Also added another chunk this morning.
However the only share in my portfolio showing red today, grrrrr ... |
Well done. Added a few myself yesterday. Afraid I’ve just become a boring income guy.
Can’t help myself |
Taken a few APAX at 126.3p. Lovely yield IF it can be maintained. Yawning chasm to NAV IF it can be anywhere near to being believed. Also this from the results:
The Board is very conscious of the discount and all options to allow shareholders to benefit from the underlying value of the portfolio will be explored.
...menas that, one day, we might wake up to some "activity". Who knows?
Any other holders here that think it might be decent value hereabouts? |
Got to trigger TA'ers to sell, I'd have thought. But fancy that XD gap to about 132p to close again. Been a poor performer but NAV way higher & they're buying back. |
Sometimes wonder if these xd's near the lows trigger stop-losses ... |
Sent it to new lows. |
XD today for 5.5p, pay day 3/4 |
There are secondary markets for PE fund interests and commitments you know...
The GP can also roll existing funds into new ones and provide liquidity to LP investors seeking an exit.
I'm not saying that either is particularly likely, but a 30-40% discount provides lots of headroom for imaginative solutions if Apax is embarrassed by the sustained discount. |
This has just come into the radar as income with growth potential.
Thanks HP I'll look out for your dealbraker issue as I work thru the detail.
Intergroup affairs need to be stated very clearly, which usually means simply, otherwise complex arrangements tend toward camouflage. |
"AGA was 96% invested as at 31 December 2024 and had unfunded commitments to the Apax Funds (together with recallable distributions) of €837m."
Where are they going to get 837M euros from? |
Any idea if Apax Partners has another fund in the works?
I wonder whether this consistently large discount - for an IT that is a rounding error in terms of Apax's AUM - might be an embarrassment for marketing future PE funds... so they might wind-up the IT??? |
@skinnypope - great post #359. i concur that at its current size the buyback is pretty much pointless. |
Thanks very Skinnypope. An impressive analysis. I'll be keeping a closer eye on your recommendations in future!
;) |
 There was nothing AI generated in that post I can assure you, but thanks for making me laugh a bit with your suggestion (no offence taken) ;-)
In fact just a few days going through 4 years of accounts, factsheets, research reports and various google holes. I suppose I could/should have fleshed out my opinion of the forward prospects for the share price, so here are some final thoughts ahead of the annual report due next month.
My view is if you have the stock already, it's a good hold. It's neither cheap nor expensive; in fact the 34% NAV discount is exactly the same as similar fund-of-fund PE stocks (HVPE, ICGT, ADIG to name three of the top of my head). However it does have a decent [8.3% yielding] and historically well covered dividend, which is why I hold this one.
Additionally this one has the feature I mentioned in my original post, which is the largest ever commitment to the new buyout fund [APAX XI] which I think is well timed. Lots of news reports on low venture deal volumes last year which should give XI good entry points as the fund ramps up. This same feature may be a drag on APAX X moving to the harvesting stage, but given the much larger allocation to XI than X, then net-net it's a positive.
If I'm right the NAV will recover a decent amount and the discount should narrow. The problems are:
- this will take time [2-3 years minimum I suspect]
- the large allocation to XI may create a concentration risk
- it will also soak up the FCF, which will limit the buyback facility [I am of the view that €30m is currently too small to have any impact]
- as stated in the other post, the rather swept under the carpet Vyaire bankruptcy
So all in all, I'm a hold. A new buyer looking for quicker gains, may be better served looking elsewhere. |
Thanks Skinny, well out of the money here. I find your analysis reassuring |
I’ve just spent a bit of time working through this one. As others say, it’s not easy to unpick this stock as reading the financials and various presentations I often felt like I was reading marketing material. However I would say that this is fairly typical of the Private Equity industry…
In short, this stock is a gateway into the Apax private equity funds that are not open to private investors. Moreover, the PE investments are predominately in three funds:
APAX IX: 2016 vintage, now “harvesting221; stage i.e. winding down and distributing
APAX X: 2020 vintage, now “mature” stage, i.e. funds fully invested
APAX XI: 2023 vintage, now “investingR21; stage, i.e. still ramping up
The holdings AGA disclose are held (mostly) in these funds, with quarterly revaluation of all the companies performed “bottom up” via the usual methods. Given that these funds are generally held by large wholesale investors, I would opine that the valuation process is “fairly” robust, however something that should be taken with a grain of salt, seeing as one of the holdings [Vyaire] filed for Chapter 11 this year, and the valuation went from €27m [YE 2023] to zero [HY 2024].
While 83% of AGA is in PE, 17% is in “Debt Instruments” which I have seen mis-characterised as quasi-liquid bonds, but in fact are syndicated loans which are much less liquid despite what you might read. The advantages of this part of the portfolio is that they pay regular coupons to AGA, versus the more unpredictable PE distributions, which helps support the size and frequency of the dividend. The disadvantage is that often AGA has exposure to the same names in the PE and Debt portfolios. [Vyaire for instance, where another ~€10m was lost in Debt in H1, over and above the €27m loss in the PE book]
So, that all said, looking ahead I think this one looks in OK shape. With APAX IX winding down, then it’s X and XI that will drive the valuation going forward. The just released NAV for YE showed X taking a drawdown, not a huge surprise given ongoing mixed market conditions which Apax attribute to their retail and healthcare investments. EBITDA multiples have come down the past few years, however are showing signs of stabilisation. AGA has cash at its highest level (£103m) for a few years, anticipating XI calling for capital soon, which I think is the key.
AGA has its highest allocation to XI [~€673m, versus ~€418m to X]; in other words, the dry powder AGA has generated from high multiple EBITDA exits and debt sales from the “harvesting221; funds, is about to invested in much larger amounts that they have ever done into much lower EBITDA multiple investments. The market is too focused on the recent NAV drawdown and not giving enough thought to the runway for the new XI fund.
The dividend cover from operating cashflow I see around x1.5 on average the past four years, the RCF is usually undrawn [although occasionally drawn and repaid promptly to cover short terms liquidity needs], and the buyback is small positive. |
Oakbloke is a clown. He's one of the ignorants of their own ignorance, so writes all kinds of BS with a lot of self conviction. |
I looked at some of the holdings and quite honestly I didn’t understand what they all do. Reminds me of New Media Spark (going back a bit), but that was ‘thorny’ to put it mildly. |
OakBloke, lol. Disaster area, as VSL & DGI9 show - he's like the kiss of death.
(Which isn't to say APAX might not be value down here, but OB sprays wildly, and is a very poor analyst). |
Over last three years this has been a truly appalling investment, though it does pay a decent dividend.
What will change?
Oakbloke's note - also linked above- is well worth reading. He likes APAX because he wanted a software/services provider and this gives him that exposure within a large folio of underlying companies. Plus-
" So I decided to look for consistent outperformance according to the rule of 40%. Add your EBITDA margin and your EBITDA growth and if it is consistently above 40% then it is highly attractive.
APAX share their EBITDA growth and I have inferred a 25% EBITDA margin (how else can you deliver growing earnings and dividends over 5 years unless you are generating at least that much). On that basis even in the thin years APAX sitting at or above the rule of 40. In a good year the EBITDA growth alone is above 40% - let alone the profit margin!
So APAX feels like a safer choice, even if it not wholly SAAS or software, and contains some service-based businesses too."
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There, if he is right, this will bottom at some point and the subsequent run back up could be highly profitable? Discount is now 34%. Maybe one to keep averaging down.
NAI - I hold. |
All quiet here Finals 4 th March |
Write up on #APAX by Oak Bloke |
Apax carves out S&W accountants from Evelyn wealth managers -
Apax Global Alpha contributes £23.4m of a reported £700m price tag for Smith & Williamson, the accountancy arm spinning off from Evelyn Partners... |
Apax Funds to acquire Evelyn Partners - |
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