Private Equity at 65% and Derived Investments of 35% due to 16 new Private Equity investments and several Derived Investments divestments

·      Private Equity had 16 closed investments and eight exits, while Derived Investments had 22 new positions, five add-ons, and 25 divestments⁽²⁾

·      FX exposure c.49% in US dollar denominated investments

Invested portfolio analysis	€m	€m	%	%
Private Equity	590.2		65%
-       AMI		14.7		1%
-       AEVI		1.9		0%
-       AEVII		52.3		6%
-       AVIII		378.6		42%
-       AIX		143.3		16%
-       ADF		(0.6)		-0%
Derived Investments	320.5		35%
-       Debt		188.4		20%
-       Equities		132.1		15%
Total(3)	910.7	910.7	100%	100%

Private Equity portfolio highlights

·      Apax Funds returned €74.5m to AGA and €150.8m was called from AGA by Apax IX and AMI

·      Unrealised gains were €47.3m and adverse FX movements were €32.2m

·      Apax IX closed eleven investments, Apax Digital Fund closed two investments, AMI Opportunities Fund closed three investments

·      Sector exposure spread across all Apax Partners' focus industries. Services and Tech & Telco were the most heavily weighted sectors, accounting for 32% each of the invested portfolio

·      Largest geographic bias in the portfolio was North America, representing 41% of the invested portfolio

·      Private Equity portfolio remained relatively young with 83% of investments with 2014-2017 vintages

Derived Investments portfolio highlights

·      AGA fully exited twelve⁽²⁾ debt investments and 13 equity investments generating proceeds of €42.9m in the year

·      Unrealised gains were €3.5m, realised gains were €42.9m, offset by FX movements of -€40.5m

·      AGA completed ten new investments in debt, twelve new equity investments and four add-on investments in equity and one in debt amounting to €278.5m

·      Aggregate Gross IRR generated on fully exited investments was 26.6%⁽⁴⁾

·      FX exposure was c.60% in US dollar denominated investments

·      Sector exposure spread across all Apax Partners' focus industries. Tech & Telco was the most heavily weighted sector, accounting for 36% of the invested portfolio

·      Geographic skew towards North America decreased by 8% to 56%

·      Portfolio split between Derived Debt and Derived Equity was 59% and 41%, respectively

Commenting on the results, Tim Breedon CBE, Chairman of Apax Global Alpha, said:

"AGA's strong underlying investment performance in 2017 was depressed by adverse currency movements. The portfolio remains well positioned to deliver future growth."

Commenting on AGA's investment focus, Ralf Gruss, COO of Apax Partners, said:

"The performance for the year was pleasing despite being overshadowed by the weakness of the US dollar. AGA gained exposure to a number of new and exciting portfolio companies in Private Equity, while realising value in older vintages. The strategy to focus more on equities delivered impressive results in Derived Investments."

For more information, the Company's 2017 Annual Report and presentation are available to view at: www.apaxglobalalpha.com 

Contact details

Investor enquiries	Media enquiries
Sarah Wojcik IR Manager - AGA	Andrew Kenny Head of Communications
Telephone: [phone]	Telephone: [phone]
Email: [e-mail]	Email: [e-mail]

Footnotes

1.     Source: Bloomberg

2.     Excludes 3 positions that were restructured. In April 2017, first and second lien debt held by AGA in Answers was restructured and it received new second lien debt, equity and warrants. In September 2017, AGA's investment in Rue21 first lien debt restructured and in lieu of this it received equity

3.     Invested portfolio excludes cash and cash equivalents and net current assets, including these the NAV is €929.9m. Adjusted NAV excludes the estimated performance fee and is €912.4m at 31 December 2017

4.     Gross IRR on exited Derived Investments in 2017. This excludes Answers first and second lien debt that restructured in April 2017 and Rue21 first lien debt that restructured in September 2017

Notes

1.     Note that references in this announcement to Apax Global Alpha Limited have been abbreviated to "AGA" or "the Company". References to Apax Partners LLP have been abbreviated to "Apax Partners" or "the Investment Adviser"

2.     Please be advised that this announcement may contain inside information as stipulated under the Market Abuse Regulations (EU) NO. 596/2014 ("MAR")

3.     This announcement is not for release, publication or distribution, directly or indirectly, in whole or in part, into or within the United States or to "US persons" (as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")) or into or within Australia, Canada, South Africa or Japan. Recipients of this announcement in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of the announcement may be restricted by law in certain jurisdictions.

4.     The information presented herein is not an offer for sale within the United States of any equity shares or other securities of Apax Global Alpha Limited ("AGA"). AGA has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act"). In addition, AGA's shares (the "Shares") have not been and will not be registered under the Securities Act or any other applicable law of the United States. Consequently, the Shares may not be offered or sold or otherwise transferred within the United States, or to, or for the account or benefit of, US Persons, except pursuant to an exemption from the registration requirements of the Securities Act and under circumstances which will not require AGA to register under the Investment Company Act. No public offering of the Shares is being made in the United States

5.     This announcement may include forward-looking statements. The words "expect", "anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and similar expressions (or their negative) identify certain of these forward-looking statements. These forward-looking statements are statements regarding AGA's intentions, beliefs or current expectations concerning, among other things, AGA's results of operations, financial condition, liquidity, prospects, growth and strategies. The forward-looking statements in this presentation are based on numerous assumptions regarding AGA's present and future business strategies and the environment in which AGA will operate in the future. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of AGA to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond AGA's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as AGA's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which AGA operates or in economic or technological trends or conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. AGA expressly disclaims any obligation or undertaking to release any updates or revisions to these forward-looking statements to reflect any change in AGA's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this announcement, or to update or to keep current any other information contained in this announcement. Accordingly, undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this announcement

About Apax Global Alpha Limited

AGA is a Guernsey registered closed-ended collective investment scheme incorporated as a non-cellular company that listed on the London Stock Exchange on 15 June 2015. It is regulated by the Guernsey Financial Services Commission.

AGA's objective is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company is targeting an annualised Total Return, across economic cycles, of 12-15% (net of fees and expenses) including a dividend yield of 5% of Net Asset Value.

The investment policy of the Company is to make Private Equity investments in Apax Funds, and Derived Investments which are investments in equities and debt derived from the insights gained via Apax Partners' Private Equity activities. The Company's portfolio is expected to be allocated in approximately equal proportions between Private Equity and Derived Investments, although the investment mix will fluctuate over time due to market conditions, investment opportunities, cash flow requirements, the dividend policy and other factors. Further information regarding the Company and its publications are available on the Company's website at www.apaxglobalalpha.com.

About Apax Partners LLP

Apax Partners is a leading global private equity advisory firm. It operates globally and has more than 30 years of investing experience. Apax Partners has advised funds that total over €42 billion in aggregate as at 31 December 2017*. Funds advised by Apax Partners invest in companies across four global sectors of Tech & Telco, Services, Healthcare and Consumer. These funds provide long‐term equity financing to build and strengthen world‐class companies. For further information about Apax Partners, please visit www.apax.com.

Apax Partners is authorised and regulated by the Financial Conduct Authority in the UK.

* Funds raised since 1981, commitments converted from fund currency to EUR at FX rates as at December 2017

 

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