18 Aug 2010 14:59
Factsheet June 2010
Aberdeen Private Equity Fund Limited (formerly Bramdean Alternatives Limited) (the "Company")
This Factsheet contains commentary and news for the month ended 30 June 2010, unless otherwise stated.
Background
The Company is a Guernsey closed-ended investment company listed on the London Stock Exchange. The principal investment focus of the Company is to invest in Private Equity and Private Equity Like Funds. The Company has small legacy holdings in a number of Hedge Funds and other Specialty Funds, which are, for the most part, being worked out of the portfolio.
On 3 June 2010 the Board of the Company announced that at the class meeting of the US Dollar shareholders and extraordinary general meeting, both held on 3 June 2010, all resolutions were duly passed.
(a) The change of name of the Company to Aberdeen Private Equity Fund Limited (APEF.L) was approved by shareholders but still needs to be registered with the Registrar of Companies in Guernsey;
(b) The investment objective and policy of the Company was changed as described in the circular dated 10 May 2010;
(c) Conversion of all US Dollar shares into Sterling shares, thereby simplifying the Company's capital structure was approved; and,
(d) The waiver, granted by the Panel on Takeovers and Mergers, of the obligation that would otherwise arise on Elsina Limited (the Company's largest shareholder) to make a general offer to shareholders pursuant to Rule 9 of the City Code as a result of the share conversion proposal in (c) or in consequence of the Company repurchasing its own shares, was approved.
On 7 June 2010 the Company confirmed that the change of name had been registered with the Registrar of Companies in Guernsey and had become effective from that date.
On 25 June 2010, the Company confirmed that the conversion of US Dollar shares into Sterling shares would occur on 2 July 2010 and would be implemented on the basis of a conversion ratio (calculated in accordance with the Company's Articles of Incorporation) of 0.5810 Sterling Shares for every one US Dollar Share (the "Conversion Ratio"). The Conversion Ratio was calculated using the Net Asset Values of the Company's Sterling shares as at 28 May 2010. In addition, a spot currency foreign exchange rate as at 28 May 2010 of USD/GBP 1.4458 was used. Dealings in the 45,540,957 new Shares arising following the conversion commenced on 2 July 2010 and with effect from that date there were 136,366,736 Sterling shares in issue.
June Estimated Net Asset Values
Sterling shares: 89.17 pence
US Dollar shares: US$ 0.7751
As described in the Company's prospectus, and as has been the case since its launch, the net asset value ("NAV") and the NAV per share are both calculated monthly by the Company's administrator based on the latest published NAV for each underlying fund.
With only one exception, investments in underlying funds for the month ended 30 June 2010 are valued using the values (whether final or estimated) as advised by their managers, general partners or administrators. The Company therefore relied on valuation and reporting methods used by the managers, general partners or administrators of the underlying funds in deriving the 30 June 2010 NAV and NAV per share. The remaining holding has been valued at a level recommended by the Company's Investment Manager.
| KEY FACTS |
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| Market Capitalisation | £71.7 million |
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| Investment Manager | Aberdeen Asset Managers Limited |
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| Annual Management Fee | 1.5% |
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| Performance fee | 10% subject to an 8% return and a high watermark |
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| Company Brokers | Matrix Corporate Capital LLP JPMorgan Cazenove |
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| Sterling class share price on 30 June 2010 | 51.25 pence |
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| Number of Sterling shares in issue | 90.825 million |
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| US Dollar class share price on 30 June 2010 | US$ 0.48 |
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| Number of US Dollar shares in issue | 78.384 million |
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| NAV publication | Monthly |
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| May Sterling Estimated NAV per share | 89.17 pence |
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| May US Dollar Estimated NAV per share | US$ 0.7751 |
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| Total Estimated Net Asset Value | US$ 181,911,109.80 |
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| Half-year end | 30 September |
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| Financial year end | 31 March |
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| Company Secretary and Administrator | RBC Offshore Fund Managers Limited |
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| Registrar | Capita Registrars (Guernsey) Limited |
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| Stock Exchange code (Sterling shares) | APEF |
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| Stock Exchange code (U.S. Dollar shares) | APEU |
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| Sedol code (Sterling shares) | B1XCHB9 |
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| Sedol code (U.S. Dollar shares) | B1XCLF1 |
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| ISIN code (Sterling shares) | GG00B1XCHB94 |
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| ISIN code (US Dollar shares) | GG00B1XCLF11 |
Source: Aberdeen Asset Managers Limited
JUNE MARKET COMMENTARY
Equity indices struggled over June as risk appetite waned with most sectors in the US racking up losses. Treasuries took a back seat to events elsewhere. Sentiment in Europe continued to deteriorate and oil credits affected by the oil spill in the Gulf of Mexico continued to weaken.
The Federal Open Market Committee statement confirmed that the committee sees little inflation and appear unlikely to tighten policy until 2011 at the earliest. The US Senate agreed to a diluted version of the financial reform bill, where banks are allowed to invest up to 3% of their Tier 1 capital in private equity and hedge funds, yet prop trading is banned.
Data wise non farm payrolls rose in May, unemployment fell and retail sales were weaker than expected. May new home sales delivered the poorest month on record, reflecting the cessation of tax incentives.
In Europe the ECB announced 3 month fixed rate tenders at full collateral until 1 year end, ensuring that liquidity will be ample over the next 6 months. Updated ECB forecasts on 2011 growth were unsurprisingly weaker than previous estimates and heavily reliant on external demand.
Spain became the latest peripheral country to come under pressure as rumours surfaced that the Government was about to seek financial support from the EU and IMF. The Spanish move to a more transparent method of bank recapitalisation was welcomed by the market and is likely to be adopted by other countries going forward.
The data reflects growing divergences in IP across the region with Germany and Italy up strongly while Greece, Portugal and Ireland remain in decline. Further evidence of a divergence between the Euro area economies was seen as unemployment fell in Germany but increased in most other economies.
The emergency budget was well received by the market. The main focus of the tightening concentrated on reining in public sector finances with additional tightening measures in the form of a hike in VAT to 20% from 17.5% and various tax reforms. The BoE have made it clear that they are content to keep rates low provided debt levels are addressed and inflation continues to tail off.
In terms of data, industrial production fell in April following two strong monthly gains and headline CPI fell. The overall PMI index was static. House price data also softened as the Nationwide house price index fell.
Prime Minister Yukio Hatoyama resigned with Minister of Finance Kan winning the party election to be the new Prime Minister. While the change in leadership took the market by surprise, currency and equity market turbulence was short lived.
In terms of data the picture was mixed. The Economy Watchers Index Survey for May showed a worsening perception of economic conditions with a fall. The Real GDP estimate for Q1 2010 rose from a slight upward revision, exports rose, and core CPI deflation also eased in May.
PORTFOLIO NEWS
The Company's commitments total $208.0 million. No new commitments were made during June. The total drawn down on commitments made is approximately $122.7 million, with 4 capital calls being made in June, totalling $1.54m. The Company has received total distributions of $7.6 million since inception. The Company received $899,658 in distributions in June. Revaluations were received from two managers in the month. One was a small downward revaluation (Pine Bridge Latin America Partners II LP at 0.1%) and one was an upward revaluation (HIG Bayside Debt & LBO Fund II LP at 5.9%).
We are continuing to see good exits from the funds we are invested in, including exits through IPO. As such distributions are tracking broadly to plan which is encouraging for the Company given its vintage profile.
Our assessment of a number of potential investment opportunities continues. We commented in last month's factsheet that we were in the final stages of due diligence with one opportunity. Following extensive operational and legal due diligence we elected not to proceed. Whilst we can never be fully sure about the exact quantum and pattern of future returns from Private Equity, Aberdeen does demand complete comfort on the quality of ancillary services such as administrator and auditor, and it was on these issues that this particular investment failed.
We are excited about a number of already identified potential investments across the private equity spectrum and will be developing these ideas over the coming months.
The overall private equity market, particularly in Europe, is gaining momentum and we note that deal momentum is increasing, particularly in the mid market buyout space. Fund raising in the mega buyout sector continues to struggle. This appears to be a function both of banks unwilling to supply the necessary leverage to support such large deals and investor concern not to be drawn back in any hurry to this sector.
To remind, the Company has current allocations to 20 different funds, the vast majority of which are Private Equity and Private Equity like funds. As previously advised we have a small allocation to Hedge Funds, which are legacy investments relating to the Company's previous investment objective team. These now represent less than 0.5% of the portfolio's NAV. To add further to our disclosures in the previous monthly factsheet, the absolute value of the Deephaven holding is now down to c$608,000 and as previously advised we expect to see further returns of funds from this holding over the remainder of this calendar year. Whilst we still expect this to be a substantive return of capital we cannot gauge with certainty the timing or magnitude of redemptions, but will disclose as we receive them. The investment in King Street Capital is a much smaller figure of c$56,000. This is a 'sidepocket' investment, and is considerably more illiquid than the Deephaven holding. The underlying investment is into German real estate and we expect this to be a 'line' in the portfolio for the time being. Although this is effectively a rounding error in the portfolio, nonetheless it is a distraction and we will endeavour to work this out.
The portfolio's commitment cover which includes cash and the strategic hedge funds was 90.8% at the end of the month. The pure cash commitment cover is 88.5%.
Portfolio Highlights
Geographical Allocation
| North America 57.2% |
| Europe 5.5% |
| Global 33.1% |
| Asia & Other 4.2% |
Portfolio Holdings Asset Allocation
| Cash 44.6% |
| Private Equity & Private Equity Like Funds 52.6% |
| Specialty Funds 2.4% |
| Strategic Hedge Funds 0.4% |
Source: Aberdeen Asset Managers Limited
US Dollar Share Performance*
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| as at | 1 month | 3 months | 6 months | 1 year |
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| 30/06/2010 |
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| US Dollar Share Price | 0.5 | -4.0 | -4.0 | -9.4 | -20.0 |
| US Dollar NAV | 0.8 | -0.6 | -1.8 | 0.3 | 2.2 |
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| Discrete Performance |
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| 30/06/2010 | 30/06/2009 |
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| Share Price | -20.0 | -41.2 |
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| NAV | 2.2 | -24.2 |
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* The entire issued share capital of US Dollar shares was converted into Sterling shares on 2 July 2010
Sterling Share Performance
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| as at | 1 month | 3 months | 6 months | 1 year |
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| 30/06/2010 |
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| Share Price | 51.3 | -6.4 | -5.1 | -1.4 | 0.0 |
| NAV | 89.2 | -3.9 | -0.4 | 8.3 | 12.5 |
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| Discrete Performance |
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| 30/06/2010 | 30/06/2009 |
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| Share Price | 0.0 | -40.2 |
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| NAV | 12.5 | -21.6 |
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PORTFOLIO HOLDINGS (INVESTED CAPITAL) ON 30 June 2010
| Manager | Type | Portfolio Weighting |
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| Cash | Cash | 44.63% |
| Oaktree OCM Opportunities Fund VIIb LP | Distressed | 10.41% |
| Greenpark International Investors III LP | Secondaries | 5.93% |
| Coller International Partners V LP | Secondaries | 3.87% |
| Thomas H Lee Parallel Fund VI LP | Buyout | 3.79% |
| MatlinPatterson Global Opportunities Partners III LP | Distressed | 3.36% |
| Silver Lake Partners III LP | Buyout | 3.31% |
| DFJ Athena LP | Venture Capital | 3.20% |
| HIG Bayside Debt & LBO Fund II LP | Distressed | 3.08% |
| SVG Strategic Recovery Fund II LP | Activist Small Cap | 3.03% |
| Tenaya Capital V LP | Venture Capital | 2.48% |
| Goldman Sachs Capital Partners VI LP | Mega Buyout | 2.42% |
| Terra Firma Capital Partners III LP | Buyout | 1.84% |
| Thoma Bravo Fund IX LP | Growth Capital | 1.82% |
| Pine Brook Capital Partners LP | Growth Capital | 1.77% |
| Resonant Music LP | Specialty | 1.66% |
| Rho Ventures VI LP | Venture Capital | 1.31% |
| PineBridge Latin America Partners II LP (formerly AIG Brazil Special Situations II LP) | Growth Capital | 0.95% |
| Aarkad Plc | Specialty | 0.76% |
| Deephaven Global Multi-Strategy Fund Ltd | Strategic Hedge Funds | 0.36% |
| King Street Capital Ltd | Strategic Hedge Funds | 0.03% |
Source: Aberdeen Asset Managers Limited
Cash: The Company currently invests its cash with counterparties that appear on Aberdeen Asset Managers Limited's approved lending list.
Strategic Hedge Funds: The part of the Company's portfolio formerly managed by Man Investments (CH) AG).
DISCLAIMER
This Factsheet update has been produced by Aberdeen Asset Managers Ltd which is authorised and regulated by the Financial Services Authority ("FSA") in the United Kingdom. Bramdean Asset Management LLP was the Company's investment manager for the period prior to 19 November 2009 and Aberdeen Asset Managers Ltd has been the Company's investment manager for the period since 19 November 2009.
This material constitutes a financial promotion for the purposes of the Financial Services and Markets Act 2000 (the "Act") and the handbook of rules and guidance issued from time to time by the FSA (the "FSA Rules").
This material is provided for information purposes, is intended for your use only and does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. This material has been provided specifically for the use of the recipient only and must be treated as proprietary and confidential information. It may not be passed on, nor reproduced in whole or in part under any circumstances without express written consent from Aberdeen. The material provided is not intended to provide a sufficient basis on which to make an investment decision. Information and opinions presented in this material have been obtained or derived from sources believed by Aberdeen Asset Managers Ltd and its affiliates to be reliable, but Aberdeen makes no representation as to their accuracy or completeness. Aberdeen accepts no liability for loss arising from the use of this material. Aberdeen gives no representations or warranty that any indicative performance or return will be achieved in the future or that the investment objectives and policies from time to time of the Company will be achieved.
You should note that, if you choose to invest in the Company, your capital will be at risk and you may therefore lose some or all of any amount that you choose to invest. This material is not intended to constitute, and should not be construed as, investment advice.
Potential investors in the Company should seek their own independent financial advice. Aberdeen neither provides investment advice to, nor receives and transmits orders from, investors in the Company nor does it carry on any other activities with or for such investors that constitute "MiFID or equivalent third country business" for the purposes of this FSA Rule.
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE RESULTS.
Please note that up-to-date information on the Company, including its monthly NAV and share prices, factsheets, Annual Report and Financial Statements, Prospectus and portfolio information can currently be found at www.aberdeenprivateequity.co.uk.
Capita Registrar's helpline is 0871 664 0300 (calls cost 10 pence per minute plus network extras, lines are open 8.30am-5.30pm Monday-Friday). For callers outside the UK, please dial: +44 20 8639 3399.
Registered Office: Canada Court, Upland Road, St. Peter Port, Guernsey, GY1 3QE, Channel Islands.
CONTACT DETAILS:
Aberdeen Asset Managers Limited
Ian Massie
Head of Investment Trust Investor Relations
E: ian.massie@aberdeen-asset.com T: +44 (0)131 528 4123