Apax Global Alpha Limited 2018 Interim Results Highlights (6760X)

TIDMAPAX

RNS Number : 6760X

Apax Global Alpha Limited

14 August 2018

(LSE: APAX)

Apax Global Alpha Limited

Unaudited interim results for the half-year ended 30 June 2018

For further information regarding the announcement of AGA's 2018 interim results, including the details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com

Key highlights

   --      Total NAV Return(1) of +6.0%, (+5.2% on a constant currency basis) 

-- Adjusted NAV(2) increased by EUR31.5m to EUR943.9m during the six months to 30 June 2018 mainly driven by a higher positive contribution from Private Equity

-- Adjusted NAV per share of EUR1.92 (GBP1.70), compared to EUR1.86 (GBP1.65) as at 31 December 2017

-- First semi-annual dividend of 4.33 pence per share declared, equivalent to 2.5% of euro NAV at 30 June 2018. Dividend of GBP21.3m will be paid on 14 September 2018

-- AGA was 104% invested and had a cash balance of EUR16.9m. Revolving credit facility drawn by EUR39.9m

   --      Following the third lock-up release, AGA's free float increased to c.60% 

Performance highlights

-- Portfolio delivered a Total NAV Return of +6.0% in 1H18, Private Equity contributed +6.0%, and Derived Investments contributed -0.1%. Costs and performance fee adjustments were -0.7% with FX contributing +0.8%

   --      Derived Debt Investments contributed +0.2% and Derived Equity -0.3% to Total NAV Return 
 
 Adjusted NAV(2) movements        Private        Derived      Cash   Revolving    Other    Total 
                                   Equity    Investments                credit              EURm 
                                     EURm           EURm      EURm    facility     EURm 
 Adjusted NAV at 31 December 
  2017                              586.1          307.2      19.0           -      0.1    912.4 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 + Investments                       11.1          132.6   (131.2)           -   (12.5)        - 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
  - Divestments                    (22.3)        (101.8)     122.0           -      2.1        - 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 + Interest and dividend 
  income                                -              -      10.1           -    (0.5)      9.6 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 +/- Unrealised gains/(losses)       54.8         (17.8)         -           -        -     37.0 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 +/- Realised gains                     -            7.0         -           -        -      7.0 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 +/- FX gains/(losses)(3)             5.0            4.4     (1.6)       (0.4)        -      7.4 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 +/- Costs and other movements          -              -     (2.6)           -    (2.2)    (4.8) 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
  - Dividends paid                      -              -    (22.9)           -        -   (22.9) 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 +/- Performance fee reserve          3.4           10.2    (15.4)           -        -    (1.8) 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 +/- Revolving credit facility 
  drawn/repaid                          -              -      39.5      (39.5)        -        - 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 Adjusted NAV at 30 June 
  2018                              638.1          341.8      16.9      (39.9)   (13.0)    943.9 
-------------------------------  --------  -------------  --------  ----------  -------  ------- 
 

Investment activity highlights

-- Private Equity represented 65% of the invested portfolio and Derived Investments represented 35%, unchanged from end 2017

-- Private Equity had five new closed investments, one add-on and one full completed exit with another two signed, while Derived Investments had 14 new positions, one add-on, and nine divestments(4)

   --      FX exposure c.51% to US dollar denominated investments (c.49% in December 2017) 
 
Invested Portfolio analysis(5)    EURm   EURm     %     % 
Private Equity                   638.8          65% 
===============================  =====  =====  ====  ==== 
 
  *    AMI                               16.8          2% 
===============================  =====  =====  ====  ==== 
 
  *    AEVI                               6.2          0% 
===============================  =====  =====  ====  ==== 
 
  *    AEVII                             62.5          6% 
===============================  =====  =====  ====  ==== 
 
  *    AVIII                            409.7         42% 
===============================  =====  =====  ====  ==== 
 
  *    AIX                              144.6         14% 
===============================  =====  =====  ====  ==== 
 
  *    ADF                              (1.0)          1% 
===============================  =====  =====  ====  ==== 
Derived Investments              344.9          35% 
===============================  =====  =====  ====  ==== 
 
  *    Derived Debt                     184.3         19% 
===============================  =====  =====  ====  ==== 
 
  *    Derived Equities                 160.6         16% 
===============================  =====  =====  ====  ==== 
Total                            983.7  983.7  100%  100% 
===============================  =====  =====  ====  ==== 
 

Private Equity portfolio highlights

-- Total Return for the Private Equity portfolio was 11.0% (10.1% on a constant currency basis) over the six month period

-- The Apax Funds returned EUR22.3m to AGA whilst EUR11.1m was invested in additional carried interest holdings; comprising of EUR7.7m in AEVII and EUR3.4m into a new carried interest holding in AEVI

-- Unrealised gains were EUR54.8m and favourable FX movements were EUR5.0m and includes gains from the sale of Genex

-- Apax IX closed one investment, Apax Digital Fund closed two investments, AMI Opportunities Fund closed two investments

   --      Gross IRR generated on three fully exited investments was 53.4%(6) 
   --      FX exposure was c.46% in US dollar denominated investments 

-- Sector exposure spread across all Apax Partners' focus industries. Tech & Telco and Services were the most heavily weighted sectors, accounting for 32% and 31% respectively of the invested portfolio

-- Largest geographic bias in the portfolio was North America, representing 42% of the invested portfolio

Derived Investments portfolio highlights

-- Total Return for the Derived Investments portfolio was -0.6% (-1.9% on a constant currency basis) over the six month period reflecting weaker markets

-- AGA fully exited three debt investments and six equity investments generating proceeds of EUR101.8m in the period

-- Unrealised losses were EUR17.8m, realised gains were EUR7.0m and there were favourable FX movements of EUR4.4m

-- AGA completed seven new investments in debt, seven new equity investments and one add-on investment in equity amounting to EUR132.6m

   --      Gross IRR on Derived Debt exits was 12.6%(7) and on Derived Equity exits was 7.7%(7) 
   --      FX exposure was c.61% in US dollar denominated investments 

-- Sector exposure spread across all Apax Partners' focus industries. Tech & Telco and Services were the most heavily weighted sectors, both accounting for 30% of the invested portfolio

   --      Geographic skew towards North America increased by 4% to 60% 
   --      Portfolio split between Derived Debt and Derived Equity was 53% and 47%, respectively 

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

"AGA produced a stronger performance in the first half of 2018. The Private Equity portfolio added value through unrealised gains as the strength of the underlying companies is starting to be reflected in the reported performance."

Commenting on AGA's investment focus, Ralf Gruss, COO of Apax Partners, said:

"We are pleased to see strong operational performance of the Private Equity portfolio not only translating into valuation increases over the period, but value also crystallised through strong exits from divestments of Genex, GlobalLogic, and Azelis. Markets for Derived Investments showed higher volatility during the period which may create opportunities for investment activity going forward."

For more information, the Company's 2018 Interim Report and presentation are available to view at: www.apaxglobalalpha.com

Contact details

 
 Investor enquiries               Media enquiries 
 Sarah Wojcik                     Andrew Kenny 
  IR Manager - AGA                 Head of Communications 
 Telephone: [phone]   Telephone: [phone] 
 Email: [e-mail]     Email: [e-mail] 
 

Footnotes

1. Total NAV Return means the movement in the Adjusted NAV per share over the period plus any dividends paid. Total Return reflects the sub-portfolio performance on a stand-alone basis. It excludes items at overall AGA level such as cash, management fees and costs

2. Adjusted NAV represents NAV of EUR947.8m adjusted for the performance fee reserve of EUR3.9m at 30 June 2018

3. FX on cash includes the revaluation of cash balances and net losses arising from the differences in exchange rates between transaction dates and settlement dates, and unrealised net losses arising from the translation into euro of assets and liabilities (other than investments) which are not denominated in euro

   4.     Represents full exits only 

5. Invested Portfolio analysis excludes cash and cash equivalents, revolving credit facility drawn and net current assets; including these the NAV is EUR947.8m. Adjusted NAV excludes the performance fee reserve of EUR3.9m and is EUR943.9m at 30 June 2018

6. Gross IRR for Private Equity calculated concurrently based on the aggregate euro cash flows of the Apax Funds for the three positions

7. Gross IRR calculated based on aggregate euro cash flows since inception of deals realised during the period (inclusive of two partial debt exits and one partial equity exit)

Notes

1. 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"

2. Please be advised that this announcement may contain inside information as stipulated under the Market Abuse Regulations (EU) NO. 596/2014 ("MAR")

3. This announcement is 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 amended (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.

4. 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

5. 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

About Apax Global Alpha Limited

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.

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 is a leading global private equity advisory firm and over its more than 35-year history, Apax Partners has raised and advised funds with aggregate commitments of almost EUR43 billion as at 30 June 2018. 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 is authorised and regulated by the Financial Conduct Authority in the UK.

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August 14, 2018 02:00 ET (06:00 GMT)