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24 Mar 2009 07:30
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Standard Life European Private Equity Trust PLC
1.Β Investment update for the period from 30 September 2008Β to 31 December 2008
In the first quarter of theΒ Company'sΒ new financial year theΒ European private equity market witnessed a significant reduction in new investment and realisation activity,Β as a result of credit market turbulence, theΒ fall in listed marketsΒ andΒ the impact ofΒ an increasingΒ macro-economic slow down.Β The total value of private equity transactions undertaken inΒ EuropeΒ fell to β¬8Β billion during the quarter, which was the lowest quarterly totalΒ this decade.Β Β
Against this background,Β theΒ Company's unaudited net asset value perΒ share ("NAV")Β fellΒ byΒ 8.5%Β toΒ 214.8p (diluted -Β 211.9p)Β asΒ at 31 December 2008,Β fromΒ 234.8p (diluted -Β 231.4p)Β asΒ at 30 September 2008.Β TheΒ Company's net assets were Β£343.5Β millionΒ asΒ at 31 December 2008Β (30 September 2008Β - Β£375.5Β million).
During the quarter endedΒ 31 December 2008Β a total of Β£14.2Β million was received by way of distributionsΒ (quarter endedΒ 30 September 2008Β - Β£2.9Β million) from the Company's portfolio ofΒ 47Β private equity fund interests. Realised gains and income representedΒ Β£12.3Β millionΒ of distributionsΒ receivedΒ (quarter endedΒ 30 September 2008Β - Β£1.0Β million).Β
The closing value of the Company's portfolio of privateΒ equity fund interests wasΒ Β£391.3Β millionΒ asΒ at 31 December 2008Β (30 September 2008Β -Β Β£412.1Β million).Β AroundΒ 96%Β by value of the private equity fund interests held by the Company were valued by the relevant underlying managersΒ as at 31 December 2008.Β The total unrealisedΒ lossΒ for the quarter ended 31 December 2008Β wasΒ Β£30.6Β millionΒ (quarter endedΒ 30 September 2008Β - Β£43.1Β millionΒ unrealisedΒ loss); thisΒ comprisedΒ an unrealised foreign exchange gainΒ of Β£68.0Β millionΒ (orΒ 16.5%Β of the opening portfolio valuation)Β and an underlying unrealisedΒ lossΒ on the portfolio of Β£98.6Β millionΒ (orΒ 23.9%Β of the opening portfolio valuation).
The unrealised foreign exchange gain was a result of sterling depreciating byΒ 18.5%Β relative to the euro and byΒ 19.3%Β relative to the US dollar.Β As for the unrealised loss on the portfolio excluding foreign exchange movements, aΒ majorityΒ 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.Β 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 ofΒ private equityΒ fund interests drew down a total ofΒ Β£20.4Β millionΒ (quarter ended 30 September 2008Β - Β£51.9Β million).Β TheΒ lower quantumΒ of new investment activityΒ reflected theΒ lower level of activityΒ in the European private equity market.
NoΒ new fund commitments were made in the quarter ended 31 December 2008. As at 31 December 2008Β the Company's aggregate outstanding commitments to its private equity fundΒ interests were Β£425.9Β million (30 September 2008Β - Β£389.2Β million). TheseΒ fundΒ commitments can be expected to be drawn down over the nextΒ 4-5Β years.Β
As at 31 December 2008 the Company had net indebtedness of Β£47.6 million (30 September 2008 - net indebtedness of Β£36.4 million). AsΒ announcedΒ previously, the Company entered into a new Β£100 million three year syndicated revolving credit facility, led by The Royal Bank of Scotland plc, in November 2008.
2.Β Disposal of private equity fund interests
In light of recent macro-economic and private equity market developments, the intentionΒ is to reduceΒ 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.Β 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 Β£32.0 million, as compared toΒ theΒ 30 September 2008 valuations of these fund interestsΒ adjusted for subsequent cashflows of Β£49.1 million,Β and released the Company from Β£105.8 million of outstanding commitments.Β
Taking account of the above disposals and election,Β subsequentΒ drawdowns and theΒ 2.9%Β andΒ 0.4% appreciationΒ of sterling compared to the euro and the US dollar respectively fromΒ 31 DecemberΒ 2008, the Company's total outstanding commitments were Β£327.5Β million as at 23 March 2009 (31 DecemberΒ 2008 - total outstanding commitments Β£425.9Β million). As at 23 March 2009 the Company's net indebtedness was Β£25.9Β million; this is before the receipt ofΒ a remainingΒ Β£1.1Β million of cash proceeds from the above disposals.
Adjusting the 31 December 2008Β NAV disclosedΒ in section 1Β above for the fund disposals undertaken after 31 December 2008Β and associated fees,Β the pro-forma 31 December 2008 NAV isΒ 203.4p (diluted -Β 200.8p).Β TheΒ Company's pro-forma net assets asΒ at 31 December 2008Β areΒ Β£325.3Β million.Β
TheΒ CompanyΒ isΒ in discussions regarding the selective disposal of aΒ number of otherΒ private equity fund interests.Β In undertakingΒ anyΒ disposals, the Board and the Manager are sensitive to theΒ objective of ensuringΒ 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 theΒ six months ending 31 March 2009Β on or aroundΒ 29Β May 2009.
For further information please contact:-
Peter McKellar ofΒ SL Capital Partners LLPΒ (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 ofΒ Standard Life plc
24 March 2009
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