Apax Global Alpha Limited 2016 Interim Financial Highlights (3613H)

TIDMAPAX

RNS Number : 3613H

Apax Global Alpha Limited

17 August 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR WITHIN THE UNITED STATES OR TO "US PERSONS" (AS DEFINED IN REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT")) OR INTO OR WITHIN AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN. RECIPIENTS OF THIS ANNOUNCEMENT IN JURISDICTIONS OUTSIDE THE UK SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY APPLICABLE LEGAL REQUIREMENTS IN THEIR JURISDICTIONS. IN PARTICULAR, THE DISTRIBUTION OF THE ANNOUNCEMENT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS.

Note that references in this announcement to Apax Global Alpha Limited have been abbreviated to "AGA" or "the Company". References to Apax Partners LLP have been abbreviated to "Apax Partners" or "the Investment Adviser"

FOR IMMEDIATE RELEASE

17 August 2016

(LSE: APAX)

Apax Global Alpha Limited

Unaudited Interim Results for the period ended 30 June 2016

For further information regarding the announcement of AGA's 2016 Interim Report and Accounts, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com/investor-information/calendar

Financial highlights for the six months to 30 June 2016

   --      Adjusted NAV of EUR894.4m, down from EUR923.6m at 31 December 2015 

-- Adjusted NAV per share of EUR1.82 (GBP1.52), compared to EUR1.88 (GBP1.38) at 31 December 2015

-- Second semi-annual dividend declared of 3.95 pence per share, equivalent to 2.5% of euro NAV at 30 June 2016 of EUR22.5m will be paid on 14 September 2016

-- First semi-annual dividend paid of 3.69 pence per share, equivalent to 2.5% euro NAV at 31 December 2015 of EUR23.4m was paid in April 2016

-- Total Return was negative 0.6%. On a constant currency basis, Total Return was positive 0.6%

   --      AGA was 94% invested and had a cash balance of EUR48.5m 

Investment highlights for the six months to 30 June 2016

   --      Well-balanced invested portfolio: Private Equity (52%) and Derived Investments (48%) 

-- Sector exposure balanced across all Apax Partners' focus industries. Tech & Telco was the most heavily weighted sector, accounting for 37% of the invested portfolio

   --      Geographic bias towards North America, representing 59% of the invested portfolio 

Performance

-- Portfolio was stable in a difficult market environment. Portfolio performance was broadly neutral with a Total Return of -0.6% up to 30 June 2016.

-- Private Equity had a positive performance of 0.9% largely driven by strong operational performance from the underlying portfolio companies, somewhat offset by lower valuation multiples.

-- Derived Investments were down 0.4%. Positive interest income was offset by write-downs for a small number of Debt Investments.

 
Private Equity - Operational Metrics                                   30 June 2016  31 December 2015 
Portfolio year-over-year Last Twelve Months (LTM) revenue growth(1)            7.4%              7.8% 
=====================================================================  ============  ================ 
Portfolio year-over-year LTM EBITDA growth(1)                                  9.8%              9.0% 
=====================================================================  ============  ================ 
Average EV/EBITDA multiple(1)                                                 11.9x             12.4x 
=====================================================================  ============  ================ 
Average net debt / EBITDA(1)                                                   4.4x              4.6x 
=====================================================================  ============  ================ 
Number of new investments(2)                                                      1                 9 
=====================================================================  ============  ================ 
Number of exits(2)                                                                7                 4 
 
   --      Private Equity portfolio highlights: 

o Apax Funds have returned EUR38.7m to AGA in H1 2016, despite a weakened exit environment

o Apax VIII closed one new investment, which was bridge-funded by the fund's capital call facility. In addition Apax VIII announced three new investments signed up during H1 2016

o Aggregate IRR generated on exited investments was 36% for the Private Equity portfolio

 
Derived Investments - Operational Metrics                    30 June 2016  31 December 2015 
Yield to maturity(3) of debt investments                            12.7%             11.5% 
===========================================================  ============  ================ 
Average years to maturity for debt investments (in years)             5.6               6.1 
===========================================================  ============  ================ 
Average income yield(4) of debt investments                         10.1%              9.6% 
===========================================================  ============  ================ 
Year-over-year LTM EBITDA growth debt investments(5)                 1.3%              5.0% 
===========================================================  ============  ================ 
Year-over-year LTM earnings growth equity investments(6)            18.5%             14.8% 
===========================================================  ============  ================ 
Average P/E multiple(7) of equity investments                       17.9x             20.0x 
Number of new investments(8)                                            5                10 
Number of full exits(9)                                                 6                 3 
 
   --      Derived Investments portfolio highlights: 

o Fully exited two debt investments and four listed equity investments, realising total proceeds of EUR51.9m. The aggregate IRR on these realisations was 26.7%. In addition, proceeds from partial realisations totalled EUR20.7m

o In the 6 months to 30 June 2016, AGA made one new investment in debt, four new investments in listed equities and one add-on investment in equities, totalling EUR65.2m

Commenting on the results, Tim Breedon CBE, Chairman of Apax Global Alpha, said:

"I am pleased to present the Company's 2016 half year results, which I believe demonstrate the resilience of the AGA portfolio. Despite challenging market conditions, the portfolio finished only marginally down for the first half of the year with a negative 0.6% Total Return. This was primarily due to income from Derived Investments and positive Private Equity performance being offset by Derived Investments unrealised losses and adverse FX."

"I believe that AGA continues to represent an attractive long-term investment for our shareholders and we continue to build and maintain a portfolio with considerable returns potential."

Commenting on AGA's investment focus, Nico Hansen, CIO of Apax Partners, said:

"The volatile conditions presented some challenges in the first quarter and tested the portfolio's fundamentals. AGA has held up well in the first half, with improving performance in the second quarter."

"I'm satisfied with the Private Equity portfolio's performance. Derived Investments were more mixed: interest income was strong but was offset by a small number of debt valuation declines. We believe overall performance will reverse across the positions which currently see mark to market valuation declines."

Financial highlights

 
                                        Private Equity   Derived Investments       Cash        Others      Total 
                                             EURm                EURm 
                                                                                    EURm        EURm        EURm 
 Adjusted NAV as of 31 December 2015             469.4                 432.4            22.9    (1.1)          923.6 
 + Investments                                       -                  65.2          (65.2)        -              - 
 - Divestments                                  (38.7)                (72.6)           107.1      4.2              - 
 + Interest and dividend income                      -                     -            14.5      2.3           16.8 
 +/- Unrealised FV movement                        8.4                (16.7)               -        -          (8.3) 
 +/- Realised FV movement                            -                 (1.9)               -        -          (1.9) 
 +/- FX losses                                   (3.0)                 (7.3)           (0.7)        -         (11.0) 
 +/- Costs and others                                -                     -           (4.7)    (0.9)          (5.6) 
 - Dividends paid                                    -                     -          (23.4)        -         (23.4) 
 +/- performance fee reserve                     (1.1)                   7.3           (2.0)        -            4.2 
 Adjusted NAV as of 30 June 2016                 435.0                 406.4            48.5      4.5          894.4 
 

Invested portfolio analysis at 30 June 2016

 
 
  Asset class           EURm    EURm    %    % 
Private Equity         440.3           52 
====================  ======  ======  ===  === 
 
  *    AEVI                      2.9         0 
====================  ======  ======  ===  === 
 
  *    AE VII                   79.8         9 
====================  ======  ======  ===  === 
 
  *    AE VIII                 353.1        42 
====================  ======  ======  ===  === 
 
  *    AMI                       4.5         1 
====================  ======  ======  ===  === 
Derived Investments    407.8           48 
====================  ======  ======  ===  === 
 
  *    Debt                    314.5        37 
====================  ======  ======  ===  === 
 
  *    Equities                 93.3        11 
====================  ======  ======  ===  === 
Total                  848.1   848.1  100  100 
====================  ======  ======  ===  === 
 
 
Sector mix             Invested portfolio  Private Equity  Derived Investments 
                 EURm           %                 %                 % 
Tech & Telco    313.2                  37              36                   38 
=============  ======  ==================  ==============  =================== 
Services        234.3                  28              31                   24 
=============  ======  ==================  ==============  =================== 
Consumer        157.8                  19              18                   20 
=============  ======  ==================  ==============  =================== 
Healthcare      131.0                  15              14                   17 
=============  ======  ==================  ==============  =================== 
Other            11.8                   1               1                    1 
=============  ======  ==================  ==============  =================== 
Total           848.1                 100             100                  100 
=============  ======  ==================  ==============  =================== 
 
 
Geographic analysis           Invested portfolio  Private Equity  Derived Investments 
                        EURm           %                 %                 % 
North America          500.4                  59              51                   68 
====================  ======  ==================  ==============  =================== 
UK                      23.2                   2               3                    3 
====================  ======  ==================  ==============  =================== 
Switzerland             15.6                   2               0                    4 
====================  ======  ==================  ==============  =================== 
Rest of Europe         190.9                  23              34                   10 
====================  ======  ==================  ==============  =================== 
India                   85.3                  10               7                   13 
====================  ======  ==================  ==============  =================== 
China                   13.5                   2               1                    2 
====================  ======  ==================  ==============  =================== 
RoW                     19.2                   2               4                    0 
====================  ======  ==================  ==============  =================== 
Total                  848.1                 100             100                  100 
====================  ======  ==================  ==============  =================== 
 

Summary of top 10 investments in Private Equity and Derived Investments

 
                               Valuation  NAV  Invested portfolio 
                                  EURm     %            % 
 Top 10 Private Equity 
=============================  =========  ===  ================== 
 EVRY ASA                           42.5    5                   5 
=============================  =========  ===  ================== 
 GlobalLogic Inc.                   41.7    5                   5 
=============================  =========  ===  ================== 
 Assured Partners                   35.5    4                   4 
=============================  =========  ===  ================== 
 Exact Software                     31.4    3                   4 
=============================  =========  ===  ================== 
 Azelis S.A.                        26.6    3                   3 
=============================  =========  ===  ================== 
 One Call / Align                   26.1    3                   3 
=============================  =========  ===  ================== 
 Full Beauty                        24.3    3                   3 
=============================  =========  ===  ================== 
 Wehkamp                            23.7    3                   3 
=============================  =========  ===  ================== 
 Idealista                          17.6    2                   2 
=============================  =========  ===  ================== 
 Shriram City                       17.4    2                   2 
=============================  =========  ===  ================== 
 Other                             153.5   16                  18 
=============================  =========  ===  ================== 
Total Private Equity               440.3   49                  52 
=============================  =========  ===  ================== 
 
Top 10 Derived Investments 
=============================  =========  ===  ================== 
 Full Beauty                        30.8    3                   4 
=============================  =========  ===  ================== 
 Ellucian                           27.3    3                   3 
=============================  =========  ===  ================== 
 Epicor                             21.0    2                   2 
=============================  =========  ===  ================== 
 Azelis S.A.                        19.7    2                   2 
=============================  =========  ===  ================== 
 Genex                              19.2    2                   2 
=============================  =========  ===  ================== 
 Compuware                          18.8    2                   2 
=============================  =========  ===  ================== 
 Acelity (Kinetic Concepts)         18.4    2                   2 
=============================  =========  ===  ================== 
 Assured Partners                   17.7    2                   2 
=============================  =========  ===  ================== 
 Advantage Sales & Marketing        17.1    2                   2 
=============================  =========  ===  ================== 
 Strides Shasun                     17.0    2                   2 
=============================  =========  ===  ================== 
 Other                             200.8   23                  25 
=============================  =========  ===  ================== 
Total Derived Investments          407.8   45                  48 
=============================  =========  ===  ================== 
 
Total Investments                  848.1   94                 100 
=============================  =========  ===  ================== 
Cash                                48.5    5                   0 
=============================  =========  ===  ================== 
Net current assets                   4.5    1                   0 
=============================  =========  ===  ================== 
Total NAV                          901.1  100                   0 
=============================  =========  ===  ================== 
Performance fee reserve            (6.7) 
=============================  =========  ===  ================== 
Total Adjusted NAV                 894.4 
=============================  =========  ===  ================== 
 

Contact details

 
 Investor Relations 
 Sarah Wojcik 
 Telephone:      [phone] 
 Email:          [e-mail] 
 
 Media enquiries (Apax Global Alpha Limited) 
 Georgiana Brunner/Annabel Clay, Greenbrook Communications 
 Telephone:      [phone] 
 Email:          [e-mail] 
 
 Media enquiries (Apax Partners LLP) 
 Alex Wessendorff 
 Telephone:      [phone] 
 Email:          [e-mail] 
 
 Company Secretary 
 Matt Horton/Jacques Colley, Aztec Group 
 Telephone:      [phone] 
 Email:          [e-mail] 
 

Notes

1. The information presented herein is not an offer for sale within the United States of any equity shares or other securities of Apax Global Alpha Limited ("AGA"). AGA has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act"). In addition, AGA's shares (the "Shares") have not been and will not be registered under the Securities Act or any other applicable law of the United States. Consequently, the Shares may not be offered or sold or otherwise transferred within the United States, or to, or for the account or benefit of, US Persons, except pursuant to an exemption from the registration requirements of the Securities Act and under circumstances which will not require AGA to register under the Investment Company Act. No public offering of the Shares is being made in the United States.

2. This announcement may include forward-looking statements. The words "expect", "anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and similar expressions (or their negative) identify certain of these forward-looking statements. These forward-looking statements are statements regarding AGA's intentions, beliefs or current expectations concerning, among other things, AGA's results of operations, financial condition, liquidity, prospects, growth and strategies. The forward-looking statements in this presentation are based on numerous assumptions regarding AGA's present and future business strategies and the environment in which AGA will operate in the future. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of AGA to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond AGA's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as AGA's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which AGA operates or in economic or technological trends or conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. AGA expressly disclaims any obligation or undertaking to release any updates or revisions to these forward-looking statements to reflect any change in AGA's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this announcement, or to update or to keep current any other information contained in this announcement. Accordingly, undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this announcement.

Footnotes

(1) Represents the weighted average of the respective metrics across the underlying portfolio companies, using latest available information

(2) Represents investments and exits during the half year ended at the indicated date. New investments during H2 2015 includes Azelis' acquisition of Koda which required additional equity investment from the Apax Private Equity Funds. During H1 2016 there were 4 full closed exits (Rhiag, King, Auto Trader and Tommy Hilfiger China) and 3 closed partial exits represented by the IPO of Ascential, a secondary sale of Capio shares in Q1 2016 and partial sale of shares in Garda. The above number of exits excludes the recapitalisation of Evry

   (3)        GAV weighted average yield to maturity (YTM) of the Derived Debt Investments 

(4) GAV weighted average of the current full year income (annual coupon/clean price as at 30 June 2016) for each debt position in the Derived Debt Investments at 30 June 2016

(5) GAV weighted average of latest available EBITDA growth, since prior year, of the underlying Derived Debt Investments

(6) GAV weighted average of the latest earnings growth, since prior year, of the underlying Derived Equity Investments. Excludes Palo Alto

   (7)        GAV weighted Price Earnings multiple of Derived Equity Investments 

(8) New investments in debt in the 6 months to 30 June 2016 were in Ellucian and four completed new equity positions in Sophos, Palo Alto, Fortinet, and Edelweiss. December comparison is for the six months ending at the indicated date

(9) Disposals in 6 months to 30 June 2016 consisted of debt realisations in Physiotherapy and Exact first lien debt and equity realisations in Greene King, Zhaopin, Karur Vysya Bank Ltd and Sinopharm. December comparison is for the six months ending at the indicated date.

About Apax Global Alpha Ltd

AGA is a Guernsey registered closed-ended collective investment scheme incorporated as a non-cellular company that listed on the London Stock Exchange on 15 June 2015. It is regulated by the Guernsey Financial Services Commission.

AGA's objective is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company is targeting an annualised Total Return, across economic cycles, of 12-15% (net of fees and expenses) including a dividend yield of 5% of Net Asset Value (NAV), once fully invested.

The investment policy of the Company is to make private equity investments in Apax Funds and Derived Investments which are investments in equities and debt derived from the insights gained via Apax Partners' Private Equity activities. The Company's portfolio is expected to be allocated in approximately equal proportions between Private Equity and Derived Investments, although the investment mix will fluctuate over time due to market conditions, investment opportunities, cash flow requirements, the dividend policy and other factors.

Further information regarding the Company and its publications are available on the Company's website at www.apaxglobalalpha.com

About Apax Partners LLP

Apax Partners LLP ("Apax Partners") is a leading global private equity advisory firm. It operates globally and has more than 30 years of investing experience. Apax Partners has advised funds that total over EUR40 billion in aggregate as at 30 June 2016. Funds advised by Apax Partners invest in companies across four global sectors of Tech & Telco, Services, Healthcare and Consumer. These funds provide long--term equity financing to build and strengthen world--class companies. For further information about Apax Partners, please visit www.apax.com.

Apax Partners LLP is authorised and regulated by the Financial Conduct Authority in the UK.

This information is provided by RNS

The company news service from the London Stock Exchange

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August 17, 2016 02:00 ET (06:00 GMT)