TIDMBPET
RNS Number : 0609A
BMO Private Equity Trust PLC
27 May 2021
To: Stock Exchange For immediate release:
27 May 2021
BMO Private Equity Trust PLC
Quarterly results for the three months ended 31 March 2021
(unaudited)
-- Share price total return for the three-month period ended 31 March 2021 of 22.5%.
-- NAV total return per share for the three-month period of -0.3%.
-- NAV of 480.67p per share as at 31 March 2021.
-- Quarterly dividend of 4.35p per Ordinary Share.
Introduction
As at 31 March 2021, the net assets of the Company were
GBP355.4m, giving a Net Asset Value ('NAV') per share of 480.67p,
which taking into account the dividend of 3.99p paid on 29 January
2021, gives a decrease of 0.3% over the quarter. Exchange rate
movements reduced the overall valuation by approximately 1.5% over
the quarter. With the discount narrowing to 22.6% as at 31 March
2021 the share price total return for the period was an impressive
22.5%. The discount has continued to narrow and is currently
14.9%.
At 31 March 2021 the Company had net debt of GBP56.8m. This
reduced substantially early in the second quarter on the receipt of
the proceeds of the Dotmatics exit. Outstanding undrawn commitments
were GBP117 million including GBP19 million to funds where the
investment period has expired.
The dividend to be paid on 30 July 2021 to shareholders on the
register on 9 July 2021 with an ex-dividend date of 8 July 2021
will be 4.35p per share.
This valuation comes quite quickly after the full year valuation
and many of the underlying funds had yet to report first quarter
valuations by the preparation date of this valuation. There is
therefore a lag where the great majority of the March valuations
will not be reflected until the June valuation. 15% by value of the
portfolio has been valued at 31 March with most of the remainder
based on December 2020 valuations. This is a usual feature of the
timing of first quarter results.
New Investments
There was only one new investment made during the first quarter.
EUR5 million was committed to the Agilitas 2020 Private Equity
Fund, a mid-market buyout fund specialising in North West Europe.
We know the management group very well having backed their previous
fund and co-invested with them twice: in both cases successfully.
After the quarter end we have made a new commitment of GBP5 million
to Apposite Healthcare Fund III, a European focussed lower
mid-market healthcare and life sciences fund. Again, we have a
strong relationship with the manager through their previous fund
and through co-investing. The pipeline of new investment
opportunities is very healthy, and we expect to make more fund
commitments and co-investments as the year progresses.
The funds in our portfolio have been active in making new
investments during the quarter with a total of GBP10.2 million
invested. Although most major economies were in some form of
lockdown for the whole of the first quarter many private equity
houses have been able to execute new investments, often in sectors
where companies have proved their resilience through the
pandemic.
We have several holdings across the range of Inflexion funds and
they have made a number of new investments. Inflexion Buyout Fund V
and the Inflexion Supplemental Fund V together invested GBP1.9
million. This was mainly invested in BES (British Engineering
Services), which was a partial reinvestment of a hugely successful
exit from the Inflexion 2010 Fund (see below), and in Medik8, a
premium skincare brand committed to ethical manufacturing and
sustainability. Selling online and through professional channels
such as dermatology clinics, spas and beauty salons, Medik8
produces science based anti-ageing products. Inflexion Enterprise
Fund V called GBP0.4 million for a number of investments including
DR&P Group (corporate insurance broker), Goat Solutions (social
media and influencer marketing agency) and Systal (mission critical
managed network IT services). Inflexion Partnership Capital II
called GBP0.5 million for Phenna, a specialised business in the
testing, inspection and certification and compliance services
sector. SEP V invested GBP0.8 million in Glasgow based company
AutoRek (financial and regulatory data management software). FPE II
invested GBP0.6 million in Codestone (ERP and hosting services).
MED II, the ArchiMed healthcare fund called GBP0.4 million for
Ad-Tech, a niche US manufacturer of electrodes used in
neurodiagnostic and neurosurgery applications. Also in the
healthcare sector MVM V called GBP0.3 million for Paragon 28 (next
generation implants and instruments for foot and ankle orthopaedic
procedures) and GT Medical (innovative brain cancer treatments
using bioreabsorbable tiles with embedded radioactive seeds).
Sticking with a technological theme, ARX CEE IV invested GBP0.5
million in Instrumentation Technologies, a Slovenia based company
making components for particle accelerators. Lastly in the US Blue
Point Capital IV invested GBP0.6 million in Transtar, a distributor
of automotive aftermarket products for the driveline and
transmission repair market.
Realisations
During the quarter there were several full or partial
realisations across the breadth of the portfolio. The total
proceeds and associated income amounted to GBP16.1 million.
The largest inflow of GBP2.5 million came from our Silverfleet
led co-investment in cleanroom consumables company STAXS where
there has been a refinancing enabled by the very strong trading
resulting from the huge demand for PPE created by the pandemic.
This investment has now returned 90% of cost within two years.
Inflexion have continued their impressive run of exits this
quarter. BES (British Engineering Services), the engineering
testing, inspection and certification services provider has been an
exceptional performer and their 2010 Fund returned GBP2.1 million
achieving 14.8x cost and an IRR of 60%. As noted above Inflexion
have partially reinvested through their Supplemental Fund V.
Inflexion have exited no fewer than three other holdings this
quarter. Inflexion Fund IV returned GBP1.4 million principally from
the sale of Bollington Wilson (insurance brokers) (5.1x, 50% IRR)
and Kynetec (agricultural and animal data provider) (3.3x, 28%
IRR). Inflexion Partnership Capital I and Inflexion Supplemental
Fund IV returned GBP0.9 million mainly from the sale of investment
consultancy LCP (3.4x, 34% IRR). FPE II had two exits with the sale
of IWSR, the data provider for the drinks industry returning GBP1.0
million (3.6x, 56% IRR) and the exit of Masstech, the video storage
management company for the media and broadcast sector, returning
GBP0.6 million (2.7x including partial reinvestment in the stock of
acquirer Telestream). A significant inflow of GBP1.2 million came
from Pentech Fund II where there has been a partial realisation of
sports betting company FanDuel. FanDuel has merged with the US
operations of Flutter Entertainment to form a new entity FanDuel
Group (FDG), which is listed in the US. Pentech have made over 10x
cost so far with further upside possible as the remaining shares in
FDG are sold down. Apposite Healthcare Fund II returned GBP1.7
million as part proceeds from its sale of social care company MC
Care. This former division of Mitie was acquired for nominal
consideration, very successfully turned around and sold to a trade
acquirer. Horizon 2013 Fund exited Style Analytics, the provider of
investment and ESG analytics software to institutional investors,
returning GBP0.5 million (2.0x, 14% IRR). August Equity sold PCS
(Pet Cremation Services) returning GBP0.4 million (3.1x cost, 22%
IRR). Piper Private Equity achieved a partial exit of online flower
company Bloom & Wild which has attracted additional private
equity backers from the USA. GBP0.9 million was returned
representing 2.0x cost, with the whole investment achieving 3.6x so
far. Piper also achieved an exit for Proper Snacks (GBP0.1 million,
2.0x, 17% IRR). Nearly all of these exits are from UK based funds.
In the Nordics Procuritas V achieved a notable exit with the
partial sale of Pierce, the online retailer of spare parts and
accessories for on and off-road vehicles. The company has had a
successful IPO on the Nasdaq Stockholm. At IPO 3.3x cost was
realised enabling a GBP0.3 million distribution. Procuritas still
holds 60% of its investment so there is considerable scope for
further upside from here.
As can be seen this was an active quarter for new investments
and realisations with new investment clearly focusing on software,
healthcare and other technology enabled businesses. Realisations
have been from a broader range of companies but again these have
included companies which have either benefitted from the pandemic
or demonstrated a resilient business model through it.
Valuation Changes
There were comparatively few changes in valuation this quarter
given that only a small minority of 31 March reports had been
received in time, the uplift to sale value of many of the exits
described above will therefore be realised next quarter. The
largest factor in the valuation was currency movements with the
relative weakness of the euro and some other European currency
against sterling reducing the valuation considerably. We maintain a
partial natural hedge against this exchange rate movement through
borrowing largely in euros. The net effect was that the overall
valuation was adversely impacted by around 1.5%.
Most of the valuation changes were upwards. Amongst the
co-investment portfolio Coretrax was up by GBP0.5 million
reflecting a strong finish to FY 2020. Rosa Mexicano, the US based
Mexican restaurant chain has started its recovery and is up by
GBP0.9 million. In Norway software company Safran has been uplifted
by GBP0.4 million. In the funds portfolio notable increases include
SEP V up by GBP0.6 million and SEP IV by GBP0.4 million. In Europe
our portfolio of Italian assets was up by GBP0.7 million mainly due
to a strong uplift for Georgetti, the high-end furniture
company.
Financing
As reported with the full year results the Company has increased
its multi-currency revolving credit facility from GBP75 million to
GBP95 million. In addition to this there is a term loan of EUR25
million. At quarter end exchange rates this gives a total borrowing
capacity of around GBP116 million. At the end of March, the Company
was utilising 58% of this but also held some GBP10 million of cash.
Since the quarter end the proceeds of the realisation of Dotmatics
have been received and the current net debt position is much more
modest at GBP30 million or 8.4% of NAV. The Company retains plenty
of capacity to fund its ongoing investment programme even if
realisations do not match new investment activity every
quarter.
Outlook
The COVID-19 pandemic is by no means over with very few
countries sufficiently well vaccinated yet to be able to have
assumed normality. That said the recent lockdowns have been
characterised by a far smaller reduction in economic activity than
was the case a year ago. Many companies have found ways of
operating fairly successfully despite the constraints that COVID
places on business travel and the ability of many to attend work.
As previously noted and illustrated by the portfolio activity in
this quarter private equity investors have a clear appetite for
companies in the technology and healthcare sectors. Their
attributes of resilience and clear added value products and
services have been thrown into relief by the pandemic. The private
equity asset class as a whole has proved adaptable to the
constraints of the pandemic and for the last two quarters deal
making has reached approximately normal volumes, albeit that much
more of the investment process has been done virtually. The exits
in the latest quarter are not all yet reflected in the valuation of
the funds. There are also a number of other investments making good
progress towards exit. There are therefore excellent prospects for
further gains for shareholders as the year progresses.
Hamish Mair
Investment Manager
BMO Investment Business Limited
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
three months ended 31 March 2021 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
----------------------------------------------- --------- ----------------- ------------
Income
Losses on investments held at fair value - (3,537) (3,537)
Exchange gains - 3,568 3,568
Investment income 529 - 529
Other income - - -
----------------------------------------------- --------- ----------------- ------------
Total income 529 31 560
----------------------------------------------- --------- ----------------- ------------
Expenditure
Investment management fee - basic fee (84) (757) (841)
Investment management fee - performance - - -
fee
Other expenses (224) - (224)
----------------------------------------------- --------- ----------------- ------------
Total expenditure (308) (757) (1,065)
----------------------------------------------- --------- ----------------- ------------
Profit/(Loss) before finance costs and
taxation 221 (726) (505)
Finance costs (61) (551) (612)
----------------------------------------------- --------- ----------------- ------------
Profit/(Loss) before taxation 160 (1,277) (1,117)
Taxation - - -
Profit/(Loss) for period/ total comprehensive
income 160 (1,277) (1,117)
Return per Ordinary Share 0.22p (1.73)p (1.51)p
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
three months ended 31 March 2020 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ----------
Income
Gains on investments held at fair value - 1,897 1,897
Exchange losses - (1,982) (1,982)
Investment income 177 - 177
Other income 6 - 6
-------------------------------------------- --------- --------- ----------
Total income 183 (85) 98
-------------------------------------------- --------- --------- ----------
Expenditure
Investment management fee - basic fee (72) (649) (721)
Investment management fee - performance - - -
fee
Other expenses (222) - (222)
-------------------------------------------- --------- --------- ----------
Total expenditure (294) (649) (943)
-------------------------------------------- --------- --------- ----------
Loss before finance costs and taxation (111) (734) (845)
Finance costs (64) (578) (642)
-------------------------------------------- --------- --------- ----------
Loss before taxation (175) (1,312) (1,487)
Taxation - - -
Loss for period/total comprehensive income (175) (1,312) (1,487)
Return per Ordinary Share (0.24)p (1.77)p (2.01)p
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
year ended 31 December 2020 (audited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 74,076 74,076
Exchange losses - (2,705) (2,705)
Investment income 4,988 - 4,988
Other income 8 - 8
-------------------------------------------- --------- --------- ---------
Total income 4,996 71,371 76,367
-------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (294) (2,650) (2,944)
Investment management fee - performance
fee - (3,007) (3,007)
Other expenses (952) - (952)
-------------------------------------------- --------- --------- ---------
Total expenditure (1,246) (5,657) (6,903)
-------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 3,750 65,714 69,464
Finance costs (260) (2,337) (2,597)
-------------------------------------------- --------- --------- ---------
Profit before taxation 3,490 63,377 66,867
Taxation - - -
Profit for year/total comprehensive income 3,490 63,377 66,867
Return per Ordinary Share 4.72p 85.71p 90.43p
BMO PRIVATE EQUITY TRUST PLC
Balance Sheet
As at 31 As at 31 As at 31 December
March 2021 March 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ------------------
Non-current assets
Investments at fair value through
profit or loss 417,444 352,588 426,249
--------------------------------------- ------------ ------------ ------------------
Current assets
Other receivables 285 42 562
Cash and cash equivalents 10,679 5,673 8,344
--------------------------------------- ------------ ------------ ------------------
10,964 5,715 8,906
Current liabilities
Other payables (5,543) (4,130) (4,492)
Interest-bearing bank loan (47,267) (33,173) (49,666)
--------------------------------------- ------------ ------------ ------------------
(52,810) (37,303) (54,158)
Net current liabilities (41,846) (31,588) (45,252)
Total assets less current liabilities 375,598 321,000 380,997
--------------------------------------- ------------ ------------ ------------------
Non-current liabilities
Interest-bearing bank loan (20,182) (21,072) (21,514)
--------------------------------------- ------------ ------------ ------------------
Net assets 355,416 299,928 359,483
--------------------------------------- ------------ ------------ ------------------
Equity
Called-up ordinary share capital 739 739 739
Share premium account 2,527 2,527 2,527
Special distributable capital
reserve 15,040 15,040 15,040
Special distributable revenue
reserve 31,403 31,403 31,403
Capital redemption reserve 1,335 1,335 1,335
Capital reserve 304,372 248,884 308,439
Shareholders' funds 355,416 299,928 359,483
--------------------------------------- ------------ ------------ ------------------
Net asset value per Ordinary Share 480.67p 405.63p 486.17p
BMO PRIVATE EQUITY TRUST PLC
Reconciliation of Movements in Shareholders' Funds
Three months Three months Year ended
ended 31 March ended 31 31 December
2021 March 2020 2020
(unaudited) (unaudited) (audited)
------------------------------------ ---------------- ------------- -------------
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 359,483 304,277 304,277
(Loss)/profit for the period/total
comprehensive income (1,117) (1,487) 66,867
Dividends paid (2,950) (2,862) (11,661)
------------------------------------ ---------------- ------------- -------------
Closing shareholders' funds 355,416 299,928 359,483
------------------------------------ ---------------- ------------- -------------
Notes (unaudited)
1. The unaudited quarterly results have been prepared on the
basis of the accounting policies set out in the statutory accounts
of the Company for the year ended 31 December 2020. Earnings for
the three months to 31 March 2021 should not be taken as a guide to
the results for the year to 31 December 2021.
2. Investment management fee:
Three months ended Three months ended Year ended 31 December
31 March 2021 31 March 2020 2020
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
management
fee - basic fee 84 757 841 72 649 721 294 2,650 2,944
Investment
management
fee - performance
fee - - - - - - - 3,007 3,007
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
84 757 841 72 649 721 294 5,657 5,951
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3. Finance costs:
Three months ended Three months ended Year ended 31 December
31 March 2021 31 March 2020 2020
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
Interest payable
on bank loans 61 551 612 64 578 642 260 2,337 2,597
4. Returns and net asset values
Three months ended Three months Year ended 31
31 March 2021 ended 31 March December 2020
2020
(unaudited) (unaudited) (audited)
The returns and net asset
values per share are based
on the following figures:
Revenue Return GBP160,000 (GBP175,000) GBP3,490,000
Capital Return (GBP1,277,000) (GBP1,312,000) GBP63,377,000
Net assets attributable GBP355,416,000 GBP299,928,000 GBP359,483,000
to shareholders
Number of shares in issue
at the period end 73,941,429 73,941,429 73,941,429
Weighted average number
of shares in issue during
the period 73,941,429 73,941,429 73,941,429
5. The financial information for the three months ended 31 March
2021, which has not been audited or reviewed by the Company's
auditor, comprises non-statutory accounts within the meaning of
Section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2020, on which the auditor issued an
unqualified report, will be lodged shortly with the Registrar of
Companies. The quarterly report will be available shortly on the
Company's website www.bmoprivateequitytrust.com
Legal Entity Identifier: 2138009FW98WZFCGRN66
For more information, please contact:
Hamish Mair (Investment Manager) 0131 718 1184
Scott McEllen (Company Secretary) 0131 718 1137
hamish.mair@bmogam.com / scott.mcellen@bmogam.com
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