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1 Nov 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
1 November 2016
(LSE: APAX)
Apax Global Alpha Limited
Quarterly Results for the period ended 30 September 2016
For further information regarding the announcement of AGA's Q3 2016 results, including the details for today's analyst and investor conference call at 9.30am (UK time), please visit www.apaxglobalalpha.com/shareholder-information/calendar
Financial highlights for the three months to 30 September 2016
· Adjusted NAV slightly down at €889.6m compared to €894.4m at 30 June 2016 mainly due to semi-annual dividend paid in the quarter of €22.4m
· Adjusted NAV per share of €1.81 (£1.57) after a dividend of 4.59 euro cents (3.95 pence sterling) per share compared to €1.82 (£1.52) at 30 June 2016
· Total Return in Q3 was 2.0%. On a constant currency basis it was 2.6% reflecting the appreciation of the euro against the US dollar and sterling.
· AGA was 93% invested and had a cash balance of €65.6m as at quarter end
Investment highlights for the three months to 30 September 2016
· Well-balanced invested portfolio: Private Equity (51%) and Derived Investments (49%)
· Sector exposure spread across all Apax Partners' focus industries. Tech & Telco was the most heavily weighted sector, accounting for 38% of the invested portfolio
· Geographic bias towards North America, representing 57% of the invested portfolio
Performance
· Portfolio performance improved for the three months to 30 September 2016 driven mainly by income and unrealised gains in Derived Investments
· Total Return year to date to 30 September 2016 was 1.3% and Total Return since IPO is 7.0%
o In Q3, Derived Debt Investments were up 3.3% and Derived Equity Investments were up 9.1%
o In Q3, Private Equity was largely flat at -0.2% as a result of a slowdown in underlying companies' earnings growth and a lower valuation of AGA's holding in Apax Europe VII carried interest
Private Equity - Operational Metrics | 30 September 2016 | 30 June 2016 | |
Portfolio year-over-year Last Twelve Months (LTM) revenue growth(1) | 6.9% | 7.4% | |
Portfolio year-over-year LTM EBITDA growth(1) | 8.1% | 9.8% | |
Average EV/EBITDA multiple(1) | 12.0x | 11.9x | |
Average net debt / EBITDA(1) | 4.3x | 4.4x | |
Number of new investments in the quarter (2) | 3 | 1 | |
Number of exits in the quarter (2) | 5 | 3 |
· Private Equity portfolio highlights:
o Apax Funds have returned €17.2m to AGA in Q3 2016
o Unrealised losses were €0.8m and FX losses were €1.4m
o Apax VIII closed two new investments (Duck Creek Technologies and Neuraxpharm/Invent Farma) and Apax IX closed its first investment (Dominion Marine Media). An Apax VIII investment previously announced during H1 2016 closed after the quarter end (Vyaire).
o Aggregate IRR generated on fully exited investments was 36.4%(10) for the Private Equity portfolio
Derived Investments - Operational Metrics | 30 September 2016 | 30 June 2016 | |
Yield to maturity(3) of debt investments | 12.1% | 12.7% | |
Average years to maturity for debt investments | 5.4 | 5.6 | |
Average income yield(4) of debt investments | 9.9% | 10.1% | |
Year-over-year LTM EBITDA growth debt investments(5) | 2.3% | 1.3% | |
Year-over-year LTM earnings growth equity investments(6) | 20.1% | 18.5% | |
Average P/E multiple(7) of equity investments | 18.0x | 17.9x | |
Number of new investments in the quarter (8) | 3 | 5 | |
Number of full exits in the quarter (9) | 7 | 6 |
· Derived Investments portfolio highlights:
o AGA fully exited two debt investments and five listed equity investments, together with two partial realisations. Proceeds of €60.0m were realised in the quarter.
o Income generated was €8.1m in the 3 months to 30 September 2016
o In Q3 2016, AGA made two new investments in debt, and one new investment in equity totalling €45.7m
Commenting on AGA's investment focus, Ralf Gruss, COO of Apax Partners, said:
"I am pleased to report that AGA's performance has improved in Q3. The portfolio finished the quarter with a positive Total Return of 2.0%.
AGA's investment portfolio is well diversified. While the performance of the Private Equity portfolio was largely flat in the quarter, AGA's Derived Investments portfolio performed strongly due to gains in both Derived Debt and Derived Equity."
Financial highlights
Private Equity €m | Derived Investments €m | Cash
€m | Others
€m | Total
€m | |
Adjusted NAV at 30 June 2016 | 435.0 | 406.4 | 48.5 | 4.5 | 894.4 |
+ Investments | - | 45.7 | (45.7) | - | - |
- Divestments | (17.2) | (60.0) | 79.9 | (2.7) | (0.0) |
+ Interest and dividend income | - | - | 7.6 | 0.5 | 8.1 |
+/- Unrealised FV movement | (0.8) | 17.2 | - | - | 16.4 |
+/- Realised FV movement | - | 2.4 | - | - | 2.4 |
+/- FX losses | (1.4) | (3.4) | (0.5) | - | (5.2) |
+/- Costs and others | - | - | (1.8) | (1.3) | (3.1) |
- Dividends paid | - | - | (22.4) | - | (22.4) |
+/- Performance fee reserve | 1.1 | (2.1) | - | - | (1.0) |
Adjusted NAV at 30 Sept 2016 | 416.7 | 406.2 | 65.6 | 1.0 | 889.6 |
Invested portfolio analysis at 30 September 2016
Asset class
|
€m |
€m |
% |
% |
Private Equity | 421.0 | 51% | ||
- AMI | 3.9 | 1% | ||
- AEVI | 2.2 | 1% | ||
- AE VII | 67.9 | 8% | ||
- AVIII | 349.0 | 42% | ||
- AIX* | (2.0) | (1%) | ||
Derived Investments | 409.6 | 49% | ||
- Debt | 319.2 | 38% | ||
- Equities | 90.4 | 11% | ||
Total | 830.6 | 830.6 | 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 | 312.5 | 38% | 37% | 38% |
Services | 203.2 | 24% | 29% | 20% |
Healthcare | 165.0 | 20% | 16% | 24% |
Consumer | 138.0 | 17% | 16% | 17% |
Other | 11.9 | 1% | 2% | 1% |
Total | 830.6 | 100% | 100% | 100% |
Geographic analysis |
€m | Invested portfolio % | Private Equity % | Derived Investments % |
North America | 472.8 | 57% | 45% | 69% |
UK | 25.9 | 3% | 3% | 4% |
Switzerland | 15.9 | 2% | 0% | 4% |
Rest of Europe | 206.2 | 25% | 39% | 10% |
India | 75.2 | 9% | 8% | 10% |
China | 13.7 | 2% | 1% | 2% |
Rest of World | 20.9 | 2% | 4% | 1% |
Total | 830.6 | 100% | 100% | 100% |
Summary of top 10 investments in Private Equity and Derived Investments
Valuation €m | NAV % | |
Top 10 Private Equity | ||
EVRY AS | 45.4 | 5% |
GlobalLogic Inc | 42.0 | 5% |
Assured Partners Inc. | 35.0 | 4% |
Azelis S.A. | 34.3 | 4% |
Exact Software | 34.1 | 4% |
Wehkamp | 24.4 | 3% |
One Call / Align | 23.6 | 3% |
Full Beauty | 23.3 | 3% |
Shriram City Union | 22.5 | 3% |
Engineering | 19.7 | 2% |
Other | 116.7 | 11% |
Total Private Equity | 421.0 | 47% |
Top 10 Derived Investments | ||
Full Beauty | 31.2 | 3% |
Ellucian | 28.2 | 3% |
Acelity | 26.8 | 3% |
Compuware | 21.0 | 2% |
Azelis S.A. | 19.8 | 2% |
Genex | 19.3 | 2% |
Assured Partners Inc. | 17.6 | 2% |
Rentpath | 17.3 | 2% |
Advantage Sales & Marketing | 17.2 | 2% |
Unilabs | 15.4 | 2% |
Other | 195.8 | 23% |
Total Derived Investments | 409.6 | 46% |
Total Investments | 830.6 | 93% |
Cash | 65.6 | 6% |
Net current assets | 1.0 | 1% |
Total NAV | 897.2 | 100% |
Performance fee reserve | (7.6) | |
Total Adjusted NAV | 889.6 |
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/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) Represents the weighted average of the respective metrics across the underlying portfolio companies, using latest available information
(2) Represents investments and exits during the quarter ended at the indicated date. During Q3 2016 there were 2 full closed exits (Epicor and Trader Corporation) and 3 closed partial exits represented by the partial secondary sales of Ascential, Capio and Chola shares. The above number of exits excludes the recapitalisation of Evry during Q2 2016 and Ideal Protein during Q3 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 30 Sept 2016) for each debt position in the Derived Debt Investments at 30 Sept 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. Excludes Palo Alto
(7) GAV weighted Price Earnings multiple of Derived Equity Investments
(8) New investments in debt in the 3 months to 30 Sept 2016 were in Vertafore and Acelity and one new equity position in TAKE.
(9) Disposals in quarter ended 30 Sept 2016 consisted of debt realisations in Berlin Packaging and Peak 10 second lien debt and equity realisations in LIC Housing, Hinduja Global Solutions, Alkem, Edelweiss and Smart Technologies.
(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 30 September 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 30 September 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 September 2016