Apax Global Alpha Regulatory News (APAX)

(LSE: APAX)

Apax Global Alpha Limited

Quarterly results for the period ended 31 March 2019

For further information regarding the announcement of AGA's 2019 first quarter results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com. 

Key highlights

· 1Q19 Total NAV Return1 was +8.7% (+6.5% constant currency)2. LTM3 Total NAV Return1 was +17.2% (+11.5% constant currency)2 reflecting strong performance of the Private Equity portfolio

· 2018 second semi-annual dividend of 4.12 pence was paid on 5 April 2019, equivalent to 2.5% of euro NAV at 31 December 2018

Outstanding commitments and funding sources

· AGA was 97% invested with net cash after liabilities of €28.0m4

· Outstanding commitments to the Apax Funds (together with recallable distributions) amounted to €259.2m (26% of NAV) with funding sources of €459.0m (46% of NAV). Funding sources comprise Derived Investments of €291.0m, undrawn facility of €140.0m, cash of €48.9m and net current liabilities of €20.9m

1Q19 performance highlights

· The contributions to Total NAV Return1 of +8.7% were: Private Equity +6.4%, Derived Investments +0.3%, FX +2.2% and costs and other movements -0.2%

· Derived Debt contributed +0.5% and Derived Equity -0.2% to Total NAV Return1

· Total Return1 of Private Equity was 12.3% (10.0% constant currency). Derived Debt delivered Total Return1 of 4.8% (2.5% constant currency). Derived Equity had a Total Return1 of 1.2% (-1.5% constant currency)

· Aggregate Gross IRR5 and Gross MOIC5 on Private Equity two full exits was 38.2% and 3.3x

· Gross IRR6 and Gross MOIC6 on one Derived Debt exit was 2.4% and 1.0x and on three Derived Equity exits was 36.5% and 1.3x 

Ralf Gruss, COO of Apax Partners, said:

"The strong operational momentum and strong exits of the Private Equity portfolio continued in the first quarter of 2019, translating into value accretion of the Invested Portfolio and strong performance for AGA."

Private Equity portfolio highlights

· Private Equity portfolio delivered a strong performance with a Total Return1 of +12.3% (+10.0% constant currency)

· Unrealised gains were €59.9m and favourable FX movements were €13.4m

· On a look-through basis, AGA invested or committed c.€49.1m in three new companies

· Calls of €5.1m were paid to AIX (€3.1m), ADF (€1.8m) and AMI (€0.2m)

· Distribution of €0.4m to AGA from AMI in relation to Ten Petroleum and Max

· Aggregate Gross IRR5 and Gross MOIC5 on full exits was 38.2% and 3.3x

· FX exposure of c.51% in US dollar denominated investments

· Tech & Telco was the most heavily weighted sector, accounting for 38% of the Private Equity portfolio

· Private Equity portfolio is diversifying across fund vintages

Derived Investments portfolio highlights

· A combination of Derived Debt Total Return1 of +4.8% (+2.5% constant currency) and Derived Equity Total Return1 of +1.2% (-1.5% constant currency) led to an overall Total Return1 of +3.2% for Derived Investments (+0.8% constant currency)

· Realised gains were €1.9m and unrealised losses of €3.0m stood against income of €3.4m and positive FX movements of €7.6m

· AGA had one add-on equity investment12 in QAD

· AGA exited one debt investment and three equities with proceeds of €39.6m13

· Gross IRR6 on Derived Debt exits was 2.4% and Gross MOIC6 was 1.0x. Gross IRR6 on Derived Equity exits was 36.5% and Gross MOIC6 was 1.3x

· FX exposure of c.62% in US dollar denominated investments

· Services was the most heavily weighted sector, accounting for 42% of the Derived Investments portfolio

· Portfolio split between Derived Debt and Derived Equity was 61% and 39% respectively

Other Invested Portfolio highlights

· Exposures remained weighted towards Private Equity at 70% and Derived Investments of 30%

· FX exposure c.54% in US dollar denominated investments

For more information, the Company's quarterly results presentation is available to view at: www.apaxglobalalpha.com 

Contact details

Footnotes

1. Total NAV Return means the movement in the Adjusted NAV per share over the period plus any dividends paid. Total Return reflects the sub-portfolio performance on a stand-alone basis. It excludes items at overall AGA level such as cash, management fees and costs

2. Constant currency returns calculated the same as Total NAV Return adjusted to remove the impact of FX

3. LTM = Last Twelve Months to 31 March 2019

4. Net cash after liabilities of €28.0m calculated by taking cash of €48.9 less net current liabilities of €20.9m at 31 March 2019

5. Aggregate Gross IRR and Gross MOIC on full exits calculated based on the expected aggregate cash flows in euro across all funds for the deals transacted in the period; Exact and Assured Partners were signed in 1Q19 and are expected to close in 2Q19 and Gross IRR and MOIC are subject to change once final proceeds have been received. Gross IRR represents concurrent Gross IRR

6. Gross IRR and Gross MOIC calculated based on aggregate euro cash flows since inception of deals realised during the year

7. Adjusted NAV represents NAV of €988.2m adjusted for the performance fee reserve of €0.3m at 31 March 2019

8. FX on cash includes the revaluation of cash balances and net losses arising from the differences in exchange rates between transaction dates and settlement dates, and unrealised net losses arising from the translation into euro of assets and liabilities (other than investments) which are not denominated in euro

9. At December 2018 and March 2019, 13 and 15 investments were respectively excluded as these are financial services companies often valued on book value or for which earnings financials are not available e.g. complex carve-outs or growth investments. Net debt/EBITDA multiple and EV/EBITDA valuation multiple excludes MatchesFashion and Vyaire Medical due to low EBITDA from opex investments and short-term fluctuations in EBITDA respectively

10. New investments in the first three months of 2019. Fractal closed in February 2019; Trade Me signed in December 2018 and AssuredPartners signed in February 2019 with both expected to close in 2Q19

11. Represents exits which were signed but not yet closed in the first three months of 2019. Both AssuredPartners and Exact signed in February 2019 and are expected to close in 2Q19

12. There was one add-on equity position (QAD) and no new purchases in the period. FullBeauty second lien debt restructured in the period and in lieu of this AGA received new second lien debt, equity and warrants. These have been excluded from the sales and purchases above

13. One debt position and three equity positions were fully realised in 1Q19. Additionally, FullBeauty second lien debt restructured in the period and in lieu of this AGA received new second lien debt, equity and warrants. These have been excluded from the sales and purchases above

14. Gross Asset Value weighted average of the respective metric across the Derived Investments Debt portfolio

15. Gross Asset Value weighted average of the current full year income (annual coupon/clean price as at the respective date) for each debt position in the Derived Debt portfolio as at the respective date

16. Gross Asset Value weighted average of the respective metric across the Derived Investments Equity portfolio. (Cengage and QAD were excluded from both LTM earnings growth and P/E ratio due to negative earnings and Answers and Solara were excluded as information was not available)

17. Invested Portfolio excludes cash and cash equivalents, revolving credit facility drawn and net current assets; including these, the NAV is €988.5m. Adjusted NAV excludes the performance fee reserve of €0.3m and is €988.2m at 31 March 2019

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. Please be advised that this announcement may contain inside information as stipulated under the Market Abuse Regulations (EU) NO. 596/2014 ("MAR")

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

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

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. 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 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 c.€40 billion as at 31 March 2019. 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.