Last checked at 
27 Apr 2016 07:00
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
27 April 2016
(LSE: APAX)
Apax Global Alpha Limited
Quarterly Results for the period ended 31 March 2016
Where we discuss the trading period to 31 December 2015 this includes trading as PCV Lux S.C.A ("PCV") and its subsidiaries (collectively the "PCV Group") prior to the acquisition by AGA and listing on 15 June 2015. Irrespective of whether the text refers to AGA or PCV, references to the trading period from 1 January to 31 December 2015 includes trading as PCV prior to the transfer of assets to AGA following the acquisition and listing on 15 June 2015.
For further information regarding the announcement of AGA's Q1 2016 results, including the details for today's analyst and investor call at 9.30am (UK time), please visit: www.apaxglobalalpha.com/investor-information/calendar
Financial highlights for the three months to 31 March 2016
· Negative Total Return of 1.8% during the quarter with Adjusted NAV decreasing by 4.3% from €923.6m to €883.6m after payment of semi-annual dividend
· Overall negative performance in the AGA portfolio largely attributable to the appreciation of the Euro against the US Dollar (FX impact of 3.2%)
· Adjusted NAV per share was €1.80 (equivalent to £1.43 at 31 March 2016), down from €1.88 at 31 December 2015
· First semi-annual dividend announced of 3.69 pence per share, equivalent to 2.5% of NAV at 31 December 2015 paid to investors on 5 April 2016
· AGA 95% invested at 31 March 2016 with a cash balance of €42.7m(1)
Investment highlights for the three months to 31 March 2016
· Invested portfolio remained well balanced: Private Equity (52%) and Derived Investments (48%)
· Sector exposure was balanced across all Apax Partners' focus industries. As at 31 March 2016, Services is the sector with the strongest weighting, accounting for 32% of the invested portfolio
· Geographic bias towards North America representing 59% of the invested portfolio at 31 March 2016
Operational performance
· Q1 2016 characterised by a strong flow of realisations leading to an increase in cash balances to €42.7m at the end of the quarter
· Overall operating performance of the Private Equity portfolio companies remained strong with Last Twelve Months (LTM) Revenue growth and EBITDA growth of 6.3% and 8.8% respectively
· Operating performance of the Derived Investments portfolio was robust with year-over-year LTM EBITDA growth of 3.7% on debt investments, and year-over-year LTM earnings growth of 17.3% for equity investments
Private Equity - Quarterly Operational Metrics | 31 December 2015 | 31 March 2016 | |
Portfolio (LTM) revenue growth(2) | 7.8% | 6.4% | |
Portfolio LTM EBITDA growth(2) | 9.0% | 9.0% | |
Average EV/EBITDA multiple(2) | 12.4x | 12.1x | |
Average net debt / EBITDA(2) | 4.6x | 4.6x | |
Number of new investments(3) | 4 | 0 | |
Number of exits(3) | 2 | 5 |
Derived Investments - Quarterly Operational Metrics | 31 December 2015 | 31 March 2016 | ||
YTM(4) of debt investments | 11.5% | 11.9% | ||
Average years to maturity for debt investments (in years) | 6.1 | 5.8 | ||
Average income yield(5) of debt investments | 9.6% | 10.1% | ||
LTM EBITDA growth debt investments(5) | 5.0% | 3.7% | ||
LTM earnings growth equity investments(7) | 12.5% | 17.3% | ||
Average P/E multiple(8) of equity investments | 20.0x | 18.8x | ||
Number of new investments(9) | 5 | 2 | ||
Number of full exits(10) | 2 | 3 | ||
· The Investment Manager has highlighted the following in the Private Equity portfolio
o Apax Private Equity Funds have returned €24.9m to AGA since 31 December 2015
o No new Private Equity investments were closed by the Apax Funds during the quarter. The Apax Funds however announced two new investments during the quarter
· The Investment Manager has highlighted the following in Derived Investments
o Fully exited two equity investments and one debt investment, realising total proceeds of €26.3m
o In the quarter ended 31 March 2016, AGA made one new investment in equity, and one add-on investment into equities totalling €10.3m
Commenting on AGA's investment focus, Ralf Gruss, COO of Apax Partners, said:
"AGA's performance has been resilient in a quarter characterised by considerable volatility in financial markets. The negative Total Return of 1.8% in Q1 2016 is significantly impacted by the appreciation of the Euro against the US Dollar. Ongoing market dislocations however continue to present attractive prospects for Derived Investments which AGA will look to exploit. Acquisition opportunities in Private Equity remain attractive though need to offer operational improvement opportunities in the current elevated pricing environment."
Financial highlights
Private Equity
€m | Derived Investments
€m | Cash and Legacy Hedge Funds €m | Others
€m | Total
€m | |
Adjusted NAV as of 31 December 2015 | 469.4 | 432.4 | 22.9 | (1.1) | 923.6 |
+ Investments | - | 10.3 | (10.3) | - | - |
- Divestments | (24.9) | (26.3) | 51.2 | - | - |
+ Interest and dividend income | - | - | 6.7 | 1.6 | 8.3 |
+/- Unrealised gains | 8.1 | (5.7) | - | - | 2.4 |
+/- FX gains | (12.3) | (17.1) | (1.0) | - | (30.4) |
+/- Costs and others | - | - | (3.4) | (2.9) | (6.3) |
- Dividends paid | - | - | (23.4) | - | (23.4) |
+/- performance fee reserve | 1.6 | 7.8 | 9.4 | ||
Adjusted NAV as of 31 March 2016 | 441.9 | 401.4 | 42.7 | (2.4) | 883.6 |
Invested portfolio analysis at 31 March 2016
Asset class (excluding hedge funds) |
€m |
€m |
% |
% |
Private Equity | 444.5 | 52 | ||
- AEVI | 2.8 | 0 | ||
- AE VII | 77.1 | 9 | ||
- AE VIII | 361.3 | 43 | ||
- AMI | 3.3 | 0 | ||
Derived Investments | 402.3 | 48 | ||
- Debt | 320.1 | 38 | ||
- Equities | 82.2 | 10 | ||
Total | 846.8 | 100 | 100 |
Sector mix |
€m | Portfolio
% | Private Equity
% | Derived Investments % |
Tech & Telco | 262.0 | 31 | 34 | 28 |
Services | 268.4 | 32 | 33 | 30 |
Consumer | 165.4 | 19 | 18 | 21 |
Healthcare | 140.9 | 17 | 13 | 20 |
Other | 10.1 | 1 | 2 | 1 |
Total | 846.8 | 100 | 100 | 100 |
Geographic analysis |
€m | Portfolio
% | Private Equity
% | Derived Investments % |
North America | 497.9 | 59 | 55 | 64 |
UK | 18.4 | 2 | 3 | 2 |
Switzerland | 15.0 | 2 | 0 | 3 |
Rest of Europe | 193.3 | 23 | 31 | 13 |
India | 80.0 | 9 | 6 | 13 |
China | 24.6 | 3 | 1 | 5 |
RoW | 17.6 | 2 | 4 | 0 |
Total | 846.8 | 100 | 100 | 100 |
Summary of top 10 investments in Private Equity and Derived Investments
| Valuation €m | % of NAV | % of invested portfolio |
Top 10 Private Equity |
|
|
|
EVRY AS | 46.0 | 5% | 5% |
GlobalLogic Inc | 40.9 | 5% | 5% |
Assured Partners | 29.8 | 3% | 4% |
Exact Software | 29.7 | 3% | 4% |
Azelis S.A. | 27.7 | 3% | 3% |
One Call / Align | 25.2 | 3% | 3% |
Full Beauty | 24.6 | 3% | 3% |
Garda | 23.6 | 3% | 3% |
Wehkamp | 18.1 | 2% | 2% |
Acelity (Kinetic Concepts) | 16.4 | 2% | 2% |
Other | 162.5 | 18% | 19% |
Total Private Equity | 444.5 | 50% | 52% |
|
|
|
|
Top 10 Derived Investments |
|
|
|
Full Beauty | 31.0 | 3% | 4% |
Assured Partners | 29.3 | 3% | 3% |
Exact Software | 24.4 | 3% | 3% |
Epicor | 20.2 | 2% | 2% |
Azelis S.A. | 19.7 | 2% | 2% |
Compuware | 18.9 | 2% | 2% |
Genex | 18.5 | 2% | 2% |
Acelity (Kinetic Concepts) | 18.5 | 2% | 2% |
rue21 Inc | 17.3 | 2% | 2% |
Advantage Sales & Marketing | 17.1 | 2% | 2% |
Other | 187.4 | 21% | 22% |
Total Derived Investments | 402.3 | 45% | 48% |
|
|
|
|
Total Investments | 846.8 | 95 | 100 |
Cash | 42.7(1) | 5 | 0 |
Net current assets | (2.4) | 0 | 0 |
Total NAV | 887.1 | 100 | 0 |
Apax Funds Valuations as of 31 March 2016
Apax Funds have also reported March 2016 valuations to their limited partner investors today. These valuations are set out below at an individual fund level (net of relevant fees and carried interest estimates). AGA holds exposures to the Apax Funds via various individual holdings which also have different fee structures.
Details on the composition and valuation of the AGA portfolio as at 31 March 2016 are set out above and in AGA's Q1 2016 Quarterly Results. These differ to those shown in the table below due to the various holding structures through which AGA invests.
Valuations for the Apax Funds to which AGA has an exposure have reported the following movements for the period from 31 December 2015 to 31 March 2016:
| Valuation as at 31 December 201511
| Capital Calls
| (Distributions) | Unrealised Gain / (Loss)
| Valuation as at 31 March 1611
| Like for like % change12 |
Apax Europe VI €m | 2,611 | - | (1,432) | (68) | 1,111 | (3%) |
Apax Europe VII €m13 | 7,501 | - | (1,513) | (526) | 5,462 | (7%) |
Apax VIII €m | 3,047 | - | (90) | (31) | 2,926 | (1%) |
Apax VIII $m | 3,854 | - | (100) | 110 | 3,864 | 3% |
AMI $m | 65 | - | - | (3) | 62 | (5%) |
Contact details
Investor Relations | |
Sarah Wojcik | |
Telephone: | +44 (0)20 7872 6300 |
Email: | investor.relations@apaxglobalalpha.com |
|
|
Media enquiries (Apax Global Alpha Limited) | |
Georgiana Brunner/Matthew Goodman/Annabel Clay, Greenbrook Communications | |
Telephone: | +44 (0)20 7952 2000 |
Email: | aga@greenbrookpr.com |
|
|
Media enquiries (Apax Partners LLP) | |
Alex Wessendorff | |
Telephone: | +44 (0)20 7872 6461 |
Email: | alex.wessendorff@apax.com |
|
|
Company Secretary | |
Matt Horton/Jacques Colley, Aztec Group | |
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) Comprises €41.4m held in AGA directly and €1.3m held in subsidiaries
(2) Represents the weighted average of the respective metrics across the underlying portfolio companies, using latest available information
(3) Represents investments and exits during the year ending at the indicated date. Note that the 4 new investments in Q4 2015 represents 3 new investments and one significant follow-on investments. There were 2 full exits, King and Rhiag and 3 partial exits in Q1 2016
(4) Gross Asset Value ("GAV") weighted average yield to maturity (YTM) of the Derived Debt Investments
(5) GAV weighted average of the current full year income (annual coupon/clean price as at 31 March 2016) for each debt position in the Derived Debt Investments at 31 March 2016
(6) GAV weighted average of latest available EBITDA growth, since prior year, of the underlying Derived Debt Investments
(7) GAV weighted average of the latest earnings growth, since prior year, of the underlying Derived Equity Investments
(8) GAV weighted Price Earnings multiple of Derived Equity Investments
(9) New investments in Q1 2016 were Sophos and an add-on to existing investments Strides Shasun Limited. New investments in Q4 2015 were into Alkem Laboratories, Full beauty second lien debt, Assured Partners second lien debt, Azelis second lien debt and Acelity bonds
(10) Disposals in Q1 2016 consisted of a debt realisation of Physiotherapy second lien debt and full equity realisations in Zhaopin and Greene King shares. Disposals in Q4 2015 were Azelis second lien debt and Synlab bonds
(11) Where relevant, the Valuations are expressed net of any estimated carried interest payable should the funds hypothetically be liquidated as at 31 December 2015 or 31 March 2016
(12) The like for like change represents the change in valuation from the prior to the current reporting date, adjusting for changes due to calls and distributions. Any calls made during the period are added to the prior valuation and distributions are added back to the current valuation
(13) The valuation of AGA's interest in Apax Europe VII has increased by 1.9%. AGA holds an investment in potential future carried interest from Apax Europe VII. The fund fully repaid limited partner loan capital in the quarter and locked in the preferred return and this is reflected in the valuation of the AEVII carried interest investment at 31 March 2016
About Apax Global Alpha Ltd
AGA is a Guernsey closed-ended investment company that listed on the London Stock Exchange on 15th June 2015.
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), once fully invested.
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, cashflow requirements, the dividend policy and other factors.
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 €34 billion in aggregate as at 31 March 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.