what is this a broken record! |
McScruff - The problem with Harbourvest and Pantheon is the the investment managers prefer to maximise their fees rather than pay shareholders a fair return with a dividend. Hence their discounts are at 44% versus an average of 33% elsewhere. |
Lets hope so, I hold Harbourvest, Oakley and HG as well. I like the dividend from Apax. The consistency of that gives me comfort as the share price and discount fluctuate. |
Makinbuks15 you are absolutely correct but is this not the same with any investment right now other than the energy sector. Pantheon and HarbourVest are on slightly greater discounts but many discounts are closing see NBPE, OCI and 3i Group etc... and it should only be a matter of time before these follow. |
Its an interesting approach but I would argue 42% is in line with a lot of PE peers. Anyway the pint is what is the catalyst for change? Its cheap, or good value, i agree but will it remain so? |
I really like the section "Applying debt discount to derived book implies AGA’s PE discount is 42%". In detail it says "AGA could be broken down into a PE fund and a debt fund. The chart below shows the current discounts to NAV for the main AIC debt sectors and a range of specialist debt funds. It may be argued that AGA’s niche approach means that it would attract the lower discount associated with the latter, rather than the 10% rating associated with the former. If we adjust AGA’s discount by applying this discount to the proportion of its portfolio in debt (28%), the residual discount being applied to its PE portfolio rises from 30% to a level well above that of its peers, to 42%." |
Hardman interview with Q&A: |
@MrScruff.
NAV 31/12/21 254.00p, divi 6.36p/sh, for H2
NAV 30/06/22 244.00p, divi 6.00p/sh, for H1
NAV 31/12/22 ??p, this NAV will determine the divi, for H2
The Q3 NAV on 30/09/22 was 251.00p, recent disposals suggest NAV stable to uplift so reasonable to anticipate divi of > 6.00p/sh |
Hardman initiates research on APAX (NB. sponsored): |
They have an explicit policy to distribute 5% of NAV annually. They could, of course, change this and probably don't need a shareholder vote to do so. But it's such a big thing for them, that they'd no doubt give some notice.
It's worth remembering that the dividend is not necessarily covered by income. Getting part of your dividend out of capital is a bit of a cheat. |
I was expecting a dividend cut across the sector. All this positivity makes it harder to value APAX and even harder to put a value on the dividends in 2023 when the markets and lending is really bad. Are you all saying the dividend could actually hold here? |
Sale of Duck Creek Tech stake:
The significant thing is that the price is 46% above the last internal valuation. The market has been suspicious of PE valuations for over a year now (hence the large discounts to NAV). This seems to contradict that view. |
For me, the key number will be the NAV at 31 December, since that will dictate next year's dividend. |
APAX has enjoyed a good rally from the multiple low at 160p. IMO now looks overextended on a much lower discount than all its peers; buoyed up by the generous yield of course.
Now up against the falling 200day MA, so would expect a retrace back to the 170p level.
free stock charts from uk.advfn.com |
At 186p, the yield is 6.78%.
The NAV is 251p so a discount of about 25%. |
Also they held this for 5 years and there is always pressure in the 5 - 7 year period to sell and return cash to investors in that fund, hence the rollover deals we see regularly |
Assume they only sell when its above NAV to maintain creditability - if they were to sell below NAV then the question would be - is all other their holdings really reflective of NAV APAX are saying |
True, the amount that Apax IX paid for Kepro was "undisclosed" at the time.
What's interesting is that PE groups consistently sell assets above carrying value, yet their shares languish at big discounts to NAV. |
Encouraging to see another exit above NAV though I note there is no comment on the return earned over five years. I suspect it would have been mentioned if it was positive |
jonwig, I consider APAX as pure PE. All PE funds hold cash against future commitments. The APAX debt portfolio, held to maturity provides a better return than cash. They will flex the allocation to the debt portfolio according to the PE commitment draw down requirements. Investing in PE opportunities at 15% plus is prioritised over the debt at 10.4% even in todays market. |
jonwig, yes indeed. Does that count as "best of both worlds"? |
Brucie - maybe because APAX isn't "pure" PE. The portfolio split is here:
The debt investments (at 28%) will brovide an income stream, so the dividend isn't entirely return of capital. |
Happy to hold. OCI has much higher discount, but no dividend. |
Performance of the debt portfolio a real positive this quarter. Average yield to maturity 10.4% now. If PE valuations falter as some believe that is going to provide a nice cushion |
PE return of 3% but 1.6% in constant currency. Thank goodness they didn't hedge. Yesterdays fall in the pound will provide another short term uptick |
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