2018 Final Results

RNS Number : 8103R

Apax Global Alpha Limited

05 March 2019

 

(LSE: APAX)

Apax Global Alpha Limited

Annual results for the year ended 31 December 2018

For further information regarding the announcement of AGA's 2018 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 Return¹ was +7.1% (+5.4% constant currency)² reflecting strong operational performance of the Private Equity portfolio and a positive contribution from Derived Debt

·      Second semi-annual dividend of 4.12 pence per share declared, equivalent to 2.5% of euro NAV at 31 December 2018. Dividend will be paid on 5 April 2019

Outstanding commitments and funding sources

·      AGA was 98% invested with a net cash balance of €17.3m. The facility was undrawn at the end of the period

·      Outstanding commitments to the Apax Funds (together with recallable distributions) amounted to €251.8m (27% of NAV) with funding sources of €479.3m (51% of NAV). Funding sources comprise Derived Investments of €320.6m, undrawn facility of €140.0m, net cash of €17.3m and net current assets of €1.4m

Performance highlights

·      The contributions to Total NAV Return¹ of +7.1% were Private Equity +9.2%, Derived Investments -2.5%, FX +1.7% and costs and other movements -1.3%

·      Derived Debt contributed +0.4% and Derived Equity -2.9% to Total NAV Return¹

·      Total Return of Private Equity was 17.4% (15.9% constant currency). Derived Debt delivered Total Return of 4.5% (0.3% constant currency). Derived Equity had negative Total Return of -17.6% (-17.4% constant currency).

·      Aggregate Gross IRR³ and Gross MOIC³ on Private Equity full exits was 50.2% and 4.3x. The 2018 full exits were achieved at a 22% uplift to the last Unaffected Valuation⁴.

·      Gross IRR⁵ and Gross MOIC⁵ on Derived Debt exits was 11.0% and 1.2x and on Derived Equity exits was -15.8% and 0.9x  

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

"AGA's results demonstrate the value accretion potential of our strong portfolio over the long-term."

Ralf Gruss, COO of Apax Partners, said:

"AGA delivered positive returns in a year where most markets turned negative. The Private Equity portfolio had pleasing returns driven by the strong operational momentum in the portfolio companies and three lucrative exits. In Derived Investments, the quality of the Derived Debt portfolio allowed for outperformance against credit markets. Listed equity investments however disappointed and could not withstand market volatility."

Adjusted NAV6 movements	Private Equity €m	Derived Investments €m		Cash €m		Facility drawn €m	Other €m	2018 Total €m
Adjusted NAV at 31 December 2017	586.1		307.2		19.0	-	0.1	912.4
+ Investments	43.5		212.5		(254.8)	-	(1.2)	-
- Divestments	(134.9)		(176.5)		308.2	-	3.2	-
+ Interest and dividend income	-		-		19.6	-	(0.3)	19.3
+/- Unrealised gains/(losses)	84.3		(31.2)		-	-	-	53.1
+/- Realised gains/(losses)	-		(11.4)		-	-	-	(11.4)
+/- FX gains/(losses)7	8.4		6.6		0.1	-	-	15.1
+/- Costs and other movements	-		-		(12.8)	-	(0.4)	(13.2)
- Dividends paid			-		(46.6)	-	-	(46.6)
+/- Performance fee reserve	4.1		13.4		(15.4)	-	-	2.1
+/- Revolving credit facility      drawn/repaid	-		-		-	-	-	-
Adjusted NAV at 31 December 2018	591.5		320.6		17.3	-	1.4	930.8

Private Equity portfolio highlights

·      Private Equity portfolio delivered a strong performance with a Total Return¹ of 17.4% (15.9% constant currency)

·      Unrealised gains were €84.3m and favourable FX movements were €8.4m

·      AGA is expecting calls of at least €62m⁸ during 2019 relating to the 2018 investment activity and fees of the Apax Private Equity funds

·      On a look-through basis, AGA invested in eight new companies and one add-on investment committing c.€73.3m and AGA also purchased two carried positions in AEVI and AEVII amounting to €11.1m

·      The Apax Funds returned €134.9m to AGA, mainly from the sale of Azelis (€72.0m) and GlobalLogic (€34.2m)

·      Aggregate Gross IRR³ and Gross MOIC³ on full exits was 50.2% and 4.3x

·      FX exposure of c.51% in US dollar denominated investments

·      Tech & Telco was the most heavily weighted sector, accounting for 36% of the Private Equity portfolio

·      Private Equity portfolio is maturing with 86% of Private Equity investments from 2014-2018 vintage

Derived Investments portfolio highlights

·      A combination of a Derived Debt Total Return¹ of 4.5% (0.3% constant currency) and negative returns from the Derived Equity portfolio of -17.6% (-17.4% constant currency) led to an overall negative Total Return¹ of -6.0% for Derived Investments (-8.0% constant currency)

·      Realised losses were €11.4m and unrealised losses of €31.2m stood against income of €19.3m and positive FX movements of €6.6m. 81% of gross losses were from Derived Equity

·      AGA completed eleven new investments in debt and eleven⁹ equity investments amounting to €212.5m

·      AGA exited twelve¹⁰ debt investments generating proceeds of €112.8m. There were twelve¹⁰ exits in equities with proceeds of €63.7m

·      Gross IRR⁵ on Derived Debt exits was 11.0% and Gross MOIC⁵ was 1.2x. Gross IRR⁵ on Derived Equity exits was -15.8% and Gross MOIC⁵ was 0.9x

·      FX exposure of c.62% in US dollar denominated investments

·      Services was the most heavily weighted sector, accounting for 41% of the Derived Investments portfolio

·      Portfolio split between Derived Debt and Derived Equity was 56% and 44% respectively

Other Invested Portfolio highlights

·      Exposures remained skewed towards Private Equity at 65% and Derived Investments of 35%

·      FX exposure c.55% in US dollar denominated investments

Invested Portfolio11 analysis	€m	€m	%	%
Private Equity	591.5		65%
-       AMI		20.6		2%
-       AEVI		5.3		1%
-       AEVII		59.5		6%
-       AVIII		342.3		38%
-       AIX		160.2		18%
-       ADF		3.6		0%
Derived Investments	320.6		35%
-       Derived Debt		178.3		19%
-       Derived Equity		142.3		16%
Total	912.1	912.1	100%	100%

For more information, the Company's 2018 annual results presentation is 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.     Total NAV Return means the movement in the Adjusted NAV per share over the period plus any dividends paid. Total Return reflects the sub-portfolio performance on a stand-alone basis. It excludes items at overall AGA level such as cash, management fees and costs

2.     Constant currency returns calculated the same as Total NAV Return adjusted to remove the impact of FX

3.     Aggregate Gross IRR and Gross MOIC on full exits calculated based on the aggregate cash flows in euro across all funds for the deals realised in the year; Genex which closed in March 2018, GlobalLogic which closed in August 2018 and Azelis which closed in November 2018. Gross IRR represents concurrent Gross IRR

4.     Gross IRR and Gross MOIC calculated based on aggregate euro cash flows since inception of deals realised during the year

5.     Unaffected Valuation is determined as the fair value in the last quarter before exit, when valuation is not affected by the exit process (i.e. because an exit was signed, or an exit was sufficiently close to being signed that the Apax Funds incorporated the expected exit multiple into the quarter end valuation)

6.     Adjusted NAV represents NAV of €930.8m - there is no performance fee reserve at 31 December 2018

7.     FX on cash includes the revaluation of cash balances and net losses arising from the differences in exchange rates between transaction dates and settlement dates, and unrealised net losses arising from the translation into euro of assets and liabilities (other than investments) which are not denominated in euro

8.     Expected calls of €62m represents current outstanding balance of facilities drawn at 31 December 2018. Balances of facilities drawn in US dollar have been converted to euro at the closing FX rate at 31 December 2018

9.     Eleven equity investments comprising nine new equity positions, one add-on position, and one position received as part of a demerger of another position

10.  Twelve debt realisations comprise of five debt positions that were called; five positions that were fully exited and two positions that amortised during the year. Twelve equity positions comprise of nine full disposals; three partial exits (of which one was a stock demerger)

11.  Invested Portfolio excludes cash and cash equivalents, revolving credit facility drawn and net current assets; including these, the NAV is €930.8m

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 and over its more than 40-year history, Apax Partners has raised and advised funds with aggregate commitments of c.€40 billion as at 31 December 2018. 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.

 

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