19 Jul 2021 11:58
London, UK, 19 July 2021
Edison issues review on Standard Life Private Equity Trust (SLPE)
Standard Life Private Equity Trust (SLPET) reported a NAV total return of 14.9% in H121, on the back of a 22.9% increase in the underlying portfolio value at constant currency, partially offset by negative FX effects (in particular sterling appreciation vs euro). SLPET's high realisation activity (including several successful IPOs and private transactions) continued in the period with £92.7m proceeds. These exits generated an average uplift to carrying value two quarters prior (to exit dates) at 63.1% and average multiple on invested capital (MOIC) at 2.6x.
While private equity exit activity has been strong recently, the high level of dry powder results in fierce competition for quality assets. Consequently, SLPET's investment level (defined by the overcommitment ratio) remains below the 30-75% target range (currently at c 28%). We believe that its recent high realisation activity may continue in the near term, given that 53% of its portfolio represents vintages of four years or older, with the five-year-plus bucket held at 2.3x cost on average, while the five-year and four-year buckets are held at 2.2x and 1.9x, respectively. At the same time, SLPET's manager sees a good pipeline of primary fund and co-investment opportunities (with three primary commitments and three co-investments closed in H121), which will absorb some of the exit proceeds.
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