TIDMAPAX
RNS Number : 9417I
Apax Global Alpha Limited
14 August 2019
Apax Global Alpha
Interim Report and Accounts 2019
INTRODUCTION
Realising potential
Apax Global Alpha ("AGA") offers unique exposure to the global
investment expertise of Apax Partners.
Our objective is to provide shareholders with capital
appreciation from our investment portfolio and with regular
dividends.
For more information visit
www.apaxglobalalpha.com
OVERVIEW
Investment proposition
Company strategy
Financial highlights
Strategic Report
Chairman's statement
Investment Manager's report
Market overview
Performance review
Private Equity 01
- Acquisitions and divestments 01
- Top 30 investments 02
Derived Investments 03
- Acquisitions and divestments 05
- Top 30 investments 05
Statement of Directors' 07
responsibilities 07
Financial Statements 09
Independent review report 13
Condensed statement of financial 17
position 18
Condensed statement of profit 19
or loss 23
and other comprehensive 24
income 25
Condensed statement of changes 26
in equity 26
Condensed statement of cash 27
flows
Notes to the condensed interim 28
financial statements 29
Shareholder Information 30
Administration 31
Investment policy 40
Quarterly returns since 40
1Q16 41
Portfolio allocation since 42
1Q16 43
Glossary 44
Overview Investment proposition
Why invest in AGA?
ACCESS TO THE FULL EXPERTISE AND RESOURCES OF APAX PARTNERS
-- A leading, global investment advisory firm with an over
40-year track record in Private Equity and ten years' experience in
Derived Investments
-- AGA benefits from Apax Partners' large investment team,
including the senior executives who serve on its Investment
Committee
UNIQUE EXPOSURE TO A PORTFOLIO OF ATTRACTIVE INVESTMENTS,
WELL-DIVERSIFIED ACROSS THE APAX SECTORS
-- The Apax Private Equity Funds(1) have consistently
outperformed relevant public benchmark indices across cycles
-- Derived Investments leverage the Private Equity expertise and
insights of Apax Partners, applying the same rigour and analysis to
the appraisal of debt and listed equity opportunities
COMPANY OBJECTIVE IS TO DELIVER ATTRACTIVE TARGET NET RETURNS,
OFFERING BOTH CAPITAL APPRECIATION AND REGULAR DIVIDS
-- 12-15% Total NAV Return target per annum, including:
-- 5% of NAV dividend yield per annum
1. Defined as all Apax Buyout Funds.
Generating value
AGA's structure gives access to a wide range of global
investment opportunities.
THE INVESTMENT ADVISOR
Apax
Partners
LLP
THE INVESTMENT MANAGER
Apax
Guernsey Managers Limited
THE COMPANY
Apax
Global Alpha
Overview Our strategy
Our strategy
Our strategy is to invest across the economic cycle in Private
Equity and Derived Investments opportunities.
Investment process
Our Investment Advisor looks for opportunities where experience
and insight can unlock potential.
Identify
Support
Realise
Apax sector expertise
Long-standing sector focus and sub-sector knowledge provides
deep industry expertise.
Tech & Telco
Healthcare
Services
Consumer
APAX GLOBAL PLATFORM
Global platform provides opportunities to invest flexibly across
geographies.
Global offices
7
Equity partners
21
Transformational ownership
Strong operational capabilities allow for transformational
improvements in portfolio companies, including digital
acceleration.
DERIVED INVESTMENTS INSIGHT
A mix of global investments in debt and equities.
AGA's Private Equity portfolio
-- Investments in existing and future Apax Funds
-- Both primary and secondary investments
and commitments
AGA's Derived Investments portfolio
-- Investments in private and public debt
-- Targeted investments in equity
-- Ideas derived from Apax Private Equity activity
-- Provides strong cash yield and liquidity for AGA
Overview Financial highlights
What we have achieved so far this year
Record half-year returns and NAV has surpassed
EUR1bn
Total NAV Return1
13.4%
Adjusted nav
EUR1,032m
DIVID
5.27c
4.86p
Adjusted nav PER SHARE
EUR2.10
GBP1.88
Private Equity Derived Debt Derived Equity
Total Return(3) Total Return(3) Total Return(3)
20.5% 5.4% 0.9%
------------------------ ------------------------
Percentage of portfolio Percentage of portfolio Percentage of portfolio
62% 25% 13%
------------------------ ------------------------
1. Total NAV Return for the Company reflects the percentage movement
in the period between the closing euro Adjusted NAV (dividend added
back) relative to the opening Adjusted NAV
2. Adjusted NAV represents NAV of EUR1,034.5m adjusted for the performance
fee reserve of EUR2.6m at 30 June 2019
3. 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
For details of calculations used please see the glossary on page
45
Private Equity financial metrics(1) Derived Investments financial metrics(2)
LTM EBITDA growth Derived debt
12.6% LTM EBITDA growth
LTM revenue growth 17.3%
12.2%
Net debt to EBITDA multiple Yield to maturity
3.9x 9.9%
Enterprise Value to EBITDA multiple
15.3x Derived equity
LTM earnings growth
14.9%
Price to earnings ratio
20.8X
LTM: Last Twelve Months
1. Please refer to page 17 for further details
2. Please refer to page 23 for further details
Strategic report Chairman's statement
Chairman's statement
Adjusted Net Asset Value grows to over EUR1bn for the first time
in the Company's history.
Strong investment performance continues in 1H19
Total NAV Return for six months to 30 JUNE 2019
13.4%
DIVID 2.5% OF NAV, IN RESPECT OF 30 June 2019
4.86
pence per share
Overview
Apax Global Alpha's 2019 interim results reflect the strongest
half-year investment performance since our IPO in 2015. AGA's Total
NAV Return was 13.4% for the six-month period and Adjusted NAV has
grown to EUR1,032m, an important milestone for the Company.
Results
Total NAV Return for 1H19 was 13.4%. Currency movements only
played a minor role: on a constant currency basis, the Company
delivered a Total NAV Return of 12.9% during the six-month
period.
Adjusted NAV per share increased from EUR1.90 to EUR2.10.
Private Equity Investments remain the major driver of performance
(Total Return of 20.5%, 20.3% constant currency). The Derived Debt
portion of the portfolio achieved returns in line with its
longer-term target (Total Return of 5.4%, 4.8% constant currency)
whilst returns in Derived Equity were flat for the first six months
(Total Return of 0.9%, -0.7% constant currency).
Investment activity
1H19 was characterised by a number of successful Private Equity
realisations: four full exits were signed or closed during the
period, generating an average uplift of 19.2% over their last
Unaffected Valuations and an average Gross IRR of 24.0%. In
addition, AGA gained exposure to seven new investments (signed or
closed), into which the Company is expected to deploy a total of
EUR87.9m.
In the Derived Investments portfolio, there has been an
increased focus on Derived Debt where a total of six new
investments were made, deploying EUR65.5m of capital. One new
position was established in Derived Equity. Exits from the Derived
Investments portfolio achieved a Gross IRR of 27.0% on average. As
at 30 June 2019, AGA had a cash position of EUR116.3m, mainly as a
result of the strong exit activity in the Private Equity portfolio.
The Company expects to deploy this liquidity into Private Equity
and Derived Investments over the course of the next six months.
Market environment
Capital markets experienced a significant rebound during 1H19.
Many public market indices have grown by double digits, reflecting
easing US-China tensions and continued global GDP growth.
Meanwhile, credit yields across the risk spectrum have seen a
substantial contraction, driven by both narrowing credit spreads
and lower base rates.
The Apax Funds' focus sectors are less cyclically exposed and
also less exposed to political risks such as trade tensions than
the overall economy. Our outlook remains cautious however, as macro
economic conditions are showing signs of a slowdown, particularly
in Europe.
Dividend
The Board remains committed to a policy of distributing 5% of
AGA's NAV per annum as a dividend to shareholders. Accordingly, a
final dividend for the fiscal year 2018 of 4.12 pence per share was
paid to shareholders on 5 April 2019.
The Board has also approved an interim dividend in respect of
the fiscal year 2019 of 4.86 pence per share. Using the closing
exchange rate of 1.0836 on 7 August 2019, this represents 2.5% of
AGA's euro NAV per share as at 30 June 2019, equivalent to 5.27
euro cents. The interim dividend will be paid on 13 September 2019
to members on the register on 23 August 2019. The shares will be
marked ex-dividend on 22 August 2019.
Commitments and funding
As announced on 15 July 2019, AGA has made a commitment of $450m
to the Apax X Fund, split 50:50 between the euro and US dollar
tranches. Apax X aims to continue the Apax established private
equity strategy of investing in buyout investments globally across
its four core sectors: Tech & Telco, Services, Healthcare and
Consumer. Apax X is the successor fund to Apax IX, to which AGA
committed $350m in 2016.
The Board is pleased that the successful development of the
Company has allowed AGA to increase its commitment size to Apax X
by close to 30% in comparison to Apax IX. This will allow the
Company to maintain an attractive overall exposure to Private
Equity.
Outlook
Much of the outlook for 2019 remains the same as it did at the
beginning of the year. There is still uncertainty from trade
tensions between the US and China, and new tensions might possibly
arise between the US and Europe. In addition, Brexit concerns
remain unresolved. As such, the macro-economic picture appears more
dependent on political decision-making than ever before.
It is likely that public-to-private deals and corporate
carve-outs will continue to feature more prominently in sourcing
deals in the Private Equity portfolio.
In Derived Investments, the focus remains on identifying
attractive opportunities that will allow AGA to continue to deploy
its excess liquidity.
Tim Breedon CBE
Chairman
13 August 2019
Strategic report Investment manager's report Market overview
Investment Manager's market review and outlook
1H19 saw a rebound in public markets, with the S&P 500
hitting a new all-time high. Private equity markets were liquid in
1H19, with buyers somewhat benefiting from the cool down in 4Q18.
However, we expect valuation levels to quickly readjust to public
market levels.
1H19 market review
After the doom and gloom of 4Q18, public markets around the
globe rebounded in two waves over the past six months. This ascent
was temporarily interrupted in April by a breakdown in US-China
trade negotiations. But with a "truce" reached in Osaka, the first
half of the year finished on a very positive note. As depicted in
Fig.1, many public market equity indices showed double-digit gains
in 1H19. Because of these increases, North American public market
indices are at, or close to, their all-time highs. Europe and the
Emerging Markets regained their losses from last year but have not
developed as strongly as the US markets. This appears to be
reflective of macro economic growth rates and their outlook. While
the US continues to grow quickly, a GDP slowdown is measurable in
Europe and in Asia, notably in China. In addition, some leading
indicators of economic activity point to a further worsening of
trends. As Fig.2 shows, manufacturing Purchasing Managers' Indices
("PMI") in the major economies have clearly declined substantially
over the past 12 months, and a few European and Asian PMIs are now
deep in contraction territory (with sub-50 values). A manufacturing
recession in Europe is under way.
If trade talks do not have a positive conclusion, a more
pronounced slowdown in the world economy seems inevitable. That
said, macro economic indicators such as unemployment rates and
short and mid-term GDP model forecasts, for example from the ECB
for Europe, remain satisfactory. However, these may need to be
revised soon in light of the economic trends described. Overall,
central banks are flagging a more dovish stance on both sides of
the Atlantic and markets are clearly taking some comfort from
that.
Credit markets in particular were influenced by the recent US
central bank repositioning. Sovereign, investment grade and
non-investment grade yields across the risk spectrum reversed gear
and significantly contracted in 1H19. This resulted in the US
dollar dipping relative to the euro in June; however, it later
quickly recovered given the stronger GDP trends in the US.
North American private equity activity remained high in 1H19
with deal-making volumes close to their already elevated 2018
benchmarks; meanwhile in Europe, the pace was substantially slower
(Fig.3). Valuation levels seemed somewhat lower than last year
(Fig.4) as the public market correction in 4Q18 provided some
relief. Given the public market rebound this will likely be a short
respite.
2019 to 2020 outlook
A number of significant geopolitical issues keep lingering, with
a wide range of possible outcomes: the current US-China and the
future US-EU trade situations, Brexit, as well as a possible crisis
with Iran appear to be the most pertinent. Each of these is highly
uncertain and at the same time powerful enough to possibly shake
the world economy or at least the economy of one or more large
geographies. As such, the macro economic picture and markets appear
more dependent on political decision-making than ever before. This
makes an economic and investment forecast extremely difficult. So
far in 2019, the capital markets seem to be discounting the
associated risks - recent sentiment is very positive despite this
geopolitical overhang. Whether this sentiment persists into autumn
is unclear to us.
With regard to deal making in alternative assets, the markets
are widely open for now. One of the more visible trends is the
increasing willingness of corporates to scrutinise their business
portfolios and divest what is no longer deemed as core. As a
consequence, the corporate carve-out is a private equity deal type
we expect to see more of in the next 18 months. The situation for
public-to-privates is a bit more ambiguous. Markets in 2H18 were
quite conducive to these deals; their decision-making cycle let
many of them drag into 1H19. However, the more recent stock market
rallies could shut down this trend for the second half of the
year.
From a private equity and sector perspective, the Apax Funds'
focus sectors (Tech & Telco, Healthcare, Consumer, Services and
Digital) have less exposure to political risks than, for example,
automotive, industrials or commodities. Fig. 5 compares the Apax
Funds' focus sector valuations to historical averages (Tech and
Software being part of Tech & Telco for comparative purposes).
Valuations in Healthcare and Consumer look relatively attractive
and they are also less cyclical than many other sectors.
From a credit perspective, markets have recovered substantially
during 1H19. Contracting yields and spreads, coupled with the
aforementioned economic and geopolitical uncertainty, create a
difficult-to-navigate "late-cycle" environment for credit
investments. As a reaction to central banks becoming more dovish
again, a number of investors have started to reduce exposure to
floating rate loans and increase exposure to fixed rate high yield
instruments. Whilst the fixed income universe has again become more
viable for AGA, we believe that in the current environment more
focus than ever on the credit quality of the underlying business is
the more relevant factor for making a new investment. We continue
our focus by narrowing the deal pipeline to opportunities where we
can leverage the insights of the Investment Advisor's private
equity teams. We also expect that investments in credit will
continue to outweigh new listed equity investments, and that within
credit, we will selectively add senior secured instruments to the
portfolio to achieve a more conservative positioning in this
late-cycle environment.
Strategic report Investment manager's report Performance
review
Performance review
AGA's portfolio delivering strong returns for shareholders in
1H19
SUMMARY:
Total NAV Return1
13.4%
Adjusted NAV2
EUR1,032m
Adjusted NAV per share
EUR2.10/GBP1.88
Market capitalisation
GBP726.8m
Performance highlights
AGA demonstrated strong performance during the first six months
of 2019: Total NAV Return1 was 13.4% (12.9% constant currency)
(Fig.2), Adjusted NAV grew to more than EUR1.0bn, and dividends
distributed to shareholders were in line with the stated policy to
distribute 5% of NAV on an annual basis.
This result was driven by the Private Equity portfolio which
continued to exhibit strong performance with a Total Return1 of
20.5% (20.3% constant currency). The key driver remains the
operational performance of the underlying portfolio companies,
together with exits achieved at premium valuations.
Within Derived Investments, Derived Debt continued to deliver
returns in line with expectations. Total Return(1) of Derived Debt
was 5.4% (4.8% constant currency) and the two divestments realised
during the period achieved an average Gross IRR of 13.4%. We also
continue to be pleased with the overall quality of the underlying
portfolio.
Derived Equity delivered a flat performance during the period
with a Total Return1 of 0.9% (-0.7% constant currency). Whilst we
have seen progress in a number of investments held by AGA, other
investments faced share price volatility and /or underperformed
market expectations. We remain focused on these positions, whilst
increasing our scrutiny in relation to new opportunities in listed
equities.
Investment portfolio
AGA's Adjusted NAV was EUR1,032m at 30 June 2019 (Fig.3) with an
Invested Portfolio of EUR938.3m (Fig.1). Cash and net current
liabilities represented EUR96.2m, or 9% of Adjusted NAV. Excess
liquidity primarily resulted from the strong exits achieved in the
Private Equity portfolio which returned EUR148.5m during the
period, together with realisations of EUR50.4m from the Derived
Investments portfolio. We expect to re-deploy these resources into
the Private Equity and Derived Debt portfolio during the next six
months.
The Private Equity portfolio represented 62% of the Invested
Portfolio at 30 June. The reduced Private Equity exposure was due
to exit activity in the Apax Funds. The largest exposures in the
portfolio remain through the Apax VIII and Apax IX funds
(investment vintages from 2012 onwards). With AGA's recently
announced commitment to the Apax X fund, we have ensured the
Company's continued access and exposure to Apax Private Equity
Investments for the years to come.
Just over half of AGA's overall geographic exposure continued to
be to North America at 51%, followed by Europe at 23%. This is
largely mirrored by the currency exposures of the Fund, with US
dollars representing 54% and the euro representing 20% of the
portfolio. The main sector exposure was to Tech & Telco at 36%,
followed by Services at 26%.
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. Constant
currency returns calculated the same as Total NAV Return adjusted
to remove the impact of FX
2. Adjusted NAV represents NAV of EUR1,034.5m adjusted for the performance
fee reserve of EUR2.6m at 30 June 2019
DIVIDS
AGA's dividend policy to pay out 5% of NAV forms an important
part of returns to shareholders (Fig.4). Since IPO, the Company has
paid and declared EUR189m of dividends.
In the first six months of 2019, AGA paid the second semi-annual
dividend in relation to 2018 totalling EUR23.7m. Due to AGA's
strong performance, the pence per share payout of the first
dividend for 2019 will increase to 4.86 pence per share and is
expected to be paid on 13 September 2019. Total dividends paid
during 2019 will therefore be EUR0.10 or GBP0.09 per share.
COMMITMENTS AND FUNDING
At 30 June 2019, outstanding commitments to the Apax Funds
(together with recallable distributions) amounted to EUR239.2m.
Post this reporting period, AGA announced a commitment of $450m to
the Apax X Fund. With this, AGA will gain exposure to a seventh
Apax Fund, increasing its total unfunded commitments (together with
recallable distributions) to EUR636.8m. The majority of this amount
is expected to be deployed over a five-year period.
From our extensive analysis performed in the context of sizing
the Apax X commitment, we have confidence that AGA has enough
liquidity, even in more extreme scenarios, to meet its obligations
to the Apax Funds. As Fig.5 depicts, AGA has a significant balance
sheet of EUR1,034.5m available and has access to an additional
EUR140.0m from the undrawn revolving credit facility at 30
June.
Apax X expects to operate a capital call facility to bridge
capital calls from its investors. The operation of a capital call
facility will provide AGA and other Apax X investors with
significant visibility for liquidity planning. Capital call
facilities are also operated by the Apax IX, Apax VIII, AMI and
Digital funds.
None of the Apax Funds, in which AGA invests, employ long-term
or structural gearing.
Private equity highlights
On a look-through basis, AGA committed EUR52.1m to Private
Equity Investments which closed during the six months, adding
exposure to three new portfolio companies (Fractal Analytics, Trade
Me and Huayue Education) whilst the Apax Funds reinvested in one
existing position (AssuredPartners) together with the new majority
owners.
AGA received distributions totalling EUR148.5m in 1H19, an
amount higher than for 2018 as a whole. This included two strong
full exits for Apax VIII: AssuredPartners and Exact Software.
The Private Equity portfolio has performed very strongly, with
like-for-like value gains of 20.8% in 1H19. The key drivers
continued to be strong organic and inorganic growth of the
underlying portfolio companies.
DERIVED INVESTMENTS highlights
New investment activity in Derived Investments was focused on
Derived Debt positions during the reporting period. AGA deployed
EUR65.5m into new debt investments across five companies. These
opportunities were sourced from the Apax global platform and the
activities of the sector teams. All but two new investments were
outside the current Apax Funds private equity holdings. From a risk
management perspective, AGA included some first lien secured
transactions into the portfolio mix. AGA also sold two debt
positions during the period, generating an average Gross IRR of
13.4%3.
The Derived Equity portfolio showed mixed results in the first
six months of the year. Whilst exits from the Derived Equity
portfolio demonstrated pleasing returns (average Gross IRR of
35.0%3), some of the existing portfolio positions continued to
disappoint.
RESPONSIBLE INVESTING
Apax Partners remains focused on CSR issues and consider these
as part of the overall investment thesis.
From a practical perspective, Apax Partners' ability to assess
and influence CSR matters in portfolio investments differs between
Private Equity Investments and Derived Investments. This is because
Private Equity Investments are characterised by longer hold periods
and, often, controlling stakes, whereas Derived Investments tend to
have shorter hold periods and usually involve non-control
positions. The latter limits the ability to influence CSR
initiatives within the Derived Investments.
CSR: Corporate and Social Responsibility
3. Gross IRR calculated based on aggregate euro cash flows since
inception of deals realised during 1H19
FIG.1: Portfolio overview at 30 June 2019
INVESTMENT PORTFOLIO
GBP938.3m
91% of total NAV
PRIVATE EQUITY
62%
DERIVED INVESTMENTS
38%
FIG.2: Total NAV Return contributions (%)
Private Equity 12.8%
---------------------------- ------
Derived Debt 1.0%
---------------------------- ------
Derived Equity (0.1%)
---------------------------- ------
Cost and other movements (0.5%)
---------------------------- ------
Performance fee adjustment1 (0.3%)
---------------------------- ------
FX 0.5%
---------------------------- ------
1H19 Total NAV Return 13.4%
---------------------------- ------
LTM Total NAV Return 14.4%
---------------------------- ------
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2019
FIG.3: Adjusted NAV development (EURm)
Adjusted NAV at 31 December 2018 930.8
--------------------------------- -------
Private Equity 119.2
--------------------------------- -------
Derived Debt 9.0
--------------------------------- -------
Derived Equity (0.8)
--------------------------------- -------
Cost and other movements (4.4)
--------------------------------- -------
Performance fee adjustment1 (2.6)
--------------------------------- -------
Dividend paid (23.7)
--------------------------------- -------
FX 4.4
--------------------------------- -------
Adjusted NAV at 30 June 2019 1,031.9
--------------------------------- -------
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2019
FIG.4: Dividend payouts
Dividend payments
% of NAV pence per share
p %
---- ---- ---
2H15 3.69 2.5
---- ---- ---
2016 8.08 5.0
---- ---- ---
2017 8.41 5.0
---- ---- ---
2018 8.45 5.0
---- ---- ---
1H19 4.86 2.5
---- ---- ---
As AGA is a Guernsey company there is no income test for
dividend. AGA must satisfy a cash flow and viability test in order
to pay dividends.
Strategic report Investment manager's report Private equity
Strong performance from positive operational momentum in the
portfolio companies
SUMMARY:
Private Equity Total Return1
20.5%
Distributions from Apax Funds
EUR148.5m
Gross IRR2 on 2019 full exits
24.0%
On a look-through basis, AGA invested EUR52.1m in four new
companies that closed in the period and committed c.EUR35.8m to
three new deals that signed in the period3
Strong operational performance and exits contributed to healthy
returns
Diversified portfolio with
79%
of investments from 2015-2019 vintage
CONTINUED OPERATIONAL MOMENTUM DELIVERING STRONG NAV
PERFORMANCE
The Private Equity portfolio delivered strong performance in the
six months with a Total Return of 20.5% (Fig.1). FX positively
contributed but its impact was marginal; on a constant currency
basis the Total Return was 20.3%.
Adjusted NAV decreased by EUR11.2m from EUR591.5m to EUR580.3m
(Fig.2). Fair value unrealised gains of EUR119.2m mainly from the
strong performance of Apax IX ("AIX") and Apax VIII ("AVIII"),
largely offset the receipt of distributions of EUR148.5m
(principally the result of exit proceeds from AssuredPartners and
Exact Software).
A number of portfolio companies delivered significant valuation
increases, the three largest being ThoughtWorks, Exact Software and
Cole Haan (Fig.3). ThoughtWorks is performing extremely well
operationally. The acceleration in EBITDA growth is the result of
several initiatives, including a comprehensive margin expansion
programme supported by Apax's Operational Excellence Practice.
Meanwhile, the increase in Exact Software reflected its exit
valuation, at a premium to its prior carrying value. Cole Haan's
sales and EBITDA are expanding very rapidly as investment in
product innovation, talent and infrastructure are paying off across
categories, channels and geographies.
The largest valuation declines in the portfolio were from One
Call, Guotai Junan Securities ("GTJA") and Ideal Protein (Fig.3).
One Call continued to perform below expectations. A new CEO was
appointed at the start of the year, focusing on cultivating
relationships with key customers, and delivering a new IT system.
The new IT system is expected to increase internal efficiencies and
improve the customer experience. Listed on the Hong Kong and
Shanghai stock exchanges, GTJA's operational performance has
recovered after a difficult 2018, but volatility in its share price
has continued as the US-China trade war persists. Ideal Protein
battled a decline in product sales and elevated customer churn. The
new CEO has added to her management team to support the execution
of a recovery plan.
Overall, the Private Equity portfolio continues to perform
strongly: LTM EBITDA growth was 12.6%. We expect this operational
momentum in the portfolio to continue into the remainder of 2019
and beyond, as long as the macro environment backdrop does not
deteriorate significantly.
NEW INVESTMENT ACTIVITY LEVERAGING SUB-SECTOR EXPERTISE
The pace of investment in 1H19 was similar to that of 2H18. On a
look-through basis, AGA invested EUR52.1m in Private Equity deals
which closed during the six months. This included three investments
for AIX already highlighted in the 2018 Annual Report: leading
advanced analytics player Fractal Analytics; large US insurance
broker AssuredPartners; and New Zealand's leading online
marketplace and classifieds site, Trade Me.
These deals are good examples of Apax Partners' strategy to
leverage its experience in specific sub-sectors in order to source
and exploit more differentiated opportunities. Fractal Analytics
represents the Apax Funds' 12th investment in the IT Services
sub-sector, while Trade Me is the eighth in the digital
marketplaces sub-sector. AssuredPartners is a business the Apax
Funds know well through prior successful ownership. The significant
experience gained from this focus plays an important role in
finding attractive risk-reward profiles and allows for the
execution of proven value creation strategies.
In addition, in June 2019 AIX invested in Huayue Education, a
leading provider of Chinese language learning and teaching
solutions with a national presence across China.
1. Total Return reflects the sub-portfolio performance on a stand-alone
basis. Returns are quoted on a constant currency basis to remove
the impact of FX
2. Gross IRR and Gross MOIC on full exits calculated based on the aggregate
cash flows in euros across all funds for the deals realised in the
year: AssuredPartners and Exact Software closed in May 2019, Acelity
and Electro Stocks signed in May 2019 and June 2019 respectively
and are expected to close in 2H19. Gross IRR represents concurrent
Gross IRR
3. Final costs may change once deals have fully closed
SUCCESSFUL PACE OF REALISATIONS CONTINUES
AGA received distributions of EUR148.5m in 1H19, an amount
higher than for 2018 as a whole. This included two strong full
exits for AVIII: AssuredPartners and Exact Software.
The sale of AssuredPartners delivered a 2.9x Gross MOIC and a
36.6% Gross IRR with a 14.0% uplift1 on exit to the last Unaffected
Valuation. Since acquisition, the company has pursued a successful
M&A strategy and delivered strong organic growth following
investment in IT, sales force, and management infrastructure. This
resulted in revenue and EBITDA more than doubling during AVIII's
ownership. As highlighted previously, AIX took a substantial
minority stake in the business at completion.
Exact Software delivered a 4.0x Gross MOIC and a 39.5% Gross IRR
with a 34.4% uplift1 on exit to the last Unaffected Valuation.
During AVIII's ownership, the company delivered rapid growth,
having accelerated its software-as-a-service ("SaaS") transition,
expanded its product suite, and used M&A to strengthen its
offering in specific niches and to sell its non-core US
division.
In addition to these full exits, several portfolio companies,
such as ThoughtWorks, were refinanced in order to optimise capital
structures and/or fund dividends.
APAX FUNDS UPDATE
AIX is performing very strongly and delivering early value
creation in many companies. In July 2019, AIX closed an investment
in Baltic Classifieds Group, a collection of leading online
classified advertising platforms in Lithuania and Estonia. The AIX
portfolio now stands at 20 closed investments. Approximately
two-thirds of the portfolio was acquired at attractive absolute
multiples, while the balance is high-growth businesses acquired at
reasonable relative multiples.
In March 2019, a consortium including AIX announced an agreement
to acquire the entire issued, and to be issued, share capital of
Inmarsat, a London Stock Exchange-listed provider of mobile
satellite communications services. The transaction is expected to
complete by the end of the year, subject to regulatory approvals.
In addition, a yet undisclosed transaction was signed by AIX in
April 2019 in the Services sector which is currently subject to
regulatory approvals.
Post period end, AIX signed an agreement to acquire ADCO Group,
the global market leader in the mobile sanitary solutions sector,
in August 2019. The transaction is expected to close in 4Q19.
AVIII continued to deliver strong realisations with the
previously highlighted exits of AssuredPartners and Exact Software.
The Fund is in harvesting mode and we expect further NAV expansion
and exits in the coming years.
Apax Europe VII ("AEVII") and Apax Europe VI ("AEVI") continue
to actively evaluate exit opportunities and monetise their
portfolios. In May 2019, AEVII agreed the sale of Acelity to the 3M
company. Under the Apax Funds' ownership the business has been
transformed through strategic M&A (targeted acquisitions as
well as disposals of non-core assets) and also investment in
R&D, sales force and management. The transaction, which is
expected to close in 2H19, will deliver a 3.1x Gross MOIC and a
17.0% Gross IRR with a 0.9% uplift1 on exit to the last Unaffected
Valuation. In June 2019, AEVII also agreed the sale of Electro
Stocks, delivering a Gross MOIC of 0.3x and immaterial Gross IRR
but representing an uplift of 15.1%1 compared to the last
Unaffected Valuation. A Spanish electrical component distributor,
selling a wide range of products, mainly to installers through its
79 points-of-sale distribution network, it has been underperforming
for many years, but is small and immaterial for AGA.
AEVII is expected to commence carried interest payments
following the completion of these exits. This will start a
monetisation of the carried interest stakes in AEVII acquired by
AGA in 2015 and 2018.
The Apax Mid-Market Israel Fund ("AMI") and the Apax Digital
Fund ("ADF") continue to remain focused on their investment
pipeline as well as supporting their existing holdings. Post period
end, ADF announced two transactions: an investment in Signavio, a
leading SaaS provider of business process management software, and
the acquisition of MetaMetrics, the leading provider of reading and
mathematics measurement scales for educational assessments in the
United States. Both transactions are expected to complete later
this year.
In line with its investment policy to invest in new private
equity funds advised by Apax Partners, AGA committed $450m to Apax
X ("AX"). The Fund, which has yet to hold a final close, will
continue the Apax Funds' established strategy of investing in
buyout investments globally across its four focus sectors.
MARKET OUTLOOK
High valuations and intense competition continue to characterise
the private equity landscape. Buyout deal volumes recently hit a
post-financial crisis peak. We have previously highlighted the
approach Apax Partners takes to navigate this "late-cycle"
environment. To recap, the focus is on retaining discipline around
entry multiples, and pursuing a differentiated investment strategy
targeting businesses which can be transformed or repositioned. This
is achieved through: leveraging Apax Partners' sub-sector expertise
to actively target opportunities in areas we know well and where
proven strategies can be deployed; making the most of our global
platform to generate a large amount of deal flow; and utilising our
deep operating skills to bring a clear thesis around improvements
and to accelerate change.
This strategy is evident in the existing portfolio and its
performance today. The portfolio is in good shape: it is
well-diversified by sector and geography, earnings growth is solid
with sustainable momentum, and leverage is moderate compared to the
rest of the industry.
1. Valuation uplifts on exits are calculated based on the total
actual or estimated sales proceeds and income as appropriate since
the last Unaffected Valuation. Unaffected Valuation is determined
as the fair value in the last quarter before exit, when valuation
is not affected by the exit process (i.e. because an exit was
signed, or an exit was sufficiently close to being signed that the
Apax Funds incorporated the expected exit multiple into the quarter
end valuation)
FIG. 1: Private Equity performance (%)
Movement in underlying portfolio companies' earnings 27.5%
---------------------------------------------------------------- ------
Movement in net debt1 (6.3%)
---------------------------------------------------------------- ------
Movement in comparable companies' valuation multiple2 9.4%
---------------------------------------------------------------- ------
One-off and other3 (3.2%)
---------------------------------------------------------------- ------
Management fees paid and carried interest accrued by Apax Funds (7.1%)
---------------------------------------------------------------- ------
Movement in AEVII and AEVI carried interest fair value 2.0%
---------------------------------------------------------------- ------
Movement in performance fee reserve4 (0.3%)
---------------------------------------------------------------- ------
FX 1.3%
---------------------------------------------------------------- ------
LTM Total Return 23.3%
---------------------------------------------------------------- ------
1. Represents movement in all instruments senior to equity
2. Movement in the valuation multiples captures movement in the comparable
companies' valuation multiples. In accordance with International
Private Equity and Venture Capital Valuation ("IPEV") guidelines,
the Apax Funds use a multiples-based approach where an appropriate
valuation multiple (based on both public and private market valuation
comparators) is applied to maintainable earnings, which is often,
but not necessarily, represented by EBITDA to calculate Enterprise
Value
3. Mainly dilutions from the management incentive plan as a result of
growth in the portfolio's value
4. Performance fee adjustment accounting for the movement in the performance
fee reserve at 30 June 2019
FIG.2: Private Equity Adjusted NAV development (EURm)
Adjusted NAV at 31 December 2018 591.5
--------------------------------- -------
Calls 19.5
--------------------------------- -------
Distributions (148.5)
--------------------------------- -------
Unrealised gains 119.2
--------------------------------- -------
Performance fee adjustment1 (2.6)
--------------------------------- -------
FX 1.2
--------------------------------- -------
Adjusted NAV at 30 June 20192 580.3
--------------------------------- -------
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2019
2. Includes AGA's exposure to carried interest holdings in AEVII
and AEVI which were respectively valued at EUR44.7m and EUR4.0m at
30 June 2019
FIG.4: Private Equity portfolio at 30 June 2019
AIX 23%
-------------------- ---
AVII 27%
-------------------- ---
AEVII 8%
-------------------- ---
AEVI 1%
-------------------- ---
AMI 2%
-------------------- ---
ADF 1%
-------------------- ---
Derived Investments 38%
-------------------- ---
INVESTED PORTFLIO
EUR582.9m
56% of Total NAV
Apax IX ("AIX")
------------------------ ---------
AGA NAV EUR214.5m
------------------------ ---------
% of AGA PE portfolio 37%
------------------------ ---------
Vintage 2016
------------------------ ---------
EUR154.5m
Commitment +$175m
------------------------ ---------
Invested and committed1 74%
------------------------ ---------
Apax VIII ("AVIII")
------------------------ ---------
AGA NAV EUR255.5m
------------------------ ---------
% of AGA PE portfolio 44%
------------------------ ---------
Vintage 2012
------------------------ ---------
EUR159.5m
Commitment +$218.3m
------------------------ ---------
Invested and committed1 104%
------------------------ ---------
Apax Europe VII ("AEVII")2
--------------------------- --------
AGA NAV EUR73.3m
--------------------------- --------
% of AGA PE portfolio 13%
--------------------------- --------
Vintage 2007
--------------------------- --------
Commitment EUR86.5m
--------------------------- --------
Invested and committed 108%
--------------------------- --------
Apax Europe VI ("AEVI")3
------------------------- --------
AGA NAV EUR5.8m
------------------------- --------
% of AGA PE portfolio 1%
------------------------- --------
Vintage 2005
------------------------- --------
Commitment EUR10.6m
------------------------- --------
Invested and committed 107%
------------------------- --------
AMI Opportunities Fund ("AMI")
---------------------------------
AGA NAV EUR22.4m
----------------------- --------
% of AGA PE portfolio 4%
----------------------- --------
Vintage 2015
----------------------- --------
Commitment $30m
----------------------- --------
Invested and committed 55%
----------------------- --------
Apax Digital Fund ("ADF")
-------------------------- --------
AGA NAV EUR11.4m
-------------------------- --------
% of AGA PE portfolio 2%
-------------------------- --------
Vintage 2017
-------------------------- --------
Commitment $50m
-------------------------- --------
Invested and committed 18%
-------------------------- --------
1. Invested and committed figures for AIX and AVIII are represented
by the AIX and AVIII euro tranches respectively
2. Includes AGA's exposure to AEVII as a limited partner, valued at
EUR28.5m and through its carried interest holdings, valued at EUR44.7m.
The carried interest holdings were acquired through a EUR10.5m investment
in 2015 and EUR7.7m investment in April 2018
3. Includes AGA's exposure to AEVI as a limited partner, valued at EUR1.8m
and through its carried interest holdings, valued at EUR4.0m. The
carried interest holdings were acquired through a EUR3.4m investment
in April 2018
OPERATIONAL METRICS
LTM revenue and EBITDA growth were 12.2% and 12.6% respectively.
This follows LTM revenue and EBITDA growth of 13.9% and 17.7% at
December 2018. Excluding significant M&A, growth was 10.5% and
10.7% LTM to June 2019 for sales and EBITDA respectively.
The weighted average valuation multiple in AGA's portfolio
increased from 13.9x at December 2018 to 15.3x LTM EBITDA in June
2019. This increase mirrors performance of public markets during
the first six months of the year. In addition, portfolio companies
in higher-growth Tech & Telco and Digital sectors have a higher
relevance in the Apax Funds portfolio with 51% of the portfolio now
(up from 49% at 31 December 2018).
The weighted average leverage of portfolio companies decreased
slightly from 4.0x to 3.9x LTM EBITDA at June 2019. This is due to
EBITDA growth outpacing changes in absolute levels in net debt.
Acquisitions Closed3 COST (4)
-------------------------------------------------------------------- --------
AssuredPartners
Insurance brokerage firm that distributes P&C, personal lines,
and healthcare insurance (AIX, North America, Services) EUR20.2m
-------------------------------------------------------------------- --------
Fractal Analytics
Provider of advanced analytics services to Fortune 500 enterprises
(AIX, India, Tech & Telco) EUR6.6m
-------------------------------------------------------------------- --------
Trade Me
Largest internet auction website in New Zealand (AIX, Rest of
World, Services) EUR22.2m
-------------------------------------------------------------------- --------
Huayue Education
Provider of Chinese language learning and teaching solutions
(AIX, China, Consumer) EUR3.1m
-------------------------------------------------------------------- --------
Divestments Full exits (closed or signed)
---------------------------------------------------------------------------------
Gross MOIC5
3.1x
-------------------------------------------------------------------- -----------
Acelity Gross IRR5
Provider of therapies and products for the advanced wound care,
tissue regeneration and therapeutic support system markets (AEVII,
North America, Healthcare) (signed not closed) 17%
-------------------------------------------------------------------- -----------
Gross MOIC5
2.9x
-------------------------------------------------------------------- -----------
AssuredPartners
Insurance brokerage firm that distributes P&C,
personal lines, and healthcare insurance Gross IRR5
(AVIII, North America, Services) 37%
-------------------------------------------------------------------- -----------
Gross MOIC5
0.3x
-------------------------------------------------------------------- -----------
Electro Stocks
Electrical components distributor
(AEVII, Europe, Services) Gross IRR5
(signed not closed) nm6
-------------------------------------------------------------------- -----------
Gross MOIC5
4.0x
Exact Software
Provider of cloud-based and on-premise business software and
services for SMBs Gross IRR5
(AVIII, Europe, Tech & Telco) 40%
-------------------------------------------------------------------- -----------
1. Gross Asset Value weighted average of the respective metric across
the portfolio. At June 2019 and December 2018, 14 and 12 investments
were respectively excluded as these are financial services companies
often valued on book value or for which earnings financials are not
available e.g. complex carve-outs or growth investments. For EV/EBITDA
and net debt/EBITDA figures exclude MATCHESFASHION.COM and Vyaire
Medical due to low EBITDA from opex investments and short-term fluctuations
in EBITDA respectively. The December 2018 comparative for LTM revenue
growth and LTM EBITDA growth initially excluded MATCHESFASHION.COM
and Vyaire Medical, as these have been included in the June 2019
metrics the comparative has been amended for their inclusion accordingly
2. Represents closed and signed investments and exits. Four new investments
closed in the period and three investments signed with expected closing
dates in 2H19 (Inmarsat signed in April 2019, Baltics Classified
Group in June 2019 and another Services investment in June 2019).
Exits: AssuredPartners and Exact Software closed in May 2019, Acelity
and Electro Stocks signed in May 2019 and June 2019 and are expected
to close in 2H19
3. Represents deals closed in 1H19 only
4. Cost is AGA's indirect exposure to the underlying portfolio companies
held by Apax Funds. Costs may change following final close of a deal
5. Gross IRR and Gross MOIC on exits calculated based on the aggregate
cash flows in euros across all funds for the deals realised in 1H19:
AssuredPartners closed in May 2019, Exact Software closed in May
2019, Acelity signed in May 2019, Electro Stocks signed in June 2019.
Gross IRR represents concurrent Gross IRR
6. Not meaningful
Top 30 Private Equity investments - AGA'S INDIRECT EXPOSURE
Initial
purchase Valuation % of
Fund year Geography EURm NAV
------------------------ ------------- ---------- --------------- --------- ----
ThoughtWorks AIX 2017 North America 55.6 5%
------------------------ ------------- ---------- --------------- --------- ----
Cole Haan AVIII 2013 North America 48.5 5%
------------------------ ------------- ---------- --------------- --------- ----
Acelity AEVII 2011 North America 39.7 4%
------------------------ ------------- ---------- --------------- --------- ----
Idealista AVIII 2015 Europe 38.2 4%
------------------------ ------------- ---------- --------------- --------- ----
Engineering AVIII 2016 Europe 36.9 4%
------------------------ ------------- ---------- --------------- --------- ----
Unilabs AEVI & AIX 2007 Europe 36.7 4%
------------------------ ------------- ---------- --------------- --------- ----
Vyaire Medical* AVIII 2016 North America 35.6 3%
------------------------ ------------- ---------- --------------- --------- ----
Neuraxpharm AVIII 2016 Europe 32.3 3%
------------------------ ------------- ---------- --------------- --------- ----
EVRY* AVIII 2015 Europe 30.1 3%
------------------------ ------------- ---------- --------------- --------- ----
Duck Creek Technologies AVIII 2016 North America 28.4 3%
------------------------ ------------- ---------- --------------- --------- ----
Paycor* AIX 2018 North America 27.5 3%
------------------------ ------------- ---------- --------------- --------- ----
Trade Me* AIX 2019 Rest of world 23.6 2%
------------------------ ------------- ---------- --------------- --------- ----
Candela AIX 2017 North America 21.9 2%
------------------------ ------------- ---------- --------------- --------- ----
AssuredPartners AIX 2019 North America 20.6 2%
------------------------ ------------- ---------- --------------- --------- ----
Wehkamp AVIII 2015 Europe 19.9 2%
------------------------ ------------- ---------- --------------- --------- ----
Safetykleen* AIX 2017 United Kingdom 19.6 2%
------------------------ ------------- ---------- --------------- --------- ----
MATCHESFASHION.COM AIX 2017 United Kingdom 18.0 2%
------------------------ ------------- ---------- --------------- --------- ----
ECi Software Solutions* AIX 2017 North America 17.6 2%
------------------------ ------------- ---------- --------------- --------- ----
Quality Distribution* AVIII 2015 North America 16.5 2%
------------------------ ------------- ---------- --------------- --------- ----
Authority Brands AIX 2018 North America 16.2 2%
------------------------ ------------- ---------- --------------- --------- ----
Shriram City Union AVIII 2015 India 11.6 1%
------------------------ ------------- ---------- --------------- --------- ----
Tosca Services AIX 2017 North America 11.0 1%
------------------------ ------------- ---------- --------------- --------- ----
Boats Group* AIX 2016 North America 10.6 1%
------------------------ ------------- ---------- --------------- --------- ----
Genius Sports AIX 2018 United Kingdom 10.0 1%
------------------------ ------------- ---------- --------------- --------- ----
Attenti AIX 2017 Israel 8.6 1%
------------------------ ------------- ---------- --------------- --------- ----
Tivit AEVI & AEVII 2010 Rest of world 8.2 0%
------------------------ ------------- ---------- --------------- --------- ----
Go Global Travel AMI 2017 Israel 8.2 0%
------------------------ ------------- ---------- --------------- --------- ----
Psagot AEVII 2010 Israel 7.8 0%
------------------------ ------------- ---------- --------------- --------- ----
Healthium AIX 2018 India 7.5 0%
------------------------ ------------- ---------- --------------- --------- ----
Kepro AIX 2017 North America 7.5 0%
------------------------ ------------- ---------- --------------- --------- ----
Other investments 75.5 7%
-------------------------------------------------------------------- --------- ----
Total gross investments 749.9 72%
-------------------------------------------------------------------- --------- ----
Carried interest (82.1) (8%)
-------------------------------------------------------------------- --------- ----
Capital call facilities
and other (84.9) (8%)
-------------------------------------------------------------------- --------- ----
Total Private Equity 582.9 56%
-------------------------------------------------------------------- --------- ----
* AGA also invests in these companies in the Derived Investments
portfolio
Strategic report Investment manager's report Derived
investments
Exposure to Derived Debt has increased
SUMMARY:
Derived Investments Total Return1
3.7%
Fully exited two debt investments generating EUR12.2m(2). Four
exits in equities with proceeds of EUR34.9m(2)
Gross IRR3 on full Derived Debt exits 13.4% and Gross MOIC3
1.2x. Gross IRR3 on Derived Equity exits 35.0% and Gross MOIC3
1.3x
Six investments in debt and two equity investments amounting
to:
EUR82.3m4
Derived Debt Derived Equity
65% 35%
1. Total Return reflects the sub-portfolio performance on a stand-alone
basis. Returns are quoted on a constant currency basis to remove
the impact of FX
2. Divestments of EUR50.4m consists of EUR12.2m from two debt positions
exited, EUR34.9m from four equity positions, EUR1.3m received from
debt positions that amortised during the period and EUR2.0m in relation
to realisation of FullBeauty debt which restructured in February
2019. See page 23 for further details
3. Gross IRR and Gross MOIC calculated based on the aggregate euro cash
flows since inception for investments realised during the year (inclusive
of partial exits)
4. Investments of EUR82.3m consists of EUR65.5m from six new debt investments,
EUR14.8m from two equity positions and EUR2.0m related to debt and
equity received as part of the restructuring of FullBeauty. See page
23 for further details
DERIVED INVESTMENTS PORTFOLIO SHIFTING TO DERIVED DEBT
Since the beginning of the year, the Derived Investments
portfolio has shifted more towards Derived Debt instruments. The
combination of public market indices reaching new highs, an
uncertain geopolitical outlook, and indications of a slowdown in
Europe and Asia, have all reduced the relative attractiveness of
listed equities compared to previous years. Furthermore, we are
aiming to reduce the overall return volatility AGA has experienced
from its Derived Investments over the past 12-18 months.
Hence in 1H19, EUR51.5m of net capital was deployed into Derived
Debt, outweighing Derived Equity, where EUR19.6m of net capital was
divested. A total of six new positions were added to the Derived
Debt portfolio (and two exits), whilst one new company was added to
Derived Equity (and four exits).
For the rest of the year, we expect to remain focused on
identifying attractive Derived Debt positions for AGA, whilst
selecting those Derived Equity opportunities with the best
risk-reward profile.
POSITIVE PERFORMANCE
Overall, Derived Investments produced positive returns during
the first six months. Total Return was 3.7% (2.7% constant
currency) (Fig.1). Whilst the Derived Debt portfolio delivered
returns in line with expectations with a Total Return of 5.4% (4.8%
constant currency), the Derived Equity portfolio produced a sub-par
Total Return of 0.9% (-0.7% constant currency). Adjusted NAV
increased by EUR34.8m from EUR320.6m to EUR355.4m (Fig.2).
Investments of EUR82.3m4, consisting of six new debt positions and
two equity positions, more than offset the divestments of
EUR50.4m2, consisting of two debt positions and four equity
positions.
Derived Debt performance was largely driven by the high quality
of investments and a supportive debt market environment: of the 20
positions held at 30 June, six positions were new, and 79% of the
remaining positions were held at prices at or above those at year
end. Only three positions: Rocket Software, FullBeauty and Vyaire,
showed negative valuation movements.
The two debt exits delivered an average Gross IRR of 13.4%(3),
and the income yield on the Derived Debt portfolio, which averaged
9.9% on an annualised basis, led to the overall steady return of
this section of the portfolio.
Derived Equity performance remained mixed, resulting in an
overall flat return. We are, however, pleased with the returns
achieved on the exited positions, where a total of EUR34.9m was
returned to AGA at an average Gross IRR of 35.0%(3).
Within the existing portfolio, a number of positions showed good
recovery from the prior year-end lows (such as Development Credit
Bank ("DCB"), Can Fin Homes and Lonza), whilst others faced ongoing
share price volatility or published disappointing trading results.
The greatest valuation gains and losses in the portfolio were
mainly from Derived Equity positions (Fig.3). The largest gains
were from DCB, Lonza and Paycor. The largest negative valuation
movements came from Just Group, Sinopharm and the residual equity
stake in Answers.
INVESTMENT ACTIVITY: DERIVED DEBT
Debt markets quickly recovered from the 2018 year-end lows,
resulting in fewer opportunities where AGA could exploit market
valuation dislocations. We have also observed more junior loan
transactions where sponsors have preplaced entire tranches with
individual investors to mitigate their execution risk.
Despite this market backdrop, AGA deployed EUR65.5m into new
Derived Debt opportunities. These include investments in
AccentCare, a provider of post-acute healthcare services in the US;
AmeriLife, a wholesale and retail insurance distributor; and
ServePro, a franchisor of fire and water cleanup and restoration.
Each of these companies was known to our Investment Advisor from
their private equity activities.
AGA also exited two positions in the reporting period: Goodpack
and PDC Brands. Goodpack was a relatively small holding, and as the
business is exposed to the international rubber trade, the position
was exited earlier in the year with a 1.0x Gross MOIC1 and 1.9%
Gross IRR1. PDC Brands is a fast-growing beauty company. The
position was exited after generating 1.3x Gross MOIC1 and Gross IRR
of 15.4%1.
INVESTMENT ACTIVITY: DERIVED equity
The first half of 2019 saw a rebound in public markets and we
therefore saw the opportunity to crystallise value in four holdings
whilst maintaining buying discipline in the rising price
environment, making just two equity investments in the past six
months.
Of the two equity investments, QAD was an add-on to an existing
position: a US Enterprise and Resource Planning ("ERP") software
company. The other was an investment in Airtel Africa where AGA
participated in the IPO. We believed the shares were offered at an
attractive price given the long-term growth outlook and
diversification of the business, mitigating risks from the
geographies it operates in.
Since the beginning of the year, more focus was on realisations
from the existing portfolio: four equity positions were realised,
three of which were in the first quarter. The four equity exits
delivered a cumulative average Gross IRR of 35.0%1.
Greencore, an international producer of convenience foods, was
one of AGA's top equity performers in 2018. It was successfully
exited at 1.5x Gross MOIC1 and 64.4% Gross IRR1, after the
intrinsic value was seen to be reflected in the share price,
particularly after the sale of its subsidiary Peacock. On Mitie, we
took the view that competitive pressures on margins did not present
much more upside in AGA holding the stock any longer. The return
was 1.1x Gross MOIC1 and 10.2% Gross IRR1. Civitas Solutions was
another strong realisation at 1.3x Gross MOIC1 and 30.9% Gross
IRR1, which we realised after a private equity firm announced a
take private of the business in late 2018. Lastly, Solara is a
company that was demerged from Strides Pharma Sciences, which AGA
continues to hold. It was a relatively small position in the
portfolio and therefore AGA exited the position. The return was
1.0x Gross MOIC1 and 4.3% Gross IRR1.
DERIVED INVESTMENTS TRACK RECORD
Fig.5 and Fig.6 depict Gross Total Returns generated by the
Derived Debt and Derived Equity Investments since 2015, the year
AGA had its initial public offering. Derived Debt Investments have
delivered a steady performance over the years, including periods
that cut across times with significant market volatility.
Annualised Gross Total Return2 was 5.4% since the beginning of
2015, though this return was substantially impacted by three debt
investments made between 2013 and 2015 that subsequently
restructured. Return on the Derived Debt portfolio excluding these
three restructured investments was very healthy, with an annualised
Gross Total Return2 of 11.6%, on a constant currency basis. As
discussed with shareholders before, we have adapted our investment
approach following these investments and since 2016 only one small
debt investment, Goodpack, which had a Gross IRR1 of -0.2%, has
generated a negative return on a constant currency basis for AGA.
Derived Equity Investments produced an annualised Gross Total
Return2 of 9.7% (8.3% excluding the restructured positions) since
2015, though returns over the years have shown much higher
volatility. In particular, during 2018, the portfolio was not able
to withstand the negative market movements witnessed across many
markets and the portfolio still needs to catch up with the recovery
of markets we have seen in 2019.
MARKET OUTLOOK
After the doom and gloom in 4Q18, public markets around the
globe rebounded in the last six months. Upside in the near future,
for example from dovish central banks, appears to be balanced by
political risks such as the trade disputes, Brexit and the crisis
in the Strait of Hormuz.
1. Gross IRR and Gross MOIC calculated based on the aggregate euro cash
flows since inception for investments realised during the year (inclusive
of partial exits). For individual investments it represents the Gross
IRR and Gross MOIC calculated based on their respective euro cash
flows since initial purchase
2. Gross Total Return calculated based on each respective portfolio's
Total Return adjusted to exclude the impact of performance fees and
FX. Annualised Gross Total Return calculated on a constant currency
basis by compounding each respective period's return from 1 January
2015 to 30 June 2019
FIG.1: Derived Investments performance (%)
%
---------------------------- -----
Income 2.7
---------------------------- -----
Realised gains 0.8
---------------------------- -----
Unrealised losses (0.9)
---------------------------- -----
Performance fee adjustment1 -
---------------------------- -----
FX 1.1
---------------------------- -----
1H19 Total Return 3.7
---------------------------- -----
LTM Total Return (2.6)
---------------------------- -----
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2019
FIG.2: Derived Investments Adjusted NAV development (EURm)
GBPm
--------------------------------- ------
Adjusted NAV at 31 December 2018 320.6
--------------------------------- ------
Investments 82.3
--------------------------------- ------
Divestments (50.4)
--------------------------------- ------
Realised gains 2.4
--------------------------------- ------
Unrealised losses (2.6)
--------------------------------- ------
Performance fee adjustment1 -
--------------------------------- ------
FX 3.1
--------------------------------- ------
Adjusted NAV at 30 June 2019 355.4
--------------------------------- ------
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2019
FIG.4: Derived Investments portfolio at 30 June 2019
%
---------------
Derived Debt 25
---------------
Derived Equity 13
---------------
Private Equity 62
---------------
Invested portfolio
EUR355.4m
34% of total NAV
Operational metrics
Derived Debt
Operational performance in the Derived Debt portfolio, measured
by LTM EBITDA growth1, grew materially to 17.3% mainly due to the
addition of new positions (AccentCare, AmeriLife, Exact Software,
ServPro and Trade Me) with higher EBITDA growth. The average debt
yield to maturity1 decreased to 9.9%, mainly due to the change in
the portfolio mix as AGA increased its holdings in first lien debt.
57% of Derived Debt value was yielding 10% to maturity1 or
higher.
Derived Equity
Average LTM earnings growth3 in the Derived Equity portfolio
decreased from 19.2% to 14.9%. The average price-to-earnings
multiple3 for the Derived Equity portfolio increased to 20.8x
mainly due to global equity markets rebounding.
Acquisitions5 COST6
----------------------------------------------------------------------- ---------
AccentCare
Provider of post-acute healthcare services in the US
(North America, Healthcare, first lien) EUR13.2m
----------------------------------------------------------------------- ---------
AmeriLife First
Wholesale and retail insurance distributor focusing on health, lien
annuity and life insurance products in the US senior market EUR12.4m
(North America, Services, first lien and second lien) Second
lien
EUR4.4m
----------------------------------------------------------------------- ---------
Exact Software
Provider of cloud-based and on-premise business software and services
for SMBs
(Europe, Tech & Telco, second lien) EUR19.7m
----------------------------------------------------------------------- ---------
ServPro
A franchisor of fire and water cleanup and restoration
(North America, Services, first lien) EUR3.5m
----------------------------------------------------------------------- ---------
Trade Me
Largest internet auction website in New Zealand
(Rest of world, Services, first lien) EUR12.3m
----------------------------------------------------------------------- ---------
Airtel Africa
Provider of telecommunications and mobile money services
(Rest of world, Services, listed equity) EUR13.3m
----------------------------------------------------------------------- ---------
QAD (add-on position)
Provider of ERP software to manufacturing companies
(North America, Tech & Telco, listed equity) EUR1.5m
----------------------------------------------------------------------- ---------
Divestments5,7
-------------------------------------------------------------------- ----------
Goodpack Gross
Container leasing and logistics company MOIC
(North America, Services, second lien) 1.0x
Gross
IRR
2%
-------------------------------------------------------------------- ----------
PDC Brands Gross
Beauty and personal care company MOIC
(North America, Consumer, second lien) 1.3x
Gross
IRR
15%
-------------------------------------------------------------------- ----------
Civitas Solutions Gross
Provider of health and human services to patients with intellectual MOIC
disabilities 1.3x
(North America, Healthcare, listed equity)
Gross
IRR
31%
-------------------------------------------------------------------- ----------
Greencore Gross
International producer of convenience foods MOIC
(Europe, Consumer, listed equity) 1.5x
Gross
IRR
64%
-------------------------------------------------------------------- ----------
Mitie Gross
Facilities management company MOIC
(United Kingdom, Services, listed equity) 1.1x
Gross
IRR
10%
-------------------------------------------------------------------- ----------
Solara Gross
Indian Active Pharmaceutical Ingredient manufacturer MOIC 1.0x
(India, Healthcare, listed equity)
Gross
IRR
4%
-------------------------------------------------------------------- ----------
1. Gross Asset Value weighted average of the respective metric across
the Derived Debt portfolio. (FullBeauty & Paycor were excluded from
LTM EBITDA growth)
2. Income yield represents Gross Asset Value weighted average of the
current full period's income (annual coupon/clean price as at the
respective date) for each debt position in the Derived Debt portfolio
as at the respective date
3. Gross Asset Value weighted average of the respective metric across
the Derived Equity portfolio. (Answers, Airtel Africa, QAD and Cengage
were excluded from both LTM earnings growth and P/E ratio)
4. Represents new investments and full exits in 1H19
5. In February 2019, AGA's investment in FullBeauty second lien debt
restructured and, in lieu of this, the Company received equity, warrants
of EUR0.5m and new second lien debt of EUR1.5m. These have been excluded
from acquisitions and divestments detailed above
6. Represents cost acquired in 1H19
7. Each position's Gross IRR and Gross MOIC calculated based on euro
cash flows since the initial purchase date of the investment
Top 30 Derived investments
Valuation % of
Instrument Geography Sector EURm NAV
------------------------- ----------------- --------------- ------------- --------- ----
Paycor* Preferred shares North America Tech & Telco 23.7 2%
------------------------- ----------------- --------------- ------------- --------- ----
KRKA Listed equity Europe Healthcare 22.1 2%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Syncsort loan North America Tech & Telco 21.9 2%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Exact Software loan Europe Tech & Telco 20.0 2%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Quality Distribution* loan North America Services 17.5 2%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Rocket Software loan North America Tech & Telco 17.1 2%
------------------------- ----------------- --------------- ------------- --------- ----
First lien term
Vyaire Medical* loan North America Healthcare 15.3 1%
------------------------- ----------------- --------------- ------------- --------- ----
Development Credit Bank Listed equity India Services 14.1 1%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
PowerSchool loan North America Tech & Telco 13.3 1%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
ECi Software Solutions* loan North America Tech & Telco 13.1 1%
------------------------- ----------------- --------------- ------------- --------- ----
First lien term
AccentCare loan North America Healthcare 13.1 1%
------------------------- ----------------- --------------- ------------- --------- ----
First lien term
Alexander Mann Solutions loan United Kingdom Services 12.8 1%
------------------------- ----------------- --------------- ------------- --------- ----
First lien term
Trade Me* loan Rest of world Services 12.6 1%
------------------------- ----------------- --------------- ------------- --------- ----
First lien term
AmeriLife loan North America Services 12.4 1%
------------------------- ----------------- --------------- ------------- --------- ----
Airtel Africa Listed equity Rest of world Tech & Telco 11.3 1%
------------------------- ----------------- --------------- ------------- --------- ----
Sinopharm Listed equity China Healthcare 11.0 1%
------------------------- ----------------- --------------- ------------- --------- ----
Sophos* Listed equity United Kingdom Tech & Telco 10.4 1%
------------------------- ----------------- --------------- ------------- --------- ----
Lonza Listed equity Europe Healthcare 9.9 1%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Safetykleen* loan United Kingdom Services 9.6 1%
------------------------- ----------------- --------------- ------------- --------- ----
QAD Listed equity North America Tech & Telco 8.8 1%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
LegalShield loan North America Services 8.8 1%
------------------------- ----------------- --------------- ------------- --------- ----
Can Fin Homes Listed equity India Services 7.0 1%
------------------------- ----------------- --------------- ------------- --------- ----
Strides Pharma Science Listed equity India Healthcare 6.7 1%
------------------------- ----------------- --------------- ------------- --------- ----
Just Group Listed equity United Kingdom Services 6.6 1%
------------------------- ----------------- --------------- ------------- --------- ----
Repco Home Finance Listed equity India Services 6.5 1%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Boats Group* loan North America Services 5.9 1%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
AmeriLife loan North America Services 4.4 1%
------------------------- ----------------- --------------- ------------- --------- ----
EVRY* Listed equity Europe Tech & Telco 4.4 0%
------------------------- ----------------- --------------- ------------- --------- ----
Second lien term
Veritext loan North America Services 4.4 0%
------------------------- ----------------- --------------- ------------- --------- ----
First lien term
ServPro loan North America Services 3.5 0%
------------------------- ----------------- --------------- ------------- --------- ----
Other investments 7.2 1%
---------------------------------------------------------------------------- --------- ----
Total Derived Investments 355.4 34%
-------------------------------------------- ----------------------------- --------- ----
* Investments also held by Apax Funds
Strategic report Statement of Directors' responsibilities
Statement of principal risks and uncertainties
As an investment company with an investment portfolio comprising
financial assets, the principal risks associated with the Company's
business largely relate to financial risks, strategic and business
risks, and operating risks.
A detailed analysis of the Company's principal risks and
uncertainties are set out on pages 38 to 40 of the annual report
and accounts 2018 and have not changed materially since the date of
the report. The Company has not identified any new risks that will
impact the remaining six months of the financial year.
Statement of Directors' responsibilities in respect of the
Interim Report and Accounts
The Directors confirm that to the best of their knowledge:
-- the condensed interim financial statements have been prepared
in accordance with IAS 34 interim financial reporting as required
by DTR4.2.4R;
-- the Chairman's Statement and Investment Manager's report
(together constituting the Interim Management Report), together
with the statement of principal risks and uncertainties above,
include a fair review of the information required by DTR4.2.7R,
being an indication of important events that have occurred during
the period and their impact on these interim financial statements;
and a description of the principal risks and uncertainties for the
remaining six months of the year; and
-- the condensed interim financial statements provide a fair
review of the information required by DTR4.2.8R, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the Company during that
period, and any changes in the related party transactions described
in the last annual report and accounts that could materially affect
the financial position or performance of the Company during that
period. Please refer to note 9 of the condensed interim financial
statements.
Signed on behalf of the Board of Directors
Tim Breedon CBE
Chairman
13 August 2019
Signed on behalf of the Audit Committee
Susie Farnon
Chairman of the Audit Committee
13 August 2019
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Financial statements Independent review report
to Apax Global Alpha Limited
Conclusion
We have been engaged by Apax Global Alpha Limited (the
"Company") to review the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 June
2019 which comprise the condensed statement of financial position,
the condensed statement of profit or loss and other comprehensive
income, the condensed statement of changes in equity, the condensed
statement of cash flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2019 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Lee Clark
for and on behalf of
KPMG Channel Islands Limited
Chartered Accountants, Guernsey
13 August 2019
Financial statements Condensed statement of financial
position
At 30 June 2019 (Unaudited)
30 June 31 December
2019 2018
Notes EUR'000 EUR'000
------------------------------------------------------ ----- --------- -----------
Assets
------------------------------------------------------ ----- --------- -----------
Non-current assets
------------------------------------------------------ ----- --------- -----------
Investments held at fair value through profit or loss
("FVTPL") 8a 938,325 912,048
------------------------------------------------------ ----- --------- -----------
Total non-current assets 938,325 912,048
------------------------------------------------------ ----- --------- -----------
Current assets
------------------------------------------------------ ----- --------- -----------
Cash and cash equivalents 116,275 17,306
------------------------------------------------------ ----- --------- -----------
Investment receivables 6,230 2,125
------------------------------------------------------ ----- --------- -----------
Other receivables 1,896 1,454
------------------------------------------------------ ----- --------- -----------
Total current assets 124,401 20,885
------------------------------------------------------ ----- --------- -----------
Total assets 1,062,726 932,933
------------------------------------------------------ ----- --------- -----------
Liabilities
------------------------------------------------------ ----- --------- -----------
Current liabilities
------------------------------------------------------ ----- --------- -----------
Investment payables 26,528 -
------------------------------------------------------ ----- --------- -----------
Accrued expenses 1,681 2,162
------------------------------------------------------ ----- --------- -----------
Total current liabilities 28,209 2,162
------------------------------------------------------ ----- --------- -----------
Total liabilities 28,209 2,162
------------------------------------------------------ ----- --------- -----------
Capital and reserves
------------------------------------------------------ ----- --------- -----------
Shareholders' capital 14 873,804 873,804
------------------------------------------------------ ----- --------- -----------
Share-based payment performance fee reserve 10 2,584 -
------------------------------------------------------ ----- --------- -----------
Retained earnings 158,129 56,967
------------------------------------------------------ ----- --------- -----------
Total equity 1,034,517 930,771
------------------------------------------------------ ----- --------- -----------
Total shareholders' equity and liabilities 1,062,726 932,933
------------------------------------------------------ ----- --------- -----------
On behalf of the Board of Directors
Tim Breedon Susie Farnon
Chairman Chairman of the Audit Committee
13 August 2019 13 August 2019
30 June 30 June 31 December 31 December
2019 2019 2018 2018
EUR GBP equivalent1 EUR GBP equivalent1
------------------------------- --------- ---------------- ----------- ----------------
Net Asset Value ("NAV") ('000) 1,034,517 926,700 930,771 836,717
------------------------------- --------- ---------------- ----------- ----------------
Adjusted NAV ('000)2 1,031,933 924,385 930,771 836,717
------------------------------- --------- ---------------- ----------- ----------------
NAV per share 2.11 1.89 1.90 1.70
------------------------------- --------- ---------------- ----------- ----------------
Adjusted NAV per share2 2.10 1.88 1.90 1.70
------------------------------- --------- ---------------- ----------- ----------------
1. The sterling equivalent has been calculated based on the GBP/EUR
exchange rate at 30 June 2019 and 31 December 2018 respectively
2. Adjusted NAV is the NAV net of the share-based payment performance
fee reserve. Adjusted NAV per share is calculated by dividing the
Adjusted NAV by the total number of shares
The accompanying notes form an integral part of these condensed
interim financial statements.
Financial statements Condensed statement of profit or loss
and other comprehensive income
Six months ended 30 June 2019 (Unaudited)
Six months Six months
ended ended
30 June 30 June
2019 2018
Notes EUR'000 EUR'000
-------------------------------------------------------- ----- ---------- ----------
Income
-------------------------------------------------------- ----- ---------- ----------
Investment income 8,282 9,652
-------------------------------------------------------- ----- ---------- ----------
Net gains on investments at FVTPL 8b 123,441 53,493
-------------------------------------------------------- ----- ---------- ----------
Realised foreign currency losses (31) (2,043)
-------------------------------------------------------- ----- ---------- ----------
Net unrealised foreign currency gains/(losses)1 116 (246)
-------------------------------------------------------- ----- ---------- ----------
Total income 131,808 60,856
-------------------------------------------------------- ----- ---------- ----------
Operating and other expenses
-------------------------------------------------------- ----- ---------- ----------
Performance fee 10 (2,584) (1,810)
-------------------------------------------------------- ----- ---------- ----------
Management fee 9 (2,379) (2,228)
-------------------------------------------------------- ----- ---------- ----------
Administration and other operating expenses 6 (931) (1,573)
-------------------------------------------------------- ----- ---------- ----------
Total operating expenses (5,894) (5,611)
-------------------------------------------------------- ----- ---------- ----------
Total income less operating expenses 125,914 55,245
-------------------------------------------------------- ----- ---------- ----------
Finance costs 11 (777) (708)
-------------------------------------------------------- ----- ---------- ----------
Profit before tax 125,137 54,537
-------------------------------------------------------- ----- ---------- ----------
Tax charge 7 (228) (142)
-------------------------------------------------------- ----- ---------- ----------
Profit after tax for the period 124,909 54,395
-------------------------------------------------------- ----- ---------- ----------
Other comprehensive income - -
-------------------------------------------------------- ----- ---------- ----------
Total comprehensive income attributable to shareholders 124,909 54,395
-------------------------------------------------------- ----- ---------- ----------
Earnings per share (cents) 15
-------------------------------------------------------- ----- ---------- ----------
Basic and diluted 25.43 11.08
-------------------------------------------------------- ----- ---------- ----------
Adjusted2 25.35 11.02
-------------------------------------------------------- ----- ---------- ----------
1. In the prior period, the net unrealised foreign currency gains on
cash and cash equivalents of EUR0.1m offset by revaluation loss of
EUR0.4m on the revolving credit facility drawn at 30 June 2018
2. The Adjusted earnings per share has been calculated based on the
profit attributable to ordinary shareholders divided by the weighted
average shares in issue adjusted for total performance fee shares
accrued at 30 June 2019 and 30 June 2018 respectively as explained
in note 15
The accompanying notes form an integral part of these condensed
interim financial statements.
Financial statements Condensed statement of changes in
equity
Six months ended 30 June 2019 (Unaudited)
Share-based
payment
Shareholders' Retained performance
capital earnings fee reserve Total
For the six months ended 30 June 2019 Notes EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------------------- ----- ------------- --------- ------------ ---------
Balance at 1 January 2019 873,804 56,967 - 930,771
-------------------------------------------- ----- ------------- --------- ------------ ---------
Total comprehensive income attributable
to shareholders - 124,909 - 124,909
-------------------------------------------- ----- ------------- --------- ------------ ---------
Share-based payment performance fee reserve
movement 10 - - 2,584 2,584
-------------------------------------------- ----- ------------- --------- ------------ ---------
Dividend paid 16 - (23,747) - (23,747)
-------------------------------------------- ----- ------------- --------- ------------ ---------
Balance at 30 June 2019 873,804 158,129 2,584 1,034,517
-------------------------------------------- ----- ------------- --------- ------------ ---------
Share-based
payment
Shareholders' Retained performance
For the six months ended 30 June 2018 capital earnings fee reserve Total
and 31 December 2018 Notes EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------------------- ----- ------------- --------- ------------ ---------
Balance at 1 January 2018 873,804 38,617 17,495 929,916
-------------------------------------------- ----- ------------- --------- ------------ ---------
Total comprehensive income attributable
to shareholders - 54,395 - 54,395
-------------------------------------------- ----- ------------- --------- ------------ ---------
Share-based payment performance fee reserve
movement 10 - - (13,562) (13,562)
-------------------------------------------- ----- ------------- --------- ------------ ---------
Dividend paid 16 - (22,928) - (22,928)
-------------------------------------------- ----- ------------- --------- ------------ ---------
Balance at 30 June 2018 873,804 70,084 3,933 947,821
-------------------------------------------- ----- ------------- --------- ------------ ---------
Total comprehensive income attributable
to shareholders - 10,552 - 10,552
-------------------------------------------- ----- ------------- --------- ------------ ---------
Share-based payment performance fee reserve
movement 10 - - (3,933) (3,933)
-------------------------------------------- ----- ------------- --------- ------------ ---------
Dividend paid 16 - (23,669) - (23,669)
-------------------------------------------- ----- ------------- --------- ------------ ---------
Balance at 31 December 2018 873,804 56,967 - 930,771
-------------------------------------------- ----- ------------- --------- ------------ ---------
The accompanying notes form an integral part of these condensed
interim financial statements.
Financial statements Condensed statement of cash flows
Six months ended 30 June 2019 (Unaudited)
Six months Six months
ended ended
30 June 30 June
2019 2018
EUR'000 EUR'000
--------------------------------------------------------------- ---------- ----------
Cash flows from operating activities
--------------------------------------------------------------- ---------- ----------
Interest received 7,171 9,963
---------------------------------------------------------------- ---------- ----------
Interest paid (88) (12)
---------------------------------------------------------------- ---------- ----------
Dividend received 542 246
---------------------------------------------------------------- ---------- ----------
Performance fee paid - (15,372)
---------------------------------------------------------------- ---------- ----------
Operating expenses paid (3,579) (3,020)
---------------------------------------------------------------- ---------- ----------
Tax paid (36) (128)
---------------------------------------------------------------- ---------- ----------
Purchase of Private Equity Investments1 - (11,126)
---------------------------------------------------------------- ---------- ----------
Capital calls paid to Private Equity Investments (19,474) -
---------------------------------------------------------------- ---------- ----------
Capital distributions received from Private Equity Investments 148,528 22,057
---------------------------------------------------------------- ---------- ----------
Purchases of Derived Investments2 (53,869) (120,143)
---------------------------------------------------------------- ---------- ----------
Sales of Derived Investments2 44,241 99,939
---------------------------------------------------------------- ---------- ----------
Net cash from operating activities 123,436 (17,596)
---------------------------------------------------------------- ---------- ----------
Cash flows from financing activities
--------------------------------------------------------------- ---------- ----------
Finance costs paid (941) (740)
---------------------------------------------------------------- ---------- ----------
Dividend paid3 (23,642) (23,425)
---------------------------------------------------------------- ---------- ----------
Revolving credit facility drawn 22,673 43,614
---------------------------------------------------------------- ---------- ----------
Revolving credit facility repaid (22,673) (4,012)
---------------------------------------------------------------- ---------- ----------
Net cash from financing activities (24,583) 15,437
---------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at the beginning of the period 17,306 18,989
---------------------------------------------------------------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 98,853 (2,159)
---------------------------------------------------------------- ---------- ----------
Effect of foreign currency fluctuations on cash and
cash equivalents 116 86
---------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at the end of the period 116,275 16,916
---------------------------------------------------------------- ---------- ----------
1. In the prior period, these cash flows related to the purchase of
two carried interest positions in AEVI and AEVII from the secondary
market
2. On 7 February 2019, the Company's investment in FullBeauty second
lien debt restructured and the Company received equity and warrants
of EUR0.5m and new second lien debt of EUR1.5m. As no cash was exchanged,
these have been excluded from the cash flows from operating activities.
In the prior period, the Company's equity investment in Strides Pharma
Sciences Limited ("Strides") (formerly "Strides Shasun Limited")
demerged and the Company received shares in a new company, Solara,
that subsequently listed on the National Stock Exchange of India
("NSE") on 27 June 2018. This resulted in a partial realisation of
Strides (EUR1.2m) and a new investment of EUR1.2m in Solara, which
have been excluded from the comparative as no cash was exchanged
3. Dividend paid represents the cash amount paid to shareholders adjusted
for foreign currency movements. The difference between the amount
included in the condensed statement of profit or loss and other comprehensive
income in the cash flow statement represents the foreign currency
difference between the liability booked and the final amount paid
The accompanying notes form an integral part of these condensed
interim financial statements.
Financial statements Notes to the condensed interim financial
statements
For the six months ended 30 June 2019
1 Reporting entity
Apax Global Alpha Limited (the "Company" or "AGA") is a limited
liability Guernsey company that was incorporated on 2 March 2015.
The address of the Company's registered office is PO Box 656, East
Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey,
GY1 3PP. The Company invests in Private Equity funds, listed and
unlisted securities including debt instruments.
The Company's main corporate objectives are to provide
shareholders with capital appreciation from its investment
portfolio and regular dividends. The Company's operating activities
are managed by its Board of Directors and its investment activities
are managed by Apax Guernsey Managers Limited (the "Investment
Manager") under a discretionary investment management agreement.
The Investment Manager obtains investment advice from Apax Partners
LLP (the "Investment Adviser").
2 Basis of preparation
Statement of compliance
These condensed interim financial statements have been prepared
in accordance with IAS 34 "Interim Financial Reporting" as adopted
by the European Union and should be read in conjunction with the
Annual Report and Accounts 2018 which were prepared in accordance
with International Financial Reporting Standards, as adopted by the
European Union ("IFRS"). They do not include all the information
required for a complete set of IFRS financial statements. However,
selected explanatory notes are included to explain events and
transactions that are significant to an understanding of changes in
the Company's financial position and performance since the last
annual financial statements.
These condensed interim financial statements were authorised for
issue by the Company's Board of Directors on 13 August 2019.
Going concern
The Directors consider that it is appropriate to adopt the going
concern basis of accounting in preparing these condensed interim
financial statements. In reaching this assessment, the Directors
have considered a wide range of information relating to present and
future conditions (at least 12 months from 13 August 2019, the
authorisation date of these financial statements), including the
statement of financial position, future projections, cash flows and
the longer-term strategy of the business.
3 Accounting policies
There are no new standards or changes to standards since the
Annual Report and Accounts 2018 which significantly impact these
condensed interim financial statements. The accounting policies
applied by the Company in these condensed interim financial
statements are consistent with those set out on pages 66 to 69 of
the Annual Report and Accounts 2018.
4 Critical accounting estimates and judgements
In preparing these condensed interim financial statements, the
Company makes judgements and estimates that affect the reported
amounts of assets, liabilities, income and expenses. Actual results
could differ from those estimates. Estimates and judgements are
continually evaluated and are based on the Board of Directors and
Investment Manager's experience and their expectations of future
events. Revisions to estimates are recognised prospectively.
(i) Judgements
The judgement that has the most significant effect on the
amounts recognised in the Company's condensed interim financial
statements relates to investment assets. These have been determined
to be investments held at FVTPL and have been accounted for
accordingly.
(ii) Estimates
The estimate that has the most significant effect on the amounts
recognised in the Company's condensed interim financial statements
relates to investments held at FVTPL. The fair value of investments
traded in an active market at FVTPL is determined by reference to
their bid-market pricing at the reporting date, otherwise the fair
value is determined by using appropriate valuation techniques and
methodologies.
The Investment Manager is responsible for the preparation of the
Company's valuations and meets quarterly to approve and discuss the
key valuation assumptions. The meetings are open to the Board of
Directors and the Investment Adviser to enable them to challenge
the valuation assumptions and the proposed valuation estimates and
for the external auditors to observe. On a quarterly basis, the
Board of Directors review and approve the final NAV calculation
before it is announced to the market.
The Investment Manager also makes estimates and assumptions
concerning the future and the resulting accounting estimates will,
by definition, seldom equal the related actual results. The
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities are
outlined in note 13.
5 Segmental analysis
The segmental analysis of the Company's results and financial
position is set out below. There have been no changes to the
reportable segments since those presented in the Annual Report and
Accounts 2018.
Reportable segments
Private
Condensed statement of profit or loss and other Equity Derived Central
comprehensive income Investments Investments functions1 Total
for the six months ended 30 June 2019 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------------------------------- ------------ ------------ ----------- --------
Investment income - 8,370 (88) 8,282
-------------------------------------------------------- ------------ ------------ ----------- --------
Net change in investments at FVTPL 120,539 2,902 - 123,441
-------------------------------------------------------- ------------ ------------ ----------- --------
Realised foreign currency (losses)/gains - (74) 43 (31)
-------------------------------------------------------- ------------ ------------ ----------- --------
Net unrealised foreign currency gains - - 116 116
-------------------------------------------------------- ------------ ------------ ----------- --------
Total income 120,539 11,198 71 131,808
-------------------------------------------------------- ------------ ------------ ----------- --------
Performance fees2 (2,584) - - (2,584)
-------------------------------------------------------- ------------ ------------ ----------- --------
Management fees (372) (2,007) - (2,379)
-------------------------------------------------------- ------------ ------------ ----------- --------
Administration and other operating expenses - (113) (818) (931)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total operating expenses (2,956) (2,120) (818) (5,894)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total income less operating expenses 117,583 9,078 (747) 125,914
-------------------------------------------------------- ------------ ------------ ----------- --------
Finance costs - - (777) (777)
-------------------------------------------------------- ------------ ------------ ----------- --------
Profit/(loss) before tax 117,583 9,078 (1,524) 125,137
-------------------------------------------------------- ------------ ------------ ----------- --------
Tax charge - (228) - (228)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total comprehensive income attributable to shareholders 117,583 8,850 (1,524) 124,909
-------------------------------------------------------- ------------ ------------ ----------- --------
Cash
Private and
Equity Derived other
Condensed statement of financial position Investments Investments NCAs3 Total
at 30 June 2019 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------ ------------ ------------ -------- ----------
Total assets 582,943 355,382 124,401 1,062,726
------------------------------------------ ------------ ------------ -------- ----------
Total liabilities - (26,528) (1,681) (28,209)
------------------------------------------ ------------ ------------ -------- ----------
NAV 582,943 328,854 122,720 1,034,517
------------------------------------------ ------------ ------------ -------- ----------
Private
Condensed statement of profit or loss and other Equity Derived Central
comprehensive income Investments Investments functions1 Total
for the six months ended 30 June 2018 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------------------------------- ------------ ------------ ----------- --------
Investment income - 9,653 (1) 9,652
-------------------------------------------------------- ------------ ------------ ----------- --------
Net change in investments at FVTPL 59,833 (6,340) - 53,493
-------------------------------------------------------- ------------ ------------ ----------- --------
Realised foreign currency losses - (1,669) (374) (2,043)
-------------------------------------------------------- ------------ ------------ ----------- --------
Net unrealised foreign currency losses - - (246) (246)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total income 59,833 1,644 (621) 60,856
-------------------------------------------------------- ------------ ------------ ----------- --------
Performance fees (1,217) (593) - (1,810)
-------------------------------------------------------- ------------ ------------ ----------- --------
Management fees (293) (1,935) - (2,228)
-------------------------------------------------------- ------------ ------------ ----------- --------
Administration and other operating expenses4 - (743) (830) (1,573)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total operating expenses (1,510) (3,271) (830) (5,611)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total income less operating expenses 58,323 (1,627) (1,451) 55,245
-------------------------------------------------------- ------------ ------------ ----------- --------
Finance costs - - (708) (708)
-------------------------------------------------------- ------------ ------------ ----------- --------
Profit/(loss) before tax 58,323 (1,627) (2,159) 54,537
-------------------------------------------------------- ------------ ------------ ----------- --------
Tax charge - (142) - (142)
-------------------------------------------------------- ------------ ------------ ----------- --------
Total comprehensive income attributable to shareholders 58,323 (1,769) (2,159) 54,395
-------------------------------------------------------- ------------ ------------ ----------- --------
Cash
Private and
Equity Derived other
Condensed statement of financial position Investments Investments NCAs3 Total
at 31 December 2018 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------ ------------ ------------ -------- --------
Total assets 591,458 324,125 17,350 932,933
------------------------------------------ ------------ ------------ -------- --------
Total liabilities (239) (1,024) (899) 2,162
------------------------------------------ ------------ ------------ -------- --------
NAV 591,219 323,101 16,451 930,771
------------------------------------------ ------------ ------------ -------- --------
1. Central functions represents interest income earned on cash balances
held and other general administration and finance costs
2. Represents the movement in each respective portfolio's overall performance
fee reserve (realised and unrealised). At 30 June 2019, there was
no performance fee payable on the realised portfolio and the maximum
performance fee payable on the unrealised portfolio was EUR2.5m.
In the Strategic Report, this has all been allocated to Private Equity
and nil to Derived Investments, in accordance with the calculation
methodology in the IMA
3. NCAs refers to net current assets of the Company
4. Expenses related to Derived Investments have been reclassified from
central functions to Derived Investments in the prior year comparative
6 Administration and other operating expenses
Six months Six months
ended ended
30 June 30 June
2019 2018
EUR'000 EUR'000
-------------------------------------------------- ---------- ----------
Directors' fees 154 129
-------------------------------------------------- ---------- ----------
Administration and other fees 299 246
-------------------------------------------------- ---------- ----------
Deal transaction, custody and research costs 113 817
-------------------------------------------------- ---------- ----------
General expenses 319 338
-------------------------------------------------- ---------- ----------
Auditors' remuneration
-------------------------------------------------- ---------- ----------
Other assurance services - interim review 46 46
-------------------------------------------------- ---------- ----------
Tax services - (3)
-------------------------------------------------- ---------- ----------
Total administration and other operating expenses 931 1,573
-------------------------------------------------- ---------- ----------
The decrease of EUR0.7m in deal transaction, custody and
research costs was mainly due to lower broker fees being incurred
in the current period. The Company has no employees and there were
no pension or staff cost liabilities incurred during the
period.
7 Taxation
The Company is exempt from taxation in Guernsey under the
provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989 and is charged an annual exemption fee of GBP1,200 (30 June
2018: GBP1,200).
The Company, at times, may be required to pay tax in other
jurisdictions as a result of specific trades in its investment
portfolio. During the period ended 30 June 2019, the Company had a
net tax expense of EUR0.2m (30 June 2018: EUR0.1m) mainly related
to tax incurred on the sale of listed equities in India and debt
interest income in the United Kingdom. No deferred income taxes
were recorded as there are no timing differences.
8 Investments
(a) Investments held at FVTPL
30 June 31 December
2019 2018
EUR'000 EUR'000
--------------------------- --------- -----------
Private Equity Investments 582,943 591,458
--------------------------- --------- -----------
Derived Investments 355,382 320,590
--------------------------- --------- -----------
Debt 232,118 178,272
--------------------------- --------- -----------
Equities 123,264 142,318
--------------------------- --------- -----------
Closing fair value 938,325 912,048
--------------------------- --------- -----------
Six months Year Six months
ended ended ended
30 June 31 December 30 June
2019 2018 2018
EUR'000 EUR'000 EUR'000
------------------------- ----------- ------------- -----------
Opening fair value 912,048 910,669 910,669
------------------------- ----------- ------------- -----------
Calls 19,474 32,540 -
------------------------- ----------- ------------- -----------
Distributions (148,528) (135,060) (22,333)
------------------------- ----------- ------------- -----------
Purchases1 82,304 236,465 143,707
------------------------- ----------- ------------- -----------
Sales (50,414) (189,305) (101,866)
------------------------- ----------- ------------- -----------
Net change in fair value 123,441 56,739 53,493
------------------------- ----------- ------------- -----------
Closing fair value 938,325 912,048 983,670
------------------------- ----------- ------------- -----------
1. Included in purchases of the prior period is EUR11.1m related
to Private Equity as two carried interest holdings were purchased
in the secondary market in April 2018
8 Investments continued
(b) Net gains/(losses) on investments at FVTPL
Six months Six months
ended ended
30 June 30 June
2019 2018
EUR'000 EUR'000
--------------------------------------------------------- ---------- ----------
Private Equity Investments
--------------------------------------------------------- ---------- ----------
Gross unrealised gains 170,147 60,861
--------------------------------------------------------- ---------- ----------
Gross unrealised losses (49,608) (1,028)
--------------------------------------------------------- ---------- ----------
Total net unrealised gains on Private Equity Investments 120,539 59,833
--------------------------------------------------------- ---------- ----------
Derived Investments
--------------------------------------------------------- ---------- ----------
Gross unrealised gains 46,467 20,306
--------------------------------------------------------- ---------- ----------
Gross unrealised losses (22,690) (27,624)
--------------------------------------------------------- ---------- ----------
Net unrealised gains/(losses) on Derived Investments 23,777 (7,318)
--------------------------------------------------------- ---------- ----------
Gross realised gains 7,731 9,203
--------------------------------------------------------- ---------- ----------
Gross realised losses (28,606) (8,225)
--------------------------------------------------------- ---------- ----------
Net realised (losses)/gains on Derived Investments (20,875) 978
--------------------------------------------------------- ---------- ----------
Total net gains/(losses) on Derived Investments 2,902 (6,340)
--------------------------------------------------------- ---------- ----------
Total net gains in investments at FVTPL 123,441 53,493
--------------------------------------------------------- ---------- ----------
(c) Involvement with unconsolidated structured entities
The Company's investments in Private Equity funds are considered
to be unconsolidated structured entities. Their nature and purpose
is to invest capital on behalf of their limited partners. The funds
pursue sector-focused strategies, investing in four key sectors:
Tech & Telco, Services, Healthcare and Consumer. The Company
commits to a fixed amount of capital, which may be drawn (and
returned) over the life of the fund. The Company pays capital calls
when due and receives distributions from the funds, once an asset
has been sold. Note 12 summarises current outstanding commitments
and recallable distributions to the six underlying Private Equity
Investments held. The fair value of these was EUR582.9m at 30 June
2019 (30 June 2018: EUR638.8m), whereas total value of the Private
Equity funds was EUR13.6bn (30 June 2018: EUR14.5bn). During the
period, the Company did not provide financial support and has no
intention of providing financial or other support to these
unconsolidated structured entities.
9 Related party transactions
The Investment Manager was appointed by the Board of Directors
under a discretionary Investment Management Agreement ("IMA") dated
22 May 2015 and an amendment dated 22 August 2016, which sets out
the basis for the allocation and payment of the management fee.
The management fee is calculated in arrears at a rate of 1.25%
per annum on the fair value of Derived Investments and non-fee
paying Private Equity Investments which do not already pay a
management fee and/or an advisory fee to the Investment Manager or
Investment Adviser. During the six months ended 30 June 2019,
management fees of EUR2.4m (30 June 2018: EUR2.2m), of which
EUR1.2m was accrued at the end of the period, was earned by the
Investment Manager. The Investment Manager is also entitled to a
performance fee on realised gains when they reach or exceed a
benchmark performance, as explained in note 10.
The IMA has an initial term of six years and automatically
continues for a further three additional years unless, prior to the
fifth anniversary, the Investment Manager or the Company (by a
special resolution) serves written notice to terminate the IMA. The
Company is required to pay the Investment Manager all fees and
expenses accrued and payable for the notice period through to the
termination date.
The Investment Adviser has been engaged by the Investment
Manager to provide advice on the investment strategy of the
Company. An Investment Advisory Agreement ("IAA"), dated 22 May
2015, and an amendment dated 22 August 2016, exists between the two
parties. Though not legally related to the Company, the Investment
Adviser has been determined to be a related party. The Company paid
no fees to and had no transactions with the Investment Adviser
during the period (30 June 2018: EURNil).
The Company has an Administration Agreement with Aztec Financial
Services (Guernsey) Limited ("Aztec") dated 22 May 2015. Under the
terms of the agreement, Aztec has delegated some of the Company's
accounting and bookkeeping services to Apax Partners Fund Services
Limited ("APFS"), a related party of the Investment Adviser, under
a sub-administration agreement dated 22 May 2015. A fee of EUR0.3m
(30 June 2018: EUR0.2m) was paid by the Company in respect of
administration fees and expenses, of which EUR0.1m (30 June 2018:
EUR0.1m) was paid to APFS.
The table below summarises shares held by Directors:
% OF % OF
TOTAL TOTAL
SHARES SHARES
30 June IN 31 December IN
2019 ISSUE 2018 ISSUE
------------- ------- ------- ----------- -------
Tim Breedon 70,000 0.014% 70,000 0.014%
-------------- ------- ------- ----------- -------
Susie Farnon 20,000 0.004% 20,000 0.004%
-------------- ------- ------- ----------- -------
Chris Ambler 18,008 0.004% 18,008 0.004%
-------------- ------- ------- ----------- -------
Mike Bane - - - -
-------------- ------- ------- ----------- -------
10 Performance fee
Six months Year Six months
ended ended ended
30 June 31 December 30 June
2019 2018 2018
EUR'000 EUR'000 EUR'000
---------------------------------------------------------- ---------- ------------ ----------
Opening performance fee reserve - 17,495 17,495
---------------------------------------------------------- ---------- ------------ ----------
Performance fee charged/(released) to statement of profit
or loss and other comprehensive income 2,584 (2,123) 1,810
---------------------------------------------------------- ---------- ------------ ----------
Performance fee paid - (15,372) (15,372)
---------------------------------------------------------- ---------- ------------ ----------
Closing performance fee reserve 2,584 - 3,933
---------------------------------------------------------- ---------- ------------ ----------
A performance fee is payable on an annual basis once realised
gains on the Derived Investments and non-fee paying Private Equity
Investments exceed the prescribed benchmark of 8% internal rate of
return. Performance fees are only payable to the extent they do not
dilute the returns below the 8% benchmark. They are calculated at
20% on total realised gains. Where there are overall net realised
losses in a period these are carried forward and netted against
future performance fees that may become payable.
The performance fee is payable to the Investment Manager by way
of ordinary shares of the Company. The mechanics of the payment of
the performance fee are explained in the prospectus. In accordance
with IFRS 2 "Share-based Payment", performance fee expenses are
charged through the statement of profit or loss and other
comprehensive income and allocated to a share-based payment
performance fee reserve in equity.
In the six months ended 30 June 2019, no performance fee was
paid to the Investment Manager (31 December 2018: EUR15.4m) as the
performance fee hurdle was not met on assets realised for cash in
the prior year.
At 30 June 2019, management's best estimate of the expected
performance fee was calculated on the eligible portfolio on a
liquidation basis. There was no performance fee accrued on realised
gains earned during the period (30 June 2018: EUR3.2m) as the
required benchmark return of 8% was not met on assets realised for
cash. The effect of the performance fee on NAV per share is
disclosed in note 15.
11 Revolving credit facility and finance costs
The Company entered into a multi-currency revolving credit
facility on 6 November 2018 (the "Loan Agreement") with Credit
Suisse AG, London Branch ("Credit Suisse") for general corporate
purposes. It subsequently ended its revolving credit facility with
Lloyds Bank plc on 9 November 2018. The Company may borrow under
the Loan Agreement; including letters of credit subject to a
maximum borrowing limit set at EUR140.0m. The facility has an
initial term of three years and is due to expire on 5 November
2021.
The interest rate charged is LIBOR or EURIBOR plus a margin of
210 bps. During the period EUR45k (30 June 2018: EUR88k) interest
was paid on three drawdowns (30 June 2018: seven drawdowns) of the
facility. In addition the Company paid a non-utilisation fee of
EUR0.7m (30 June 2018: EUR0.6m) on the undrawn facility. At 30 June
2019 and 31 December 2018 the facility was unutilised.
Under the Loan Agreement, the Company is obliged to provide
collateral for each utilisation which is required to be in the form
of material Private Equity Investments only. The Loan Agreement
also requires that the loan-to-value must not exceed 35% of the
eligible Private Equity NAV.
12 Financial risk management
The Company holds a variety of financial instruments in
accordance with its Investment Management strategy. The investment
portfolio comprises Private Equity Investments and Derived
Investments as shown in the table below:
30 June 31 December
2019 2018
--------------------------- ------- -----------
Private Equity Investments 62% 65%
--------------------------- ------- -----------
Derived Investments 38% 35%
--------------------------- ------- -----------
Debt 25% 19%
--------------------------- ------- -----------
Equities 13% 16%
--------------------------- ------- -----------
Total 100% 100%
--------------------------- ------- -----------
The Company's activities expose it to a variety of financial
risks: liquidity risk, credit risk and market risk, which includes
price risk, foreign currency risk and interest rate risk. There
have been no material changes in the Company's exposure to credit
risk and market risk since 31 December 2018. The changes in the
Company's exposure to liquidity risk, and how it is managed, are
explained below.
Liquidity risk
The table on the following page includes the maturity profile of
the Company's financial liabilities at 30 June 2019 based on
contractual undiscounted repayment obligations. In addition to
financial liabilities, the Company had undrawn commitments to, and
recallable distributions from, Private Equity Funds of EUR239.2m
(31 December 2018: EUR251.8m). The expected maturity profile of
these obligations based on management's best assessment, which
requires a significant degree of judgement, is also included in the
table overleaf:
30 June 2019
Up to 3-12
3 months months 1-5 years Total
EUR'000 EUR'000 EUR'000 EUR'000
--------------------------------------------------- --------- -------- --------- --------
Investment payables 26,528 - - 26,528
--------------------------------------------------- --------- -------- --------- --------
Accrued expenses 1,681 - - 1,681
--------------------------------------------------- --------- -------- --------- --------
Private Equity Investments outstanding commitments
and recallable distributions 22,858 124,453 91,900 239,211
--------------------------------------------------- --------- -------- --------- --------
Total 51,067 124,453 91,900 267,420
--------------------------------------------------- --------- -------- --------- --------
31 December 2018
Up to 3-12
3 months months 1-5 years Total
EUR'000 EUR'000 EUR'000 EUR'000
--------------------------------------------------- --------- -------- --------- --------
Accrued expenses 2,162 - - 2,162
Private Equity Investments outstanding commitments
and recallable distributions - 78,820 172,930 251,750
--------------------------------------------------- --------- -------- --------- --------
Total 2,162 78,820 172,930 253,912
--------------------------------------------------- --------- -------- --------- --------
The Company expects to meet its total obligations in the table
above from cash resources of EUR116.2m at 30 June 2019 and its
short-term revolving credit facility (see note 11) upon which it
can draw up to EUR140.0m. The Company may utilise this facility in
the short term to bridge Private Equity calls and ensure that it
can realise the Derived Investments at the best price available.
The Company's Derived Investments portfolio provides additional
liquidity management options. The levelling of this portfolio in
accordance with the fair value hierarchy is explained in note
13.
The Company manages liquidity risk on the basis of expected cash
flows, not on contractual maturity.
The Company's outstanding commitments and recallable
distributions to Private Equity Investments are summarised
below1:
30 June 31 December
2019 2018
EUR'000 EUR'000
------------------ -------- -----------
Apax Europe VI 225 225
------------------ -------- -----------
Apax Europe VII 1,030 1,030
------------------ -------- -----------
Apax VIII 26,034 26,584
------------------ -------- -----------
AMI Opportunities 11,514 10,701
------------------ -------- -----------
Apax IX 166,686 173,872
------------------ -------- -----------
Apax Digital 33,722 39,338
------------------ -------- -----------
Total 239,211 251,750
------------------ -------- -----------
1. Excludes the Company's commitment of $450m into Apax X
approved by the Board after period end. Please see note 17 for
further details
13 Fair value estimation
(a) Investments measured at fair value
IFRS 13 "Fair Value Measurement" ("IFRS13") requires the Company
to classify fair value measurements using a fair value hierarchy
that reflects the significance of the inputs used to make those
measurements. The fair value hierarchy has the following
levels:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Valuation techniques based on observable inputs (other than
quoted prices included within level 1), that are observable for the
asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices). This category includes
instruments valued using: quoted market prices in active markets
for similar but not identical instruments; quoted prices for
identical instruments in markets that are not considered to be
active; and, other valuation techniques where all the significant
inputs are directly or indirectly observable from market data
(level 2).
-- Valuation techniques for the asset or liability that are not
based on observable market data (that is, unobservable inputs)
(level 3).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes "observable" requires
significant judgement by the Company. The Company considers
observable data to be market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
13 Fair value estimation continued
The following table analyses within the fair value hierarchy the
Company's financial assets (by class) measured at fair value at 30
June 2019:
Level Level Level
1 2 3 Total
Assets EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- -------- -------- -------- --------
Private Equity Investments - - 582,943 582,943
--------------------------- -------- -------- -------- --------
Derived Investments 118,658 231,155 5,569 355,382
--------------------------- -------- -------- -------- --------
Debt - 231,155 963 232,118
--------------------------- -------- -------- -------- --------
Equities 118,658 - 4,606 123,264
--------------------------- -------- -------- -------- --------
Total 118,658 231,155 588,512 938,325
--------------------------- -------- -------- -------- --------
The following table analyses within the fair value hierarchy the
Company's financial assets (by class) measured at fair value at 31
December 20181:
Level Level Level
1 2 3 Total
Assets EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- -------- -------- -------- --------
Private Equity Investments - - 591,458 591,458
--------------------------- -------- -------- -------- --------
Derived Investments 133,104 168,805 18,681 320,590
--------------------------- -------- -------- -------- --------
Debt - 168,805 9,467 178,272
--------------------------- -------- -------- -------- --------
Equities 133,104 - 9,214 142,318
--------------------------- -------- -------- -------- --------
Total 133,104 168,805 610,139 912,048
--------------------------- -------- -------- -------- --------
1. EUR168.8m of debt investments classified as level 3 for the
year ended 31 December 2018 have been reclassified into level 2,
due to a change in management's judgement over what constitutes
"observable"
IFRS13 requires the Company to describe movements in and
transfers between levels of the fair value hierarchy The Company
determines if there is a transfer between each respective level at
the end of each reporting period based on the valuation information
available.
There were no transfers to or from level 1 during the period.
One debt investment transferred out of level 3 to level 2 fair
value hierarchy when a significant input used in the fair value
measurement was previously unobservable became observable.
Movements in level 3 instruments are summarised below:
Six months ended Year ended 31 December
30 June 2019 20181
------------------------------ ---------------------------------- ----------------------------------
Private Derived Private Derived
Equity Investments Total Equity Investments Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------ --------- ------------ --------- --------- ------------ ---------
Opening fair value 591,458 18,681 610,139 590,185 21,410 611,595
------------------------------ --------- ------------ --------- --------- ------------ ---------
Additions 19,474 2,025 21,532 43,666 6,662 50,328
------------------------------ --------- ------------ --------- --------- ------------ ---------
Disposals and repayments (148,528) (30,430) (178,991) (135,060) (2,653) (137,713)
------------------------------ --------- ------------ --------- --------- ------------ ---------
Realised losses - (28,405) (28,405) - (2,440) (2,440)
------------------------------ --------- ------------ --------- --------- ------------ ---------
Unrealised gains 120,539 50,635 171,174 92,667 (4,299) 88,368
------------------------------ --------- ------------ --------- --------- ------------ ---------
Transfers in/(out) of level 3 - (6,936) (6,936) - - -
------------------------------ --------- ------------ --------- --------- ------------ ---------
Closing fair value 582,943 5,569 588,512 591,458 18,681 610,139
------------------------------ --------- ------------ --------- --------- ------------ ---------
1. The prior year comparative for Derived Investments has been
restated as a number of debt investments have been reclassified
into level 2 due to a change in management's judgement over what
constitutes "observable"
The unrealised gains attributable to level 3 investments held at
30 June 2019 were EUR171.2m (31 December 2018: EUR88.4m).
(b) Significant unobservable inputs used in measuring fair
value
The Company values debt instruments in the Derived Portfolio
using third-party market data and broker quotes where available.
Where such information is not available the Company uses models
that take account of factors that are relevant to each investment
and that prioritise the use of observable inputs.
The Company values unquoted equities in the Derived Portfolio
using recent transaction data where applicable or models that
utilise comparable company multiples applied to budgeted and
historical earnings.
The Company values its holdings in Private Equity based on the
NAV statements it receives from the respective underlying fund. The
main inputs into the valuation models used to value the underlying
level 3 investments within the Private Equity Funds are earnings
multiples (based on the earnings multiples of comparable listed
companies). These are applied to the budgeted or historical
earnings of each investment. In addition, original transaction
price, recent transactions in the same or similar instruments and
completed third-party transactions in comparable instruments are
also considered.
13 Fair value estimation continued
The table below sets out information about significant
unobservable inputs used in measuring financial instruments
categorised as level 3 in the fair value hierarchy:
30 June 31 December
Significant Sensitivity to changes in 2019 2018
unobservable significant unobservable Valuation Valuation1
Description Valuation technique inputs inputs EUR'000 EUR'000
------------- ---------------------- --------------- ---------------------------------- ---------- -----------
The Company does not apply
further discount or liquidity
premiums to the valuations
as these are already captured
in the underlying valuation.
This NAV is subject to changes
in the valuations of the
underlying portfolio companies.
These can be exposed to
a number of risks, including
liquidity risk, price risk,
credit risk, currency risk
and interest rate risk.
A movement of 10% in the
value of Private Equity
Investments would move the
Private NAV at the period end by
Equity NAV adjusted for 5.6% (31 December 2018:
Investments carried interest NAV 6.0%). 582,943 559,408
------------- ---------------------- --------------- ---------------------------------- ---------- -----------
The Company's investment
in AEVII carried interest
changed methodology to a
NAV method (and has been
included above).
In the prior year, the Company's
investment was valued based
on a discounted cash flow
model. A movement of 10%
Private in the discount rate applied
Equity Discounted cash Discount would move the NAV at 31
Investments flow model rate applied December 2018 by 0.1%. - 32,050
------------- ---------------------- --------------- ---------------------------------- ---------- -----------
The Company held 1 debt
position which applied an
unobservable credit quality
adjustment (31 December
2018: 2). The average credit
quality adjustment applied
was 4.6% (31 December 2018:
10.6%).
A movement of 10% in the
risk premium would result
in a movement of 0.0% on
Discounted cash Credit quality NAV at period end (31 December
Debt flow model adjustment 2018: 0.0%). 963 9,467
------------- ---------------------- --------------- ---------------------------------- ---------- -----------
The Company held 4 equity
positions (31 December 2018:
3 ) of which 3 positions
(31 December 2018: 2) were
valued using comparable
company multiples. The average
multiple was 8.0x (31 December
2018: 4.4x).
A movement of 10% in the
Comparable company multiple applied would move
earnings multiples Comparable the NAV at period end by
and/or precedent company 0.1% (31 December 2018:
Equities transaction analysis multiples 0.2%). 4,606 9,214
------------- ---------------------- --------------- ---------------------------------- ---------- -----------
1. The comparative at 31 December 2018 has been restated, as
EUR168.8m of debt investments classified as level 3 for the year
ended 31 December 2018 have been reclassified into level 2, due to
a change in management's judgement over what constitutes
"observable"
14 Shareholders' capital
At 30 June 2019, the Company had 491,100,768 ordinary shares
fully paid with no par value in issue (31 December 2018:
491,100,768 shares). All ordinary shares rank pari passu with each
other, including voting rights, and there has been no change since
31 December 2018.
The Company has one share class; however, a number of
shareholders are subject to lock-up arrangements for periods of
five or ten years, which restrict them from disposing of ordinary
shares issued at admission. For shareholders with five-year lock-up
periods, 20% of ordinary shares are released from lock-up each year
from the first anniversary of admission, 15 June 2016. At 30 June
2019, 80% in total of these five-year lock-up shares have been
released from lock-up. For shareholders with ten-year lock-up
periods, 20% of ordinary shares will be released from lock-up each
year from the sixth anniversary of admission on 15 June 2021.
15 Earnings and NAV per share
Six months Six months
ended ended
30 June 30 June
Earnings 2019 2018
---------------------------------------------------------------- ----------- ------------
Total comprehensive income attributable to equity shareholders:
EUR'000 124,909 54,395
---------------------------------------------------------------- ----------- ------------
Weighted average number of shares in issue
---------------------------------------------------------------- ----------- ------------
Ordinary shares at end of period 491,100,768 491,100,768
---------------------------------------------------------------- ----------- ------------
Shares issued in respect of performance fee (see note
10) - -
---------------------------------------------------------------- ----------- ------------
Total weighted and diluted ordinary shares 491,100,768 491,100,768
---------------------------------------------------------------- ----------- ------------
Effect of performance fee adjustment on ordinary shares
---------------------------------------------------------------- ----------- ------------
Performance shares to be awarded based on a liquidation
basis1 1,564,262 2,586,699
---------------------------------------------------------------- ----------- ------------
Adjusted Shares2 492,665,030 493,687,467
---------------------------------------------------------------- ----------- ------------
Earnings per share (cents)
---------------------------------------------------------------- ----------- ------------
Basic and diluted 25.43 11.08
---------------------------------------------------------------- ----------- ------------
Adjusted 25.35 11.02
---------------------------------------------------------------- ----------- ------------
30 June 31 December
2019 2018
---------------------------------- --------- -----------
NAV EUR'000
---------------------------------- --------- -----------
NAV at the end of the period/year 1,034,517 930,771
---------------------------------- --------- -----------
NAV per share (EUR)
---------------------------------- --------- -----------
NAV per share 2.11 1.90
---------------------------------- --------- -----------
Adjusted NAV per share2 2.10 1.90
---------------------------------- --------- -----------
1. The number of performance shares is calculated inclusive of deemed
realised performance shares that would be issued utilising the theoretical
performance fee payable calculated on a liquidation basis
2. The calculation of Adjusted Shares above assumes that new shares
were issued by the Company to the Investment Manager in lieu of the
performance fee. As per the Prospectus, the Company may also purchase
shares from the market if the Company is trading at a discount to
its NAV per share. In such a case, the Adjusted NAV per share would
be calculated by taking the NAV at the year or period end adjusted
for the performance fee reserve and then divided by the current number
of ordinary shares in issue. At 30 June 2019, the Adjusted NAV per
share for both methodologies resulted in an Adjusted NAV per share
of EUR2.10 (31 December 2018: EUR1.90)
At 30 June 2019, there were no items that would cause a dilutive
effect on earnings per share. The adjusted earnings per share has
been calculated based on the profit attributable to shareholders
adjusted for the total accrued performance fee at period end over
the weighted average number of ordinary shares. This has been
calculated on a full liquidation basis inclusive of performance fee
attributable to realised investments. Performance shares to be
issued are calculated based on the trading price of shares and
foreign currency rate at close of business on 30 June 2019.
16 Dividend
Six months
Six months ended ended
30 June 2019 30 June 2018
----------------------------------------------- ------------------ ----------------
Dividend paid to shareholders EUR'000 GBP'000 EUR'000 GBP'000
----------------------------------------------- -------- -------- ------- -------
Final dividend paid - 4.12 pence per share (30
June 2018: 4.17 pence per share) 23,747 20,233 22,928 20,478
----------------------------------------------- -------- -------- ------- -------
Total 23,747 20,233 22,928 20,478
----------------------------------------------- -------- -------- ------- -------
Six months
ended Six months ended
30 June 2019 30 June 2018
--------------------------------------------------- --------------- ------------------
Dividend proposed EUR GBP EUR GBP
--------------------------------------------------- ------- ------ -------- --------
Interim dividend (see note 17 for further details) 5.27c 4.86p 4.82c 4.33p
--------------------------------------------------- ------- ------ -------- --------
On 4 March 2019, the Board approved the final dividend for 2018,
4.12 pence per share (4.74 cents euro equivalent). This represents
2.5% of the Company's euro NAV at 31 December 2018 and was paid on
5 April 2019.
17 Subsequent events
On 15 July 2019, the Board approved a commitment of $450m to
Apax X Fund, which has yet to announce its final close. The
commitment will be split equally between the euro and dollar
tranches of the fund.
On 13 August 2019, the Board approved the interim dividend for
the six months ended 30 June 2019 of 4.86 pence per ordinary share
(5.27 cents euro equivalent) which represents 2.5% of the Company's
euro NAV at 30 June 2019.
Shareholder information Administration
Directors (all Non-Executive)
Tim Breedon CBE (Chairman)
Susie Farnon (Chair of the Audit Committee)
Chris Ambler
Mike Bane
Registered Office of the Company
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Investment Manager
Apax Guernsey Managers Limited
Third Floor, Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey GY1 2HJ
Channel Islands
Investment Adviser
Apax Partners LLP
33 Jermyn Street
London SW1Y 6DN
United Kingdom
www.apax.com
Administrator, Company Secretary and Depositary
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Tel: +44 (0)1481 749 700
AGA-admin@aztecgroup.co.uk
www.aztecgroup.co.uk
Corporate Broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
United Kingdom
Registrar
Link Asset Services
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
Tel: +44 (0)871 664 0300
enquiries@linkgroup.co.uk
www.linkassetservices.com
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
St Peter Port
Guernsey GY1 1WR
Channel Islands
Association of Investment Companies - AIC
The AIC is the trade body for closed-ended investment companies.
It helps its member companies deliver better returns for their
investors through lobbying, media engagement, technical advice,
training and events.
www.theaic.co.uk
Dividend timetable
Announcement: 14 August 2019
Ex-dividend date: 22 August 2019
Record date: 23 August 2019
Payment date: 13 September 2019
Earnings releases and annual results
Earnings releases are expected to be issued on or around 6
November 2019 and 6 May 2020. The annual results for the 12 months
to 31 December 2019 are expected to be issued around 10 March
2020.
Stock symbol
London Stock Exchange: APAX
Enquiries
Any enquiries relating to shareholdings on the share register
(for example, transfers of shares, changes of name or address, lost
share certificates or dividend cheques) should be sent to the
Registrars at the address given above. The Registrars offer an
online facility at www.signalshares.com which enables shareholders
to manage their shareholding electronically.
Investor Relations
Enquiries relating to AGA's strategy or results may be directed
to:
Sarah Page
IR Manager - AGA
Apax Partners LLP
33 Jermyn Street
London SW1Y 6DN
United Kingdom
Tel: +44 (0)20 7872 6300
investor.relations@apaxglobalalpha.com
Tax notification for german investors
Pursuant to changes to the German Investment Tax Act ("GITA"),
with effect from 1 January 2018, AGA became subject to the tax
regime of GITA. This is likely to have certain tax compliance and
reporting implications for German tax resident investors in AGA. In
particular, German tax resident investors that held shares in AGA
on 31 December 2017 will be deemed to have disposed of and
immediately reacquired their interests on that date and any
resultant deemed gain or loss will be released (in whole or in
part) on subsequent disposals.
German tax resident investors should reach out to their own
personal tax advisor to consider the impact of AGA becoming subject
to the tax regime of GITA with regard to their own personal
circumstances.
Shareholder information Investment policy
The Company's investment policy is to make: (i) Private Equity
Investments, which are primary and secondary commitments to, and
investments in, existing and future Apax Funds; and (ii) Derived
Investments, which Apax will typically identify as a result of the
process that Apax Partners undertakes in its private equity
activities and which will comprise direct or indirect investments
other than Private Equity Investments, including primarily
investments in public and private debt, as well as limited
investments in equity, primarily in listed companies. Once fully
invested, the Company expects to be invested in approximately equal
proportion between Private Equity Investments and Derived
Investments, though the investment mix will fluctuate over time due
to market conditions and other factors, including calls for and
distributions from Private Equity Investments, the timing of making
and exiting Derived Investments and the Company's ability to invest
in future Apax Funds. The actual allocation may therefore fluctuate
according to market conditions, investment opportunities and their
relative attractiveness, the cash flow requirements of the Company,
its dividend policy and other factors.
Private Equity Investments
The Company expects that it will seek to invest in any new Apax
Funds that are raised in the future. Private Equity Investments may
be made into Apax Funds with any target sectors and geographic
focus and may be made directly or indirectly. The Company will not
invest in third-party managed funds.
Derived Investments
The Company will typically follow the Apax Group's core sector
and geographical focus in making Derived Investments, which may be
made globally. Derived Investments may include, among others: (i)
direct and indirect investments in equity and debt instruments,
including equity in private and public companies, as well as in
private and public debt which may include sub-investment grade and
unrated debt instruments; (ii) co-investments with Apax Funds or
third-parties; (iii) investments in the same or different types of
equity or debt instruments in portfolio companies as the Apax Funds
and may potentially include; (iv) acquisitions of Derived
Investments from Apax Funds or third parties; (v) investments in
restructurings; and; (vi) controlling stakes in companies.
Investment restrictions
The following specific investment restrictions apply to the
Company's investment policy:
-- no investment or commitment to invest shall be made in any
Apax Fund which would cause the total amounts invested by the
Company in, together with all amounts committed by the Company to,
such Apax Fund to exceed, at the time of investment or commitment,
25% of the Gross Asset Value; this restriction does not apply to
any investments in or commitments to invest made to any Apax Fund
that has investment restrictions restricting it from investing or
committing to invest more than 25% of its total commitments in any
one underlying portfolio company;
-- not more than 15% of the Gross Asset Value may be invested in
any one portfolio company of an Apax Fund on a look-through
basis;
-- not more than 15% of the Gross Asset Value may be invested in
any one Derived Investment; and
-- in aggregate, not more than 20% of the Gross Asset Value is
intended to be invested in Derived Investments in equity securities
of publicly listed companies. However, such aggregate exposure will
always be subject to an absolute maximum of 25% of the Gross Asset
Value.
The aforementioned restrictions apply as at the date of the
relevant transaction or commitment to invest. Hence, the Company
would not be required to effect changes in its investments owing to
appreciations or depreciations in value, distributions or calls
from existing commitments to Apax Funds, redemptions or the receipt
of, or subscription for, any rights, bonuses or benefits in the
nature of capital or of any acquisition or merger or scheme of
arrangement for amalgamation, reconstruction, conversion or
exchange or any redemption, but regard shall be had to these
restrictions when considering changes or additions to the Company's
investments (other than where these investments are due to
commitments made by the Company earlier).
The Company may borrow in aggregate up to 25% of Gross Asset
Value at the time of borrowing to be used for financing or
refinancing (directly or indirectly) its general corporate purposes
(including, without limitation, any general liquidity requirements
as permitted under its Articles of Incorporation), which may
include financing short-term investments and/or buybacks of
ordinary shares. The Company does not intend to introduce long-term
structural gearing.
Shareholder information Quarterly returns since 1Q16
Total Return1 (euro) Return attribution
-------- -------------------------- --------------------------------------------------------------
Private Derived Derived Private Derived Derived Performance Total
Equity Debt Equity Equity Debt Equity fee Other3 NAV Return
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
1Q16 (0.5%) (1.5%) (5.4%) (0.3%) (0.7%) (0.5%) 0.5% (0.8%) (1.8%)
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2Q16 1.6% (0.4%) 5.8% 0.9% (0.1%) 0.4% (0.3%) 0.3% 1.2%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
3Q16 (0.3%) 5.0% 11.1% (0.2%) 1.7% 1.1% (0.1%) (0.5%) 2.0%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
4Q16 7.5% 5.9% (0.3%) 3.4% 2.0% (0.0%) (0.4%) 0.5% 5.5%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
1Q17 1.6% 0.5% 4.7% 0.7% 0.2% 0.6% (0.3%) 0.2% 1.4%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2Q17 (2.7%) (7.7%) 11.4% (1.9%) (2.4%) 2.9% (0.6%) (0.2%) (2.1%)
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
3Q17 1.0% (1.4%) 0.2% 0.8% (0.3%) 0.2% (0.2%) (0.9%) (0.3%)
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
4Q17 3.4% 5.2% 3.4% 1.8% 1.0% 1.0% (0.4%) 0.2% 3.5%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
1Q18 0.0% (1.7%) (0.2%) (0.3%) 0.0% (0.1%) 0.2% (0.4%) (0.7%)
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2Q18 11.0% 2.5% (1.8%) 6.9% 0.7% (0.2%) (0.3%) (0.1%) 6.9%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
3Q18 5.4% 1.5% (10.4%) 3.5% 0.2% (1.8%) 0.1% (0.2%) 1.8%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
4Q18 0.0% 2.3% (3.9%) 0.0% 0.2% (0.7%) (0.3%) 0.1% (0.7%)
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
1Q19 12.3% 4.8% 1.2% 7.9% 0.9% 0.1% 0.0% (0.2%) 8.7%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2Q19 7.1% 0.9% (0.4%) 4.8% 0.2% 0.0% (0.3%) (0.2%) 4.4%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2016 8.0% 8.0% 11.3% 3.8% 2.7% 0.9% (0.0%) (0.9%) 6.6%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2017 3.3% (2.0%) 24.2% 1.6% (0.7%) 4.3% (1.4%) (1.7%) 2.2%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
2018 17.4% 4.5% (17.6%) 10.1% 1.2% (3.0%) 0.2% (1.4%) 7.1%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
LTM 2019 23.3% 9.0% (14.6%) 16.1% 1.5% (2.4%) 0.1% (0.9%) 14.4%
-------- ------- ------- -------- ------- ------- ------- ----------- ------- -----------
Total Return1 (Constant
currency) Return attribution
-------- --------------------------- -------------------------------------------------------------------
Private Derived Derived Private Derived Derived Performance Total
Equity Debt Equity Equity Debt Equity fee Other2 FX3 NAV Return
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
1Q16 1.8% 2.5% (0.8%) 0.7% 0.4% (0.2%) 0.8% (0.4%) (3.1%) (1.8%)
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2Q16 (0.1%) (2.5%) 5.4% 0.3% (0.9%) 0.5% (0.4%) 0.0% 1.6% 1.2%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
3Q16 0.1% 6.0% 11.5% (0.1%) 2.1% 1.2% (0.1%) (0.6%) (0.5%) 2.0%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
4Q16 4.1% (0.0%) (4.5%) 2.0% 0.3% (0.5%) (0.4%) 0.1% 4.0% 5.5%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
1Q17 2.0% 1.7% 4.5% 1.1% 0.7% 0.7% (0.3%) (0.2%) (0.6%) 1.4%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2Q17 1.5% (1.5%) 17.9% 0.7% (0.3%) 3.3% (0.5%) (0.6%) (4.8%) (2.1%)
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
3Q17 2.5% 1.7% 1.1% 1.3% 0.5% 0.5% (0.1%) (0.2%) (2.3%) (0.3%)
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
4Q17 4.5% 6.6% 3.9% 2.7% 1.4% 1.2% (0.4%) (0.2%) (1.1%) 3.5%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
1Q18 1.3% 0.6% 2.4% 0.4% 0.4% 0.2% 0.3% (0.3%) (1.7%) (0.7%)
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2Q18 8.9% (2.6%) (3.9%) 5.8% (0.2%) (0.6%) (0.3%) (0.5%) 2.7% 6.9%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
3Q18 5.5% 1.0% (9.5%) 3.5% 0.1% (1.7%) 0.2% (0.2%) (0.1%) 1.8%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
4Q18 (0.3%) 1.3% (4.9%) (0.2%) 0.1% (0.8%) (0.3%) 0.0% 0.5% (0.7%)
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
1Q19 10.0% 2.5% (1.5%) 6.4% 0.5% (0.2%) 0.0% (0.2%) 2.2% 8.7%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2Q19 8.0% 2.3% 0.8% 5.3% 0.5% 0.1% (0.3%) (0.2%) (1.0%) 4.4%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2016 5.9% 5.6% 12.0% 3.0% 2.1% 1.0% 0.0% (1.3%) 1.9% 6.6%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2017 10.0% 9.8% 35.7% 4.9% 2.1% 5.5% (1.4%) (1.0%) (8.0%) 2.2%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
2018 15.9% 0.3% (17.4%) 9.2% 0.4% (2.9%) 0.2% (1.5%) 1.7% 7.1%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
LTM 2019 21.1% 7.1% (16.0%) 14.5% 1.1% (2.6%) 0.1% (0.9%) 2.2% 14.4%
-------- -------- -------- ------- ------- ------- ------- ----------- ------ ------ -----------
NOTE: All quarterly information included in the tables above is
unaudited
1. Total Return for each respective sub-portfolio has been calculated
by taking total gains or losses and dividing them by the sum of Adjusted
NAV at the beginning of the period and the time-weighted net invested
capital. The time-weighted net invested capital is the sum of investments
made during the period less realised proceeds received during the
period, both weighted by the number of days the capital was at work
in the portfolio
2. Includes management fees and other general costs. It also includes
FX on the euro returns table only
3. Includes the impact of FX movements on investments and FX on cash
held during each respective period
Shareholder information Portfolio allocation since 1Q16
Portfolio Allocation(1) Portfolio NAV NAV
-------- ------------------------------------ ------------------------------------ ------------------
Total
Private Derived Derived Net cash Private Derived Derived Net cash Total Adjusted
Equity Debt Equity and NCAs Equity Debt Equity and NCAs NAV NAV
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
1Q16 50% 36% 9% 5% 444.5 320.1 82.1 40.3 887.1 883.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2Q16 49% 35% 10% 6% 440.3 314.5 93.3 53.0 901.1 894.4
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
3Q16 47% 36% 10% 7% 421.0 319.2 90.4 66.6 897.2 889.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
4Q16 52% 30% 13% 4% 498.8 284.9 127.9 38.5 950.0 938.7
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
1Q17 52% 30% 16% 2% 489.5 282.4 147.5 16.6 935.9 928.0
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2Q17 50% 21% 13% 16% 457.6 195.3 119.5 148.0 920.4 908.1
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
3Q17 58% 21% 19% 1% 522.8 189.1 170.8 12.7 895.5 881.9
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
4Q17 63% 20% 14% 2% 590.2 188.4 132.1 19.2 929.9 912.4
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
1Q18 65% 15% 17% 3% 572.5 136.2 152.6 22.1 883.3 883.3
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2Q18 67% 19% 17% (4%) 638.8 184.3 160.6 (35.8) 947.8 943.9
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
3Q18 68% 17% 17% (2%) 638.9 158.1 159 (16.3) 939.7 937.3
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
4Q18 64% 19% 15% 2% 591.5 178.3 142.3 18.7 930.8 930.8
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
1Q19 68% 18% 11% 3% 669.5 178.9 112 28.1 988.5 988.2
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2Q19 56% 22% 12% 9% 582.9 232.1 123.3 96.2 1,034.5 1,031.9
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2016 50% 34% 11% 5% 451.1 309.7 98.4 49.6 908.9 901.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2017 56% 23% 16% 5% 515.0 213.8 142.5 49.1 920.4 907.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2018 66% 18% 16% (0%) 610.4 164.2 153.6 (2.8) 925.4 923.8
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
2019 YTD 62% 20% 12% 6% 626.2 205.5 117.6 62.1 1,011.5 1,010.1
-------- ------- ------- ------- --------- ------- ------- ------- --------- ------- ---------
1. For annual periods the average weighting over four quarters
used; for 2019 YTD the average of 1Q19 and 2Q19 used
Shareholder information Glossary
Adjusted NAV Calculated by adjusting the NAV at reporting periods,
by the estimated performance fee reserves.
-------------------------- -------------------------------------------------------------
Adjusted NAV per share Calculated by dividing the Adjusted NAV by the number
of shares in issue.
-------------------------- -------------------------------------------------------------
ADF Means the limited partnerships that constitute the
Apax Digital Fund Private Equity fund.
-------------------------- -------------------------------------------------------------
AEVI Means the limited partnerships that constitute the
Apax Europe VI Private Equity fund.
-------------------------- -------------------------------------------------------------
AEVII Means the limited partnerships that constitute the
Apax Europe VII Private Equity fund.
-------------------------- -------------------------------------------------------------
AGML or Investment Means Apax Guernsey Managers Limited.
Manager
-------------------------- -------------------------------------------------------------
AIX Means the limited partnerships that constitute the
Apax IX Private Equity fund.
-------------------------- -------------------------------------------------------------
AMI Means the limited partnerships that constitute the
AMI Opportunities Fund, the Apax Mid-Market Israel
Fund, focused on investing in Israel.
-------------------------- -------------------------------------------------------------
Apax Global Alpha Means Apax Global Alpha Limited.
or Company or AGA
-------------------------- -------------------------------------------------------------
Apax Group Means Apax Partners LLP and its affiliated entities,
including its sub-advisers, and their predecessors,
as the context may require.
-------------------------- -------------------------------------------------------------
Apax Partners or Apax Means Apax Partners LLP.
or Investment Adviser
-------------------------- -------------------------------------------------------------
Apax Private Equity Means Private Equity funds managed, advised and/or
Funds operated by Apax Partners.
or Apax Funds
-------------------------- -------------------------------------------------------------
APG Means Apax Partners Guernsey Limited.
-------------------------- -------------------------------------------------------------
AVIII Means the limited partnerships that constitute the
Apax VIII Private Equity fund.
-------------------------- -------------------------------------------------------------
AX Means the limited partnerships that will constitute
the Apax X Private Equity fund.
-------------------------- -------------------------------------------------------------
Brexit Refers to the upcoming exit of the UK from the EU
following the invocation of Article 50 of the Treaty
on the European Union on 29 March 2017.
-------------------------- -------------------------------------------------------------
Capital Markets Practice Consists of a dedicated team of specialists within
or CMP the Apax Partners Group having in-depth experience
of the leverage finance debt markets, including market
conditions, participants and opportunities. The CMP
was initially set up to support the investment advisory
teams within Apax Partners in structuring the debt
component of a private equity transaction. The CMP
has over the years expanded its mandate to working
alongside the investment advisory teams to advise
on debt Derived Investments.
-------------------------- -------------------------------------------------------------
Custody risk The risk of loss of securities held in custody occasioned
by the insolvency or negligence
of the custodian.
-------------------------- -------------------------------------------------------------
DCB Means Development Credit Bank.
-------------------------- -------------------------------------------------------------
Derived Debt Investments Comprise of debt investments held within the Derived
or Derived Debt Investments portfolio.
-------------------------- -------------------------------------------------------------
Derived Equity Investments Comprise of equity investments held within the Derived
or Derived Equity Investments portfolio.
-------------------------- -------------------------------------------------------------
Derived Investments Comprise investments other than Private Equity Investments,
including primarily investments
in public and private debt, with limited investments
in equity, primarily in listed companies, which in
each case typically are identified by Apax Partners
as part of its private equity activities.
-------------------------- -------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortisation.
-------------------------- -------------------------------------------------------------
EV Enterprise Value.
-------------------------- -------------------------------------------------------------
FVTPL Means fair value through profit or loss.
-------------------------- -------------------------------------------------------------
FX Foreign exchange.
-------------------------- -------------------------------------------------------------
GITA Means German Investment Tax Act.
-------------------------- -------------------------------------------------------------
Gross Asset Value or Means the Net Asset Value of the Company plus all
GAV liabilities of the Company (current and non--current).
-------------------------- -------------------------------------------------------------
Gross IRR or Internal Means an aggregate, annual, compound, internal rate
Rate of Return of return calculated on the basis of cash receipts
and payments together with the valuation of unrealised
investments at the measurement date. Foreign currency
cash flows have been converted at the exchange rates
applicable at the date of receipt or payment. For
Private Equity Investments, IRR is net of all amounts
paid to the underlying Investment Manager and/or
general partner of the relevant fund, including costs,
fees and carried interests. For Derived Investments,
IRR does not reflect expenses to be borne by the
relevant investment vehicle or its investors including,
without limitation, performance fees, management
fees, taxes and organisational, partnership or transaction
expenses.
-------------------------- -------------------------------------------------------------
GTJA Means Guotai Junan Securities.
-------------------------- -------------------------------------------------------------
Invested Portfolio Means the part of AGA's portfolio which is invested
in Private Equity and Derived Investments, however
excluding any other investments such as legacy hedge
funds and cash.
-------------------------- -------------------------------------------------------------
IPO Initial public offering.
-------------------------- -------------------------------------------------------------
KPI Key performance indicator.
-------------------------- -------------------------------------------------------------
LSE London Stock Exchange.
-------------------------- -------------------------------------------------------------
LTM Last twelve months.
-------------------------- -------------------------------------------------------------
Market capitalisation Market capitalisation is calculated by taking the
share price at the reporting period date multiplied
by the number of shares in issue. The euro equivalent
is translated using the exchange rate at the reporting
period date.
-------------------------- -------------------------------------------------------------
MOIC Multiple of invested capital.
-------------------------- -------------------------------------------------------------
NBFC Non-bank financial company.
-------------------------- -------------------------------------------------------------
NTM Next twelve months.
-------------------------- -------------------------------------------------------------
Net Asset Value or Means the value of the Company's assets less its
NAV liabilities as calculated in accordance with the
Company's valuation policy. NAV has no adjustments
related to the IPO proceeds or performance fee reserves.
-------------------------- -------------------------------------------------------------
Operational Excellence Professionals who support the Apax Funds' investment
Practice or OEP strategy by providing assistance to portfolio companies
in specific areas such as devising strategies, testing
sales effectiveness and cutting costs.
-------------------------- -------------------------------------------------------------
OCI Other comprehensive income.
-------------------------- -------------------------------------------------------------
PCV Means PCV Lux S.C.A.
-------------------------- -------------------------------------------------------------
PCV Group Means PCV Lux S.C.A and its subsidiaries. PCV Group
was established in August 2008. Irrespective of whether
the text refers to AGA or PCV Group, references to
trading or performance prior to the IPO on 15 June
2015 refer to trading as PCV Group.
-------------------------- -------------------------------------------------------------
Performance fee reserve The performance fee reserve is the estimated performance
fee reserve which commenced accruing on 1 January
2015 in line with the Investment Management Agreements
of the PCV Group and AGA.
-------------------------- -------------------------------------------------------------
P/E Price earnings.
-------------------------- -------------------------------------------------------------
Private Equity Investments Means primary commitments to, secondary purchases
or Private Equity of commitments in, and investments in, existing and
future Apax Funds.
-------------------------- -------------------------------------------------------------
Reporting period Means the period from 1 January 2019 to the current
financial reporting period ending on 30 June 2019.
-------------------------- -------------------------------------------------------------
SME Small and mid--sized enterprises.
-------------------------- -------------------------------------------------------------
Total NAV Return or For a period means the return on the movement in
TNR the Adjusted NAV per share at the end of the period
together with all the dividends paid during the period,
to the Adjusted NAV per share at the beginning of
the period/year. Adjusted NAV per share used in the
calculation is rounded to five decimal points. TNR
is net of all fees and performance fee reserves.
-------------------------- -------------------------------------------------------------
Total Return or TR Total Return, the sub-portfolio performance in a
given period, is calculated by taking total gains
or losses and dividing them by the sum of Adjusted
NAV at the beginning of the period and the time weighted
net invested capital. The time weighted net invested
capital is the sum of investments made during the
period less realised proceeds received during the
period, both weighted by the number of days the capital
was at work in the portfolio. Total Return is net
of performance fees, however is gross of overall
AGA level items such as cash, management fees and
costs.
-------------------------- -------------------------------------------------------------
Total Shareholder Return For the period means the net share price change together
or TSR with all dividends paid during the period.
-------------------------- -------------------------------------------------------------
Unaffected Valuation Means the fair value in the last quarter before exit,
when valuation is not affected by the exit process
(i.e. because an exit was signed, or an exit was
sufficiently close to being signed that the Apax
Funds incorporated the expected exit multiple into
the quarter end valuation).
-------------------------- -------------------------------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKNDBOBKDDFD
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