Apax Global Alpha Regulatory News (APAX)

Apax Global Alpha Limited

Interim Report 2023

Introduction

Apax Global Alpha Limited ("AGA" or the "Company") aims to offer shareholders superior long-term returns by providing access to Apax Private Equity Funds where value creation is accelerated through business improvement

About AGA

Public market access to private equity

AGA offers public market access to Apax Private Equity Funds (or the "Apax Funds") and their global portfolio of mostly private companies.

AGA also holds a portfolio of Derived Debt1 ("Debt portfolio" or "Debt Investments") which provides robustness to the Company's balance sheet and generates additional returns and income towards the dividend.

AGA has a premium listing and is a constituent of the FTSE 250 Index (LSE: APAX).

30 june 2023 HIGHLIGHTS

H1 2023 Total NAV Return2

2.4%

Adjusted NAV3

€1,299m

Market capitalisation at 30 June 2023

£907m

Interim dividend

5.70p

Adjusted NAV3 per share

€2.64/£2.27

Share price at 30 June 2023

£1.85

AGA shareholders

1. Excludes three positions in Derived Equity valued at €13.8m

2. Total NAV Return is an Alternative Performance Measure ("APM"). It means the return on the movement in the Adjusted NAV per share over the period plus any dividends. Further details can be seen on pages 28 and 47.

3. Adjusted NAV reflects Total NAV of € 1,301.8m, before performance fee reserve of €3.1m at 30 June 2023. Further details can be seen on pages 28 and 46

About AGA

Accessing a portfolio of hidden gems

AGA's objective is to provide shareholders with superior long-term returns through capital appreciation and regular dividends

12-15%

Target ANnual Total NAV Return across economic cycles

5%

of NAV p.a. dividend policy

Access to a portfolio of hidden gems, mostly private companies which shareholders can't buy elsewhere

Exposure to 79 portfolio companies and a portfolio of predominantly debt instruments

Mostly private companies in the Tech & Digital, Services, Healthcare, and Internet/Consumer sectors

Blue-chip investment advisor with more than 50 years of experience

"All-weather" investment strategy well-suited to generate alpha

Value creation in Private Equity driven by operational improvement

Private Equity portfolio diversified across sectors, strategies, and fund vintages

Robust balance sheet, strengthened by portfolio of debt investments

Well capitalised and with good visibility on future calls from the Private Equity Funds

Debt portfolio generating additional returns and a steady flow of income to support dividend

Key highlights

Resilient performance against an uncertain market backdrop driven by continued earnings growth across the Private Equity Funds' portfolio companies

AGA's Invested Portfolio as at 30 june 2023

71%

Private equity

We believe the Apax Funds' focus on driving alpha through operational improvement, coupled with a deep sector expertise, and prudent balance sheet management, positions the Company well for the second half of 2023.

Tim Breedon CBE

Chairman

Private Equity

Companies

79

Portfolio

Derived Investments

Debt Portfolio2

Portfolio

13%

yield to maturity

At 30 June 2023

Income

11%

Income yield

At 30 June 2023

Capital Management3

€38m

Realised proceeds and income

in H1 2023

1. Please refer to pages 13 and 17 for further details on calculations

2. Excludes three positions in Derived Equity valued at €13.8m

3. Realised proceeds and income includes income relating to debt investments and derived equity as well as bank interest received

4. Average uplift to latest unaffected valuations for full and partial exits in the first six months of 2023. See further details on page 19

Strategic report

contents

Chairman's statement

Resilient performance in challenging market conditions

The first six months of 2023 saw continuing macroeconomic challenges arising from geopolitical instability, inflation concerns, and tight labour markets. Central banks raised interest rates aggressively in the face of high inflation allied to strong wage growth and employment levels. Meanwhile, yield curves flattened indicating that while the peak in the current tightening cycle is close to being reached, rates are expected to remain higher for longer as a result of elevated core inflation expectations. Perhaps surprisingly given the uncertain market environment and higher discount rates, public equity markets rallied led by a rise in cyclical and large tech stocks.

Results

Total NAV Return for AGA was 2.4% for the six months to 30 June 2023. Adjusted NAV was €1.3bn which translates to €2.64 cents/£2.27 pence Adjusted NAV per share as at 30 June 2023.

Overall performance was supported by growth in the Private Equity portfolio and strong returns from the Company's Debt Investments. In Private Equity, Total NAV Return was 1.9% in the six months to 30 June 2023, driven by continued growth in the underlying portfolio. Meanwhile, the Debt portfolio returned 5.3% in the same period.

Portfolio update

At 30 June 2023, AGA was 93% invested, split 71% in Private Equity and 28% in Debt Investments, with the remaining 1% invested across three Derived Equity positions.

In Private Equity, the Apax Funds continued to focus on target sectors and on generating alpha by buying under-optimised assets where business improvement can lead to an acceleration in financial performance as well as an increase in relative valuation multiples compared to peers. Whilst earnings growth across the Private Equity portfolio slowed somewhat in Q2 2023, the portfolio remained resilient with average LTM EBITDA growth of 14% at 30 June 2023.

Leverage across the Apax Funds' portfolio reduced slightly to 4.4x at 30 June 2023. As highlighted at AGA's Capital Markets Day which was held in June this year, the Apax Funds' portfolio is well-positioned to weather the current interest rate environment. Over three quarters of portfolio companies have debt maturities extending beyond 2027 whilst a similar proportion of debt outstanding is at a fixed rate.

Despite a generally more difficult exit environment, AGA has received c.€35m of distributions in the past six months predominantly from three exits in the Private Equity portfolio. These were achieved at an average uplift of 24% to unaffected valuations. In the last five years AGA has received total distributions from the Apax Funds of €998m compared to calls of €651m.

In terms of investment activity, the Apax Funds remained cautious when assessing new opportunities and in the first six months of the year AGA deployed c.€11m across three new private equity investments. The pipeline for new deals is improving with a further two investments post period-end.

Turning to AGA's Debt portfolio, this consists of carefully selected investments primarily in first and second lien loans designed to complement the Private Equity portfolio. At 30 June 2023, this portfolio had a yield to maturity of 13.3% and consisted almost exclusively of floating rate instruments.

Liquidity, commitments, and funding

The Board takes a prudent approach to liquidity and capital management and AGA's liquidity position remains healthy in light of uncertain markets.

Net cash, together with the undrawn revolving credit facility ("RCF") and capital invested in Debt and the remaining Derived Equity investments, leaves AGA with resources of €693m and therefore well-positioned to meet future Private Equity calls. Unfunded commitments, including recallable distributions from the Apax Funds, reduced by €20m to €985m at 30 June 2023.

RCF RENEWAL

On 5 September 2023 AGA entered into a new multi-currency RCF of €250m with SMBC Bank International plc and JPMorgan Chase Bank, N.A., London Branch, replacing the facility held with Credit Suisse AG, London Branch. The new RCF has an initial term of 2.5 years, and the interest rate charged will be SOFR or Euribor plus a margin between 300-335bps. The existing RCF was undrawn at 30 June 2023.

Dividend

The Board has a policy to paying 5% of NAV per annum in dividends and, since IPO in 2015, AGA has paid out €411m in dividends to shareholders.

In line with this policy the Board has approved an interim dividend for 2023 of 5.7 pence per share. The dividend will be paid on 3 October 2023 to shareholders on the register of members on 15 September 2023. The shares will trade ex-dividend on 14 September 2023.

Outlook

Whilst no investment strategy can be totally immune to the current macroeconomic headwinds, we believe that the Apax Funds' focus on driving alpha through operational improvement, coupled with our prudent approach to balance sheet management, positions AGA well for the second half of 2023.

Tim Breedon CBE

Chairman

5 September 2023

Responsible Investing

Delivering value sustainably

Committed to creating long-term value and delivering sustainable returns

The Board believes that responsible investment is important in protecting and creating long-term value. The Board relies upon its Responsible Investment policy and the expertise and practices of Apax to ensure it delivers returns ethically and responsibly.

Environment, Social, and Governance ("ESG") considerations have been a core part of the investment process for Apax and the Apax Funds' portfolio companies for over a decade. The focus of Apax's ESG programme has been on transparency and on improving and enhancing the measuring of outcomes. Apax collects, and reports on, over 130 ESG-related metrics from the Apax Funds' portfolio companies. This is incorporated into Apax's data platform alongside financial data, allowing the team to gain greater insights from across the portfolio. Learn more about the Apax intelligence platform on p.23.

Apax actively participates in industry-leading platforms and the firm's approach has been recognised by the Principles for Responsible Investment ("PRI"). Apax is a member of the BVCA Responsible Investment Advisory Group, the Thirty Percent Coalition and the Sustainable Markets Initiative Private Equity Taskforce, as well as a signatory to ILPA Diversity in Action Group, and the initiative Climat International.

The consequences of the rapid development being seen in the field of artificial intelligence has been a major focus area for Apax in the first half of 2023. A cross-disciplinary working group has been set up to assess the implications of, and opportunities resulting from, this technology. The focus is centred on i) investment strategy, ii) portfolio company value creation, and iii) internal Apax processes.

To learn more about how Apax works with portfolio companies to turn ideas into action, listen to Apax's podcast episode with Karin Witton, Global Head of Sustainability at Apax IX portfolio company Tosca, a leading provider of supply chain solutions and reusable packaging. Karin offers a whistle-stop tour into her career in sustainability, her efforts at Tosca and how she is helping make an already sustainable business more so.

CASE STUDY

Podcast episode with Karin Witton, Tosca

Dalia Rahman, ESG specialist in Apax's Operational Excellence Practice, speaks to Karin Witton, Global Head of Sustainability at Apax IX portfolio company Tosca, a leading provider of supply chain solutions and reusable packaging.

Listen to Apax podcast on turning ideas into action with Karin Witton.

https://www.apax.com/news-views/turning-ideas-into-action-lessons-on-sustainability-from-tosca-s-karin-witton/

Key highlights

Apax's interactive ESG data analytics platform helps drive faster, data-driven decisions at portfolio companies

Read Apax's Sustainability Report: https://www.apax.com/reports/apax-sustainability-report-edition-2023-v2/index.html#page=1

10th

SUSTAINABILITY REPORT PUBLISHED

130+

eSG KPIs collected

60%

OF MAJORITY OWNED PORTFOLIO COMPANIES IN APAX IX AND X HAVE COMPLETED APAX'S CARBON BASELINING EXERCISE

Investment Manager's Report

Market review

AGA's performance was resilient in challenging markets in the first six months of 2023

OVERVIEW AND OUTLOOK

The economic outlook remains uncertain and short-term interest rates are likely to stay high in major economies with the timing of the pivot unclear. Higher borrowing costs are weighing on economic demand and whilst consumer spending has remained resilient, there are mixed signals from several confidence indicators. That said, with headline inflation and the labour market easing somewhat, the second half of 2023 should bring more clarity on the path of the global economy.

Forecasts for GDP have slightly improved, and developed markets are expected to grow by 1.4% in 2023 and 1.5% in 2024. However, euro area growth remains weak at 0.6% in 2023, and the outlook for the US uncertain.

What this means

AGA's portfolio is diversified by sector and vintage. The Apax Funds' strategy of buying and transforming companies in sub-sectors with strong economic motors is well-suited to the current environment as it is less reliant on cyclical growth, high leverage, and financial engineering.

The Apax Funds' demonstrated ability to buy companies at a discount to comparable companies and close the gap on exit by transforming businesses provides a margin of safety if valuations continue to fall significantly, although activity is likely to remain moderate compared to recent years.

PRIVATE EQUITY MARKETS

Against a continued uncertain macroeconomic backdrop where valuations remained elevated, the cost of capital expensive, and visibility on prospective earnings muddy, private equity firms continued to act with caution in H1 2023.

Whilst pipelines for new investments picked up, the exit environment remained difficult. Nevertheless, private market valuations have proven more stable than public markets, likely as a result of longer-term perspectives, exit optionality and capital at private equity firms' disposal.

Private equity activity should continue to pick up once there is less uncertainty. In the near term, inflation easing could bolster transaction activity, but it could also see another pullback from a slowing economy.

What this means

The Apax Funds' focus on alpha generation through business improvement and on coveted categories means that they are generally less exposed to cyclical trends. This investment strategy provides comfort in these uncertain times, with the Apax Funds having a built-in buffer against declining valuations by virtue of an average discount of 24% versus peers on entry multiples in the last three flagship funds1.

The Private Equity portfolio is also relatively lowly levered, with c.75% of debt outstanding at a fixed rate and with long-dated maturities meaning it is more insulated from short-term movements in credit markets.

Looking at the pipeline, the Apax Funds have continued to identify attractive investment opportunities with two new investments post period-end.

The pace of realisations is likely to remain below the peak seen in 2021 but given the high-quality nature and vintage diversification of the Private Equity portfolio, we expect continued demand for portfolio companies of the Apax Funds, even in a more challenging environment.

1 Average discount vs peers on entry multiples for Apax VIII, IX, and Apax X

PRIVATE EQUITY TRANSACTION VOLUMES

TOTAL US PRIVATE EQUITY TRANSACTION VALUE ($BN)

Source: LCD

TOTAL US PRIVATE EQUITY TRANSACTION VOLUME (TRANSACTION COUNT)

Source: LCD

PUBLIC EQUITY MARKETS

The current cycle is proving complex to extrapolate with previously reliable gauges of bull and bear markets providing limited guidance as to what the future may hold.

Whilst still below the 2021 peak, equity markets have rebounded strongly in the first half of the year with the S&P 500 up 15.9% and the Europe STOXX 600 up 8.7%. What started as a rally driven by a handful of big stocks has turned into a cross-sector surge, ignoring more traditional recession alarms.

What this means

Public equity exposure in AGA's portfolio is mostly from residual look-through holdings in previously IPO'd Private Equity portfolio companies. These holdings represent approximately 7% of Adjusted NAV at 30 June 2023. The divergence in performance across stocks paints a mixed picture for these listed holdings, with some weighing on the Private Equity funds' performance. Listed investments are valued at the closing share price at period-end.

Apax will seek to maximise the value of the Apax Funds' public company positions. As an example, the sale of Duck Creek, in which the Apax Funds held a c.20% stake, was announced in January 2023 at a c.53% premium to the unaffected share price at 30 December 2022.

CREDIT MARKETS

European and North American broadly traded secondary loan markets have seen significant tightening of spreads in the first half of 2023. Three-year spreads for trading US 1L loans tightened by c.84bps to an average of 532bps over Libor and EU loans tightened by c.116bps to c.589bps over Euribor.

Although overall spreads are still elevated versus recent years, higher quality credits have in general tightened more.

What this means

Whilst primary leveraged buyout issuances are yet to recover to historic levels, there remains a strong pipeline of primary opportunities to support M&A financing and public-to-private transactions.

The majority of positions within AGA's Debt portfolio are in lower-risk first and second lien loans, providing a margin of safety to potential issuers' declining credit quality.

28%

OF INVESTED PORTFOLIO IN DEBT investments

13%

Yield to maturity

INFLATION

Inflationary pressures persisted in the first half of 2023 but there are signs of cooling with headline inflation easing somewhat. There are early signs of the labour market easing, albeit with mixed signals from confidence indicators.

US inflation has been moving closer to the Fed's 2% target after peaking at more than 9% last year. The Consumer Price Index fell sharply to 3.0% in June, highlighting the Fed's relative success at cooling down inflation. However, the US Core PCE Index, which measures inflation excluding food and energy, proved stickier and only fell modestly to 4.1%.

Euro area inflation has also cooled but remains higher than in the US. Euro area inflation fell from its peak of 10.6% in October last year, initially driven by a drop in energy inflation, to 5.3% in July. Core inflation, which was unchanged at 5.5% in July, has been more persistent and started to moderate only recently.

Whilst the cooling has allowed the Fed to slow down in tightening monetary policy and the ECB to signal a possible rate hike pause in September, price growth has yet to fall further. US and euro area core inflation remain well above central banks' target of 2%.

What this means

Most of the portfolio companies have strong market positions and correspondingly have pricing power to pass on higher costs to customers, thereby minimising the impact on the bottom line. In addition, the Apax Funds' portfolio is relatively less exposed to businesses with higher energy costs and with more blue-collar labour, where we have seen the highest inflation. However, for a limited number of portfolio companies (e.g., healthcare services), there are timing delays between increased input costs and price adjustments which has led to a decline in margins. More broadly going forward, inflation could also have an impact on demand as buyers purchase less.

INTEREST RATES

Rate increases have continued into 2023 as central banks look to control inflation. The Fed's latest rate increase took benchmark borrowing costs to their highest level in more than 22 years. The ECB deposit facility rate is at a record high last reached in 2001.

As at June 2023, most policymakers projected the benchmark rate peaking at 5.5% to 5.75%, with the Fed Funds Rate increasing from 5.25% to 5.5% in July. In August 2023 the ECB's deposit facility rate stood at 3.75% and the Bank of England confirmed a 14th consecutive increase, raising rates to 5.25%.

Whilst headline inflation has eased, indications from central banks suggest borrowing costs will remain high for some time with the timing of a pivot unclear.

What this means

Whilst the cost of borrowing has increased, the Apax Funds have relatively low levels of leverage at 4.4x net debt/EBITDA on average. Apax's Capital Markets team also sought to actively refinance portfolio companies when the cost of debt was "cheap" and 83% of portfolio companies have maturities extending beyond 2027, limiting the impact of interest rate rises in the near term. Apax is closely monitoring the capital structures in the portfolio to minimise the impact, and portfolio companies are taking early action where necessary.

In the Debt portfolio, 99% of AGA's investments are floating rate notes which benefit from increasing interest rates.

Although AGA's RCF is floating rate, exposing it to interest rate increases, the potential impact is limited as it is not used for structural leverage and was undrawn at 30 June 2023.

4.4x

average leverage across the Private Equity portfolio companies1

99%

of AGA's debt INVESTMENTS ARE FLOATING RATE

1. Net debt/EBITDA multiple excluded 28 companies where EBITDA is not meaningful such as financial services or companies with negative EBITDA, or high growth business valued on a revenue basis. Due to these adjustments, the comparatives may not be on a like-for-like basis

Performance review

Earnings growth across the Private Equity Funds' portfolio companies was a key driver of AGA's overall performance in the first six months of 2023

2.4%

H1 2023 TOTAL NAV RETURN

€2.64/£2.27

ADJUSTED NAV PER SHARE

AT 30 JUNE 2023

The Company achieved a Total Adjusted NAV Return of 2.4% (3.6% constant currency) in the first six months of 2023. This was primarily driven by value creation across the Private Equity portfolio companies as well as strong returns from the Debt portfolio.

Earnings growth remained a key driver of value creation in Private Equity despite some slow-down in earnings in Q2 2023. Average LTM EBITDA growth across the Private Equity portfolio companies remained robust at 14.1% as at 30 June 2023. There were also some FX headwinds as a result of the euro strengthening against the dollar.

In the Private Equity portfolio, average leverage levels reduced to 4.4x whilst valuation multiples came down by 0.9x to 16.3x in the six months to 30 June 2023. This multiple decline was primarily driven by multiple compression from Paycor and Thoughtworks, both publicly listed companies in which the Apax Funds remain shareholders following their IPOs in 2021.

STRONG PIPELINE BUT CONTINUED caution AROUND NEW INVESTMENTS

Against the current market backdrop, the Apax Funds continued to take a cautious approach to new investments. Three new investments were made in the six months to 30 June 2023. The Apax Global Impact fund invested in Swing Education, an online marketplace that connects schools and substitute teachers, the Apax Digital Fund II in Magaya, a leading digital freight software platform, and the AMI Opportunities Fund invested in Zoo Eretz, Israel's leading pet products wholesaler and retailer.

In May Apax XI announced that it had signed its first investment in IBS Software, a provider of modern software solutions to the global travel and logistics industry. In July, Apax XI also agreed to invest in Palex, a leading distributor of medical technology equipment and solutions in Southern Europe.

Despite the more challenging environment for exits, the Apax Funds have continued to successfully exit businesses in the first half of 2023, achieving an average uplift of 24%1 across three full exits.

DEBT PORTFOLIO ENHANCING RETURNS

The Debt portfolio delivered a Total Return of 5.3%2 in the six months to 30 June 2023. This portfolio enhances the robustness of AGA's balance sheet and generates income towards the dividend and additional returns. This portfolio is a valuable source of additional liquidity for AGA and also supports unfunded commitments to the Apax Private Equity Funds, reducing cash drag for the Company.

99% of Debt Investments are floating rate and the portfolio continued to benefit from rising base rates, generating an income yield of 11.4% at 30 June 2023.

H1 2023 TOTAL NAV RETURN CONTRIBUTIONS (%)

1. Valuation uplifts on exits are calculated based on the total actual or estimated sales proceeds and income as appropriate since the last Unaffected Valuation. 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). Where applicable, average uplifts of partial exits and IPOs includes proceeds received and the closing fair value at period-end

2. On a constant currency basis, Total NAV Return was 6.9% for H1 2023

3. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2023

4. Total NAV Return means the movement in the Adjusted NAV per share over the period plus any dividends paid

COMPARABLES-BASED VALUATION METHODOLOGY

In Private Equity, the Apax Funds predominantly use a comparable-based valuation methodology, preferring the transparency that comes with this approach as opposed to alternatives such as discounted cash flows or long-term trading multiples. Fair value of the Apax Funds' private investments is largely determined using public trading comparatives and/or transaction comparables as appropriate.

Public stock, including the positions in previously IPO'd portfolio companies, is valued at the closing share price of the portfolio company as at 30 June 2023.

Equity values are calculated based on a relevant earnings metric multiplied by applicable valuation multiples, and after taking into account portfolio company debt (average at 30 June 2023: 4.4x1).

Equity values are also net of NAV facilities used in some of the underlying holding structures. These have been put in place for Apax IX and Apax X, and both to replace more volatile margin loan structures and to generally optimise cashflows to investors and rebalance risk. At 30 June 2023, the total of these facilities on a look-through basis was c.8% of Adjusted NAV.

In the Derived Investments portfolio, Debt Investments are valued with reference to observable broker quotes where available and models using market inputs. Equity positions are valued based on share prices or using comparable multiples.

COMMITMENTS AND FUNDING

As at 30 June 2023, AGA was a limited partner in 11 Apax Funds, providing exposure to 79 underlying portfolio companies.

Outstanding commitments to the Apax Funds (together with recallable distributions) reduced by €20m in the six months to 30 June 2023 to €985m at the end of the period.

As most of the Apax Funds operate capital call facilities to bridge capital calls from investors for periods of up to 12 months, AGA has significant visibility on future calls resulting from these commitments, facilitating the Company's liquidity planning.

At the period-end, AGA had cash (including net current assets) of €87.4m and its RCF of €250m was undrawn.

H1 2023 ADJUSTED NAV DEVELOPMENT (€M)

1. Net debt/EBITDA multiple excluded 28 companies where EBITDA is not meaningful such as financial services or companies with negative EBITDA, or high growth business valued on a revenue basis. Due to these adjustments, the comparatives may not be on a like-for-like basis

2. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2023

INVESTED PORTFOLIO BY SECTOR AT 30 JUNE 2023

39%

Tech & Digital

Private Equity 25% Derived Investments 14%

28%

Services

Private Equity 22% Derived Investments 6%

17%

Healthcare

Private Equity 9% Derived Investments 8%

16%

Internet/Consumer

Private Equity 15% Derived Investments 1%

Portfolio review

AGA aims to offer shareholders superior long-term returns by providing access to Apax Private Equity Funds where value creation is accelerated through business improvement

71%

PRIVATE EQUITY

28%

debt

AGA offers access to a portfolio of hidden gems. These are mostly private companies that shareholders can't buy elsewhere. These companies typically operate globally across the core Apax sectors of tech & digital, services, healthcare, and internet/consumer. As at 30 June 2023, these companies were performing well with average LTM EBITDA growth of 14%.

The Apax Funds' investment strategy is an "all-weather" strategy, focused on generating alpha through operational impact and it does not rely on tailwinds from financial markets. In fact, 84% of value creation1 comes from operating improvements.

AGA also has a portfolio of Debt Investments. This is a unique feature of AGA and adds robustness to the Company's balance sheet and reduces cash drag. This portfolio generates income towards the dividend and additional returns for the Company. At 30 June 2023, the portfolio had an average yield to maturity of 13.3% and, with the vast majority of Debt Investments being floating rate, it generated an income yield of 11.4%.

AGA's investment strategy has delivered total returns of c.69% over the last five years or 12% on an annualised basis. AGA has also returned cash to shareholders in the form of a dividend and, since IPO, the Company has paid out c.32% of its 30 June 2023 NAV in dividends to shareholders.

1. Valuation uplifts on exits are calculated based on the total actual or estimated sales proceeds and income as appropriate since the last Unaffected Valuation. 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). Where applicable, average uplifts of partial exits and IPO's includes proceeds received and the closing fair value at period end

PRIVATE EQUITY

1.9%

Private Equity H1 2023 Total return

14.1%

LTM EBITDA growth1

TO 30 JUNE 2023

16.0%

LTM revenue growth1

TO 30 JUNE 2023

16.3X

LTM VALUATION MULTIPLE1

At 30 JUNE 2023

The Apax Funds' investment strategy of "mining the hidden gems" means that they are generally less exposed to cyclical end markets and more exposed to businesses benefiting from secular growth trends and with strong underlying economic motors. The funds seek to generate alpha through significant business quality improvement; buying under-optimised assets where potential can be visualised, and then obtain an acceleration in financial performance as well as an increase in relative valuation multiples as that potential is unlocked.

The composition of the current Private Equity portfolio is well diversified across the four core Apax sectors of tech & digital, services, healthcare, and internet/consumer, with a focus on a small number of sub-sectors that display attractive characteristics or compelling investment themes.

In addition, the portfolio shows a good diversification across investment vintages. Of the 79 portfolio companies, 8 were invested before 2017, 30 in the 2017-2019 period, and 41 investments are from 2020 and later. Hence companies across the portfolio are at different stages of their investment cycle.

CONTINUED MOMENTUM IN PRIVATE EQUITY

The Private Equity portfolio, which represented 71% of AGA's Invested Portfolio at 30 June 2023, delivered a Total Return of 1.9% in the first six months, driven by earnings growth across the Funds' portfolios. While there was some slowdown in growth in Q2 2023, reflecting ongoing macroeconomic uncertainty, average LTM EBITDA growth across the Private Equity portfolio companies remained robust at 14% at 30 June 2023.

Valuation multiples came down slightly from 17.2x at 2022 year-end to 16.3x¹ at the end of June 2023. This decline is primarily driven by multiple compression from Paycor and Thoughtworks, two publicly listed holdings. However, there were also instances where the set of comparable companies used to value a portfolio company was adjusted to account for an impact of M&A. An example of this is Vyaire which divested its consumables business in March 2023.

At 30 June 2023, and following the exit of Duck Creek to Vista in Q1 2023, listed companies represented 10% of AGA's Private Equity portfolio, down from 14% at the end of 2022.

The majority of these positions stem from IPOs where the Apax Funds took advantage of attractive valuations achievable in public markets in 2020 and 2021 and, together with subsequent secondary sales, have already returned 3.4x initial costs2 to AGA.

Looking at the current Private Equity portfolio, the capital structures of the Apax Funds' portfolio companies are well-positioned with long-dated maturities and reasonably low leverage at 4.4x¹ net debt/EBITDA on average.

H1 2023 Private Equity Adjusted NAV development (€M)

1. Gross Asset Value weighted average of the respective metrics across the portfolio. LTM Revenue growth and LTM EBITDA growth rates excludes 24 companies where EBITDA is not meaningful such as financial services or high growth business with fluctuations in EBITDA. Due to these adjustments, the comparatives may not be on a like-for-like basis

2. Includes proceeds received from pre-IPO funding rounds, dividends, primary and secondary offerings of shares in companies to 30 June 2023, from companies that listed in 2020 and 2021

3. Includes AGA's exposure to carried interest holdings in AEVII and AEVI which were respectively valued at €15.4m and €1.5m at 30 June 2023 (€15.6m and €1.5m respectively at 31 December 2022)

4. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2023

Case study

The Apax Funds' investment strategy in action

The Apax Funds' investment strategy allows for repeatable success. The teams' experience and expertise investing in online marketplaces is one example of how this strategy creates a flywheel effect.

Watch this short video to learn how the Apax Funds' strategy can enable companies to jump the learning curve to execute faster and more efficiently. https://vimeo.com/833296068/018b89528e

NAV PERFORMANCE

At 30 June 2023 Private Equity Adjusted NAV was €858.9m, down slightly from €871.0m at 31 December 2022, largely due to distributions coming back to AGA as the Funds completed three full exits in the first half of 2023.

At 30 June 2023, AGA was a limited partner in 11 Apax Private Equity Funds. The largest exposure was to Apax IX and Apax X which are both fully invested. Performance for Apax X was up in the period whilst a decline in Paycor's share price impacted performance for Apax IX in the second quarter. Apax XI, the latest global buyout fund to which AGA has made a commitment of $700m, made its first two investments post period-end. For more details on the individual funds see p. 22.

At the portfolio company level, the strongest valuation gains were from Duck Creek (+€11.1m), Cadence Education (+€7.2m), and Rodenstock(+€6.1m). The largest valuation declines came from Thoughtworks (-€17.4m), MatchesFashion (-€6.6m), and Trade Me (-€3.3m).

PRIVATE EQUITY PERFORMANCE (%)

1. Represents movement in all instruments senior to equity

2. Movement in the valuation multiples captures movement in the comparable companies valuation multiples. In accordance with International Private Equity and Venture Capital Valuation ("IPEV") guidelines, the Apax Funds use a multiple-based approach where an appropriate valuation multiple (based on both public and private market valuation comparators) is applied to maintainable earnings, which is often but not necessarily represented by EBITDA to calculate Enterprise Value

3. Mainly dilutions from the management incentive plan as a result of growth in the portfolio's value

4. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2023

TRANSACTION ACTIVITY

Against an uncertain market backdrop, the Apax Funds continued to take a more cautious approach to new investments.

On a look-through basis, AGA deployed €11.4m1 across three new investments in the first six months of 2023, including the first standalone investment for the Apax Global Impact Fund, to which AGA has committed $60m.

In a bilateral deal, AGI acquired a minority stake in Swing Education, a pioneering online marketplace that connects schools and substitute teachers. The Company's mission aligns with Apax Global Impact's objective to "expand access to quality education for all" and falls into AGI's "Social and Economic Mobility" impact theme. The team is attracted by the organic opportunity in both existing and new markets and, in the near term, there are multiple levers of growth that can be used to make Swing into a scaled, high-quality platform.

In January, ADF II agreed to acquire Magaya, a leading digital freight software platform that automates critical workflows for logistics providers. The AMI Opportunities Fund II, to which AGA has committed $40m, also made its first investment in Zoo Eretz, Israel's leading pet products wholesaler and retailer.

The pipeline of new investments remains healthy and, in May and July, Apax XI signed its first two investments in IBS Software, a provider of modern software solutions to the global travel and logistics industry, and Palex, a distributor of medical technology equipment and solutions in Southern Europe.

Turning to exits, and in what is generally a difficult exit environment, the Apax Funds realised three investments at an average uplift of 24%2 to previous unaffected valuations and an average Gross MOIC of 2.2x in the first six months of 2023. AGA received total distributions of €35m in the six months period, primarily from these three exits.

In Q2 2023, the AMI Opportunities Fund sold its remaining stake in Global-e, a leading provider of cross-border e-commerce solutions. The transaction delivered a gross MOIC of 35.6x and a total Gross IRR of 172%. AMI invested $20.5m in Global-e in mid-2018 and partnered with the OEP to help management accelerate growth and improve its internal operational processes.

Following the announcement at signing in November 2021, Apax IX completed its partial exit from Inmarsat following the sale to Viasat. Apax IX will continue to own c.8% of the shares in the combined Nasdaq-listed company.

Earlier in the year, Vista acquired Duck Creek Technologies from Apax VIII. This deal closed in March 2023 and delivered a total return of 5.2x3 Gross MOIC and 38% Gross IRR. The business was originally carved out from Accenture, upgraded and transformed, listed on NASDAQ and then taken private by Vista.

Apax VIII also sold its remaining position in Shriram Finance, a leading non-bank finance company focused on the micro enterprises segment in India, delivering a total Gross MOIC of 0.8x. This disappointing result was linked, in part, to unforeseen regulatory changes in the Indian government's demonetisation effort, as well as the Covid-19 impact on Shriram's micro-enterprise customer segment.

1. Represents AGA's look-through cost to investments acquired by the Apax Funds during H1 2023. For Apax Funds which are yet to hold their final close, these amounts remain subject to change due to equalisation adjustments

2. Valuation uplifts on exits are calculated based on the total actual or estimated sales proceeds and income as appropriate since the last Unaffected Valuation. 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). Where applicable, average uplifts of partial exits and IPO's includes proceeds received and the closing fair value at period-end

3. Represents Gross IRR and Gross MOIC on full and partial exits calculated based on the concurrent aggregate expected cash flows and remaining fair value in euro across all funds signed. For some portfolio companies, this represents returns calculated in the funds underlying currency (e.g. AMI based on USD returns) or based on individual fund sleeves, e.g. AVIII EUR

AGA deploys money not invested in Private Equity into Debt Investments

AGA invests as a Limited Partner in the Apax Private Equity Funds. In simple terms, when the funds sell portfolio companies AGA receives distributions from these Private Equity Funds (net of fees and carried interest). AGA also receives income from its Debt portfolio and the Company has a RCF which provides a further source of capital. AGA uses this capital to pay expenses, including the RCF commitment fee, and any interest due as well as semi-annual dividend to shareholders. Any excess cash is invested into Debt Investments to generate additional returns for AGA. The debt portfolio is also used to fund existing commitments and when assessing new commitments to the Apax Private Equity Funds.

Derived investments

5.3%

Debt portfolio H1 2023 Total Return

13.3%

yield to maturity

AT 30 JUNE 2023

Capital not invested in Private Equity is primarily invested in Debt Investments (96% of the Derived Investment Portfolio).

This portfolio is a valuable source of liquidity and enhances the robustness of AGA's balance sheet, providing additional returns for AGA and a steady flow of income to support dividends.

In the first six months of 2023, the Debt portfolio achieved a Total Return of 5.3% (6.9% constant currency) and, over the last five years, the Debt portfolio has achieved a 46.8% cumulative constant currency Total Return. This represents an outperformance of 24.4% compared to the S&P/LSTA Leveraged Loan Index which delivered 22.4% for the same five-year period. This performance is equivalent to an alpha of 4.9% p.a.

PORTFOLIO OVERVIEW

As at 30 June 2023, AGA held €341.7m of Debt Investments, representing 28% of the Total Invested Portfolio.

The portfolio primarily comprises Debt Investments in companies and sectors where Apax can leverage insights from its private equity activities. Whilst individual investments are identified through a bottom-up process, the portfolio is actively managed top down from a risk and liquidity perspective. The Debt portfolio is robust with exposure to positions where the outlook is more uncertain actively being reduced.

The largest position in the portfolio represents only 2% of AGA's NAV, and 64% of the Debt Investments are invested in first lien loans. First lien loans, in particular syndicated loans, tend to be more readily tradeable when compared to Debt Investments that are more junior in the capital structure, and we believe the current proportion of first lien loans held is appropriate in the context of the Private Equity commitments made by AGA.

AGA's Debt Portfolio consists of carefully selected positions to complement the Private Equity portfolio and at 30 June 2023 it had an average yield to maturity of 13.3%. 99% of Debt Investments are in floating rate loans and the portfolio generated an 11.4% average income yield at 30 June 2023, which contributes towards the dividend.

Derived Equity now makes up a very small part of the portfolio and at 30 of June 2023, the portfolio held three positions valued at €13.8m.

DERIVED DEBT SOURCED FROM APAX INSIGHTS1

72%

PRIVATE EQUITY STYLE DILIGENCE where the majority of positions are sourced from private equity style diligence.

18%

CURRENT APAX FUNDS OWNERSHIP are positions where the Apax Funds also hold an equity interest.

10%

PRIOR APAX FUNDS OWNERSHIP are positions where AGA purchased the debt subsequent to Apax Funds holding an equity interest.

1. Apax insights detailed in the chart show sourcing of credit investments since 2019

H1 2023 Debt performance (%)

2. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2023

Private equity lifecycle as at 30 June 2023