TIDMAPAX

RNS Number : 2725R

Apax Global Alpha Limited

04 November 2021

(LSE: APAX)

Apax Global Alpha Limited

Quarterly results for the period ended 30 September 2021

Key highlights

 
 
 --   Total NAV Return(1) of 9.9% in the quarter (8.3% constant 
       currency). 
 --   Total Adjusted NAV increased to c. EUR 1.5bn with Adjusted 
       NAV per share, growing from EUR2.81 (GBP2.41) to EUR3.02 (GBP2.59) 
       in the three months to 30 September 2021. 
 --   Performance in Private Equity driven primarily by earnings 
       growth in the portfolio and an increase in multiples, mainly 
       as a result of ThoughtWorks IPO in the quarter. 
 --   Private Equity exits achieved at healthy uplifts(2) of 56.9%. 
 --   Strong investment pace in Private Equity, with AGA deploying 
       c.EUR47m on a look through basis across three new Private 
       Equity investments in the period. 
 --   Distributions of c.EUR85m received from Private Equity, including 
       proceeds from one full exit (TietoEvry), one partial exit 
       (Wizeline) and two public listings (ThoughtWorks and Paycor) 
       in the period. 
 --   Five Derived Investments positions were realised in the quarter 
       for a total of c. EUR70m, providing net realisations of c. 
       EUR43m that can be used to meet future Private Equity calls. 
 --   Liquidity position is healthy with available cash after net 
       liabilities of EUR73m, and the evergreen revolving credit 
       facility of EUR140m remaining undrawn. Derived Investments 
       of c.EUR394m(3) provide a further source of funding for AGA. 
 

Ralf Gruss, COO of Apax Partners, said:

"It has been another strong quarter and we are pleased to see that AGA's investment strategy and sector focus have continued to deliver robust NAV performance. In Private Equity, we have seen a number of transactions, primarily in the Tech sector. There continues to be a solid pipeline of deals and real momentum across the portfolio."

Financial highlights

-- Growth in Adjusted NAV(3) to c. EUR1.5 billion, up from c. EUR1.4 billion as at 30 June 2021.

-- Portfolio weighted towards Private Equity (72%), vs. Derived Debt (24%) and Derived Equity (4%).

-- AGA was 95% invested as at 30 September 2021 and had outstanding commitments to the Apax Funds (together with recallable distributions) of EUR434m.

 
                        Q3 2021 (EUR)   Q3 2021 (GBP) 
 Adjusted NAV (3)       EUR 1,483m      GBP 1,274m 
                       --------------  -------------- 
 Adjusted NAV (3) per   EUR 3.02        GBP 2.59 
  share 
                       --------------  -------------- 
 NAV (3) per share      EUR 3.03        GBP 2.61 
                       --------------  -------------- 
 
 
                        Exposure   Q3 2021        Q3 2021 
                                              constant currency 
 Total NAV Return(1)                9.9%            8.3% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Private Equity          68%       13.6%          11.8% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Derived Debt            23%       3.4%            1.5% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Derived Equity           4%       6.5%            5.4% 
                       ---------  --------  ------------------- 
 Cash & Others             5% 
                       ---------  --------  ------------------- 
 

Private Equity portfolio highlights

 
 
 --   The Private Equity portfolio performed strongly in the quarter: 
       Total Return(1) of 13.6% (11.8% constant currency). 
 --   Deal activity reflective of Apax's 'good to great' investment 
       strategy and sub-sector expertise, focusing on companies where 
       a significant re-rating opportunity exists based on business 
       quality improvement. 
 --   Aggregate Gross IRR(4) and Gross MOIC(4) on Private Equity 
       exits in Q3 2021 were 73.6% and 6.5x respectively. Exits were 
       achieved at an average uplift(2) of 56.9%, reflecting the 
       quality of the portfolio. 
 --   On a look-through basis, AGA invested c.EUR47m(5) in three 
       new investments in Tech that closed during the period. 
 --   Continued strong earnings growth and operating performance 
       from the portfolio companies: LTM Revenue (6) and EBITDA growth 
       (6) of 22% and 41% respectively across the Private Equity 
       portfolio. 
 --   LTM Enterprise Value/EBITDA valuations multiples increased 
       to 23.5x from 18.0x in June 2021, primarily driven by the 
       re-rating of ThoughtWorks achieved at IPO. 
 --   The Apax Digital Fund II, to which AGA has made a commitment 
       of $90m, closed at its $1.75bn hard cap in the period. 
 

Derived Investments portfolio highlights

 
 
 --   Steady performance across the portfolio with Derived Investments 
       achieving a Total Return(1) of 3.8% (2.0% constant currency) 
       in the quarter, driven by Derived Debt which makes up 87% 
       of the Derived Investments portfolio. 
 --   Continued focus on investments in lower risk first and second 
       lien loans where there is a high degree of visibility on cash 
       flow, and in target sub-sectors where Apax has unique insights 
       gained from the Private Equity investment activity - c.EUR27m 
       deployed across 4 new debt positions in Q3 2021. 
 --   Five Derived Investments positions were realised during the 
       quarter with net distributions of c. EUR43m. The realisations 
       reflect AGA's strategy of creating liquidity from the Derived 
       Investments portfolio to support capital calls from the Apax 
       Private Equity funds. 
 --   Strong operating performance from underlying Derived Debt 
       portfolio companies: c.33% LTM EBITDA growth to 30 September 
       2021. 
 --   Reflecting the increased share of first lien loans and the 
       impact of lower base rates in the portfolio, the overall yield 
       to maturity of the portfolio stands at 6.5% at 30 September 
       2021. 
 --   No new investments in Derived Equity. 
 --   Derived Debt delivered a Total Return(1) of 3.4% (1.5% constant 
       currency) and Derived Equity delivered Total Return(1) of 
       6.5% (5.4% constant currency) in the quarter. 
 

For further information regarding the announcement of AGA's 2021 third 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            Q3 2021 
  (EURm)                       Equity    Investments    Cash      Shares      drawn    Other     Total 
                             --------  -------------  --------  ---------  ---------  -------  -------- 
 Adjusted NAV at 30.6.21        916.6          434.7      78.4          -          -   (49.4)   1,380.3 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 + Investments                   59.2           27.1   (122.1)          -          -     35.8         - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 - Distributions/ 
  divestments                  (84.8)         (70.2)     154.7          -          -      0.3         - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 + Interest and dividend 
  income                            -              -      11.8          -          -      0.6      12.4 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Gains/(losses)             108.9          (2.8)         -          -          -        -     106.1 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- FX gains/(losses)(7)        16.2            7.0     (0.4)          -          -        -      22.8 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Costs and other 
  movements                         -              -     (2.2)          -          -      0.1     (2.1) 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
  - Dividends paid                  -              -    (34.4)          -          -        -    (34.4) 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Performance fee 
  reserve                           -          (2.1)         -          -          -        -     (2.1) 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Treasury shares                -              -         -          -          -        -         - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 +/- Revolving credit               -              -         -          -          -        - 
  facility 
  drawn/repaid                                                                                        - 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 Adjusted NAV at 
  30.9.21 (3)                 1,016.1          393.7      85.8          -          -   (12.6)   1,483.0 
---------------------------  --------  -------------  --------  ---------  ---------  -------  -------- 
 

Private Equity - operational metrics

 
Private Equity - operational metrics               30 September 2021    30 June 2021 
                                                   ----------------- 
Portfolio year-over-year LTM revenue growth(6)                 21.5%           22.3% 
================================================  ==================  ============== 
Portfolio year-over-year LTM EBITDA growth(6)                  41.0%           42.7% 
================================================  ==================  ============== 
Enterprise Value / EBITDA valuation multiple(6)                23.5x           18.0x 
================================================  ==================  ============== 
Net debt / EBITDA multiple (6)                                  3.4x            3.7x 
------------------------------------------------  ------------------  -------------- 
 
 

Derived Investments - operational metrics

 
Derived Investments - operational metrics    30 September 2021  30 June 2021 
                                             ----------------- 
Debt year-over-year LTM EBITDA growth(8)                 32.6%         37.3% 
===========================================  =================  ============ 
Debt average income yield to maturity(8)                  6.5%          6.8% 
===========================================  =================  ============ 
Debt average years to maturity                             6.2           5.9 
===========================================  =================  ============ 
Debt average income yield(9)                              6.5%          6.4% 
-------------------------------------------  -----------------  ------------ 
 

Other Invested Portfolio highlights

 
Invested Portfolio analysis(10)    EURm     EURm    %     % 
                                  -----  -------  --- 
 
  *    AMI                         52.5            4% 
================================  =====  =======  ===  ==== 
 
  *    AEVI                         7.3            0% 
================================  =====  =======  ===  ==== 
 
  *    AEVII                       23.4            2% 
================================  =====  =======  ===  ==== 
 
  *    AVIII                      164.8           11% 
================================  =====  =======  ===  ==== 
 
  *    AIX                        576.4           41% 
================================  =====  =======  ===  ==== 
 
  *    ADF                         38.3            3% 
================================  =====  =======  ===  ==== 
 
  *    AX                         153.4           11% 
================================  =====  =======  ===  ==== 
Private Equity                           1,016.1        72% 
================================  =====  =======  ===  ==== 
 
  *    Derived Debt               348.8           24% 
================================  =====  =======  ===  ==== 
 
  *    Derived Equity              51.5            4% 
================================  =====  =======  ===  ==== 
Derived Investments                        400.3        28% 
================================  =====  =======  ===  ==== 
Total                                    1,416.4       100% 
--------------------------------  -----  -------  ---  ---- 
 

Footnotes

 
 
   1.    "Total NAV Return" means the movement in the Adjusted NAV 
          per share over the period plus any dividends paid. "Total 
          Return" reflects the sub-portfolio performance on a stand-alone 
          basis. It excludes items at 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 period calculated based on the expected sales 
          proceeds and/ or the fair value remaining. For investments 
          where there were subsequent partial realisations since June 
          2021, uplift calculated by taking proceeds received in Q3 
          2021 plus remaining fair value at 30 September 2021 compared 
          to fair value at 30 June 2021 
   3.    NAV was EUR1,489.6m whilst Adjusted NAV was EUR1,483.0m 
          reflecting the estimated performance fee reserve of EUR6.6m 
          at period end. Private Equity NAV and Adjusted NAV were 
          the same at EUR1,016.1m. Derived Investments NAV was EUR400.3m 
          compared to an Adjusted NAV of EUR393.7m which has an adjustment 
          of EUR6.6m for the performance fee reserve. 
   4.    Private Equity Aggregate Gross IRR and Gross MOIC, combined 
          in EUR, of 73.6% and 6. 5x calculated based on the aggregate 
          cash flows across all funds for the 1 full exit, 1 partial 
          exit and 2 IPOs 
   5.    EUR47m of invested cost in new Private Equity investments 
          remains subject to final closing adjustments 
   6.    Gross Asset Value weighted average of the respective metric 
          across the portfolio. At June 2021 and September 2021, 21 
          and 24 investments were excluded (investments in the financial 
          services sector; companies with negative EBITDA or moving 
          from negative to positive EBITDA; investments that are written-off; 
          companies where EBITDA is not meaningful for specific reasons) 
   7.    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 
   8.    Gross Asset Value weighted average of the respective metric 
          across the Derived Debt portfolio 
   9.    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 
   10.   Invested Portfolio excludes cash and cash equivalents, revolving 
          credit facility drawn and net current assets, including 
          these the NAV was EUR1,489.6m and Adjusted NAV was EUR1,483.0m 
          reflecting adjustment of EUR6.6m for the estimated performance 
          fee reserve 
 
 

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" 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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