Apax Global Alpha Ld - Update on Capital Allocation

Apax Global Alpha

26/06/2024 07:00

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RNS Number : 8626T  Apax Global Alpha Limited  26 June 2024

Update on Capital Allocation

Further to the announcement on 2 May 2024 the Board has undertaken a review of
Apax Global Alpha Limited's ("AGA" or the "Company") capital allocation
policy. Today, the Company is pleased to announce the conclusion of this
review and present the details of the new framework which becomes effective
immediately.

 

Key highlights

 

·   Creation of a Distribution Pool(1) which earmarks funds on AGA's
balance sheet available for share buybacks, allowing the Board to take
advantage of the opportunity presented by wide discounts to create immediate
value for shareholders by investing in the Company's own shares.

 

·     100% of "Excess Cash Flow" intended to be allocated to the
Distribution Pool on an annual basis until its size reaches 5% of the
Company's Net Asset Value ("NAV").

 

·     The Board has decided to seed the Distribution Pool with €30m.
Share Buyback Programme to commence immediately.

 

·     Continued payment of regular dividends to shareholders
semi-annually, with the dividend being set at an absolute level of 11p per
share per annum. The Board believes that this provides shareholders with
certainty of income. The dividend of 11p per share is equivalent to 5.1% of
AGA's NAV as at 31 March 2024 and represents a current dividend yield of
c.7%(2). To ensure shareholders continue to benefit from the Company's growth
the Board may also consider distributing capital through a special dividend as
part of its capital allocation framework.

 

·    The new capital allocation framework constructed in line with AGA's
investment objectives to maximise returns for shareholders across economic
cycles, and taking into account AGA's overall financial position which
continues to be prudently managed.

 

·      The new framework reflects feedback received from shareholders
representing the majority of the Company's share capital, suggesting that they
would like to see buybacks added to the "capital allocation toolkit" available
to the Company.

 

Commenting on the new capital allocation framework, Karl Sternberg, incoming
Chairman of AGA, said: "The Board believes that AGA's current discount to NAV
presents an attractive opportunity for AGA to create immediate value for
shareholders by investing in the Company's own shares. As such, we have
authorised launching a Share Buyback Programme immediately.

 

AGA's new, flexible framework gives the Board the tools it needs to allocate
capital as effectively as possible for the benefit of shareholders whilst also
ensuring the Company continues to grow over time through investments in AGA's
Private Equity portfolio. The regular dividend offers an attractive yield and
provides shareholders with certainty over the income they can expect from the
Company in the future."

 

New capital allocation framework explained

 

The new capital allocation framework will be implemented without compromising
the Company's investment strategy, portfolio composition, or balance sheet.

The Board will create a Distribution Pool(1) which earmarks funds on AGA's
balance sheet available for share buybacks. The Board intends to allocate 100%
of "Excess Cash Flow" to this Distribution Pool until the size of the
Distribution Pool reaches 5% of the Company's NAV. "Excess Cash Flow" will be
assessed annually and is defined as distributions from AGA's underlying
Private Equity portfolio and cash income from the Company's Debt portfolio
less capital calls paid, costs and expenses, repayment of the RCF, and
dividends paid.

The Board will consider using funds from the Distribution Pool for share
buybacks if AGA's shares trade at a discount in excess of 23% to the last
published NAV, in line with the Company's prospectus. The Board is committed
to maximising value for shareholders and will retain flexibility with regards
to the level of discount at which it believes buying its own shares is more
accretive than making new portfolio investments.

To take advantage of the investment opportunity presented by the current wide
discount to NAV and AGA's available liquid resources, the Board has authorised
commencing a Share Buyback Programme immediately and it has allocated €30m
to seed the Distribution Pool, representing 2.4% of NAV as at 31 March 2024.

In addition to share buybacks, AGA will continue to pay regular dividends to
shareholders semi-annually, with the dividend being set at an absolute level
of 11p per share per annum. This is equivalent to 5.1% of AGA's NAV as at 31
March 2024, currently yielding c.7% based on latest share price(2). To ensure
shareholders continue to benefit from the Company's growth the Board may also
consider distributing capital through a special dividend as part of its
capital allocation framework.

The share repurchases will be conducted within the limits approved by
shareholders at the Company's Annual General Meetings ("AGM"). At the
Company's most recent AGM, held on 1 May 2024, shareholders authorised AGA to
repurchase up to 14.99% of its issued share capital at the time. As at today's
date, the Company has authority to purchase up to 73,616,005 shares prior to
the next AGM, which is expected to be held in May 2025.

 

An update on the new capital allocation framework will be presented at the
Capital Markets Day due to be held today at 15:00 UK. To register for the
event, please visit AGA's website:
https://www.apaxglobalalpha.com/investor-centre/financial-calendar
(https://www.apaxglobalalpha.com/investor-centre/financial-calendar)

 

END

 

Contact details

Investor Relations - AGA

Katarina Sallerfors

T: +44 7436908492

E: katarina.sallerfors@apax.com

 

 

Footnotes

 1.  Distribution pool will be held in cash and Debt investments

 2.  Share price as at close of business on 25 June 2024

 

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 investment Company listed on the
London Stock Exchange. 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).

 

The Company makes Private Equity investments in Apax Funds, and has a smaller
portfolio of primarily debt investments, derived from the insights gained via
Apax's Private Equity activities.

 

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

 

 

About Apax

 

Apax Partners LLP ("Apax") is a leading global private equity advisory firm.
For over 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 $77 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
(http://www.apax.com/) .

 

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

 

 

 

 

 

 

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