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7 Mar 2017 07:00
Please be advised that this announcement may contain inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014 ("MAR")
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.
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"
FOR IMMEDIATE RELEASE
7 March 2017
(LSE: APAX)
Apax Global Alpha Limited
Annual Results for the period ended 31 December 2016
For further information regarding the announcement of AGA's 2016 annual results, including the details for today's analyst and investor conference call at 9.30am (UK time), please visit www.apaxglobalalpha.com/shareholder-information/results-and-publications
Financial highlights
· Adjusted NAV increased by €15.1m to €938.7m during the 12 months to 31 December 2016, driven by broadly equal contributions from the Private Equity and Derived Investment portfolios.
· Payment of two semi-annual dividends totalling €45.9m and equalling the annual target dividend yield of 5% of NAV
· Adjusted NAV per share of €1.91 (£1.63) after total dividends paid of 9.35 euro cents (7.64 pence sterling) per share, compared to Adjusted NAV per share of €1.88 (£1.38) at 31 December 2015
· Total NAV Return during the year of 6.6%, representing largely flat performance during the first half but strong performance during the second half
· AGA was 96% invested and had a cash balance of €33.9m as at year end
Investment highlights
· Commitment of c.$350m to Apax IX finalised
· Private Equity exposure increased to 55% and Derived Investments were 45%
· Sector exposure spread across all Apax Partners' focus industries. Tech & Telco was the most heavily weighted sector, accounting for 37% of the invested portfolio
· Geographic bias towards North America, representing 55% of the invested portfolio reflecting continuing attractive opportunities in the US
Performance
· Portfolio delivered a Total NAV Return of 6.6% during the year, driven by H2 2016 Total NAV Return of 7.2%
· Performance also benefited from the portfolio's exposure to investments denominated in US dollars, generating an FX gain of 2.7% due to the Investment Manager's view that more attractive investment opportunities were available in the US
· Derived Debt Investments delivered a Total Return of 6.2% driven by income, whilst Derived Equity Investments delivered 5.5% with positive contribution from all performance elements
· Private Equity delivered 6.6% Total Return, reflecting value creation arising from both operational performance and slightly higher valuation multiples of the portfolio companies
Private Equity - Operational Metrics | 31 December 2015 | 31 December 2016 | |
Portfolio year-over-year Last Twelve Months (LTM) revenue growth(1) | 7.8% | 6.1% | |
Portfolio year-over-year LTM EBITDA growth(1) | 9.0% | 9.8% | |
Average EV/EBITDA multiple(1) | 12.4x | 12.9x | |
Average net debt / EBITDA(1) | 4.6x | 4.4x | |
Number of new investments in the year (2) | 13 | 5 | |
Number of exits in the year (2) | 10 | 12 |
· Private Equity portfolio highlights
o Apax Funds returned €68.8m to AGA and €58.4m was called from AGA by the Apax Funds, which includes €15.2m of prior distributions recalled during the year
o Unrealised gains were €26.3m and favourable FX movements were €9.3m
o Apax VIII closed four investments (Engineering, Duck Creek Technologies, Invent Neurax and Vyaire Medical) and Apax IX closed its first investment (Boats Group) and announced a second (Unilabs)
o Aggregate Gross IRR generated on fully exited investments was 29.9%(10)
Derived Investments - Operational Metrics | 31 December 2015 | 31 December 2016 | |
Yield to maturity(3) of debt investments | 11.5% | 12.0% | |
Average years to maturity for debt investments | 6.1 | 5.7 | |
Average income yield(4) of debt investments | 9.6% | 9.6% | |
Year-over-year LTM EBITDA growth debt investments(5) | 5.0% | 2.7% | |
Year-over-year LTM earnings growth equity investments(6) | 14.8% | 32.0% | |
Average P/E multiple(7) of equity investments | 20.0x | 23.5x | |
Number of new investments in the year (8) | 16 | 11 | |
Number of full exits in the year (9) | 8 | 17 |
· Derived Investments portfolio highlights
o AGA fully exited eight debt investments and nine equity investments. Including proceeds from partial realisations, €204.1m was realised during the year
o The 12 months to 31 December 2016 saw unrealised losses of €17.6m, realised gains of €6.6m, income generated of €32.5m, all of which excludes FX gains of €12.7m
o AGA completed five new investments in debt, and six new investments in equity, amounting to €174.0m
o Aggregate Gross IRR generated on fully exited investments was 13.2%
Commenting on the results, Tim Breedon CBE, Chairman of Apax Global Alpha, said:
"It is my pleasure to present AGA's 2016 full year results. Both the Private Equity and Derived portfolios saw stronger performance during the second half of the year after largely flat performance during the first half.
The annual Total NAV Return of 6.6% is set against a volatile market backdrop influenced by economic and political events across the globe. AGA's ability to create value during times of volatility reinforces our belief that AGA represents an attractive long-term investment to our shareholders."
Commenting on AGA's investment focus, Ralf Gruss, COO of Apax Partners, said:
"In a year during which financial markets have been overshadowed by the political agenda in both Europe and the US, returns generated on AGA's fully exited investments remained strong during the year. With its commitment to Apax IX, AGA achieved another milestone allowing it to further diversify its private equity investments over time.
The Apax Funds expect to continue their approach of investing in opportunities where the key value creation drivers are largely independent from the macro environment. Apax Partners will continue to advise AGA's manager to identify value opportunities in Derived Investments in a market environment where prices remain elevated across many asset classes."
Financial highlights
Private Equity €m | Derived Investments €m | Cash
€m | Others
€m | Total
€m | |
Adjusted NAV at 31 December 2015 | 469.4 | 432.4 | 22.9 | (1.1) | 923.6 |
+ Investments | 58.4 | 174.0 | (231.9) | (0.5) | - |
- Divestments | (68.8) | (204.1) | 268.5 | 4.4 | - |
+ Interest and dividend income | - | - | 30.6 | 1.9 | 32.5 |
+/- Unrealised FV movement | 26.3 | (17.6) | - | - | 8.7 |
+/- Realised FV movement | - | 6.6 | - | - | 6.6 |
+/- FX gains | 9.3 | 12.7 | 2.5 | - | 24.5 |
+/- Costs and others | - | - | (10.7) | (0.2) | (10.9) |
- Dividends paid | - | - | (45.9) | - | (45.9) |
+/- Performance fee reserve | (0.5) | 2.2 | (2.1) | - | (0.4) |
Adjusted NAV at 31 December 2016 | 494.1 | 406.2 | 33.9 | 4.5 | 938.7 |
Invested portfolio analysis at 31 December 2016
Asset class
|
€m |
€m |
% |
% |
Private Equity | 498.8 | 55% | ||
- AMI | 4.2 | 1% | ||
- AEVI | 2.0 | 1% | ||
- AE VII | 63.3 | 7% | ||
- AVIII | 432.6 | 47% | ||
- AIX* | (3.3) | (1%) | ||
Derived Investments | 412.8 | 45% | ||
- Debt | 284.9 | 31% | ||
- Equities | 127.9 | 14% | ||
Total | 911.6 | 911.6 | 100% | 100% |
*AIX value is negative as it has drawn on the capital call facility as a bridge to the first capital call for new investments in the fund and to pay fund start-up costs and fees
Sector mix |
€m | Invested portfolio % | Private Equity % | Derived Investments % |
Tech & Telco | 334.8 | 37% | 38% | 35% |
Services | 232.6 | 25% | 28% | 22% |
Healthcare | 202.9 | 22% | 19% | 27% |
Consumer | 132.4 | 15% | 14% | 15% |
Other | 8.9 | 1% | 1% | 1% |
Total | 911.6 | 100% | 100% | 100% |
Geographic analysis |
€m | Invested portfolio % | Private Equity % | Derived Investments % |
North America | 497.9 | 55% | 47% | 64% |
UK | 31.5 | 3% | 1% | 6% |
Rest of Europe | 251.8 | 28% | 39% | 13% |
India | 74.0 | 8% | 7% | 10% |
China | 17.3 | 2% | 1% | 3% |
Rest of World | 39.1 | 4% | 5% | 4% |
Total | 911.6 | 100% | 100% | 100% |
Summary of top 10 investments in Private Equity and Derived Investments
Valuation €m | NAV % | |
Top 10 Private Equity | ||
GlobalLogic Inc | 51.3 | 5% |
EVRY AS | 51.3 | 5% |
Azelis S.A. | 40.2 | 4% |
Assured Partners | 36.5 | 4% |
Exact Software | 34.1 | 4% |
One Call / Align | 22.2 | 2% |
Wehkamp | 21.3 | 2% |
Idealista | 20.0 | 2% |
Engineering | 19.7 | 2% |
Invent Neurax | 19.1 | 2% |
Other | 183.1 | 20% |
Total Private Equity | 498.8 | 52% |
Top 10 Derived Investments | ||
Ellucian | 31.1 | 3% |
Acelity (Kinetic Concepts) | 30.9 | 3% |
Full Beauty | 26.3 | 3% |
Unilabs | 21.0 | 2% |
Genex | 21.0 | 2% |
A listed equity position* | 20.7 | 2% |
Azelis S.A. | 20.4 | 2% |
Assured Partners | 19.2 | 2% |
Advantage Sales & Marketing | 18.7 | 2% |
Rentpath | 18.5 | 2% |
Other | 185.0 | 21% |
Total Derived Investments | 412.8 | 44% |
Total Investments | 911.6 | 96% |
Cash | 33.9 | 4% |
Net current assets | 4.5 | 0% |
Total NAV | 950.0 | 100% |
Performance fee reserve | (11.3) | |
Total Adjusted NAV | 938.7 |
* Name of position is not disclosed as AGA is considering position for further investment
Contact details
Investor enquiries | Media enquiries | ||
Sarah Wojcik | Alex Wessendorff | ||
Telephone: +44 (0)20 7872 6573 | Telephone: +44 (0)20 7872 6461 | ||
Email: sarah.wojcik@apax.com | Email: alex.wessendorff@apax.com | ||
Company Secretary | |||
Jacques Colley | |||
Telephone: +44 (0)1481 749 700 | |||
Email: AGA-admin@aztecgroup.co.uk | |||
Notes
1. 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.
2. 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.
Footnotes
(1) Represents the weighted average of the respective metrics across the underlying portfolio companies, using latest available information
(2) Represents investments and exits during the year ended at the indicated date. During 2016, there were five new investments (Engineering, Vyaire Medical, Duck Creek, Invent Farma and Boats Group), eight closed full exits (King, Rhiag, Auto Trader, Tommy Hilfiger China, Sisal, Plantasjen, Epicor and Trader Corporation) and four closed partial exits represented by the partial secondary sales of Ascential, Capio, Chola and Garda shares. The above number of exits excludes the recapitalisation of Evry during Q2 2016, Ideal Protein during Q3 2016 and GlobalLogic during Q4 2016.
(3) GAV weighted average yield to maturity (YTM) of the Derived Debt Investments
(4) GAV weighted average of the current full year income (annual coupon/clean price as at 31 December 2016) for each debt position in the Derived Debt Investments at 31 December 2016
(5) GAV weighted average of latest available EBITDA growth, since prior year, of the underlying Derived Debt Investments
(6) GAV weighted average of the latest earnings growth, since prior year, of the underlying Derived Equity Investments
(7) GAV weighted Price Earnings multiple of Derived Equity Investments
(8) New investments in debt in the 12 months to 31 December 2016 were in Ellucian, Vertafore, Acelity, Cole Haan and Unilabs, and new equity positions included Edelweiss, Sophos, Fortinet, Palo Alto, TAKE and Geometric. This excludes the follow-on investment into Strides Shasun and new positions, where the Investment Manager is looking to increase AGA's exposure. These positions will be disclosed once the Investment Manager completes this process
(9) Derived Debt disposals in year ended 31 December 2016 consisted of Exact and Hema first lien debt, and Physiotherapy Associates, Berlin Packaging, Peak10, Acelity, Unilabs and Compuware second lien debt. Equity positions from Greene King, Karur Vysara Bank, Sinopharm, Zhaopin, Alkem, LIC Housing, Hinduja Global Solutions, Edelweiss, and Smart Technologies. This excludes positions where the Investment Manager is looking to reduce AGA's exposure. These positions will be disclosed once the Investment Manager completes this process
(10) Returns shown represent gross returns to the Apax Funds, i.e. AMI, Apax VIII, Apax Europe VII, Apax Europe VI. It also includes total invested cost, total realised value to date and unrealised value at 31 December 2016
About Apax Global Alpha Ltd
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 (NAV).
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 LLP ("Apax Partners") is a leading global private equity advisory firm. It operates globally and has more than 30 years of investing experience. Apax Partners has advised funds that total over €40 billion in aggregate as at 31 December 2016*. 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 LLP is authorised and regulated by the Financial Conduct Authority in the UK.
* Funds raised since 1981, commitments converted from fund currency to EUR at FX rates as at December 2016