Apax Global Alpha Regulatory News (APAX)

(LSE: APAX)

Apax Global Alpha Limited

Quarterly results for the period ended 30 September 2018

For further information regarding the announcement of AGA's 2018 third quarter results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com. 

Key highlights

· 3Q18 Total NAV Return1 was +1.8% (+1.9% constant currency). LTM2 Total NAV Return was +11.6% (+11.9% constant currency)3, reflecting strong performance of the Private Equity portfolio

· 3Q18 Adjusted NAV4 decreased by €6.6m to €937.3m reflecting the first semi-annual dividend paid in respect of 2018 of €23.7m

· Adjusted NAV per share of €1.91 (£1.70), compared to €1.92 (£1.70), at 30 June 2018

Outstanding commitments and funding sources

· AGA was 102% invested with a net cash balance of -€14.1m as the facility was drawn by €17.3m at the end of the period

· Outstanding commitments to the Apax Funds (together with recallable distributions) amounted to €278.4m (30% of NAV) with funding sources of €438m (47% of NAV) which comprises €314.8m of Derived Investments and €123.6m related to undrawn facility, net cash and net current assets

3Q18 performance highlights

· The Invested Portfolio5 delivered a Total NAV Return of +1.8%, Private Equity contributed +3.5%, Derived Investments contributed -1.6%, and FX had an impact of -0.1%

· Derived Debt contributed +0.1% and Derived Equity -1.7% to Total NAV Return

· Aggregate Gross IRR6 and Gross MOIC6 on full exits (GlobalLogic and Azelis) was 53.7% and 4.5x

· Gross IRR7 and Gross MOIC7 on Derived Debt exits was 9.9% was 1.2x. There were no realisations from the Derived Equity portfolio

Ralf Gruss, COO of Apax Partners, said:

"These are encouraging results that demonstrate the performance potential of AGA. The strong operational momentum of the Private Equity portfolio is translating into value accretion of the Invested Portfolio. A maturing Private Equity portfolio also continues to create lucrative exit opportunities."

Private Equity portfolio highlights

· The Apax Funds returned €33.8m to AGA, mainly from the sale of GlobalLogic

· Unrealised gains were €33.2m and adverse FX movements were €0.3m

· In Q3, Apax IX completed two new deals (Genius Sports and Authority Brands) amounting to €16.6m

· In Q3, aggregate Gross IRR6 and Gross MOIC6 on full exits (GlobalLogic and Azelis) was 53.7% and 4.5x

· Over the past twelve months, €79.9m was invested and €74.2m was realised from the Private Equity portfolio

· FX exposure of c.45% in US dollar denominated investments

· Sector exposure spread across all Apax Partners' focus industries. Tech & Telco and Services were the most heavily weighted sectors, accounting for 32% and 31% of the Invested Portfolio

· Geographic exposure evenly spread between North America and Europe, representing 41% and 41% of the Invested Portfolio

· Private Equity portfolio is maturing with 87% of Private Equity investments from 2014-2017 vintage

Derived Investments portfolio highlights

· Realised losses were €3.9m, unrealised losses were €16.4m, income of €5.6m, offset by adverse FX movements of €0.7m

· In Q3, AGA completed two new investments in debt (Alexander Mann and Veritext), one new equity investment (Lonza) and two add-on investments in equity (Mitie and Just Group), amounting to €33.7m

· In Q3, AGA fully exited four debt investments generating proceeds of €40.5m. There were no equity exits

· Gross IRR on Derived Debt exits was 9.9%7 and Gross MOIC was 1.2x7

· Over the past twelve months, €208.3m was invested and €236.5m was realised from the Derived Investments portfolio

· FX exposure of c.56% in US dollar denominated investments

· Sector exposure spread across all Apax Partners' focus industries. Services were the most heavily weighted sector, accounting for 37% of the Invested Portfolio

· Geographic bias towards North America representing 49% of the Invested Portfolio

· Portfolio split between Derived Debt and Derived Equity was 50% and 50% respectively

Other Invested Portfolio highlights

· Exposures remained skewed towards Private Equity at 67% and Derived Investments of 33%

· FX exposure c.48% in US dollar denominated investments

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

Apax Funds valuations as at 30 September 2018

AGA is pleased to announce it has received the Apax Funds' valuations as at 30 September 2018. 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 30 September 2018 are set out in AGA's 3Q 2018 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 to, have reported the following movements for the period from 30 June 2018 to 30 September 2018:

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. LTM = Last Twelve Months to 30 September 2018

3. Total NAV Return in the nine months to September 2018 was +7.8% (+7.2% constant currency)

4. Adjusted NAV represents NAV of €939.7m adjusted for the performance fee reserve of €2.4m at 30 September 2018

5. Invested Portfolio excludes cash and cash equivalents, revolving credit facility drawn and net current assets; including these, the NAV is €939.7m. Adjusted NAV excludes the performance fee reserve of €2.4m and is €937.3m at 30 September 2018

6. Gross IRR and Gross MOIC on full exits calculated based on the aggregate cash flows in euro across all funds for the realised deal in GlobalLogic which closed in August 2018 and Azelis which is expected to close in November 2018. Gross IRR represents concurrent Gross IRR

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

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 2017 and June 2018 nine and twelve 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. The increase was due to new portfolio additions

10. New closed investments in the first nine months of 2018

11. Represents closed exits in the first nine months of 2018

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

13. 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

14. Gross Asset Value weighted average of the respective metric across the Derived Investments Equity portfolio. (Cengage, Answers, Solara and Rue21 excluded from both LTM earnings growth and P/E ratio; additionally Mitie was excluded from LTM earnings growth. In prior period, Solara was included in Strides pharma science following its demerger in 2Q18

15. There were two new investments in Derived Debt (Alexander Mann and Veritext), whereas there was one new Derived Equity investment (Lonza) and two Derived Equity add-on positions (Mitie and Just Group)

16. Four debt realisations comprise of two debt positions that were called (Aptos and Vertafore) and two positions that were fully exited (Advantage Sales & Marketing and Rentpath). There were no equity realisations in 3Q18

17. Where relevant, the valuations are expressed net of any estimated carried interest payable should the funds hypothetically be liquidated as at 30 June 2018 or 30 September 2018

18. 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

19. Not Meaningful as Apax Digital has drawn down on the capital call facility as a bridge to the first capital call for fund costs and investments in the fund

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 35-year history, Apax Partners has raised and advised funds with aggregate commitments of over €43 billion as at 30 September 2018. 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.