TIDMAPAX

RNS Number : 5313K

Apax Global Alpha Limited

06 May 2022

(LSE: APAX)

Apax Global Alpha Limited

Quarterly results for the period ended 31 March 2022

Key Q1 highlights

-- Despite volatile markets, the portfolio proved resilient during the quarter with a Total NAV Return(1) of (1.7%) ((3.8%) constant currency). Valuations in the period were primarily affected by weakness in the listed investments within the PE portfolio following IPOs.

-- 72% of the Invested Portfolio is in Private Equity and the portfolio is well diversified across four key sectors and vintages.

-- Transformation of the portfolio companies is integral to delivering strong operational performance with LTM EBITDA growth(2) and LTM revenue growth(2) of 21.6% and 18.7% respectively.

-- Deal activity in the period remained strong with the Apax Funds completing one full exit (Unilabs) and four new investments (Alcumus, YunZhangFang, T-Mobile, and Ole Smokey).

-- AGA continued its strategy to invest in funds advised by Apax with a new $60m commitment to the Apax Global Impact fund in the period.

-- AGA's liquidity position is healthy comprising EUR146m available cash and an evergreen revolving credit facility (RCF) of EUR140m which remains undrawn. The Derived Investments portfolio of EUR358m provides a further source of capital flexibility. This compares to total outstanding commitments (including recallable distributions) to the Apax Funds of EUR441m.

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

" Against a backdrop of volatile markets and macro conditions impacted by inflationary pressures and geopolitical risks, the established Apax Funds strategy of creating alpha through business improvement, of investing in coveted sub-sectors of prior expertise, and of buying selectively is well suited to the period ahead. As a result, AGA's portfolio remains well positioned for continued strong performance and to generate further value for shareholders. "

Financial highlights

-- Adjusted NAV(3) was largely unchanged at EUR1.4 billion (FY21 EUR1.5 billion), including the dividend payment of EUR37.4m (6.36p per share) during the quarter.

   --      Invested portfolio weighted towards Private Equity (72%) vs. Derived Investments (28%). 

-- Post period end, AGA committed $40m to AMI II fund. Additionally, the evergreen RCF was increased to EUR250m (from EUR140m) in keeping with the higher NAV and the greater proportion of private equity in the portfolio today than on inception, with the other key terms remaining unchanged. The RCF is available for general corporate purposes, including short-term financing of investments such as the drawdown on commitments to Apax Funds.

 
                         Q1 2022 (EUR)   Q1 2022 (GBP) 
 Adjusted NAV (3)        1,419.6m        1,195.8m 
                        --------------  -------------- 
 Adjusted NAV (3) per 
  share                  2.89            2.44 
                        --------------  -------------- 
 NAV (3) per share       2.90            2.44 
                        --------------  -------------- 
 
 
                        Exposure   Q1 2022        Q1 2022 
                                              constant currency 
 Total NAV Return(1)               (1.7%)          (3.8%) 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Private Equity          65%      (3.1%)          (5.4%) 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Derived Debt            23%       2.8%            0.3% 
                       ---------  --------  ------------------- 
 Total Return(1) - 
  Derived Equity           2%      (0.7%)          (2.1%) 
                       ---------  --------  ------------------- 
 Cash & Others            10% 
                       ---------  --------  ------------------- 
 

Private Equity portfolio highlights

-- The Private Equity Total Return(1) for the quarter was (3.1%) ((5.4%) constant currency), reflecting the current market backdrop.

-- The portfolio focuses on four key sectors, with 42% in Tech & Digital, 28% in Services, 13% in Healthcare, and 17% in Internet/Consumer.

-- The portfolio remains well diversified across the fund lifecycle with 27% in the investment phase, 55% in the maturity phase, and 18% in the harvesting phase.

-- On a look-through basis, AGA invested c.EUR45.8m in four new private equity investments which closed during the period.

   --      Unilabs was fully exited in Q1 2022 with a Gross IRR(4) and Gross MOIC(4) of 25.3% and 3.1x respectively. 

Derived Investments portfolio highlights

-- Steady performance of Derived Investments with a Total Return(1) of 2.5% (0.1% constant currency) in Q1, primarily reflecting FX tailwinds.

-- The portfolio remains weighted towards Tech and is predominantly invested in debt instruments (91% of Derived Investments), of which the majority are the lower risk first lien tranches (61% of Derived Investments).

-- 96% of the Derived Debt portfolio is invested in floating rate instruments minimising duration risk and providing return upside in a rising interest environment

-- Continued deployment of excess liquidity into Derived Debt with new investments of EUR22.4m(5) .

For further information regarding the announcement of AGA's 2022 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

 
  Lorraine Rees 
    Investor Relations - AGA 
   Telephone: +44 (0)7889 089 220 
   Email: lorraine.rees@apax.com 
 

APPIX

Movements in NAV

 
 Adjusted NAV movements      Private     Derived               Treasury   Facility             1Q 22 
  (EURm)                      Equity    Investments    Cash     Shares      drawn    Other     Total 
                            --------  -------------  -------  ---------  ---------  -------  -------- 
 Adjusted NAV at 31.12.21    1,012.9          327.2    108.5          -          -     33.1   1,481.7 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 + Investments                   5.1           22.4   (21.4)          -          -    (6.1)         - 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 - Distributions/ 
  divestments                 (68.8)          (5.2)    107.4          -          -   (33.4)         - 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 + Interest and dividend 
  income                           -              -      4.4          -          -      0.2       4.6 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 +/- Gains/(losses)           (53.4)          (2.9)        -          -          -        -    (56.3) 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 +/- FX gains/(losses)(6)       22.6            7.9      1.3          -          -        -      31.8 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 +/- Costs and other 
  movements                        -              -    (2.6)          -          -      0.1     (2.5) 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
  - Dividends paid                 -              -   (37.4)          -          -        -    (37.4) 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 +/- Performance fee 
  reserve(7)                   (0.9)            7.0        -      (8.4)          -        -     (2.3) 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 +/- Treasury shares               -              -    (8.4)        8.4          -        -         - 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 +/- Revolving credit              -              -        -          -          -        -         - 
  facility 
  drawn/repaid 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 Adjusted NAV at 31.3.22       917.5          356.4    151.8          -          -    (6.1)   1,419.6 
--------------------------  --------  -------------  -------  ---------  ---------  -------  -------- 
 

Private Equity - operational metrics

 
Private Equity - operational metrics               31 March 2022  31 December 2021 
                                                   ------------- 
Portfolio year-over-year LTM revenue growth(2)             18.7%             20.2% 
================================================  ==============  ================ 
Portfolio year-over-year LTM EBITDA growth(2)              21.6%             35.3% 
================================================  ==============  ================ 
Enterprise Value / EBITDA valuation multiple(2)            19.0x             23.2x 
================================================  ==============  ================ 
Net debt / EBITDA multiple (2)                              4.5x              4.2x 
------------------------------------------------  --------------  ---------------- 
 
 

Derived Investments - operational metrics

 
Derived Investments - operational metrics    31 March 2022  31 December 2021 
                                             ------------- 
Debt year-over-year LTM EBITDA growth(8)             21.4%             22.2% 
===========================================  =============  ================ 
Debt average income yield to maturity(8)              6.7%              6.2% 
===========================================  =============  ================ 
Debt average years to maturity                         5.8               6.1 
===========================================  =============  ================ 
Debt average income yield(9)                          6.2%              5.4% 
-------------------------------------------  -------------  ---------------- 
 

Other Invested Portfolio highlights

 
Invested Portfolio analysis(11)    EURm     EURm    %     % 
                                  -----  -------  --- 
 
  *    AMI                         25.3            2% 
================================  =====  =======  ===  ==== 
 
  *    AEVI                         7.7            1% 
================================  =====  =======  ===  ==== 
 
  *    AEVII                       29.5            2% 
================================  =====  =======  ===  ==== 
 
  *    AVIII                      127.6           10% 
================================  =====  =======  ===  ==== 
 
  *    AIX                        441.7           35% 
================================  =====  =======  ===  ==== 
 
  *    ADF                         40.9            3% 
================================  =====  =======  ===  ==== 
 
  *    ADF II                     (1.5)            0% 
================================  =====  =======  ===  ==== 
 
  *    AX                         247.2           19% 
================================  =====  =======  ===  ==== 
Private Equity                             918.4        72% 
================================  =====  =======  ===  ==== 
 
  *    Derived Debt               327.1           26% 
================================  =====  =======  ===  ==== 
 
  *    Derived Equity              30.7            2% 
================================  =====  =======  ===  ==== 
Derived Investments                        357.8        28% 
================================  =====  =======  ===  ==== 
Total                                    1,276.2       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.    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. Net debt/EBITDA multiple and EV/EBITDA 
          valuation multiple excluded companies where EBITDA is not 
          meaningful such as financial services or high growth business 
          valued on a revenue basis. 
   3.    Adjusted NAV reflects Total NAV of EUR1,421.9m, after performance 
          fee reserve of EUR2.3m. 
   4.    Gross MOIC and Gross IRR calculated based on the expected 
          aggregate euro cash flows since inception for the AIX holding 
          only 
   5.    Total invested of EUR22.4m includes EUR16.2m relates to 
          follow-on investments and delayed draws on existing positions 
          HelpSystems, Infogain RCF and Mitratech 1L and 2L during 
          the period. 
   6.    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. 
   7.    Movement in the performance fee reserve reflects the performance 
          fee reserve accrued by the Company's at 
          period end. This does not represent the underlying Private 
          Equity portfolio's carried interest. 
   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.   Gross Asset Value weighted average of the respective metric 
          across the Derived Equity portfolio. 
   11.   Invested Portfolio excludes cash and cash equivalents, revolving 
          credit facility drawn and net current assets, including 
          these the NAV was EUR1,421.9m and Adjusted NAV was EUR1,419.6m 
          reflecting adjustment of EUR2.3m 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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