TIDMAPAX

RNS Number : 5363X

Apax Global Alpha Limited

05 May 2021

(LSE: APAX)

Apax Global Alpha Limited

Quarterly results for the period ended 31 March 2021

Key highlights

-- Strong performance during the quarter: AGA's Total NAV Return(1) was 10.4% (6.8% constant currency).

-- Focus on four key sectors and a strategy of business improvement in private equity driving strong returns in the portfolio.

-- Two full exits signed or closed (Boats Group, Signavio), one significant partial exit (Psagot), and one public listing (InnovAge) in Private Equity. Excluding the InnovAge IPO (primary only), the average uplift on exits was 50.5%(2) to previous Unaffected Valuations(2) .

-- Apax X continues to have a strong pipeline of new investments, having signed or closed six new deals in the first quarter.

-- The Derived Investment portfolio had a Total Return(1) of 8.0% in Q1, driven by strong performance in Derived Debt which makes up the largest part of the Derived Investment portfolio and a rebound in the Derived Equity positions.

-- AGA's liquidity position is healthy with EUR100m of cash and its evergreen revolving credit facility of EUR140m undrawn. Derived Investments of EUR369m(3) provide a further source of funding for AGA.

-- Consumer sector renamed 'Internet / Consumer' (incorporating all online marketplaces previously included under Services) to reflect increased focus on digital consumer opportunities away from traditional retail.

Commenting on the results, Ralf Gruss, COO of Apax Partners, said:

"It has been a very good start to the year with AGA continuing to deliver strong NAV performance in the quarter. There is a strong pipeline of new investments and the current portfolio is performing well, benefitting from a focus on sectors that are showing strong structural growth, and investment in digital enablement and digital acceleration. As global economies continue to open, AGA's portfolio is well positioned for continued growth and to generate further value for shareholders."

Financial highlights

-- Significant growth in Adjusted NAV(3) to EUR1.3 billion, up from EUR1.2 billion in the last quarter, despite dividend payment of 5.28p per share during the quarter.

   --      Portfolio weighted towards Private Equity (69%) vs. Derived Investments (31%). 

-- AGA was 93% invested as at 31 March 2021 and had outstanding commitments to the Apax Funds (together with recallable distributions) of EUR443m.

 
                        Q1 2021 (EUR)   Q1 2021 (GBP) 
 Adjusted NAV (3)       EUR 1,297m      GBP 1,106m 
                       --------------  -------------- 
 Adjusted NAV (3) per   EUR 2.64        GBP 2.25 
  share 
                       --------------  -------------- 
 NAV (3) per share      EUR 2.65        GBP 2.25 
                       --------------  -------------- 
 
 
                        Exposure   Q1 2021        Q1 2021 
                                              constant currency 
 Total NAV Return(1)                10.4%           6.8% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Private Equity          64%       13.7%           9.6% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Derived Debt            25%       6.4%            2.5% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Derived Equity           4%       18.3%          14.1% 
                       ---------  --------  ------------------- 
 Cash & Others             7% 
                       ---------  --------  ------------------- 
 

Private Equity portfolio highlights

-- The Private Equity portfolio performed strongly in the quarter: Total Return(1) of 13.7% (9.6% constant currency).

-- Deal activity reflective of Apax's 'good to great' investment strategy and sub-sector expertise, focusing on opportunities where there is a significant re-rating at exit based on business quality improvement.

-- Aggregate Gross IRR(4) and Gross MOIC(4) on Private Equity exits in Q1 2021, excluding the InnovAge IPO (primary only), were 15.3% and 1.7x respectively. Including the InnovAge IPO the aggregate Gross IRR(4) and Gross MOIC(4) increase to 134.5% and 2.5x, respectively.

-- On a look-through basis, AGA invested c.EUR70m(5) in six new investments signed or closed during the period. (Azentio, Lutech, Herjavec, PIB Group, Rodenstock and idealista)

-- Continued strong operating performance from the portfolio companies with earnings growth accelerating in Q1 2021: LTM Revenue(6) and EBITDA growth(6) of 12.1% and 44.2% respectively across the Private Equity portfolio.

Derived Investments portfolio highlights

-- Derived Investments leverage the insights and expertise of the Investment Advisor. The portfolio is weighted towards Tech and is predominantly invested in Derived Debt (87% of Derived Investments).

-- Strong performance of Derived Investments with a Total Return(1) of 8.0% (4.0% constant currency) in Q1, driven by performance in Derived Debt with a Total Return(1) of 6.4% (2.5% constant currency).

-- Performance of Derived Equity rebounded during the period with a Total Return(1) of 18.3% (14.1% constant currency).

-- Continued deployment of excess liquidity into Derived Debt with new investments of EUR54.7m(7) .

For further information regarding the announcement of AGA's 2021 first quarter results, including the Company's results presentation and dial-in details for today's analyst and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com .

Contact details

 
  Katarina Sallerfors 
    Investor Relations - AGA 
   Telephone: +44 (0)207 666 6526 
   Email: katarina.sallerfors@apax.com 
 

APPIX

Movements in NAV

 
 Adjusted NAV(3) movements    Private     Derived                Treasury   Facility             1Q 20 
  (EURm)                       Equity    Investments    Cash      Shares      drawn    Other     Total 
                             --------  -------------  --------  ---------  ---------  -------  -------- 
 Adjusted NAV at 31.12.20       788.3          319.4     124.6          -          -   (31.1)   1,201.2 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 + Investments                   41.2           54.7   (126.8)          -          -     30.9         - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 - Distributions/ 
  divestments                 (101.5)         (28.1)     129.6          -          -        -         - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 + Interest and dividend 
  income                            -              -       5.3          -          -        -       5.3 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Gains/(losses)              73.1           10.3         -          -          -        -      83.4 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- FX gains/(losses)(8)        29.6           12.6       0.4          -          -        -      42.6 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Costs and other 
  movements                         -              -     (3.2)          -          -      0.2     (3.0) 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
  - Dividends paid                  -              -    (30.0)          -          -        -    (30.0) 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Performance fee 
  reserve                           -          (2.9)         -          -          -        -     (2.9) 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Treasury shares                -              -         -          -          -        -         - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Revolving credit                                                   -          -        - 
  facility 
  drawn/repaid                      -              -         -                                        - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 Adjusted NAV at 
  31.3.21 (3)                   830.7          366.0      99.9          -          -        -   1,296.6 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 

Private Equity - operational metrics

 
Private Equity - operational metrics               31 March 2021  31 December 2020 
                                                   ------------- 
Portfolio year-over-year LTM revenue growth(6)             12.1%              6.6% 
================================================  ==============  ================ 
Portfolio year-over-year LTM EBITDA growth(6)              44.2%             20.8% 
================================================  ==============  ================ 
Enterprise Value / EBITDA valuation multiple(6)            18.2x             16.9x 
================================================  ==============  ================ 
Net debt / EBITDA multiple (6)                              3.9x              3.9x 
------------------------------------------------  --------------  ---------------- 
 
 

Derived Investments - operational metrics

 
Derived Investments - operational metrics    31 March 2021  31 December 2020 
                                             ------------- 
Debt year-over-year LTM EBITDA growth(9)             30.3%             26.2% 
===========================================  =============  ================ 
Debt average income yield to maturity(9)              7.3%              8.1% 
===========================================  =============  ================ 
Debt average years to maturity                         5.6               5.7 
===========================================  =============  ================ 
Debt average income yield(10)                         6.9%              7.3% 
===========================================  =============  ================ 
Equity price-to-earnings ratio(11)                    9.1x              7.1x 
-------------------------------------------  -------------  ---------------- 
 

Other Invested Portfolio highlights

 
Invested Portfolio analysis(12)    EURm     EURm    %     % 
                                  -----  -------  --- 
Private Equity                             830.7        69% 
================================  =====  =======  ===  ==== 
 
  *    AMI                         25.5            2% 
================================  =====  =======  ===  ==== 
 
  *    AEVI                         6.3            0% 
================================  =====  =======  ===  ==== 
 
  *    AEVII                       30.6            2% 
================================  =====  =======  ===  ==== 
 
  *    AVIII                      169.4           14% 
================================  =====  =======  ===  ==== 
 
  *    AIX                        498.3           42% 
================================  =====  =======  ===  ==== 
 
  *    ADF                         31.2            3% 
================================  =====  =======  ===  ==== 
 
  *    AX                          69.4            6% 
================================  =====  =======  ===  ==== 
Derived Investments                        368.9        31% 
================================  =====  =======  ===  ==== 
 
  *    Derived Debt               332.8           27% 
================================  =====  =======  ===  ==== 
 
  *    Derived Equity              46.1            4% 
================================  =====  =======  ===  ==== 
Total                                    1,199.6       100% 
--------------------------------  -----  -------  ---  ---- 
 

Footnotes

 
 
   1.    "Total NAV Return" means the movement in the Adjusted NAV 
          per share over the quarter plus any dividends paid. "Total 
          Return" reflects the sub-portfolio performance on a stand-alone 
          basis. It excludes items at the overall AGA level such as 
          cash, management fees, and costs 
   2.    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). 
          Average uplift of full exits and significant partial exits 
          in the current quarter calculated based on the expected 
          sales proceeds and/ or the fair value remaining. Weighted 
          average uplift on two full exits, one significant partial 
          exit and one public listing (InnovAge) were 91.2%, whilst 
          excluding InnovAge's IPO weighted average uplift was 50.5% 
   3.    NAV was EUR1,299.5m whilst Adjusted NAV was EUR1,296.6m 
          reflecting the estimated performance fee reserve of EUR2.9m 
          at period end. Private Equity NAV and Adjusted NAV were 
          the same at EUR830.7m. Derived Investments NAV was EUR368.9m 
          whilst it's Adjusted NAV was EUR366.0m reflecting the adjustment 
          for the performance fee reserve of EUR2.9m. 
   4.    Private Equity Aggregate Gross IRR and Gross MOIC of 15.3% 
          and 1.7x calculated based on the expected aggregate cash 
          flows across all funds for the 2 full exits (Boats Group 
          and Signavio) and 1 significant partial exit (Psagot). Including 
          InnovAge (all primary) Gross IRR and Gross MOIS were 134.5% 
          and 2.5x respectively. Gross IRR represents concurrent Gross 
          IRR 
   5.    Invested cost remains subject to closing on investments 
          signed which have yet to close (Lutech, Herjavec Group, 
          Rodenstock) 
   6.    Gross Asset Value weighted average of the respective metric 
          across the portfolio. LTM Revenue growth and LTM EBITDA 
          growth rates exclude companies where EBITDA is not meaningful 
          such as financial services or high growth business with 
          fluctuations in EBITDA. TietoEVRY is also excluded due to 
          the unavailability of reported data. Net debt/EBITDA multiple 
          and EV/EBITDA valuation multiple excluded companies where 
          EBITDA is not meaningful such as financial services or companies 
          with negative EBITDA, or high growth business valued on 
          a revenue basis. MATCHESFASHION.COM is excluded due to low 
          EBITDA from opex investments and short-term fluctuations 
          in EBITDA. Cole Haan has been excluded at March 2021 as 
          it has negative EBITDA 
   7.    Total invested of EUR54.7m includes EUR1.2m related to a 
          delayed draw on existing position Evercommerce during the 
          period 
   8.    FX on cash includes the revaluation of cash balances and 
          net losses arising from the differences in exchange rates 
          between transaction dates and settlement dates, and unrealised 
          net losses arising from the translation into euro of assets 
          and liabilities (other than investments) which are not denominated 
          in euro 
   9.    Gross Asset Value weighted average of the respective metric 
          across the Derived Debt portfolio 
   10.   Gross Asset Value weighted average of the current full year 
          income (annual coupon/clean price as at the respective date) 
          for each debt position in the Derived Debt portfolio as 
          at the respective date 
   11.   Gross Asset Value weighted average of the respective metric 
          across the Derived Equity portfolio. (Answers, FullBeauty 
          and Cengage were excluded from both LTM earnings growth 
          and P/E ratio) 
   12.   Invested Portfolio excludes cash and cash equivalents, revolving 
          credit facility drawn and net current assets, including 
          these the NAV was EUR1,299.5m and Adjusted NAV was EUR1,296.6m 
          reflecting adjustment of EUR2.9m for the estimated performance 
          fee reserve accrued 
 
 

Notes

 
 1.   Note that references in this announcement to Apax Global Alpha 
       Limited have been abbreviated to "AGA" or "the Company". References 
       to Apax Partners LLP have been abbreviated to "Apax Partners" 
       or "the Investment Adviser" 
 2.   Please be advised that this announcement may contain inside 
       information as stipulated under the Market Abuse Regulations 
       (EU) NO. 596/2014 ("MAR") 
 3.   This announcement is not for release, publication or distribution, 
       directly or indirectly, in whole or in part, into or within 
       the United States or to "US persons" (as defined in Regulation 
       S under the United States Securities Act of 1933, as amended 
       (the "Securities Act")) or into or within Australia, Canada, 
       South Africa or Japan. Recipients of this announcement in jurisdictions 
       outside the UK should inform themselves about and observe any 
       applicable legal requirements in their jurisdictions. In particular, 
       the distribution of the announcement may be restricted by law 
       in certain jurisdictions 
 4.   The information presented herein is not an offer for sale within 
       the United States of any equity shares or other securities 
       of Apax Global Alpha Limited ("AGA"). AGA has not been and 
       will not be registered under the US Investment Company Act 
       of 1940, as amended (the "Investment Company Act"). In addition, 
       AGA's shares (the "Shares") have not been and will not be registered 
       under the Securities Act or any other applicable law of the 
       United States. Consequently, the Shares may not be offered 
       or sold or otherwise transferred within the United States, 
       or to, or for the account or benefit of, US Persons, except 
       pursuant to an exemption from the registration requirements 
       of the Securities Act and under circumstances which will not 
       require AGA to register under the Investment Company Act. No 
       public offering of the Shares is being made in the United States 
 5.   This announcement may include forward-looking statements. The 
       words "expect", "anticipate", "intends", "plan", "estimate", 
       "aim", "forecast", "project" and similar expressions (or their 
       negative) identify certain of these forward-looking statements. 
       These forward-looking statements are statements regarding AGA's 
       intentions, beliefs or current expectations concerning, among 
       other things, AGA's results of operations, financial condition, 
       liquidity, prospects, growth and strategies. The forward-looking 
       statements in this presentation are based on numerous assumptions 
       regarding AGA's present and future business strategies and 
       the environment in which AGA will operate in the future. Forward-looking 
       statements involve inherent known and unknown risks, uncertainties 
       and contingencies because they relate to events and depend 
       on circumstances that may or may not occur in the future and 
       may cause the actual results, performance or achievements of 
       AGA to be materially different from those expressed or implied 
       by such forward looking statements. Many of these risks and 
       uncertainties relate to factors that are beyond AGA's ability 
       to control or estimate precisely, such as future market conditions, 
       currency fluctuations, the behaviour of other market participants, 
       the actions of regulators and other factors such as AGA's ability 
       to continue to obtain financing to meet its liquidity needs, 
       changes in the political, social and regulatory framework in 
       which AGA operates or in economic or technological trends or 
       conditions. Past performance should not be taken as an indication 
       or guarantee of future results, and no representation or warranty, 
       express or implied, is made regarding future performance. AGA 
       expressly disclaims any obligation or undertaking to release 
       any updates or revisions to these forward-looking statements 
       to reflect any change in AGA's expectations with regard thereto 
       or any change in events, conditions or circumstances on which 
       any statement is based after the date of this announcement, 
       or to update or to keep current any other information contained 
       in this announcement. Accordingly, undue reliance should not 
       be placed on the forward-looking statements, which speak only 
       as of the date of this announcement. 
 

About Apax Global Alpha Limited

AGA is a Guernsey registered closed-ended collective investment scheme incorporated as a non-cellular company that listed on the London Stock Exchange on 15 June 2015. It is regulated by the Guernsey Financial Services Commission.

AGA's objective is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company is targeting an annualised Total Return, across economic cycles, of 12-15% (net of fees and expenses) including a dividend yield of 5% of Net Asset Value.

The investment policy of the Company is to make Private Equity investments in Apax Funds, and Derived Investments which are investments in equities and debt derived from the insights gained via Apax Partners' Private Equity activities.

Further information regarding the Company and its publications are available on the Company's website at www.apaxglobalalpha.com.

About Apax Partners LLP

Apax Partners LLP ("Apax") is a leading global private equity advisory firm. For nearly 50 years, Apax has worked to inspire growth and ideas that transform businesses. The firm has raised and advised funds with aggregate commitments of more than $60 billion. The Apax Funds invest in companies across four global sectors of Tech, Services, Healthcare, and Internet/Consumer. These funds provide long-term equity financing to build and strengthen world-class companies. For further information about Apax, please visit www.apax.com.

Apax Partners is authorised and regulated by the Financial Conduct Authority in the UK.

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