Portfolio Update

15 Dec 2006 11:04

F&C Private Equity Trust PLC15 December 2006 F&C Private Equity Trust PLC ("F&CPET") Portfolio Review for the two months to 30 September 2006 • Interim Dividends of 1.0p per A share and 2.1p per B share • NAV increases of 2.9% per A share and 2.0% per B share • 3 new fund commitments • High levels of investment activity Net Asset Values and Dividends The Company has changed its year-end and this is the first review using calendaryear quarter end dates. The review covers the two-month period since the 31 Julyvaluation. The C pool converted completely into the B pool on 25 September andthe small residual portfolio of smaller company stocks (£0.6m) is now helddirectly in the B pool. The A pool had net assets of £25.2m at 30 September.This has now reduced by £10.4m following the payment of the special dividend of15.5p per A share on 20 October. The NAV per A share at 30 September was 37.52p,an increase since 31 July of 2.9%. The B pool had net assets of £122.6m at 30September. The NAV per B share was 169.62p, an increase since 31 July of 2.0%. An interim dividend in respect of the period to 31 December 2006 of 1.0p per Ashare and 2.1p per B share will be paid on 19 January 2007 to those shareholderson the register at 29 December 2006. New Commitments During the two-month period the Company has made three new fund commitments.These cover new geographic areas for F&C PET. €5m has been committed to GildeBuyout Fund III. This fund covers the Benelux and neighbouring countries. Gildeis one of the better-known Dutch-based mid-market private equity groups. F&C PEThas also made its first commitment to Italy through the purchase of a secondaryposition in Alto Capital I for €3.24m. Subsequent to the quarter-end anadditional commitment of €3m was made to Alto's new fund. After having reviewednumerous Asian funds over the years, we have made our first commitment to apurely Asian fund, through a $5m participation in AIF Capital Asia III. This isa particularly strong and experienced team who cover the principal markets ofGreater China and India. Since the quarter-end we have acquired another secondary investment in the formof Argan Capital - the former Bank of America European private equity team andportfolio. €4.9m was invested in this fund giving immediate exposure to amaturing portfolio. More recently we have invested $4.2m in 3si, the US-basedcash security and protection company. This deal was led by Stirling SquareCapital Partners. Additionally, F&C PET invested £2m for 15.5% of EuropeanBoating Holidays (RJD lead) and an additional £0.75m has been invested inEquidebt, the debt collection company, to help with its growth plans. Veryrecently £5m has been committed to Alchemy Special Opportunities Fund. There area number of other commitments and co-investments under consideration and some ofthese will be implemented before the end of 2006. The total outstandingcommitments of the B pool, including those made after the end of September, are£138m. At 30 September the B pool had cash and cash equivalents of £30.2m.Since the quarter-end drawdowns and new investments have reduced liquidity toapproximately £20m. Drawdowns Total drawdowns and new investments in the two month period amounted to £6.94m.The more notable individual investments included £906,087 by Candover 2005 intoprivate mail company DX/SMS - £460,000 by Primary Capital III into Tobar, amultichannel vendor of toys, gifts and gadgets; £310,282 by Blue Point CapitalPartners II into DriEaz, a company specializing in drying products; a combined£723,455 by Inflexion (through fund II and HFP) into Parasol, a leadingemployment agency in the North West of England; and £382,108 by Chequers intoHBI, the vehicle for taking private catering company Elior. Realisations Realisations from funds and direct investments totalled £2.5m over the twomonths. Chequers Capital distributed £454,429. This was from the partial sale ofTractel (building hoists) where Chequers have so far achieved a 31% IRR, andrefinancing of Fregate (warehouse systems) where the IRR is 38%. Academy MusicGroup completed its refinancing returning £704,126. International MezzanineInvestment redeemed another tranche of loan stock and F&C PET's share of thiswas £469,641. Valuation Changes The total valuation uplift for the portfolio is £3.6m. The largest individualcontributor to this was Gondola Holdings which, with its imminent realisation,contributed £1.28m. Other large gains were Hicks Muse Fund IV (£577,329) wherethe Latin American media investment Davivo has come good; Candover 1997 Fund(£521,745) with the sale of Vestolit now announced; and Inflexion (£264,557) andHFP (£477,981) both beneficiaries from the sale of ACIS. The impact of foreignexchange movements was minimal with an adverse movement of £0.2m. Outlook The dealflow of new fund and direct investment opportunities is strong. We havebeen encouraged by the number and quality of secondary opportunities. These haveallowed us to deploy a significant amount of the Company's liquidity intomaturing portfolios where there are good prospects of positive returns over themedium term. The co-investment portfolio is developing well at the underlyingcompany level and we would expect that 2007 will see some worthwhilerealisations. We have experienced a very busy period for new investments andthis pace of activity is likely to moderate somewhat in the New Year. For more information Hamish Mair, F&C Asset Management plc Mike Woodward, F&C Asset Management plc Tel. 0131 718 1000 This information is provided by RNS The company news service from the London Stock Exchange