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25 Apr 2017 07:00
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25 April 2017
(LSE: APAX)
Apax Global Alpha Limited
Quarterly results for the period ended 31 March 2017
For further information regarding the announcement of AGA's 2017 first quarter results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com
Financial highlights
· Total NAV Return during the quarter of 1.4%
· Adjusted NAV decreased by €10.8m to €927.9m during the 3 months to 31 March 2017, following the payment of a dividend of €23.8m(1) in the quarter
· Adjusted NAV per share of €1.89 (£1.60), compared to Adjusted NAV per share of €1.91 (£1.63) at 31 December 2016
· Second semi-annual dividend in respect of 2016 of 4.13 pence per share, equivalent to 2.5% of NAV at 31 December 2016 was paid to investors on 4 April 2017(1)
· AGA was 98% invested and had a net cash balance of €16.2m at quarter end
Portfolio highlights
· Private Equity exposure decreased slightly to 53% following distributions from Apax VIII and Derived Investments were 47% of the portfolio
· Sector exposure spread across all Apax Partners' focus industries. Tech & Telco was the most heavily weighted sector, accounting for 34% of the invested portfolio
· Geographic bias towards North America, representing 54% of the invested portfolio
Performance
· Portfolio delivered a Total NAV Return of 1.4% during the quarter and 2.0% on a constant currency basis
· Derived Debt Investments delivered a Total Return of 2.2% driven by income, whilst Derived Equity Investments delivered 5.0% with positive contribution from all performance elements. Total Derived Investments Total Return was 3.1%
· Private Equity delivered 1.6% 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 2016 | 31 March 2017 | |
Portfolio year-over-year Last Twelve Months (LTM) revenue growth(2) | 6.1% | 7.7% | |
Portfolio year-over-year LTM EBITDA growth(2) | 9.8% | 12.8% | |
Average EV / EBITDA multiple(2) | 12.9x | 13.0x | |
Average net debt / EBITDA(2) | 4.4x | 4.5x | |
Number of new investments in the quarter (3) | 1 | 2 | |
Number of exits in the quarter (3) | 4 | 3 |
Private Equity portfolio highlights
· Apax Funds returned €17.5m to AGA
· Unrealised gains were €10.6m offset by adverse FX movements of €2.5m
· Apax IX closed its acquisition of Unilabs and announced an investment in Guotai Junan Securities
· AMI closed its acquisition in Ten Petroleum
· Apax Funds fully exited three investments with the following Gross IRR's(11) : Chola 54%, Capio 6%, Ascential 2%
Derived Investments - Operational Metrics | 31 December 2016 | 31 March 2017 | |
Yield to maturity(4) of debt investments | 12.0% | 12.3% | |
Average years to maturity for debt investments | 5.7 | 5.7 | |
Average income yield(5) of debt investments | 9.6% | 9.8% | |
Year-over-year LTM EBITDA growth debt investments(6) | 2.7% | 7.5% | |
Year-over-year LTM earnings growth equity investments(7) | 32.0% | 24.5% | |
Average P/E multiple(8) of equity investments | 23.5x | 22.0x | |
Number of new investments in the quarter (9) | 7 | 10 | |
Number of exits in the quarter (10) | 4 | 4 |
Derived Investments portfolio highlights
· AGA divested two debt investments and two equity investments, realising proceeds of €57.9m
· Q1 2017 saw unrealised gains of €5.2m, realised gains of €1.0m, income generated of €7.5m and FX losses of €2.9m
· AGA made three new investments in debt, and seven new investments in equity, amounting to €71.7m
Commenting on AGA's investment focus, Ralf Gruss, COO of Apax Partners, said:
"The first quarter has generated a solid return with positive return contribution from all of AGA's Private Equity, Derived Debt and Derived Equity investments. The Apax Funds have closed or announced three new Private Equity investments in the Healthcare, Consumer, and Services sectors. Within the Derived Investments portfolio, the exposure to Derived Equity has increased during the quarter reflecting the relative attractiveness of equity investments compared to credit in the current market environment.
AGA remains fully invested and will seek to exploit its flexibility across asset classes and geographies to identify unique investment opportunities in a high valuation investment environment".
Financial highlights
Private Equity €m | Derived Investments €m | Cash
€m | Others
€m | Total
€m | |
Adjusted NAV at 31 December 2016 | 494.1 | 406.2 | 33.9 | 4.5 | 938.7 |
+ Investments | - | 71.7 | (71.7) | - | - |
- Divestments | (17.5) | (57.9) | 75.4 | - | - |
+ Interest and dividend income | - | - | 5.2 | 2.3 | 7.5 |
+/- Unrealised FV movement | 10.7 | 5.2 | - | - | 15.9 |
+/- Realised FV movement | 1.0 | - | - | 1.0 | |
+/- FX losses | (2.5) | (2.9) | (0.2) | - | (5.6) |
+/- Costs and others | - | - | 4.0 | (6.5) | (2.5) |
- Dividends paid | - | - | (23.8) | - | (23.8) |
+/- Performance fee reserve | (0.5) | 3.8 | (6.6) | - | (3.3) |
Adjusted NAV at 31 March 2017 | 484.3 | 427.1 | 16.2 | 0.3 | 927.9 |
Invested portfolio analysis at 31 March 2017
Asset class | €m | €m | % | % |
Private Equity | 489.5 | 53% | ||
- AMI | 4.0 | 1% | ||
- AEVI | 2.0 | 0% | ||
- AE VII | 63.5 | 7% | ||
- AVIII | 425.4 | 46% | ||
- AIX* | (5.4) | (1%) | ||
Derived Investments | 429.9 | 47% | ||
- Debt | 282.4 | 31% | ||
- Equities | 147.5 | 16% | ||
Total | 919.4 | 919.4 | 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 | 316.0 | 34% | 39% | 29% |
Services | 255.4 | 28% | 29% | 27% |
Healthcare | 202.4 | 22% | 18% | 27% |
Consumer | 138.6 | 15% | 13% | 16% |
Other | 7.0 | 1% | 1% | 1% |
Total | 919.4 | 100% | 100% | 100% |
Geographic analysis |
€m | Invested portfolio % | Private Equity % | Derived Investments % |
North America | 497.5 | 54% | 46% | 63% |
UK | 34.3 | 4% | 1% | 7% |
Rest of Europe | 251.4 | 27% | 40% | 13% |
India | 67.1 | 7% | 7% | 8% |
China | 28.4 | 3% | 1% | 6% |
Rest of World | 40.7 | 5% | 5% | 3% |
Total | 919.4 | 100% | 100% | 100% |
Summary of top 10 investments in Private Equity and Derived Investments
Valuation €m | NAV % | |
Top 10 Private Equity | ||
EVRY AS | 51.8 | 6% |
Global Logic Inc. | 47.6 | 5% |
Azelis S.A. | 41.1 | 5% |
Assured Partners | 38.9 | 4% |
Exact Software | 35.7 | 4% |
Shriram | 25.9 | 3% |
Engineering | 21.7 | 2% |
Idealista | 21.6 | 2% |
One Call | 21.5 | 2% |
Unilabs | 20.8 | 2% |
Other | 162.9 | 17% |
Total Private Equity | 489.5 | 52% |
Top 10 Derived Investments | ||
Assured Partners | 38.0 | 4% |
Liva Nova plc | 30.4 | 3% |
Full Beauty | 25.1 | 3% |
Kepro | 24.0 | 3% |
Unilabs | 21.7 | 2% |
Genex | 20.9 | 2% |
Azelis S.A. | 20.5 | 2% |
Rentpath | 19.9 | 2% |
Advantage Sales & Marketing | 18.4 | 2% |
Strides Shasun Ltd | 17.9 | 2% |
Other | 193.1 | 21% |
Total Derived Investments | 429.9 | 46% |
Total Investments | 919.4 | 98% |
Net cash and cash equivalents (12) | 16.2 | 2% |
Net current assets | 0.3 | 0% |
Total NAV | 935.9 | 100% |
Performance fee reserve | (8.0) | |
Total Adjusted NAV | 927.9 |
Apax Funds Valuations as at 31 March 2017
Apax Funds have also reported March 2017 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 2017 are set out above and in AGA's Q1 2017 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 2016 to 31 March 2017:
Valuation as at 31 December 2016(13) | Capital Calls
| Net Distributions | Unrealised Gain / (Loss)
| Valuation as at 31 March 2017(13) | Like-for-like % change13 | |
Apax Europe VI €m | 820 | - | - | (43) | 777 | -5% |
Apax Europe VII €m | 3,980 | - | (234) | (98) | 3,648 | -2% |
Apax VIII €m | 3,457 | - | (140) | 69 | 3,386 | 2% |
Apax VIII $m | 4,333 | - | (152) | 138 | 4,319 | 3% |
AMI $m | 74 | - | - | (2) | 72 | -3% |
Apax IX EUR €m | (22) | - | - | (13) | (35) | NM(15) |
Apax IX USD $m | (72) | - | - | (52) | (124) | NM(15) |
Contact details
Investor and media enquiries | Company Secretary |
Sarah Wojcik | Jacques Colley |
Telephone: +44 (0)20 7666 6573 | Telephone: +44 (0) 1481 749 700 |
Email: sarah.wojcik@apax.com | Email: AGA-admin@aztecgroup.co.uk |
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. 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
3. 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) AGA paid €23.8m to Capita in March 2017 which was subsequently distributed to investors on the 4 April 2017
(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 quarter ended at the indicated date. During Q1 2017, there were three closed full exits (Chola, Capio and Ascential) vs two closed full exits (Sisal and Plantasjen) and two closed partial exits during Q4 2016 (Chola and Ascential). The above number of exits excludes the recapitalisation of Global Logic during Q4 2016. Closed new investments were in Unilabs and Ten Petroleum
(4) 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 2017) for each debt position in the Derived Debt Investments at 31 March 2017
(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 debt in Q1 2017 were in Kepro, Caliber Collision and an add-on to Assured Partners, and new equity positions included Liva Nova, Epam, Shriram Transport Finance Co. Ltd, 51Job Inc, DCB Bank, Mitie and N Brown Group PLC.
(10) Derived Equity disposals in Q1 2017 consisted of Chola and Geometric. Derived Debt divestments in Ellucian and Acelity debt which was repaid in February 2017.
(11) Gross IRRs represent return to the Apax Funds as at 31 March 2017, including unrealised value and total realised proceeds. Calculated since the initial purchase date of the investment
(12) Net cash and cash equivalents represents total cash held less current liabilities related to trades that settled post quarter end
(13) Where relevant, the Valuations are expressed net of any estimated carried interest payable should the funds hypothetically be liquidated as at 31 December 2016 or 31 March 2017
(14) 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 net distributions. Any calls made during the period are added to the prior valuation and net distributions are added back to the current valuation. Net distributions during the period represent the difference between gross distributions paid out by the fund to limited partners and any distributions recalled
(15) NM as Apax IX EUR and Apax IX USD have drawn down on the capital call facility as a bridge to the first capital call for fund costs and investments in the fund
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 March 2017*. 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 March 2017