(LSE: APAX)
Apax Global Alpha Limited
Annual results for the year ended 31 December 2019
For further information regarding the announcement of AGA's 2019 annual results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com.
Key highlights
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Total NAV Return1 was +22.7% (+20.5% constant currency)2 reflecting the good performance of the overall portfolio and in particular the very strong performance of Private Equity during the year
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Total NAV Return1 of +22.7% contributed by: o Private Equity +19.3% o Derived Debt +2.2% o Derived Equity +0.7% o FX +2.2% o Costs and other movements -1.0% o Performance fee adjustment -0.7%
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Total Return1 of Private Equity was +33.9%. Derived Debt delivered Total Return1 of +11.8%. Derived Equity had a Total Return1 of +9.1%
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Adjusted NAV surpassed €1bn during the year, growing to €1,092m, with Adjusted NAV per share of €2.22/£1.88 at year-end
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The Board has agreed a reduction in management fees with the Investment Manager aimed at better aligning the incentives of the Investment Manager with the Company's investment objectives and the evolution of the portfolio |
Fee amendments
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The Board has agreed a series of amendments to the Investment Management Agreement relating to management fees. The annual fee of 1.25% of the value of the Derived portfolio and Eligible Private Equity3 will be reduced to: |
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o 1% p.a. for Derived Debt |
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o 0.5% p.a. for Derived Equity and Eligible Private Equity3
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The performance fee structure has also been adjusted: |
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o The performance fee rate has been reduced from 20% to 15% for Derived Debt, with a revised hurdle rate of 6% net of fees (previously: 8% gross) |
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o For Derived Equities and Eligible Private Equity3, the performance fee rate remains at 20% but the hurdle rate has been increased to 8% net of fees (previously: 8% gross) |
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o Performance fees will now be payable on the net annual performance of each portfolio o To transition to the new fee arrangement, the Company's investment portfolio is assumed to be realised and reacquired for cash as at 31 December 2019. The performance fee accrual of €6.9m will become payable to the Investment Manager in shares in the Company, to be acquired in the secondary market, as set out under the terms of the Investment Management Agreement
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The Company has also entered into a new administration agreement with Apax Partners and its affiliate Apax Partners Fund Services Limited ("APFS") in respect of the provision of certain corporate and investor relations services at a fee rate of 0.04% p.a. of the value of the Invested Portfolio
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Overall fees payable by the Company to the Investment Manager and Investment Advisor will be capped at 3% p.a. of Net Asset Value (previously: uncapped). These changes take effect from 1 January 2020. The Board expects a material overall reduction in investment management fees to result from these changes in a substantial majority of cases and believes they produce a better alignment of incentives with the Company's investment objectives. Further details on the revised fee structure are set out on page 90 of the Annual Report
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Outstanding commitments and funding sources
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AGA was 101% invested. Though the facility was undrawn, there were net current liabilities of €9.5m4 primarily due to the purchase of a debt position which had yet to settle at year end |
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Outstanding commitments to the Apax Funds (together with recallable distributions) amounted to €496.9m(46% of NAV) with funding sources of €472.7m (43% of NAV). Funding sources comprise Derived Investments of €342.2m, undrawn facility of €140.0m, offset by net current liabilities of €9.5m4
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Adjusted NAV5 movements (€m) |
Private Equity |
Derived Investments |
Cash |
Facility drawn |
Other5 |
2019 Total |
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Adjusted NAV at 31.12.18 |
591.5 |
320.6 |
17.3 |
- |
1.4 |
930.8 |
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+ Investments |
165.9 |
133.7 |
(287.4) |
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(12.2) |
- |
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- Divestments |
(182.4) |
(126.8) |
312.3 |
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(3.1) |
- |
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+ Interest and dividend income |
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20.3 |
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0.7 |
21.0 |
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+/- Unrealised gains/(losses) |
179.2 |
(2.0) |
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- |
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177.2 |
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+/- Realised gains |
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8.0 |
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8.0 |
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+/- FX gains6 |
12.1 |
8.7 |
0.1 |
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20.9 |
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+/- Costs and other movements |
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(9.7) |
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0.4 |
(9.3) |
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- Dividends paid |
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(49.6) |
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(49.6) |
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+/- Performance fee reserve7 |
(6.9) |
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(6.9) |
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+/- Revolving credit facility drawn/repaid |
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Adjusted NAV at 31.12.198 |
759.4 |
342.2 |
3.3 |
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(12.8) |
1,092.1 |
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Private Equity portfolio highlights
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Private Equity portfolio delivered a very strong performance with a Total Return1 of +33.9% (+31.7% constant currency)2: o Unrealised gains 33.0% o Performance fee adjustment -1.3% o FX +2.2% |
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On a look-through basis, AGA invested c.€104.0m in 13 new investments9 |
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Calls of €149.3m paid to AIX, €10.0m paid to AVIII, €6.4m paid to Digital and €0.2m paid to AMI |
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Distributions of €182.4m were from AVIII (€154.7m related to Assured, Exact, EVRY, Idealista), AEVII (€21.4m related to Acelity, Genex, Electro-Stocks), AIX (€5.3m, ThoughtWorks, Manappuram Finance) and AMI (€1.0m, Ten Petroleum, Max) |
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Private Equity exited seven positions10 (Assured, Exact, Electro-Stocks, Acelity, OneCall, Neobpo and Sophos) during the year. |
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Aggregate Gross IRR11 and Gross MOIC11 on full exits was 14.2% and 2.0x |
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FX exposure of c.51%in US dollar denominated investments |
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Tech & Telco was the most heavily weighted sector, accounting for 39% of the Private Equity portfolio |
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Private Equity portfolio is maturing with 87% of Private Equity investments from 2015-2019 vintage |
Derived Investments portfolio highlights
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Derived Investments had a positive performance from of both its sub-portfolios producing a Total Return1 of +10.8% (+8.2% constant currency)2: o Income +6.3% o Realised gains +2.4% o Unrealised losses -0.6% o FX +2.6% - Derived Debt performance driven mainly by income from attractive yields. Total Return1 +11.8% (+9.6% constant currency)2 - Derived Equity performance mainly driven by realisations. Total Return1 +9.1% (+5.5% constant currency)2 |
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New investments of €133.7m12 were primarily into new debt positions (€115.0m) whilst proceeds of €126.8m13 were generated by both Derived equity (€79.0m) and Derived Debt (€47.8m) |
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Gross IRR14 and Gross MOIC14 on Derived Debt full exits were 15.1% and 1.2x whilst Derived Equity full exits were 15.9% and 1.2x |
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FX exposure of c.65% in US dollar denominated investments |
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Tech & Telco was the most heavily weighted sector, accounting for 40% of the Derived Investments portfolio |
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Portfolio split was 74% Derived Debt and 26% Derived Equity at year end
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Other Invested Portfolio highlights
Invested Portfolio analysis15 |
€m |
€m |
% |
% |
Private Equity |
766.3 |
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69% |
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- AMI |
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25.5 |
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2% |
- AEVI |
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6.8 |
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1% |
- AEVII |
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53.1 |
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5% |
- AVIII |
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274.5 |
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25% |
- AIX |
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396.8 |
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35% |
- ADF |
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12.2 |
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1% |
- AX |
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(2.6) |
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0% |
Derived Investments |
342.2 |
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31% |
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- Derived Debt |
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252.5 |
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23% |
- Derived Equity |
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89.7 |
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8% |
Total |
1,108.5 |
1,108.5 |
100% |
100% |
Commenting on the results, Tim Breedon CBE, Chairman of Apax Global Alpha, said:
"The Board is very pleased with the results the Company has achieved this year. W ith NAV growing to over €1bn for the first time, AGA has delivered strong returns and a growing dividend to shareholders ."
Commenting on the results, Ralf Gruss, COO of Apax Partners, said:
"The evolution of AGA's portfolio approach has delivered improved results in Derived Investments while re-positioning the portfolio towards Private Equity. This was done with the aim of enhancing performance and reducing volatility over the long-term. Excellent performance in Private Equity reflects mainly value creation from the Apax VIII and Apax IX fund portfolio companies. With its commitment to Apax X, AGA achieved another milestone allowing it to further diversify its private equity investments over time."
More information including the Company's latest results presentation is available to view on the website at: www.apaxglobalalpha.com.
Contact details
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Footnotes
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Notes
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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 |
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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 debt and equities derived from the insights gained via Apax Partners' Private Equity activities. 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 and over its more than 40-year history, Apax Partners has raised and advised funds with aggregate commitments of c.€40 billion. 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.