1st Quarter Results

RNS Number : 9504M

BMO Private Equity Trust PLC

26 May 2022

 

To: Stock Exchange	For immediate release:
	26 May 2022

BMO Private Equity Trust PLC

Quarterly results for the three months ended 31 March 2022 (unaudited)

 

· NAV total return per share for the three-month period ended 31 March 2022 of 0.4%.

· Share price total return for the three-month period ended 31 March 2022 of -4.5%.

· NAV of 637.78p per share as at 31 March 2022.

· Quarterly dividend of 6.05p per Ordinary Share representing a yield of 4.7% ∞ .

Introduction

As at 31 March 2022, the net assets of the Company were £471.6 million, giving a Net Asset Value ('NAV') per share of 637.78p, which taking into account the dividend of 5.27p paid on 28 January 2022, gives an increase of 0.4% over the quarter. The share price performance has been disappointing with a share price total return of -4.5% for the period. The discount had widened to 28% by the quarter end and now stands at 29%. Many of the other investment companies in our sector have seen similar downward pressure on share prices reflecting the impact of external shocks on investor sentiment.

As at 31 March 2022 the Company had net debt of £12.2 million. The current debt is slightly higher at £21.3 million. Outstanding undrawn commitments were £152.9 million including £36.8 million to funds where the investment period has expired.

The dividend to be paid on 29 July 2022 to shareholders on the register on 8 July 2022 with an ex-dividend date of 7 July 2022 will be 6.05p per share.

As is usual for the first quarter most of the valuations are based upon 31 December valuations. Very few March reports had been received by the date of compilation of this valuation. 14% of valuations are based on 31 March data with the remaining 86% based on December reports. This is in line with the usual proportions at this early point in the year.

New Investments

There were five new commitments to funds made during the quarter. $14 million was committed to Corsair VI, the mid-market buyout fund with a focus on financial services in North America and Europe. This is a firm we have known for a number of years, mainly through our co-investment in insurance company software business RGI. We have made three new commitments to funds based in the Nordic region. €10 million was committed to Procuritas VII, the fourth fund we have backed in a series of highly successful mid-market buyout funds from this Stockholm based manager. €7 million was committed to Verdane Edda III (technology based growth investments in the upper mid-market of Northern Europe) and €8 million to Verdane Capital XI (mid-sized and smaller growth investments in Northern Europe including secondary portfolios as well as single assets). We are already invested in the previous Verdane Edda fund. €7.0 million was committed to MED Platform II, the ArchiMed managed mid-market buyout fund with a focus on healthcare in North America and Europe.

Three new co-investments have been added during the quarter. The co-investment portfolio now accounts for 46.7% of the overall portfolio.

$10.0 million (£7.8 million) was invested in Aurora Payment Solutions, a digital payments solutions provider for over 20,000 US merchants in multiple sectors including hospitality and transport. Headquartered in Texas, this investment is led by Corsair Capital, who as noted above are financial services specialists.

£3.9 million was invested in Perfect Image, a Newcastle based IT services group. The company's client base are SMEs often undertaking migrations to the Cloud or bolstering their cybersecurity. The deal is led by Chiltern Capital, a lower mid-market manager with whom we have co-invested on a number of occasions.

€3.3 million (£2.8 million) was invested in Bomaki, a 'sushi samba' style restaurant chain based in the Milan region of Northern Italy. The restaurants offer a fusion cuisine combining influences from Japan and Brazil. The chain starts with nine restaurants and the plan is to build out to 24 within three years. The deal is led by Augens Capital who are well known to us from the San Siro investment (funeral homes). There is also a co-lead investor, Buono Ventures, who have specific expertise in the restaurant sector.

There were small follow-ons in three co-investments; £0.8 million in Canadian adtech company Pathfactory, £0.6 million in Ontario based software company Tier I CRM and £0.4 million in vein visualisation equipment company AccuVein.

The funds in the portfolio initiated several new investments during the quarter. As has been the case in recent years there is a strong representation from technology enabled businesses and companies with a healthcare focus.

FPE II have called £0.6 million for Egress, a provider of migration and managed services enabling mainly NHS and local authority customers to move to the cloud. Kester Capital called £0.5 million for Optibrium a software company focusing on drug discovery for the pharmaceuticals sector. MVM V called £0.5 million for two companies; Vero Bioscience, the provider of a novel nitric oxide delivery system with applications for new born babies and cardiac patients where we are also a co-investor, and OptiNose a drug delivery company where its product XHANCE treats chronic sinusitis. In Finland Vaaka III called £0.4 million for Medbase a provider of decision support databases for professionals and organizations covering for example drug interactions with other drugs and potential adverse effects.

After the quarter end £5 million has been committed to Northern Gritstone, a new investment company founded by the Universities of Manchester, Leeds and Sheffield to make investments in University spin-outs and other growth opportunities in the North of England. This is an innovative and carefully structured new venture led by the former Goldman Sachs partner and government minister Lord O'Neil and Duncan Johnson, formerly of Caledonia Investments and RJD Partners.

The total investment in co-investments and through fund drawdowns in the quarter was £20.6 million.

Realisations

There were no realisations of co-investments in the quarter but there were several exits from companies held in the funds portfolio.

In the UK August Equity IV returned £2.9 million from energy procurement company Zenergi (5.3x cost, 50% IRR). From a range of funds Inflexion returned £2.7 million from compliance risk management company Alcumus (5.9x cost, 37% IRR). Primary Capital IV had two exits; railway equipment and services provider Readypower returned £1.4 million (4.6x cost, 39% IRR) and the accredited online courses company ICS Learn £1.1 million (4.4x cost, 49% IRR). There was a return of capital of £1.1 million from our co-investment in Weird Fish following the partial redemption of loan stock.

There were a number of good exits in Europe. Astorg VI exited the Switzerland based Autoform which provides software for use in sheet metal forming in a sale to Carlyle which returned £2.4 million (4.1x cost, 30% IRR). ArchiMed II sold Austrian medical and veterinary diagnostics company Eurolyser returning £1.2 million (6.0x cost, 79% IRR). Finland based Vaaka II exited the leading physiotherapy company in that country, Fysio, returning £0.5 million (3.3x cost, 21% IRR).

The combined total of realisations for the first quarter was £16.2 million which is almost exactly the same as at this point last year.

Valuation Changes

The largest change in valuation was an uplift of £6.4 million for our Silverfleet led co-investment in cleanroom consumables company STAXS, which is being sold. Proceeds, which will be received imminently, are £15.8 million and together with prior receipts from last year's recapitalisation represents an excellent 6.2x cost and an IRR of 87% and a premium of 68% over the previous valuation. STAXS has made superb underlying progress which was enhanced by increased demand during the pandemic. Other uplifts include for US based Mexican themed restaurant chain Rosa Mexicano (+£1.1 million) where normality is returning to trading and Astorg VI (+£0.8 million) where the Autoform exit noted above has given a lift. There is a reduction for Ashtead (-£1.1 million) to reflect a carried interest provision.

Financing

The Company is modestly geared as we enter what is likely to be a challenging economic environment.  More than 80% of the borrowing facility is unused at the time of writing and there are several realisations at varying stages of completion which should result in substantial cash inflows over the next few months. It would be reasonable to expect the currently buoyant exit market to deflate somewhat given the accumulation of external risks but by how much and how quickly is far from clear. It is likely that there will be some buying opportunities and the Company has the resources to take these judiciously.

Outlook

As noted above the market is processing a number of external shocks after a particularly positive period for the private equity sector. Supply chain issues and the oil price rises arising from the combination of the recovery from the pandemic and the Russian invasion of Ukraine has reignited the long dormant scourge of inflation. Traditionally investment in productive assets such as equity, including private equity, has provided a degree of protection against the worst effects of inflation. There will undoubtedly be challenges for many businesses, not least those with consumer exposure, as the cost of living crisis deepens. Set against this is a robust appetite for private equity from a wide range of investors engendered by its strong track record of delivering returns through many different economic situations and its propensity to identify businesses experiencing strong secular growth.  The Company's portfolio is deliberately well diversified and this has been of conspicuous benefit throughout our 23 year history. Our investment partners are greatly experienced in both dealing with adversity and in finding resilient companies at attractive prices. This is a logical basis for confidence that your Company can continue to deliver good returns for shareholders over the long term.

Hamish Mair

Investment Manager

BMO Investment Business Limited

∞ Calculated as dividends of 4.77p paid on 29 October 2021, 5.27p paid on 28 January 2022, 5.65p paid on 29 April 2022 and 6.05p payable on 29 July 2022 divided by the Company's share price of 462.00p as at 31 March 2022.

Portfolio Summary

Ten Largest Holdings As at 31 March 2022	Total Valuation £'000	% of Total Portfolio
Inflexion Strategic Partners	19,674	4.0
STAXS	15,850	3.2
Sigma	15,336	3.1
Weird Fish	14,735	3.0
TWMA	12,349	2.5
Coretrax	11,760	2.4
Ashtead	11,131	2.2
Ambio Holdings	10,947	2.2
Aliante Equity 3	10,803	2.2
Volpi Capital	10,336	2.1
132,921		26.9

Portfolio Holdings

Investment	Geographic Focus	Total Valuation £'000	% of Total Portfolio
Buyout Funds - Pan European
Volpi Capital	Northern Europe	10,336	2.1
Apposite Healthcare II	Europe	8,271	1.7
Stirling Square Capital II	Europe	5,606	1.1
Astorg VI	Western Europe	4,545	0.9
Agilitas 2015 Fund	Northern Europe	4,243	0.9
Apposite Healthcare III	Europe	3,730	0.8
ArchiMed II	Western Europe	3,083	0.6
Silverfleet European Dev Fund	Europe	2,976	0.6
TDR II Annex Fund	Western Europe	129	-
TDR Capital II	Western Europe	83	-
Agilitas 2020 Fund	Europe	40	-
ArchiMed MED III	Global	2	-
Total Buyout Funds - Pan European		43,044	8.7
Buyout Funds - UK
Inflexion Strategic Partners	United Kingdom	19,674	4.0
August Equity Partners IV	United Kingdom	10,092	2.0
Inflexion Supplemental V	United Kingdom	4,763	1.0
Inflexion Buyout Fund V	United Kingdom	4,595	0.9
GCP Europe II	United Kingdom	4,056	0.8
Piper Private Equity VI	United Kingdom	3,819	0.8
Inflexion Buyout Fund IV	United Kingdom	3,536	0.7
Inflexion Enterprise Fund IV	United Kingdom	3,520	0.7
Kester Capital II	United Kingdom	3,307	0.7
Apiary Capital Partners I	United Kingdom	2,877	0.6
Inflexion 2010 Fund	United Kingdom	2,804	0.6
RJD Private Equity Fund III	United Kingdom	2,628	0.5
Horizon Capital 2013	United Kingdom	2,550	0.5
FPE Fund II	United Kingdom	2,299	0.5
Dunedin Buyout Fund II	United Kingdom	2,258	0.4
Inflexion Partnership Capital I	United Kingdom	2,101	0.4
August Equity Partners V	United Kingdom	2,074	0.4
Inflexion Partnership Capital II	United Kingdom	2,057	0.4
Inflexion Supplemental IV	United Kingdom	2,006	0.4
Primary Capital IV	United Kingdom	1,575	0.3
Inflexion 2012 Co-Invest Fund	United Kingdom	1,446	0.3
Inflexion Enterprise Fund V	United Kingdom	1,383	0.3
Piper Private Equity V	United Kingdom	1,001	0.2
FPE Fund III	United Kingdom	728	0.1
August Equity Partners III	United Kingdom	5	-
Total Buyout Funds - UK		87,154	17.5
Investment	Geographic Focus	Total Valuation £'000	% of Total Portfolio
Buyout Funds - Continental Europe
Aliante Equity 3	Italy	10,803	2.2
Bencis V	Benelux	8,563	1.7
Vaaka Partners Buyout Fund III	Finland	4,961	1.0
Procuritas Capital IV	Nordic	4,894	1.0
Verdane Edda	Nordic	4,877	1.0
DBAG VII	DACH	4,660	0.9
Summa II	Nordic	4,584	0.9
Corpfin Capital Fund IV	Spain	4,387	0.9
Capvis III CV	DACH	4,218	0.8
Italian Portfolio	Italy	3,927	0.8
Chequers Capital XVII	France	3,849	0.8
Montefiore IV	France	3,746	0.8
Procuritas VI	Nordic	3,592	0.7
ARX CEE IV	Eastern Europe	3,259	0.7
Procuritas Capital V	Nordic	2,714	0.5
Summa I	Nordic	2,635	0.5
Chequers Capital XVI	France	2,090	0.4
DBAG Fund VI	DACH	2,088	0.4
Capvis IV	DACH	1,933	0.4
NEM Imprese III	Italy	1,919	0.4
Vaaka II	Finland	1,409	0.3
Avallon MBO Fund II	Poland	1,297	0.3
Ciclad 5	France	1,292	0.3
Avallon MBO Fund III	Poland	1,214	0.2
Portobello Fund III	Spain	1,072	0.2
Montefiore V	France	995	0.2
DBAG VIIB	DACH	986	0.2
Corpfin V	Spain	869	0.2
DBAG VIII	DACH	815	0.2
Ciclad 4	France	749	0.2
PineBridge New Europe II	Eastern Europe	749	0.1
DBAG VIIIB	DACH	267	0.1
DBAG Fund V	DACH	232	-
Gilde Buyout Fund III	Benelux	89	-
N+1 Private Equity Fund II	Iberia	62	-
Capvis III	DACH	50	-
Total Buyout Funds - Continental Europe		95,846	19.3
Private Equity Funds - USA
Blue Point Capital IV	North America	7,403	1.5
Graycliff III	United States	3,209	0.7
Camden Partners IV	United States	2,831	0.6
Blue Point Capital III	North America	2,569	0.5
Stellex Capital Partners	North America	2,106	0.4
Graycliff IV	North America	1,374	0.3
HealthpointCapital Partners III	United States	447	0.1
Blue Point Capital II	North America	230	-
Total Private Equity Funds - USA		20,169	4.1

Investment	Geographic Focus	Total Valuation £'000	% of Total Portfolio
Private Equity Funds - Global
PineBridge GEM II	Global	1,031	0.2
F&C Climate Opportunity Partners	Global	775	0.2
PineBridge Latin America II	South America	113	-
Warburg Pincus IX	Global	86	-
AIF Capital Asia III	Asia	77	-
Total Private Equity Funds - Global		2,082	0.4
Venture Capital Funds
SEP V	United Kingdom	8,544	1.7
MVM V	Global	3,044	0.6
SEP IV	United Kingdom	1,498	0.3
Pentech Fund II	United Kingdom	825	0.2
Life Sciences Partners III	Western Europe	444	0.1
SEP II	United Kingdom	276	0.1
Environmental Technologies Fund	Europe	62	-
Alta Berkeley VI	Europe	60	-
SEP III	United Kingdom	44	-
Total Venture Capital Funds		14,797	3.0
Direct - Quoted
Antero	Global	495	0.1
Laredo Petroleum	USA	33	-
Total Direct - Quoted		528	0.1
Secondary Funds
The Aurora Fund	Europe	1,110	0.2
Total Secondary Funds		1,110	0.2
Direct - Investments/Co-investments
STAXS	Netherlands	15,850	3.2
Sigma	United States	15,336	3.1
Weird Fish	United Kingdom	14,735	3.0
TWMA	United Kingdom	12,349	2.5
Coretrax	United Kingdom	11,760	2.4
Ashtead	United Kingdom	11,131	2.2
Ambio Holdings	United States	10,947	2.2
San Siro	Italy	10,143	2.0
Jollyes	United Kingdom	8,517	1.7
Aurora Payment Solutions	United States	7,763	1.6
AccuVein	United States	6,993	1.4
Swanton	United Kingdom	6,254	1.3
Avalon	United Kingdom	6,234	1.3
1Med	Switzerland	5,885	1.2
JT IoT	United Kingdom	5,750	1.2
Amethyst Radiotherapy	Europe	5,697	1.1
Cyberhawk	United Kingdom	5,104	1.0
CETA	United Kingdom	5,102	1.0
Omlet	United Kingdom	5,027	1.0
Rosa Mexicano	United States	4,923	1.0
DMC Canotec	United Kingdom	4,919	1.0
Contained Air Solutions	United Kingdom	4,463	0.9
Prollenium	North America	4,339	0.9
Tier1 CRM	Canada	4,237	0.8
Orbis	United Kingdom	4,142	0.8
Dotmatics	United Kingdom	4,116	0.8
Perfect Image	United Kingdom	3,858	0.8
RGI	Italy	3,641	0.7
Walkers Transport	United Kingdom	3,410	0.7
PathFactory	Canada	3,299	0.7
Collingwood Insurance Group	United Kingdom	3,241	0.6
Habitus	Denmark	3,185	0.6
Bomaki	Italy	2,861	0.6
Babington	United Kingdom	2,596	0.5
Calucem	Croatia	2,582	0.5
Vero Biotech	United States	1,312	0.3
Stone Computers	United Kingdom	282	0.1
Pet Network	Eastern Europe	160	-
Total Direct - Investments/Co-investments		232,143	46.7
Total Portfolio		496,873	100.0

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2022 (unaudited)

	Revenue £'000	Capital £'000	Total £'000
Income
Gains on investments held at fair value	-	8,143	8,143
Exchange losses	-	(249)	(249)
Investment income	1,332	-	1,332
Other income	17	-	17
Total income	1,349	7,894	9,243
Expenditure
Investment management fee - basic fee	(110)	(994)	(1,104)
Investment management fee - performance fee	-	(5,245)	(5,245)
Other expenses	(274)	-	(274)
Total expenditure	(384)	(6,239)	(6,623)
Profit before finance costs and taxation	965	1,655	2,620
Finance costs	(59)	(534)	(593)
Profit before taxation	906	1,121	2,027
Taxation	6	-	6
Profit for period/ total comprehensive income	912	1,121	2,033
Return per Ordinary Share	1.23p	1.52p	2.75p

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2021 (unaudited)

	Revenue £'000		Capital £'000	Total £'000
Income
Losses on investments held at fair value	-		(3,537)	(3,537)
Exchange gains	-		3,568	3,568
Investment income	529		-	529
Other income	-		-	-
Total income	529		31	560
Expenditure
Investment management fee - basic fee	(84)		(757)	(841)
Investment management fee - performance fee	-		-	-
Other expenses	(224)		-	(224)
Total expenditure	(308)		(757)	(1,065)
Profit/(Loss) before finance costs and taxation	221		(726)	(505)
Finance costs	(61)		(551)	(612)
Profit/(Loss) before taxation	160		(1,277)	(1,117)
Taxation	-		-	-
Profit/(Loss) for period/ total comprehensive income	160		(1,277)	(1,117)
Return per Ordinary Share	0.22p		(1.73)p	(1.51)p

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

year ended 31 December 2021 (audited)

	Revenue £'000	Capital £'000	Total £'000
Income
Gains on investments held at fair value	-	128,313	128,313
Exchange gains	-	3,686	3,686
Investment income	6,719	-	6,719
Other income	3	-	3
Total income	6,722	131,999	138,721
Expenditure
Investment management fee - basic fee	(394)	(3,546)	(3,940)
Investment management fee - performance fee	-	(4,502)	(4,502)
Other expenses	(993)	-	(993)
Total expenditure	(1,387)	(8,048)	(9,435)
Profit before finance costs and taxation	5,335	123,951	129,286
Finance costs	(255)	(2,298)	(2,553)
Profit before taxation	5,080	121,653	126,733
Taxation	-	-	-
Profit for year/total comprehensive income	5,080	121,653	126,733
Return per Ordinary Share	6.87p	164.53p	171.40p

BMO PRIVATE EQUITY TRUST PLC

Balance Sheet

	As at 31 March 2022	As at 31 March 2021	As at 31 December 2021
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	'000
Non-current assets
Investments at fair value through profit or loss	496,873	417,444	483,047
Current assets
Other receivables	249	285	230
Cash and cash equivalents	23,986	10,679	32,702
	24,235	10,964	32,932
Current liabilities
Other payables	(13,312)	(5,543)	(6,610)
Interest-bearing bank loan	(15,828)	(47,267)	(15,726)
	(29,140)	(52,810)	(22,336)
Net current (liabilities)/assets	(4,905)	(41,846)	10,596
Total assets less current liabilities	491,968	375,598	493,643
Non-current liabilities
Interest-bearing bank loan	(20,385)	(20,182)	(20,196)
Net assets	471,583	355,416	473,447
Equity
Called-up ordinary share capital	739	739	739
Share premium account	2,527	2,527	2,527
Special distributable capital reserve	15,040	15,040	15,040
Special distributable revenue reserve	31,403	31,403	31,403
Capital redemption reserve	1,335	1,335	1,335
Capital reserve	420,539	304,372	422,403
Shareholders' funds	471,583	355,416	473,447
Net asset value per Ordinary Share	637.78p	480.67p	640.30p

BMO PRIVATE EQUITY TRUST PLC

Reconciliation of Movements in Shareholders' Funds

 

	Three months ended 31 March 2022	Three months ended 31 March 2021	Year ended 31 December 2021
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Opening shareholders' funds	473,447	359,483	359,483
Profit/(loss) for the period/total comprehensive income	2,033	(1,117)	126,733
Dividends paid	(3,897)	(2,950)	(12,769)
Closing shareholders' funds	471,583	355,416	473,447

 

 

Notes (unaudited)

1.  The unaudited quarterly results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 31 December 2021.  Earnings for the three months to 31 March 2022 should not be taken as a guide to the results for the year to 31 December 2022.

2.  Investment management fee:

	Three months ended 31 March 2022   (unaudited)			Three months ended 31 March 2021   (unaudited)			Year ended 31 December 2021    (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment management  fee - basic fee	110	994	1,104	84	757	841	394	3,546	3,940
Investment management  fee - performance fee	-	5,245	5,245	-	-	-	-	4,502	4,502
	110	6,239	6,349	84	757	841	394	8,048	8,442

3.  Finance costs:

	Three months ended 31 March 2022   (unaudited)			Three months ended  31 March 2021   (unaudited)			Year ended 31 December 2021   (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Interest payable on bank loans	59	534	593	61	551	612	255	2,298	2,553

4.  Returns and net asset values

	Three months ended 31 March 2022   (unaudited)	Three months ended  31 March 2021   (unaudited)	Year ended 31 December 2021   (audited)
The returns and net asset values per share are based on the following figures:
Revenue Return	£912,000	£160,000	£5,080,000
Capital Return	£1,121,000	(£1,277,000)	£121,653,000
Net assets attributable to shareholders	£471,583,000	£355,416,000	£473,447,000
Number of shares in issue at the period end	73,941,429	73,941,429	73,941,429
Weighted average number of shares in issue during the period	73,941,429	73,941,429	73,941,429

5.  The financial information for the three months ended 31 March 2022, which has not been audited or reviewed by the Company's auditor, comprises non-statutory accounts within the meaning of Section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 December 2021, on which the auditor issued an unqualified report, will be lodged shortly with the Registrar of Companies.  The quarterly report will be available shortly on the Company's website www.bmoprivateequitytrust.com

Legal Entity Identifier: 2138009FW98WZFCGRN66

For more information, please contact:

Hamish Mair (Investment Manager)	0131 718 1184
Scott McEllen (Company Secretary)	0131 718 1137
[e-mail]   / [e-mail]

 

END

 

 

QRFEAESKASXAEFA