Update on Capital Allocation

Apax Global Alpha Limited

26 June 2024

 

Update on Capital Allocation

Further to the announcement on 2 May 2024 the Board has undertaken a review of Apax Global Alpha Limited's ("AGA" or the "Company") capital allocation policy. Today, the Company is pleased to announce the conclusion of this review and present the details of the new framework which becomes effective immediately.

Key highlights

·   Creation of a Distribution Pool¹ which earmarks funds on AGA's balance sheet available for share buybacks, allowing the Board to take advantage of the opportunity presented by wide discounts to create immediate value for shareholders by investing in the Company's own shares.

·     100% of "Excess Cash Flow" intended to be allocated to the Distribution Pool on an annual basis until its size reaches 5% of the Company's Net Asset Value ("NAV").

·     The Board has decided to seed the Distribution Pool with €30m. Share Buyback Programme to commence immediately.

·     Continued payment of regular dividends to shareholders semi-annually, with the dividend being set at an absolute level of 11p per share per annum. The Board believes that this provides shareholders with certainty of income. The dividend of 11p per share is equivalent to 5.1% of AGA's NAV as at 31 March 2024 and represents a current dividend yield of c.7%². To ensure shareholders continue to benefit from the Company's growth the Board may also consider distributing capital through a special dividend as part of its capital allocation framework.

·    The new capital allocation framework constructed in line with AGA's investment objectives to maximise returns for shareholders across economic cycles, and taking into account AGA's overall financial position which continues to be prudently managed.

·      The new framework reflects feedback received from shareholders representing the majority of the Company's share capital, suggesting that they would like to see buybacks added to the "capital allocation toolkit" available to the Company.

Commenting on the new capital allocation framework, Karl Sternberg, incoming Chairman of AGA, said: "The Board believes that AGA's current discount to NAV presents an attractive opportunity for AGA to create immediate value for shareholders by investing in the Company's own shares. As such, we have authorised launching a Share Buyback Programme immediately. 

AGA's new, flexible framework gives the Board the tools it needs to allocate capital as effectively as possible for the benefit of shareholders whilst also ensuring the Company continues to grow over time through investments in AGA's Private Equity portfolio. The regular dividend offers an attractive yield and provides shareholders with certainty over the income they can expect from the Company in the future." 

New capital allocation framework explained

The new capital allocation framework will be implemented without compromising the Company's investment strategy, portfolio composition, or balance sheet.

The Board will create a Distribution Pool¹ which earmarks funds on AGA's balance sheet available for share buybacks. The Board intends to allocate 100% of "Excess Cash Flow" to this Distribution Pool until the size of the Distribution Pool reaches 5% of the Company's NAV. "Excess Cash Flow" will be assessed annually and is defined as distributions from AGA's underlying Private Equity portfolio and cash income from the Company's Debt portfolio less capital calls paid, costs and expenses, repayment of the RCF, and dividends paid.

The Board will consider using funds from the Distribution Pool for share buybacks if AGA's shares trade at a discount in excess of 23% to the last published NAV, in line with the Company's prospectus. The Board is committed to maximising value for shareholders and will retain flexibility with regards to the level of discount at which it believes buying its own shares is more accretive than making new portfolio investments.

To take advantage of the investment opportunity presented by the current wide discount to NAV and AGA's available liquid resources, the Board has authorised commencing a Share Buyback Programme immediately and it has allocated €30m to seed the Distribution Pool, representing 2.4% of NAV as at 31 March 2024.

In addition to share buybacks, AGA will continue to pay regular dividends to shareholders semi-annually, with the dividend being set at an absolute level of 11p per share per annum. This is equivalent to 5.1% of AGA's NAV as at 31 March 2024, currently yielding c.7% based on latest share price². To ensure shareholders continue to benefit from the Company's growth the Board may also consider distributing capital through a special dividend as part of its capital allocation framework.

The share repurchases will be conducted within the limits approved by shareholders at the Company's Annual General Meetings ("AGM"). At the Company's most recent AGM, held on 1 May 2024, shareholders authorised AGA to repurchase up to 14.99% of its issued share capital at the time. As at today's date, the Company has authority to purchase up to 73,616,005 shares prior to the next AGM, which is expected to be held in May 2025.

An update on the new capital allocation framework will be presented at the Capital Markets Day due to be held today at 15:00 UK. To register for the event, please visit AGA's website: https://www.apaxglobalalpha.com/investor-centre/financial-calendar

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Contact details

Investor Relations - AGA

Katarina Sallerfors

T: [phone]

E: [e-mail]

Footnotes

1.	Distribution pool will be held in cash and Debt investments
2.	Share price as at close of business on 25 June 2024

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" 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 investment Company listed on the London Stock Exchange. 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).

The Company makes Private Equity investments in Apax Funds, and has a smaller portfolio of primarily debt investments, derived from the insights gained via Apax's Private Equity activities.

Further information regarding the Company and its publications are available on the Company's website at www.apaxglobalalpha.com.

About Apax

Apax Partners LLP ("Apax") is a leading global private equity advisory firm. For over 50 years, Apax has worked to inspire growth and ideas that transform businesses. The firm has raised and advised funds with aggregate commitments of more than $77 billion. The Apax Funds invest in companies across four global sectors of Tech, Services, Healthcare and Internet/Consumer. These funds provide long-term equity financing to build and strengthen world-class companies. For further information about Apax, please visit www.apax.com.

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

 

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