BPET.L Regulatory News (BPET)

F&C Private Equity Trust plc

· NAV total return for the three months of 2.4 per cent for the Ordinary Shares.

· Share price total return for the year to date of 8.3 per cent for the Ordinary Shares.

· Two new co-investments were made during the quarter: Calucem and Ashtead.

Manager's Review

Introduction

At 31 March 2016 the net asset value ('NAV') of the Company was £222.5 million, giving a fully diluted NAV per Ordinary Share of 302.72p, an increase of 2.4% over the quarter. At that time the Company had net cash of £1 million. Outstanding undrawn commitments stood at £64.3 million at the end of the period and of this £17 million is to funds where the investment period has expired and hence only a small proportion of this amount is expected to be drawn.

New Investments

During the quarter two new commitments to funds were made. £4.0 million was committed to FPE Fund II, a UK-focused growth equity fund managed by a team which was formerly in Stonehage Fleming, Europe's largest multi-family office. We have co-invested with this team on two previous occasions. €8.0 million was committed to Astorg VI, a French-focused mid-market buyout fund. Astorg is a well established group which specialises in control investments in B2B companies that are leaders in niche sectors. After the quarter end £10 million was committed to August Equity IV, the latest fund from the UK lower mid-market specialists with whom we have invested for over a decade.

Two new co-investments were made during the quarter. €4.0 million was invested for 6.2% of Calucem, a Croatia based, but German managed, speciality chemicals company that produces different types of Calcium Aluminate Cement (CACs). Calucem is the world number two producer of CACs, which are used in monolithic refractories, building chemistry, high strength mining grouts, corrosion resistant water pipe linings, environmentally-friendly insulation manufacturing and fast-setting public works repairs. The deal is led by Italian mid-market private equity manager Ambienta.

£4.4 million was invested for 14.3% of Ashtead Technology, an Aberdeen-based oil services company which rents and services specialist equipment used in inspection, maintenance and repair for existing in production fields, brownfield extension activity and construction of new oil and gas fields. The business is more leveraged to the production phase and brownfield expansions than new field projects. The deal is led by Buckthorn, an emerging UK-based private equity manager with a specialism in the energy and energy services market.

Following these two deals the Company's exposure to co-investments is 23%. A number of other opportunities are under consideration and we expect this component to grow steadily.

Drawdowns from funds amounted to £5 million during the quarter. There was a strong international mix of new companies entering the portfolio. In France, Chequers Capital XVI called £0.7 million mainly for two new investments: Viscominvest (B2B graphic media products) and Dies Invest (aluminium extrusions). In Spain, Corpfin Capital IV called £0.3 million for Perfumerias Arenal, a health, beauty and pharmacy retailer based in NW Spain. In Denmark, Procuritas Capital V called £0.3 million for a build-up of a HVAC company based around a division of Dantherm A/S. In Italy, Progressio II called £0.2 million for Industrie Chimiche Forestali, a manufacturer of adhesives and special fabrics for the footwear, automotive and flexible packaging sectors.

Back in the UK some of our longstanding investment partners made some diverse new investments. Inflexion 2010 called £0.4 million mainly for British Engineering Services, the former engineering inspection and consultancy business of RSA. Inflexion Buyout IV called £0.5 million for Alcumus, a provider of compliance risk management and certification services. Piper Private Equity V called £0.2 million for Monica Vinader, a producer of affordable jewellery.

The combination of co-investments and drawdowns from funds totalled £12.1 million in the quarter.

Realisations

The healthy flow of realisations has continued into 2016, although at a slightly reduced volume from the same period last year. Exits were notably varied this quarter. The largest distribution of £2.2 million was from HealthpointCapital Partners III which sold surgical robotics company Blue Belt Technologies to Smith & Nephew achieving a 3x investment multiple and 30% IRR. £1.3 million came in from Dunedin Buyout II following the partial exit of Citysprint, the UK market leading same-day courier and logistics-services company, with a valuation equivalent to 2.8x cost. In Asia AIF Capital Asia III sold Chinese generic drugs company Bestime to a consortium of buyers returning £0.7 million (5.2x cost, IRR 26.8%). The Candover 2005 Fund continued its liquidation with the sale of the final part of Dutch conglomerate Stork returning £0.5 million (0.5x cost). Gilde Buyout III exited CID Lines, the hygiene and disinfectants company, through a sale to IK Investment Partners returning £0.5 million (6.1x cost, 42% IRR). In Italy, Mid-Capital Mezzanine returned £0.5 million from the redemption of loan notes in polymers company, Polynt. In Spain, Portobello Capital II exited insurance sector BPO company Multiasistencia in a sale to a HarbourVest vehicle returning £0.5 million.

Valuation Changes

There were relatively few significant changes in valuation this quarter. It is noteworthy that of the uplifts, several are the result of private-equity backed companies achieving full or partial exits through stockmarket listings. Argan Capital was up by £0.6 million principally due to its Swedish healthcare business Humana being listed on the Stockholm exchange. This achieved a valuation equivalent to 5.0x cost and 24% IRR. Capvis III and Capvis IV were uplifted, by £0.5 million and £0.2 million respectively, following the IPO on the Swiss exchange of vacuum valves company VAT Group AG at the equivalent of 3.3x cost. Other funds were uplifted reflecting good trading of portfolio companies. This included Hutton Collins III (+£0.5 million) where its two restaurant holdings, Wagamama and Byron Burgers are doing well. In Italy, ILP III was up by £0.4 million due to good trading from Oro Cash (cash for gold) and Cloud Italia Telecom.

There were some downgrades. Candover 2005 was down by £0.7 million mainly because, although two of its remaining holdings Parques Reunidos (Spain based amusement parks) and Technogym (gym equipment) achieved IPOs, the values were below the previous carrying values. In our co-investment portfolio there were downgrades based on below budget trading for David Philips (furniture for the rental sector) (-£0.2 million), Meter Provida (smart meters for gas) (-£0.4 million) and Nutrisure (superfoods) (-£0.2 million).

Financing

The Company's balance sheet was ungeared at the quarter end, but we expect to gear up modestly over the coming months as new investments are made. The £70 million revolving credit facility has more than three years to run. We have a good pipeline of fund and co-investment opportunities and the intention is to pursue these selectively, building up gearing to a level which is enough to contribute to overall return without taking too much risk. There was a notable impact of currency movements in the quarter, principally reflecting sterling weakness against the euro and to a lesser extent the dollar. This has added approximately 3.0% to the portfolio valuation over the quarter.

Outlook

The start of 2016 has seen a lower amount of new investment and exit activity than the months immediately before, however there is plenty of deal making across the breadth of the European mid-market. There are some well known risks, such as the possibility of Brexit, which are acting as a deterrent for some investors and the generally lower economic growth rates are creating some caution in longer term profit projections. The provision of equity and debt for buyouts is very good and this, coupled with a growing understanding and appreciation of the private equity model by investors and companies alike is keeping the market buoyant. We expect healthy levels of activity across the portfolios of our investment partners to continue through the year with further progress for shareholders.

Hamish Mair

Investment Manager

F&C Investment Business Limited

F&C PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2016 (unaudited)

F&C PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2015 (unaudited)

F&C PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

year ended 31 December 2015 (audited)

F&C PRIVATE EQUITY TRUST PLC

Balance Sheet

F&C PRIVATE EQUITY TRUST PLC

Reconciliation of Movements in Shareholders' Funds

1. The unaudited quarterly results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 31 December 2015.

2. Investment management fee:

3. Finance costs:

4. The basic return per Ordinary Share is based on a net profit on ordinary activities after taxation of £5,163,000 (31 March 2015 - loss £1,530,000; 31 December 2015 - profit £21,215,000) and on 72,064,084 (31 March 2015 - 72,282,273; 31 December 2015 - 72,143,369) shares, being the weighted average number of Ordinary Shares in issue during the period.

The fully diluted return per Ordinary Share is based on a net profit on ordinary activities after taxation of £5,163,000 (31 March 2015 - loss £1,530,000; 31 December 2015 - profit £21,215,000) and on 73,941,429 (31 March 2015 - 74,241,429; 31 December 2015 - 74,102,525) shares, being the weighted average number of Ordinary Shares in issue during the period after conversion of the Ordinary Share warrants.

5. The basic net asset value per Ordinary Share is based on net assets at the period end of £222,497,000 (31 March 2015 - £201,978,000; 31 December 2015 - £216,125,000) and on 72,912,872 (31 March 2015 - 72,282,273; 31 December 2015 - 71,982,273) shares, being the number of Ordinary Shares in issue at the period end.

The fully diluted net asset value per Ordinary Share is based on net assets at the period end of £223,834,000 (31 March 2015 - £204,524,000; 31 December 2015 - £218,671,000) and on 73,941,429 (31 March 2015 - 74,241,429; 31 December 2015 - 73,941,429) shares, being the number of Ordinary Shares in issue at the period end after conversion of the Ordinary Share warrants.

6. The financial information for the three months ended 31 March 2016, which has not been audited or reviewed by the Company's auditor, comprises non-statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015, on which the auditor issued an unqualified report, will be lodged with the Registrar of Companies. The quarterly report is available on the Company's website www.fcpet.co.uk.

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