Seems to be the story for PE at the moment. If you went back 12 - 18 months there was a fear that NAV's would collapse. Instead they are flatlining. 23% is probably a reasonable discount for the illiquidity risk. APAX has not suffered the huge discounts others have experienced primarily because of the dividend policy in my view. I remain disappointed that the loan holdings aren't driving better returns for the portfolio overall at this time |
Funds valuations at 30/06:
Adjusted NAV of 227p (23% discount). Larger funds barely moved over the quarter. |
 Funds advised by Apax to acquire Palex -
On 31 July 2023, the Apax XI Fund ("Apax XI"), in which AGA is a limited partner, announced that it has signed a definitive agreement to acquire a co-controlling stake in Palex, the leading distributor of medical technology ("MedTech") equipment and solutions in Southern Europe, alongside Fremman Capital. The transaction is expected to close by Q4 2023, subject to customary closing conditions.
On a look through basis, AGA is expected to invest approximately €15m in the company.1
Note that these figures relate to AGA's look through position of Apax XI's overall investment in Palex and are stated before taking into account any closing adjustments and translated based on the latest exchange rates available where applicable2.
Founded in 1955 and headquartered in Barcelona, Palex is the leading independent MedTech solutions provider in Southern Europe, focused on the marketing, sales, and logistics of high value-added MedTech equipment for public and private hospitals as well as laboratories in Iberia and Italy. The Company has a strong reputation for innovation, quality, and service. It offers a wide product portfolio of over 150,000 product references from 600+ world-leading tier-1 manufacturers.
Apax's significant global experience partnering with both MedTech and distribution-focused businesses, its digital capabilities and its operational expertise ideally positions it to partner with Palex's management team to help fuel future growth. |
Hardman research from 27/06 Capital Markets Day: |
Funds advised by Apax invest in Swing Education -
Apax Global Alpha, the closed-ended investment company providing access to the Apax Private Equity Funds, today announced that it expects to invest approximately €1.7m in Swing Education on a look-through basis1.
On 1 June 2023, the Apax Global Impact Fund ("AGI"), in which AGA is a limited partner, announced an investment in Swing Education, a pioneering online marketplace that connects schools and substitute teachers, as part of a $38m Series C funding round.
AGA's investment is calculated based on the look through position of AGI's overall investment in Swing Education and is translated based on the exchange rate at close2.
Swing Education is an online marketplace that connects substitute teachers with schools. Founded in 2015 by former K-12 educators and administrators, Swing makes it easier for schools to find reliable, qualified substitute teachers when they need them most. With over 300,000 absence days filled to date, Swing is dedicated to improving the experience of schools finding substitute teachers, of candidates entering the substitute teaching field, and of students continuing to learn disruption-free.
AGA, whose shares are listed on the London Stock Exchange, provides investors with access to a diversified portfolio of private equity funds advised by Apax as well as a focused portfolio of predominantly debt investments ('Derived Investments'). In March 2022, AGA made a commitment of $60m to AGI. |
It's not just ADVFN. I'd never read second-hand numbers. Go straight to the company's accounts. |
Updating financial information on ADVFN is woeful. Shouldn't we all be complaining bitterly about that on these boards |
Quarterly results -
Pretty decent, with PE leading the way:
In Private Equity, two full exits were completed during the period at an average uplift3 of 25%, a Gross IRR3 and Gross MOIC3 of 19% and 2.2x respectively.
And a lot of their debt holdings are floating rate. |
Annual results:
It looks like their private assets are moving with market rates, but their derived instruments (bonds) have produced some gains. No time to read the detail. |
Interesting little discussion on APAX on the Citywire forums... |
The latest Hardman note gave two good reasons why APAX deserved a premium rating in the PE sector.
First, dividends are largely paid out of interest on the "derived instruments" - mostly bonds, and second, APAX picks companies where there is scope for improved performance. They have teams which can jig them up. |
Results etc out on thurs. Views from the frontline of PE always interesting. |
ali - thnx for dropping by - maybe new to McSruff however as not seen him on the PE thread. |
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. |
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