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Apax Global Alpha Ld (APAX)

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Wednesday 14 August, 2019

Apax Global Alpha Ld

2019 Interim Results Highlights

RNS Number : 9423I
Apax Global Alpha Limited
14 August 2019
 

(LSE: APAX)

 

 

Apax Global Alpha Limited

Unaudited interim results for the half-year ended 30 June 2019

 

For further information regarding the announcement of AGA's 2019 interim results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com. 

 

 

Key highlights

 

·      1H19 Total NAV Return1 was +13.4% (+12.9% constant currency)2. LTM3 Total NAV Return1 was +14.4% (+12.2% constant currency)2 reflecting primarily strong performance of the Private Equity portfolio

·      First semi-annual dividend of 4.86 pence per share declared, equivalent to 2.5% of euro NAV at 30 June

 

 

Outstanding commitments and funding sources

 

·      AGA was 91% invested with net cash after liabilities of €96.2m4

·    Outstanding commitments to the Apax Funds (together with recallable distributions and new AX commitment) amounted to €636.8m (62% of NAV) with funding sources of €1,174.5m (114% of NAV). Funding sources comprise Private Equity Investments of €582.9m, Derived Investments of €355.4m, undrawn facility of €140.0m, cash of €116.3m and net current liabilities of €20.1m

 

Interim performance highlights

 

·      The contributions to Total NAV Return1 of +13.4% were: Private Equity +12.8%, Derived Investments +0.9%, FX +0.5% and costs and other movements -0.8%

·      Derived Debt and Derived Equity contributed +1.0% and -0.1% respectively to Total NAV Return1

·      Total Return1 of Private Equity was +20.5% (+20.3% constant currency). Derived Debt delivered Total Return1 of +5.4% (+4.8% constant currency). Derived Equity had a Total Return1 of +0.9% (-0.7% constant currency)

·      Aggregate Gross IRR5 and Gross MOIC5 on Private Equity four full exits was 24.0% and 2.8x

·      Gross IRR6 and Gross MOIC6 on two Derived Debt exits was 13.4% and 1.2x and on four Derived Equity exits was 35.0% and 1.3x 

 

 

Adjusted NAV7 movements

Private Equity

€m

Derived Investments

€m

Cash

 

€m

Facility drawn

€m

Other

 

€m

1H19 Total

€m

LTM3

Total

€m

Adjusted NAV at 31.12.18

591.5

320.6

17.3

-

1.4

930.8

943.9

+ Investments

19.5

             82.3

(76.5)

-

(25.3)

-

-

 - Divestments

(148.5)

(50.4)

196.0

-

2.9

-

-

+ Interest and dividend income

-

               -  

7.7

-

0.7

8.4

18.0

+/- Unrealised gains/(losses)

119.2

              (2.6)

-

-

-

116.6

120.3

+/- Realised gains/(losses)

-

2.4

-

-

-

2.4

(15.7)

+/- FX gains8

1.2

               3.1

0.1

-

-

4.4

20.2

+/- Costs and other movements

-

               -  

(4.6)

-

0.2

(4.4)

(8.7)

 - Dividends paid

-

               -  

(23.7)

-

-

(23.7)

(47.4)

+/- Performance fee reserve

(2.6)

               -  

-

-

-

(2.6)

1.3

+/- Revolving credit facility

     drawn/repaid

-

               -  

-

-

-

-

-

Adjusted NAV at 30.06.19

580.3

355.4

116.3

-

(20.1)

1,031.9

1,031.9

                 

 

 

Private Equity portfolio highlights

 

·      Private Equity portfolio delivered a strong performance with a Total Return1 of +20.5% (+20.3% constant currency)

·      Unrealised gains were €119.2m and favourable FX movements were €1.2m

·      On a look-through basis, AGA invested or committed c.€87.9m in seven new investments

·      Calls of €19.5m were paid to AIX (€13.3m), ADF (€6.0m) and AMI (€0.2m)

·      Distributions totalled €148.5m; €5.3m from AIX in relation to ThoughtWorks and Manappuram Finance, €142.5m from AVIII in relation to AssuredPartners and Exact Software, €0.7m from AMI in relation to Ten Petroleum and Max

·      Aggregate Gross IRR5 and Gross MOIC5 on full exits was 24.0% and 2.8x

·      FX exposure of c.52% in US dollar denominated investments

·      Tech & Telco was the most heavily weighted sector, accounting for 34% of the Private Equity portfolio

·      Private Equity portfolio is diversifying across fund vintages

 

Private Equity - operational metrics

30 June 2019

31 December 2018

Portfolio year-over-year LTM revenue growth9

12.2%

13.9%

Portfolio year-over-year LTM EBITDA growth9

12.6%

17.7%

Enterprise Value / EBITDA valuation multiple9

15.3x

13.9x

Net debt / EBITDA multiple9

3.9x

4.0x

Number of new investments in the half year10

7

3

Number of exits in the half year11

4

2

         

 

 

Derived Investments portfolio highlights

 

·      A combination of Derived Debt Total Return1 of +5.4% (+4.8% constant currency) and Derived Equity Total Return1 of +0.9% (-0.7% constant currency) led to an overall Total Return1 of +3.7% for Derived Investments (+2.6% constant currency)

·      Realised gains were €2.4m and unrealised losses of €2.6m stood against income of €8.4m and positive FX movements of €3.1m

·      New investments of €82.3m12 were weighted towards debt, as six new debt positions were added to the Derived Debt portfolio compared to two equity investments in the period

·      AGA exited two debt investments and four equity investments with proceeds of €50.4m13

·      Gross IRR6 on Derived Debt exits was 13.4% and Gross MOIC6 was 1.2x. Gross IRR6 on Derived Equity exits was 35.0% and Gross MOIC6 was 1.3x

·      FX exposure of c.57% in US dollar denominated investments

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

·      Portfolio split between Derived Debt and Derived Equity was 65% and 35% respectively

 

Derived Investments - operational metrics

 

30 June 2019

31 December 2018

Debt year-over-year LTM EBITDA growth14

 

17.3%

7.9%

Debt average income yield to maturity14

 

9.9%

10.8%

Debt average years to maturity

 

6.2

6.2

Debt average income yield15

 

9.5%

10.8%

Equity year-over-year LTM earnings growth16

 

14.9%

19.2%

Equity price-to-earnings ratio16

 

20.8x

18.5x

Number of investments in the half year12

 

7

6

Number of full exits in the half year13

 

6

10

 

 

 

Other Invested Portfolio highlights

 

·      Exposures remained weighted towards Private Equity at 62% and Derived Investments of 38%

·      FX exposure c.57% in US dollar denominated investments

 

 

Invested Portfolio analysis17 

€m

€m

%

%

Private Equity

582.9

 

62%

 

-       AMI

 

       22.4

 

2%

-       AEVI

 

       5.8

 

1%

-       AEVII

 

       73.3

 

8%

-       AVIII

 

     255.5

 

27%

-       AIX

 

     214.5

 

23%

-       ADF

 

       11.4

 

1%

Derived Investments

355.4

 

38%

 

-       Derived Debt

 

232.1

 

25%

-       Derived Equity

 

     123.3

 

13%

Total

938.3

938.3

100%

100%

 

Sector mix

 

 

€m

Invested Portfolio17

%

Private

Equity

%

Derived Investments

%

Tech & Telco

 

36%

34%

41%

Services

 

26%

21%

37%

Healthcare

 

24%

24%

22%

Consumer

 

12%

18%

0%

Digital

 

1%

2%

0%

Other

 

1%

1%

1%

Total

938.3

100%

100%

100%

 

Geographic analysis

 

 

€m

Invested Portfolio17

%

Private

Equity

%

Derived Investments

%

North America

 

51%

49%

53%

Europe

 

23%

28%

16%

United Kingdom

 

8%

7%

12%

Israel

 

4%

5%

0%

India

 

7%

5%

10%

China

 

2%

2%

3%

Rest of World

 

5%

4%

6%

Total

938.3

100%

100%

100%

 

Summary of top 30 investments in Private Equity and Derived Investments

Valuation

€m

NAV

%

Top 30 Private Equity portfolio (look-through basis) - AGA's indirect exposure

 

 

ThoughtWorks

55.6

5%

Cole Haan

48.5

5%

Acelity

39.7

4%

Idealista

38.2

4%

Engineering

36.9

4%

Unilabs

36.7

4%

Vyaire Medical*

35.6

3%

Neuraxpharm

32.3

3%

EVRY*

30.1

3%

Duck Creek Technologies

28.4

3%

Paycor*

27.5

3%

Trade Me*

23.6

2%

Candela

21.9

2%

AssuredPartners

20.6

2%

Wehkamp

19.9

2%

Safetykleen*

19.6

2%

MATCHESFASHION.COM

18.0

2%

ECi Software Solutions*

17.6

2%

Quality Distribution*

16.5

2%

Authority Brands

16.2

2%

Shriram City Union

11.6

1%

Tosca Services

11.0

1%

Boats Group*

10.6

1%

Genius Sports

10.0

1%

Attenti

8.6

1%

Tivit

8.2

0%

Go Global Travel

8.2

0%

Psagot

7.8

0%

Healthium

7.5

0%

Kepro

7.5

0%

Other (Other investments, carried interest, facility & non-current assets)

 (91.5)

(9%)

Total Private Equity

582.9

56%

 

 

 

Derived Investments portfolio

 

 

Paycor*

23.7

2%

KRKA

22.1

2%

Syncsort

21.9

2%

Exact Software

20.0

2%

Quality Distribution*

17.5

2%

Rocket software

17.1

2%

Vyaire Medical*

15.3

1%

Development Credit Bank

14.1

1%

PowerSchool

13.3

1%

ECi Software Solutions*

13.1

1%

AccentCare

13.1

1%

Alexander Mann

12.8

1%

Trade Me*

12.6

1%

AmeriLife 1L

12.4

1%

Airtel Africa

11.3

1%

Sinopharm

11.0

1%

Sophos*

10.4

1%

Lonza

9.9

1%

Safetykleen*

9.6

1%

QAD

8.8

1%

LegalShield

8.8

1%

Can Fin Homes

7.0

1%

Strides Pharma Science

6.7

1%

Just Group

6.6

1%

Repco Home Finance

6.5

1%

Boats Group*

5.9

1%

Veritext

4.4

1%

AmeriLife 2L

4.4

0%

EVRY

4.4

0%

ServPro

3.5

0%

Other

7.2

1%

Total Derived Investments

355.4

34%

 

 

 

Total Invested Portfolio

938.3

91%

Cash

116.3

11%

Revolving credit facility drawn

0.0

0%

Net current liabilities

         (20.1)

(2%)

Total NAV

1,034.5

100%

Performance fee reserve

(2.6)

 

Total Adjusted NAV

1,031.9

 

 

 

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

 

"AGA's interim results have been exceptional and the strongest since IPO. NAV has also grown to over €1bn, an important milestone. The Board is also pleased to have approved a healthy dividend to shareholders"

 

 

Ralf Gruss, COO of Apax Partners, said:

 

"The strong operational momentum and exits of the Private Equity portfolio continued into 2019, translating into value accretion and good performance for AGA. In addition, I'm pleased that AGA has committed $450m to the new Apax Partners fund, Apax X which will help diversify AGA's exposure to vintages and investments."

 

For more information, the Company's quarterly results presentation is available to view at: www.apaxglobalalpha.com   

 

 

 

Contact details

 

 

 

 

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.

LTM = Last Twelve Months to 30 June 2019

 

4.

Net cash after liabilities of €96.2m calculated by taking cash of €116.3 less net current liabilities of €20.1m at 30 June 2019

 

5.

Aggregate Gross IRR and Gross MOIC on full exits calculated based on the expected aggregate cash flows in euro across all funds for the deals transacted in the period; Exact and Assured Partners closed in May 2019 and Acelity and Electro stocks were signed in May 2019 and June 2019 respectively. They are expected to close in 2H19 and Gross IRR and MOIC are subject to change once final proceeds have been received. Gross IRR represents concurrent Gross IRR

 

6.

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

 

7.

Adjusted NAV represents NAV of €1,034.5m adjusted for the performance fee reserve of €2.6m at 30 June 2019

 

8.

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

 

9.

Gross Asset Value weighted average of the respective metric across the portfolio. At June 2019 and December 2018, 14 and 12 investments were respectively excluded as these are financial services companies often valued on book value or for which earnings financials are not available e.g. complex carve-outs or growth investments. For EV/EBITDA and net debt/EBITDA figures exclude MATCHESFASHION.COM and Vyaire Medical due to low EBITDA from opex investments and short-term fluctuations in EBITDA respectively. The December 2018 comparative for LTM revenue growth and LTM EBITDA growth initially excluded MATCHESFASHION.COM and Vyaire Medical, as these have been included in the June 2019 metrics the comparative has been amended for their inclusion accordingly

 

10.

New investments in the first six months of 2019. Fractal Analytics closed in February 2019; Trade Me and AssuredPartners closed in May 2019 and Huayue Education closed in June 2019. Inmarsat was signed in March 2019, Baltics Classifieds Group was signed in June 2019 and both are expected to close in 2H19. Additionally a new services investment was signed in June 2019 but remains subject to customary closing procedures

11.

Represents exits which were closed and signed but not yet closed in 1H19. Both AssuredPartners and Exact Software closed in May 2019. Acelity and Electro Stocks signed in May 2019 and June 2019 respectively and are expected to close in 2H19

 

12.

Represents exits which were closed and signed but not yet closed in 1H19. Both AssuredPartners and Exact Software closed in May 2019. Acelity and Electro Stocks signed in May 2019 and June 2019 respectively and are expected to close in 2H19

 

13.

Investments of €82.3m consists of €65.5m from six new debt investments, €14.8m from two equity positions (€13.3m in one new position Airtel Africa and €1.5m add-on to existing position QAD) and €2.0m related to debt and equity received as part of the restructuring of FullBeauty in February 2019

 

14.

Gross Asset Value weighted average of the respective metric across the Derived Investments Debt portfolio

 

15.

Gross Asset Value weighted average of the current full year income (annual coupon/clean price as at the respective date) for each debt position in the Derived Debt portfolio as at the respective date

 

16.

Gross Asset Value weighted average of the respective metric across the Derived Investments Equity portfolio. (QAD was excluded from LTM earnings growth and P/E ratio due to negative earnings and Answers was excluded as information was not available)

 

17.

Invested Portfolio excludes cash and cash equivalents, revolving credit facility drawn and net current liabilities; including these, the NAV is €1,034.5m. Adjusted NAV excludes the performance fee reserve of €2.6m and is €1,031.9m at 30 June 2019

 

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. Funds advised by Apax Partners invest in companies across four global sectors of Tech & Telco, Services, Healthcare and Consumer. These funds provide longterm equity financing to build and strengthen worldclass 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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