Last checked at 
4 Nov 2020 07:00
(LSE: APAX)
Apax Global Alpha Limited
Quarterly results for the period ended 30 September 2020
Key highlights
· Strong performance during the quarter: AGA's Total NAV Return1 was 8.5% (11.7% constant currency).
· Exposure to Tech & Telco / Digital, Services, and Healthcare underpinned resilience of the portfolio during Covid-19 and is driving strong returns in the Private Equity portfolio.
· Two Private Equity exits signed (idealista, Neuraxpharm) and two IPO's (Duck Creek, Max Stock) at an average uplift of 63%2 to June 2020 valuations.
· New Private Equity investment in legal practice management software provider MyCase announced.
· AGA's liquidity position is healthy with €72.9m of cash and its revolving credit facility of €140.0m remained undrawn. Derived Investments of €275.7m provide a further source of funding for AGA.
· Dividend of 4.87p paid during the period, in line with AGA's stated dividend policy of distributing 5% of NAV per annum.
· Whilst the economic outlook remains uncertain with Covid-19 infection numbers rising across the globe, the Apax Funds' focus on: i) sub-sector expertise; ii) driving business transformation; and iii) investing with modest average entry leverage levels leaves the portfolio well-positioned as the pandemic evolves.
Commenting on the results, Ralf Gruss, COO of Apax Partners, said:
"Despite the challenging environment, we are pleased to see that AGA's investment strategy and sector focus have delivered continued strong NAV performance in the quarter. In the private equity portfolio, there were several successful realisations in the period as well as attractive new investments. Whilst the impact of further lockdown measures remains to be seen, AGA's private equity portfolio has proven to be resilient and is well positioned."
Financial highlights
· Significant growth in Adjusted NAV3 to €1.12 billion, up from €1.06 billion in the last quarter.
· Portfolio weighted towards Private Equity (74%) vs. Derived Investments (26%), and resilient sectors such as Tech & Telco (44%), Services (27%) and Healthcare (19%).
Adjusted NAV3 | EUR 1,124m | GBP 1,020m |
Adjusted NAV3 per share | EUR 2.29 | GBP 2.08 |
NAV3 per share | EUR 2.29 | GBP 2.08 |
| Exposure | Q3 2020 | Q3 2020constant currency |
Total NAV Return1 |
| 8.5% | 11.7% |
Total Return1 - Private Equity | 70% | 12.4% | 15.9% |
Total Return1 - Derived Debt | 22% | 2.1% | 5.7% |
Total Return1 - Derived Equity | 3% | (2.4%) | (1.0%) |
Cash & Others | 5% |
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Private Equity portfolio highlights
· The Private Equity portfolio performed strongly in the quarter: Total Return1 of 12.4% (15.9% constant currency).
· Exit activity reflective of Apax Partners' investment strategy and sub-sector expertise (software, digital marketplaces, and specialty pharmaceuticals) and showing a significant re-rating at exit, with portfolio companies having undergone a business transformation under the Apax Funds' ownership.
· Aggregate Gross IRR4 and Gross MOIC4 on Private Equity full exits and IPO's in Q3 2020 were 51% and 5.5x respectively.
· On a look-through basis, AGA invested c.€7.9m in one new investment (MyCase) which also closed in the period.
· Continued strong operating performance from the portfolio companies: Revenue and EBITDA growth of 10.4% and 17.8% respectively across the Private Equity portfolio.
Derived Investments portfolio highlights
· Derived Investments leverage the insights and expertise of the Investment Advisor. The portfolio is weighted towards Tech & Telco and is predominantly invested in Derived Debt (88% of Derived Investments).
· Solid performance of Derived Debt with a Total Return1 of 2.1% (5.7% constant currency).
· Limited exposure to Derived Equity with remaining portfolio still affected by depressed valuation multiples across a number of positions. Total Return1 of (2.4%) ((1.0%) on a constant currency basis).
· Derived Debt exited FullBeauty debt at a Gross MOIC5 of 0.7x, generating proceeds of €1.1m. Gross IRR5 on Derived Equity exit Lonza was 35.0% and Gross MOIC5 was 1.7x.
· Deployment of excess liquidity into Derived Debt with new investments of €13.6m.
For further information regarding the announcement of AGA's 2020 third quarter results, including the Company's results presentation and details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com.
Contact details
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APPENDIX
Movements in NAV
Adjusted NAV3 movements (€m) | Private Equity | Derived Investments | Cash
| Treasury Shares | Facility drawn | Other4
| 3Q 20 Total | LTM Sep 20 | |
Adjusted NAV at 30.06.20 | 742.5 | 281.5 | 33.8 | - | - | 2.9 | 1,060.7 | 1,055.8 | |
+ Investments | 0.3 | 13.6 | (3.7) | - | - | (10.2) | - | - | |
- Distributions/ divestments | (47.5) | (18.1) | 67.0 | - | - | (1.4) | - | - | |
+ Interest and dividend income | - | - | 6.8 | - | - | (1.6) | 5.2 | 20.0 | |
+/- Unrealised gains/(losses) | 113.5 | 5.4 | - | - | - | - | 118.9 | 151.4 | |
+/- Realised gains/(losses) | - | 2.2 | - | - | - | - | 2.2 | 13.4 | |
+/- FX gains/(losses)6 | (24.7) | (8.9) | (0.7) | - | - | - | (34.3) | (53.5) | |
+/- Costs and other movements | - | - | (3.8) | - | - | 1.8 | (2.0) | (7.7) | |
- Dividends paid | - | - | (26.5) | - | - | - | (26.5) | (52.9) | |
+/- Performance fee reserve7 | - | - | - | - | - | - | - | (2.3) | |
+/- Treasury shares | - | - | - | - | - | - | - | - | |
+/- Revolving credit facility drawn/repaid | - | - | - | - | - | - | - | - | |
Adjusted NAV at 30.09.203 | 784.1 | 275.7 | 72.9 | - | - | (8.5) | 1,124.2 | 1,124.2 | |
Private Equity - operational metrics
Private Equity - operational metrics | 30 September 2020 | 30 June 2020 | ||
Portfolio year-over-year LTM revenue growth8 | 10.4% | 11.0% | ||
Portfolio year-over-year LTM EBITDA growth8 | 17.8% | 16.0% | ||
Enterprise Value / EBITDA valuation multiple8 | 17.8x | 17.0x | ||
Net debt / EBITDA multiple8 | 4.1x | 4.2x | ||
Number of closed investments in the period9 | 3 | 6 | ||
Number of exits for the period9 | 2 | 3 | ||
Derived Investments - operational metrics
Derived Investments - operational metrics |
| 30 September 2020 | 30 June 2020 |
Debt year-over-year LTM EBITDA growth10 |
| 22.4% | 9.7% |
Debt average income yield to maturity10 |
| 8.8% | 9.2% |
Debt average years to maturity |
| 5.5 | 5.7 |
Debt average income yield11 |
| 7.8% | 7.8% |
Equity year-over-year LTM earnings growth12 |
| 5.2% | 7.0% |
Equity price-to-earnings ratio12 |
| 7.8x | 20.8x |
Number of investments for the period13 |
| 4 | 4 |
Number of full exits for the period14 |
| 2 | 7 |
Other Invested Portfolio highlights
Invested Portfolio analysis15 | €m | €m | % | % |
Private Equity |
| 784.1 |
| 74% |
- AMI | 21.8 |
| 2% |
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- AEVI | 5.2 |
| 0% |
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- AEVII | 29.1 |
| 3% |
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- AVIII | 263.8 |
| 25% |
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- AIX | 435.4 |
| 41% |
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- ADF | 28.6 |
| 3% |
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- AX | 0.2 |
| 0% |
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Derived Investments |
| 275.7 |
| 26% |
- Derived Debt | 243.4 |
| 23% |
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- Derived Equity | 32.3 |
| 3% |
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Total |
| 1,059.8 |
| 100% |
Footnotes
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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"
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2. | Please be advised that this announcement may contain inside information as stipulated under the Market Abuse Regulations (EU) NO. 596/2014 ("MAR")
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3. | This announcement is 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
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4. | 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
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5. | 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. |
About Apax Global Alpha Limited
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.
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.
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 and over its more than 40-year history, Apax Partners has raised and advised funds with aggregate commitments of over €40 billion. 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 is authorised and regulated by the Financial Conduct Authority in the UK.