24 Mar 2009 07:30
Standard Life European Private Equity Trust PLC
1. Investment update for the period from 30 September 2008 to 31 December 2008
In the first quarter of the Company's new financial year the European private equity market witnessed a significant reduction in new investment and realisation activity, as a result of credit market turbulence, the fall in listed markets and the impact of an increasing macro-economic slow down. The total value of private equity transactions undertaken in Europe fell to €8 billion during the quarter, which was the lowest quarterly total this decade.
Against this background, the Company's unaudited net asset value per share ("NAV") fell by 8.5% to 214.8p (diluted - 211.9p) as at 31 December 2008, from 234.8p (diluted - 231.4p) as at 30 September 2008. The Company's net assets were £343.5 million as at 31 December 2008 (30 September 2008 - £375.5 million).
During the quarter ended 31 December 2008 a total of £14.2 million was received by way of distributions (quarter ended 30 September 2008 - £2.9 million) from the Company's portfolio of 47 private equity fund interests. Realised gains and income represented £12.3 million of distributions received (quarter ended 30 September 2008 - £1.0 million).
The closing value of the Company's portfolio of private equity fund interests was £391.3 million as at 31 December 2008 (30 September 2008 - £412.1 million). Around 96% by value of the private equity fund interests held by the Company were valued by the relevant underlying managers as at 31 December 2008. The total unrealised loss for the quarter ended 31 December 2008 was £30.6 million (quarter ended 30 September 2008 - £43.1 million unrealised loss); this comprised an unrealised foreign exchange gain of £68.0 million (or 16.5% of the opening portfolio valuation) and an underlying unrealised loss on the portfolio of £98.6 million (or 23.9% of the opening portfolio valuation).
The unrealised foreign exchange gain was a result of sterling depreciating by 18.5% relative to the euro and by 19.3% relative to the US dollar. As for the unrealised loss on the portfolio excluding foreign exchange movements, a majority of the movement over the quarter arose from a fall in comparable listed valuation multiples, as opposed to a decline in underlying earnings at investee companies. By way of comparison, over the same quarter the MSCI Europe Index (in euros) fell by 22.4% and the FTSE All Share Index fell by 11.0%.
As for new investment activity, during the quarter the Company's portfolio of private equity fund interests drew down a total of £20.4 million (quarter ended 30 September 2008 - £51.9 million). The lower quantum of new investment activity reflected the lower level of activity in the European private equity market.
No new fund commitments were made in the quarter ended 31 December 2008. As at 31 December 2008 the Company's aggregate outstanding commitments to its private equity fund interests were £425.9 million (30 September 2008 - £389.2 million). These fund commitments can be expected to be drawn down over the next 4-5 years.
As at 31 December 2008 the Company had net indebtedness of £47.6 million (30 September 2008 - net indebtedness of £36.4 million). As announced previously, the Company entered into a new £100 million three year syndicated revolving credit facility, led by The Royal Bank of Scotland plc, in November 2008.
2. Disposal of private equity fund interests
In light of recent macro-economic and private equity market developments, the intention is to reduce the Company's aggregate outstanding commitments to a level more appropriate with the Manager's revised estimates of the Company's projected draw downs and distributions and its liquid resources. On 14 January and 24 February 2009 the Company announced that in aggregate it had disposed of all or part of its fund interests in nine private equity funds and had made an election to cap its exposure to Permira IV. In aggregate all of the nine disposals and election were undertaken for a consideration of £32.0 million, as compared to the 30 September 2008 valuations of these fund interests adjusted for subsequent cashflows of £49.1 million, and released the Company from £105.8 million of outstanding commitments.
Taking account of the above disposals and election, subsequent drawdowns and the 2.9% and 0.4% appreciation of sterling compared to the euro and the US dollar respectively from 31 December 2008, the Company's total outstanding commitments were £327.5 million as at 23 March 2009 (31 December 2008 - total outstanding commitments £425.9 million). As at 23 March 2009 the Company's net indebtedness was £25.9 million; this is before the receipt of a remaining £1.1 million of cash proceeds from the above disposals.
Adjusting the 31 December 2008 NAV disclosed in section 1 above for the fund disposals undertaken after 31 December 2008 and associated fees, the pro-forma 31 December 2008 NAV is 203.4p (diluted - 200.8p). The Company's pro-forma net assets as at 31 December 2008 are £325.3 million.
The Company is in discussions regarding the selective disposal of a number of other private equity fund interests. In undertaking any disposals, the Board and the Manager are sensitive to the objective of ensuring that the Company optimises, so far as possible, the diversification of its portfolio and has sufficient outstanding commitments to benefit from future investment opportunities.
It is anticipated that the Company will release its interim announcement for the six months ending 31 March 2009 on or around 29 May 2009.
For further information please contact:-
Peter McKellar of SL Capital Partners LLP (0131 245 0055)
Note:-
Standard Life European Private Equity Trust PLC is an investment company managed by SL Capital Partners LLP, the ordinary shares of which are admitted to listing by the UK Listing Authority and to trading on the Stock Exchange and which seeks to conduct its affairs so as to qualify as an investment trust under section 842 of the Income and Corporation Taxes Act 1988. The Board of Standard Life European Private Equity Trust PLC is independent of Standard Life plc
24 March 2009