BPET.L Regulatory News (BPET)

BMO Private Equity Trust PLC

· NAV total return per Ordinary Share for the three-month period ended 31 March 2020 of (0.5) per cent.

· NAV of 405.63p per Ordinary Share.

· Share price total return for the three months of (23.1) per cent for the Ordinary Shares.

· Quarterly dividend of 3.99p per Ordinary Share.

Introduction

As at 31 March 2020, the net assets of the Company were £299.9 million, giving a Net Asset Value ("NAV") per share of 405.63p, which taking into account the dividend of 3.87p paid on 31 January 2020, gives a decrease of 0.5 per cent over the quarter. At 31 March 2020 the Company had net debt of £48.6 million. Outstanding undrawn commitments were £145.9 million, including £15 million to funds where the investment period has expired.

It is worth noting that this valuation is mainly comprised of valuations at 31 December 2019 updated for subsequent cashflows. Only a minority of valuations for 31 March 2020 have been received at the time of preparation of the valuation. The effects of the Coronavirus (COVID-19) on company valuations will take some time to be fully reflected. 19 per cent of the portfolio by value has been valued based upon 31 March 2020 valuations and of these the weighted average decrease in NAV is approximately 7 per cent. The funds element of this was down by 13.4 per cent and the co-investment element by 3.8 per cent. At this stage it is not possible to be sure that this is a fully representative sample but there is no evidence of any subsequent deterioration. By the June valuation we should have all the March reports and some of the June reports and this will give a better, although still incomplete, view of the impact on the Company's portfolio.

In line with the Company's policy to pay dividends quarterly and in accordance with its published calculation basis, a dividend of 3.92p per share was paid on 30 April 2020 and a further dividend of 3.99p per share will be paid on 31 July 2020 to shareholders on the register on 10 July 2020 with an ex-dividend date of 9 July 2020. Please note that this dividend calculation incorporates the Company's audited NAV for the year ended 31 December 2019 announced to the market on 15 April 2020.

New Investments

During the first quarter two new commitments to funds were made. €6.0 million has been committed to Poland focused mid-market buyout fund Avallon MBO III. €5.0 million has been committed to Montefiore V, a France based mid-market buyout fund with an emphasis on the services sector. Both of these involved backing management teams that we have backed successfully before. There were no further new commitments to funds or co-investments from January onwards. Our approach from here is to be highly cautious until the outcome of the COVID-19 crisis is clearer and the timing of recovery is more easily discernible.

The funds in our portfolio have made new investments during the first quarter. The more significant individual investments are diverse by sector and geography. Avallon MBO III's first investment is in Clovin (washing powder) and £0.8 million was called for this. £0.7 million has been invested by Czech Republic focused fund ARX IV in TES Vestin (components for electric motors and machines). £0.7 million has been invested by Nordic fund Summa II in Olink (protein analysis technology) and Infobric (access and energy control solutions). In the co-investment portfolio there were some calls for add-ons or re-financings. Our US based co-investment in electric motor components company Sigma, called £1.3 million for the acquisition of Tooling Dynamics (metal stamping and processing company). There was a capital call of £0.7 million by UK based pet shop chain Jollyes. Our co-investment in US based restaurant chain Rosa Mexicano was refinanced with a further investment of £0.5 million.

In total the combination of drawdowns from funds and co-investments amounted to £11.7 million in the first quarter.

Realisations

The largest realisation was the previously announced exit of Nordic insurance services company Recover Nordic which has been sold by Agilitas to EQT. The proceeds are being paid in two stages with the first amount of £4.3 million received during the quarter. The remainder of the proceeds (£3.8 million) is expected imminently. The overall return is 3.7x cost and IRR of 24 per cent. There were a number of distributions from our fund's portfolio. Corpfin IV returned £1.5 million, much of which related to the sale of medical equipment distributor Palex which has been sold to Ergon, achieving an excellent 3.8x cost and 50 per cent IRR. Capvis III returned £0.8 million from the exit of medical OEM supplier Ondal which has been sold to IK Investment Partners delivering 2.0x cost and 10 per cent IRR. DBAG V completed its sale of its holding in packing and process technology company Romaco returning £0.4 million which represented 2.5x cost and 16 per cent IRR. In the US Graycliff Private Equity Partners III has had two exits. £0.6 million came in from the sale of electronic systems supplier 901D, representing an excellent 6.1x cost and 76 per cent IRR. £0.6 million was also returned from the exit of logistics and installation services company NAL Holdings. The total proceeds of realisations in the first quarter was £9.7 million.

Valuation Changes

The largest single influence on valuations this quarter was the move in currencies with Sterling's relative weakness adding approximately £6.0 million to the valuation after accounting for the Euro denomination of the Company's debt. There were a number of uplifts in the co-investment portfolio including Sigma (+£2.0 million), TWMA (+£0.5 million), CETA (+0.4 million) and Coretrax (+£0.3 million). In each case this reflects good trading and progress made by 31 March 2020. In the fund's portfolio Life Science Partners III was up by £0.2 million. There were, unsurprisingly, a number of downgrades. The largest of these was for Accuvein (-£3.2 million) where the postponement of the anticipated exit and a requirement for new funding has caused this adjustment. The overall outlook for the company remains promising. Our large holding in oil services group Ashtead is down by £0.7 million and other co-investments such as Avalon (-£0.3 million) and Babington (-£0.3 million) are also down.

In addition, there were a number of downward adjustments across a range of funds internationally. Collectively this gave a marginal overall decline in the valuation. As noted above this valuation does not yet fully reflect the impact of the COVID-19 which will take time to feed through into trading and valuations of the portfolio companies.

Financing

The Company's net debt of £48.6 million at 31 March 2020 gives gearing of 13.9%. The Company has just under half of its revolving credit facility available to meet any difference between the proceeds from realisations and the combined drawdowns for co-investments and from funds. It is expected that for the next few months there will be a sharp fall-off in both new investments and in exits. There are likely to be a series of drawdowns to support companies with re-financings. We have conducted a detailed review of our portfolio in conjunction with our investment partners identifying those companies which expect to have a requirement for fresh equity. Our assessment is that somewhat fewer than a quarter of portfolio companies will be in this situation and that the equity required to support them will in most cases be a small proportion of the invested capital per company. The Company is well placed to meet these requirements as they arise. For all companies it is a serious situation with nearly all of them facing considerable challenges due to the lockdowns internationally. Most companies will be able to cope with some months of this upheaval. A small number are in jeopardy. All of them are receiving intensive attention from their private equity investors.

Outlook

The overwhelming concern of investors and investee companies alike is the extent of the impact of COVID-19 on the value and prospects of portfolio companies. Our portfolio contains over 30 direct holdings in companies and, through its portfolio of over 100 funds, over 400 additional underlying companies. These companies collectively cover many countries and industrial sectors with no one area being significantly over-represented. The portfolio's diversity means that there are literally hundreds of specific examples of the impact which we could retell in a blizzard of data. The nearly universal feature is that the lockdowns have radically altered plans and budgets for 2020 with the great majority adversely affected. Generalisations are potentially misleading, however our portfolio companies that are involved in healthcare or software are the least adversely affected. Those involved in what can broadly be described as retail, leisure and transport are the most badly affected and industrial and services companies which operate business to business are somewhere between the two. Within these categories there are companies that do not conform. It is also clear that the relative resilience of companies is likely to alter as the lockdown is either extended or lifted in different countries and for different sectors. The various government support schemes have been actively used by our portfolio companies and their private equity managers, but a significant proportion of companies are not eligible under the stringent rules on, for example, state aid. The first port of call for aid is, quite rightly, the companies' shareholders. Private equity as a form of investment management is distinguished by its practitioners being much more than simple providers of appropriately priced capital. The provision of expertise above and beyond this through strategic and operational advice has long been a hallmark. As has the alignment of interest between the tiers of ownership and management through incentives which means that the problems faced by companies and their management teams are very definitely our problems as well. It is our assessment based on numerous interactions over the last few months that the private equity sector is tackling this unprecedented threat with energetic resourcefulness and that together with similarly motivated company management they are doing their best to mitigate and adapt to the situation. Accordingly, our broad portfolio stands a fair chance of coming through the 'valley' later this year largely intact. There could also be value opportunities to be taken and we will keep a lookout for these.

Hamish Mair

Investment Manager

BMO Investment Business Limited

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2020 (unaudited)

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2019 (unaudited)

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

year ended 31 December 2019 (audited)

BMO PRIVATE EQUITY TRUST PLC

Balance Sheet

BMO 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 2019. Earnings for the three months to 31 March 2020 should not be taken as a guide to the results for the year to 31 December 2020.

2. Investment management fee:

3. Finance costs:

4. Returns and net asset values

5. The financial information for the three months ended 31 March 2020, 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 2019, on which the auditor issued an unqualified report, will be lodged shortly with the Registrar of Companies. The quarterly report will be available shortly on the Company's website www.bmoprivateequitytrust.com

Legal Entity Identifier: 2138009FW98WZFCGRN66

For more information, please contact: